EXHIBIT 10(b)
HANGER ORTHOPEDIC GROUP, INC.
$150,000,000
11 1/4% SENIOR SUBORDINATED NOTES DUE 2009
PURCHASE AGREEMENT
June 9, 1999
DEUTSCHE BANK SECURITIES INC.
CHASE SECURITIES INC.
PARIBAS CORPORATION
c/o Deutsche Bank Securities Inc.
Bankers Trust Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Hanger Orthopedic Group, Inc., a Delaware corporation (the "COMPANY"),
hereby confirms its agreement with you (the "INITIAL PURCHASERS"), as set
forth below.
1. THE SECURITIES. Subject to the terms and conditions herein contained,
the Company proposes to issue and sell to the Initial Purchasers $150,000,000
aggregate principal amount of its 11 1/4% Senior Subordinated Notes Due 2009,
Series A (thE "NOtes"). The Notes are to be issued under an indenture (thE
"INDENTure") to be dated as of June 16, 1999 by and between the Company and
U.S. Bank Trust, National Association, as Trustee (thE "TRUStee"). Each of the
Company's domestic subsidiarie s (the "GUARANTORS") is jointly and severally
guaranteeing (the "GUARANTEES"), on a senior subordinated basis, the Company's
obligations under the Indenture and the Notes.
The Notes will be offered and sold to the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "ACT"), in
reliance on exemptions therefrom.
In connection with the sale of the Notes, the Company has prepared a
preliminary offering memorandum dated May 21, 1999 (the "PRELIMINARY
MEMORANDUM"), and a final offering memorandum dated June 9, 1999 (the "FINAL
MEMORANDUM"; the Preliminary Memorandum and the Final Memorandum each herein
being referred to as a "MEMORANDUM") setting forth or including a description
of the terms of the Notes, the terms of the offering of the Notes, a
description of the Company and any material developments relating to the
Company occurring after the date of the most recent historical financial
statements included therein.
The Initial Purchasers and their direct and indirect transferees of the
Notes will be entitled to the benefits of the Registration Rights Agreement,
substantially in the form attached hereto as EXHIBIT A (the "REGISTRATION
RIGHTS AGREEMENT"), pursuant to which the Company and the Guarantors agree,
among other things, to file a registration statement (the "REGISTRATION
STATEMENT") with the Securities and Exchange Commission (the "COMMISSION")
registering the Notes or the Exchange Notes (as defined in the Registration
Rights Agreement) under the Act.
2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to and agrees with each of the Initial Purchasers that:
(a) Neither the Preliminary Memorandum as of the date thereof nor the
Final Memorandum nor any amendment or supplement thereto as of the date
thereof and at all times subsequent thereto up to the Closing Date (as defined
in Section 3 below) contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this Section 2(a) do not apply to statements or omissions made in reliance
upon and in conformity with information relating to any of the Initial
Purchasers furnished to the Company in writing by the Initial Purchasers
expressly for use in the Preliminary Memorandum, the Final Memorandum or any
amendment or supplement thereto.
(b) As of the Closing Date, the Company will have the authorized, issued
and outstanding capitalization set forth in the Final Memorandum; all of the
subsidiaries of the Company are listed in SCHEDULE 2 attached hereto (each, a
"SUBSIDIARY" and collectively, the "SUBSIDIARIES"); all of the outstanding
shares of capital stock of the Company and the Subsidiaries have been, and as
of the Closing Date will be, duly authorized and validly issued, are fully
paid and nonassessable and were not issued in violation of any preemptive or
similar rights; all of the outstanding shares of capital stock of the Company
and of each of the Subsidiaries will be free and clear of all liens,
encumbrances, equities and claims or restrictions on transferability (other
than those imposed by the Act and the securities or "Blue Sky" laws of certain
jurisdictions) or voting; except as set forth in the Final Memorandum, there
are no (i) options, warrants or other rights to purchase, (ii) agreements or
other obligations to issue or (iii) other rights to convert any obligation
into, or exchange any securities for, shares of capital stock of or ownership
interests in the Company or any of the Subsidiaries outstanding. Except for
the Subsidiaries or as disclosed in the Final Memorandum, the Company does not
own, directly or indirectly, any shares of capital stock or any other equity
or long-term debt securities or have any equity interest in any firm,
partnership, joint venture or other entity.
(c) Each of the Company and the Subsidiaries is duly incorporated,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation and has all requisite corporate (or partnership
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or limited liability company) power and authority to own its properties and
conduct its business as now conducted and as described in the Final
Memorandum; each of the Company and the Subsidiaries is duly qualified to do
business as a foreign corporation in good standing in all other jurisdictions
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 would not, individually or in the aggregate, have a material adverse
effect on the general affairs, management, business, condition (financial or
otherwise), prospects or results of operations of the Company and the
Subsidiaries, taken as a whole (any such event, a "MATERIAL ADVERSE EFFECT").
(d) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Indenture, the
Notes, the Exchange Notes and the Private Exchange Notes (as defined in the
Registration Rights Agreement). The Notes, when issued, will be in the form
contemplated by the Indenture. The Notes, the Exchange Notes and the Private
Exchange Notes have each been duly and validly authorized by the Company and,
when executed by the Company and authenticated by the Trustee in accordance
with the provisions of the Indenture and, in the case of the Notes, when
delivered to and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, will constitute valid and legally binding obligations
of the Company entitled to the benefits of the Indenture, and enforceable
against the Company in accordance with their terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought.
(e) The Company and each of the Guarantors has all requisite corporate
(or partnership or limited liability company) power and authority to execute,
deliver and perform its obligations under the Indenture. The Indenture meets
the requirements for qualification under the Trust Indenture Act of 1939, as
amended (the "TIA"). The Indenture has been duly and validly authorized by the
Company and each of the Guarantors and, when executed and delivered by the
Company and each of the Guarantors (assuming the due authorization, execution
and delivery by the Trustee), will constitute a valid and legally binding
agreement of the Company and each of the Guarantors, enforceable against the
Company and each of the Guarantors in accordance with its terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought.
(f) The Company and each of the Guarantors has all requisite corporate
(or partnership or limited liability company) power and authority to execute,
deliver and perform its obligations under the Registration Rights Agreement.
The Registration Rights Agreement has been duly and validly authorized by the
Company and each of the Guarantors and, when executed and delivered by the
Company and each of the Guarantors, will constitute a valid and legally
binding agreement of the Company and each of the Guarantors enforceable
against the Company and each of the Guarantors in accordance with its terms,
except that (A) the enforcement thereof may be subject to (i) bankruptcy,
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insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and (ii) general principles
of equity and the discretion of the court before which any proceeding therefor
may be brought and (B) any rights to indemnity or contribution thereunder may
be limited by federal and state securities laws and public policy
considerations.
(g) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. This Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Company. This Agreement has been duly
executed and delivered by the Company.
(h) No consent, approval, authorization or order of any court or
governmental agency or body, or third party is required for the issuance and
sale by the Company of the Notes to the Initial Purchasers, the issuance by
any Guarantor of its Guarantee or the consummation by the Company or any of
the Guarantors of the other transactions contemplated hereby, except such as
have been obtained and such as may be required under state securities or "Blue
Sky" laws in connection with the purchase and resale of the Notes by the
Initial Purchasers. None of the Company or the Subsidiaries is (i) in
violation of its certificate of incorporation or bylaws (or similar
organizational document), (ii) in breach or violation of any statute,
judgment, decree, order, rule or regulation applicable to any of them or any
of their respective properties or assets, except for any such breach or
violation which would not, individually or in the aggregate, have a Material
Adverse Effect, or (iii) in breach of or default under (nor has any event
occurred which, with notice or passage of time or both, would constitute a
default under) or in violation of any of the terms or provisions of any
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate, contract or other agreement or
instrument to which any of them is a party or to which any of them or their
respective properties or assets is subject (collectively, "CONTRACTS"), except
for any such breach, default, violation or event which would not, individually
or in the aggregate, have a Material Adverse Effect.
(i) The execution, delivery and performance by the Company of this
Agreement and the Notes and by the Company and each Guarantor of the Indenture
and the Registration Rights Agreement, and the consummation by the Company and
each Guarantor of the transactions contemplated hereby and thereby (including,
without limitation, the issuance and sale of the Notes to the Initial
Purchasers) will not conflict with or constitute or result in a breach of or a
default under (or an event which with notice or passage of time or both would
constitute a default under) or violation of any of (i) the terms or provisions
of any Contract, except for any such conflict, breach, violation, default or
event which would not, individually or in the aggregate, have a Material
Adverse Effect, (ii) the certificate of incorporation or bylaws (or similar
organizational document) of the Company or any of the Subsidiaries, or (iii)
(assuming compliance with all applicable state securities or "Blue Sky" laws
and assuming the accuracy of the representations and warranties of the Initial
Purchasers in Section 8 hereof) any statute, judgment, decree, order, rule or
regulation applicable to the Company or any of the Subsidiaries or any of
their respective properties or assets, except for any such conflict, breach or
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violation which would not, individually or in the aggregate, have a Material
Adverse Effect.
(j) The audited consolidated financial statements of the Company and the
Subsidiaries included in the Final Memorandum present fairly in all material
respects the financial position, results of operations and cash flows of the
Company and the Subsidiaries at the dates and for the periods to which they
relate and have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis, except as otherwise stated therein.
The summary and selected financial and statistical data in the Final
Memorandum present fairly in all material respects the information shown
therein and have been prepared and compiled on a basis consistent with the
audited financial statements included therein, except as otherwise stated
therein. PricewaterhouseCoopers LLP (the "INDEPENDENT ACCOUNTANTS") is an
independent public accounting firm within the meaning of the Act and the rules
and regulations promulgated thereunder.
(k) The pro forma financial statements (including the notes thereto) and
the other pro forma financial information included in the Final Memorandum (i)
comply as to form in all material respects with the applicable requirements of
Regulation S-X promulgated under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), (ii) have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements, and (iii) have been properly computed on the bases described
therein; and the assumptions used in the preparation of the pro forma
financial data and other pro forma financial information included in the Final
Memorandum are reasonable and the adjustments used therein are appropriate to
give effect to the transactions or circumstances referred to therein.
(l) There is not pending or, to the knowledge of the Company, threatened
any action, suit, proceeding, inquiry or investigation to which the Company or
any of the Subsidiaries is a party, or to which the property or assets of the
Company or any of the Subsidiaries are subject, before or brought by any
court, arbitrator or governmental agency or body which, if determined
adversely to the Company or any of the Subsidiaries, would, individually or in
the aggregate, have a Material Adverse Effect or which seeks to restrain,
enjoin, prevent the consummation of or otherwise challenge the issuance or
sale of the Notes to be sold hereunder or the consummation of the other
transactions described in the Final Memorandum.
(m) The Company and each of the Subsidiaries holds all licenses,
certificates and permits from governmental authorities ("PERMITS") which are
necessary to the conduct of their businesses, except where the failure to do
so would not have a Material Adverse Effect; and neither the Company nor any
of the Subsidiaries has infringed any patents, patent rights, trade names,
trademarks or copyrights, which infringement is material to the business of
the Company and the Subsidiaries taken as a ------- whole. The Company knows
of no material infringement by others of patents, patent rights, trade names,
trademarks or copyrights owned by or licensed to the Company.
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(n) Since the date of the most recent financial statements appearing in
the Final Memorandum, except as described therein, (i) none of the Company or
the Subsidiaries has incurred any liabilities or obligations, direct or
contingent, or entered into or agreed to enter into any transactions or
contracts (written or oral) not in the ordinary course of business which
liabilities, obligations, transactions or contracts would, individually or in
the aggregate, be material to the general affairs, management, business,
condition (financial or otherwise), prospects or results of operations of the
Companies and its Subsidiaries, taken as a whole, (ii) none of the Company or
the Subsidiaries has purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind on
its capital stock (other than with respect to any of such Subsidiaries, the
purchase of, or dividend or distribution on, capital stock owned by the
Company) and (iii) there has not been any material change in the capital stock
or long-term indebtedness of the Company or the Subsidiaries.
(o) Each of the Company and the Subsidiaries has filed all necessary
federal, state and foreign income and franchise tax returns, except where the
failure to so file such returns would not, individually or in the aggregate,
have a Material Adverse Effect, and has paid all taxes shown as due thereon;
and other than tax deficiencies which the Company or any Subsidiary is
contesting in good faith and for which the Company or such Subsidiary has
provided adequate reserves, there is no tax deficiency that has been asserted
against the Company or any of the Subsidiaries that would have, individually
or in the aggregate, a Material Adverse Effect.
(p) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources which the Company and the
Subsidiaries believe to be reliable and accurate.
(q) None of the Company, the Subsidiaries or any agent acting on their
behalf has taken or will take any action that might cause this Agreement or
the sale of the Notes to violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System, in each case as in effect, or as the
same may hereafter be in effect, on the Closing Date.
(r) Each of the Company and the Subsidiaries has good and marketable
title to all real property and good title to all personal property described
in the Final Memorandum as being owned by it and good and marketable title to
a leasehold estate in the real and personal property described in the Final
Memorandum as being leased by it free and clear of all liens, charges,
encumbrances or restrictions, except as described in the Final Memorandum or
to the extent the failure to have such title or the existence of such liens,
charges, encumbrances or restrictions would not, individually or in the
aggregate, have a Material Adverse Effect. All leases, contracts and
agreements to which the Company or any of the Subsidiaries is a party or by
which any of them is bound are valid and enforceable against the Company or
such Subsidiary, and are valid and enforceable against the other party or
parties thereto and are in full force and effect with only such exceptions as
would not, individually or in the aggregate, have a Material Adverse Effect.
The Company and the Subsidiaries own or possess adequate licenses or other
rights to use all patents, trademarks, service marks, trade names, copyrights
and know-how necessary to conduct the businesses now or proposed to be
operated by them as described in the Final Memorandum, and none of the Company
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or the Subsidiaries has received any notice of infringement of or conflict
with (or knows of any such infringement of or conflict with) asserted rights
of others with respect to any patents, trademarks, service marks, trade names,
copyrights or know-how which, if such assertion of infringement or conflict
were sustained, would have a Material Adverse Effect.
(s) There are no legal or governmental proceedings involving or
affecting the Company or any Subsidiary or any of their respective properties
or assets which would be required to be described in a prospectus pursuant to
the Act that are not described in the Final Memorandum, nor are there any
material contracts or other documents which would be required to be described
in a prospectus pursuant to the Act that are not described in the Final
Memorandum.
(t) Each of the Company and the Subsidiaries carries insurance in such
amounts and covering such risks as is adequate for the conduct of its business
and the value of its properties.
(u) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "CODE"); and each "pension plan" for
which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would
cause the loss of such qualification.
(v) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(w) Neither the Company nor any Subsidiary is an "investment company"
within the meaning of such term under the Investment Company Act of 1940 and
the rules and regulations of the Commission thereunder.
(x) The Notes, the Indenture and the Registration Rights Agreement will
conform in all material respects to the descriptions thereof in the Final
Memorandum.
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(y) No holder of securities of the Company or any Subsidiary will be
entitled to have such securities registered under the registration statements
required to be filed by the Company pursuant to the Registration Rights
Agreement other than as expressly permitted thereby.
(z) Immediately after the consummation of the transactions contemplated
by this Agreement, the fair value and present fair saleable value of the
assets of each of the Company and the Subsidiaries (each on a consolidated
basis) will exceed the sum of its stated liabilities and identified contingent
liabilities; none of the Company or the Subsidiaries (each on a consolidated
basis) is, nor will any of the Company or the Subsidiaries (each on a
consolidated basis) be, after giving effect to the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, (a) left with unreasonably small capital with which to
carry on its business as it is proposed to be conducted, (b) unable to pay its
debts (contingent or otherwise) as they mature or (c) otherwise insolvent.
(aa) None of the Company, the Subsidiaries or any of their respective
Affiliates (as defined in Rule 501(b) of Regulation D under the Act) has
directly, or through any agent, (i) sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any "security" (as defined in
the Act) which is or could be integrated with the sale of the Notes in a
manner that would require the registration under the Act of the Notes or the
Guarantees or (ii) engaged in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) in
connection with the offering of the Notes or in any manner involving a public
offering within the meaning of Section 4(2) of the Act. Assuming the accuracy
of the representations and warranties of the Initial Purchasers in Section 8
hereof, it is not necessary in connection with the offer, sale and delivery of
the Notes to the Initial Purchasers in the manner contemplated by this
Agreement to register any of the Notes under the Act or to qualify the
Indenture under the TIA.
(bb) No securities of the Company or any Subsidiary are of the same
class (within the meaning of Rule 144A under the Act) as the Notes or the
Guarantees and listed on a national securities exchange registered under
Section 6 of the Exchange Act, or quoted in a U.S. automated inter-dealer
quotation system.
(cc) None of the Company or the Subsidiaries has taken, nor will any of
them take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation of
the price of the Notes.
(dd) None of the Company, the Subsidiaries, any of their respective
Affiliates or any person acting on its or their behalf (other than the Initial
Purchasers) has engaged in any directed selling efforts (as that term is
defined in Regulation S under the Act ("REGULATION S")) with respect to the
Notes; and the Company, the Subsidiaries and their respective Affiliates and
any person acting on its or their behalf (other than the Initial Purchasers)
have complied with the offering restrictions requirement of Regulation S.
(ee) Neither the Company nor any Subsidiary has engaged in any
activities which are prohibited, or are cause for civil penalties of mandatory
or permissive exclusion from Medicare or Medicaid, under Section 1320a-7,
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1320a-7a, 1320a-7b, or 1395nn of Title 42 of the United States Code, the
federal CHAMPUS statute, or the regulations promulgated pursuant to such
statutes or regulations or related state or local statues or which are
prohibited by any private accrediting organization from which the Company or
any of its Subsidiaries seeks accreditation or by generally recognized
professional standards of care or conduct. Neither the Company nor to the
knowledge of the Company any other person who has a direct or indirect
ownership or control interest in the Company or any Subsidiary or who is an
officer, director, agent or managing employee of the Company or any
Subsidiary: (1) has had a civil monetary penalty assessed against it under
Section 1128A of the Social Security Act ("SSA"); (2) has been 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 (3) has been convicted (as
that term is defined in 42 C.F.R. (S) 1001.2) of any of the categories of
offenses described in SSA Section 1128(a) and (b)(1), (2) and (3).
In addition to the above representations and warranties, the Company
hereby makes to the Initial Purchasers each of the representations and
warranties contained in Section II of the Stock Purchase Agreement dated as of
April 2, 1999 by and among NovaCare, Inc., NC Resources, Inc., the Company and
HPO Acquisition Corporation, and such representations and warranties, as so
made by the Company, shall be incorporated into this Agreement by reference as
if set forth in full herein.
Any certificate signed by any officer of the Company or any Subsidiary
and delivered to any Initial Purchaser or to counsel for the Initial
Purchasers shall be deemed a joint and several representation and warranty by
the Company and each of the Subsidiaries to each Initial Purchaser as to the
matters covered thereby.
3. PURCHASE, SALE AND DELIVERY OF THE NOTES. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchasers, and the Initial Purchasers, acting
severally and not jointly, agree to purchase the Notes in the respective
amounts set forth on SCHEDULE 1 hereto from the Company at 97.0% of their
principal amount. One or more certificates in definitive form for the Notes
that the Initial Purchasers have agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Initial Purchasers request upon notice to the Company at least 36 hours prior
to the Closing Date, shall be delivered by or on behalf of the Company to the
Initial Purchasers, against payment by or on behalf of the Initial Purchasers
of the purchase price therefor by wire transfer (same day funds), net of the
overnight cost of such funds, to such account or accounts as the Company shall
specify prior to the Closing Date, or by such means as the parties hereto
shall agree prior to the Closing Date. Such delivery of and payment for the
Notes shall be made at the offices of Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 A.M., New York time, on June 16, 1999, or
at such other place, time or date as the Initial Purchasers, on the one hand,
and the Company, on the other hand, may agree upon, such time and date of
delivery against payment being herein referred to as the "CLOSING DATE." The
Company will make such certificate or certificates for the Notes available for
checking and packaging by the Initial Purchasers at the offices of Deutsche
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Bank Securities Inc. in New York, New York, or at such other place as Deutsche
Bank Securities Inc. may designate, at least 24 hours prior to the Closing
Date.
4. OFFERING BY THE INITIAL PURCHASERS. The Initial Purchasers propose to
make an offering of the Notes at the price and upon the terms set forth in the
Final Memorandum, as soon as practicable after this Agreement is entered into
and as in the judgment of the Initial Purchasers is advisable.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees with each
of the Initial Purchasers that:
(a) The Company will not amend or supplement the Final Memorandum or any
amendment or supplement thereto of which the Initial Purchasers shall not
previously have been advised and furnished a copy for a reasonable period of
time prior to the proposed amendment or supplement and as to which the Initial
Purchasers shall not have given their consent. The Company will promptly, upon
the reasonable request of the Initial Purchasers or counsel for the Initial
Purchasers, make any amendments or supplements to the Preliminary Memorandum
or the Final Memorandum that may be necessary or advisable in connection with
the resale of the Notes by the Initial Purchasers.
(b) The Company will cooperate with the Initial Purchasers in arranging
for the qualification of the Notes for offering and sale under the securities
or "Blue Sky" laws of such jurisdictions as the Initial Purchasers may
designate and will continue such qualifications in effect for as long as may
be necessary to complete the resale of the Notes; PROVIDED, HOWEVER, that in
connection therewith, the Company shall not be required to qualify as a
foreign corporation or to execute a general consent to service of process in
any jurisdiction or subject itself to taxation in excess of a nominal dollar
amount in any such jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the distribution by the
Initial Purchasers of the Notes or the Private Exchange Notes, any event
occurs or information becomes known as a result of which the Final Memorandum
as then amended or supplemented would include any untrue statement of a
material fact, or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if for any other reason it is necessary at any time
to amend or supplement the Final Memorandum to comply with applicable law, the
Company will promptly notify the Initial Purchasers thereof and will prepare,
at the expense of the Company, an amendment or supplement to the Final
Memorandum that corrects such statement or omission or effects such
compliance.
(d) The Company will, without charge, provide to the Initial Purchasers
and to counsel for the Initial Purchasers as many copies of the Preliminary
Memorandum and the Final Memorandum or any amendment or supplement thereto as
the Initial Purchasers may reasonably request.
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(e) The Company will deposit the net proceeds from the sale of the
Notes, together with cash, U.S. government obligations and/or other "Cash
Equivalents" (as defined in the Final Memorandum) in the amounts described in
"Description of the Notes--Pledge for Special Mandatory Redemption" in the
Final Memorandum with the Trustee in a special account established under the
Indenture, pending the closing of the acquisition (the "ACQUISITION") of
Novacare Orthotics & Prosthetics, Inc. ("NOVACARE O&P"). Upon the closing of
the Acquisition, the Company will apply the net proceeds from the sale of the
Notes as set forth under "Sources and Uses of Funds" in the Final Memorandum.
(f) For so long as any of the Notes remain outstanding, the Company will
furnish to the Initial Purchasers copies of all reports and other
communications (financial or otherwise) furnished by the Company to the
Trustee or to the holders of the Notes and, as soon as available, copies of
any reports or financial statements furnished to or filed by the Company with
the Commission or any national securities exchange on which any class of
securities of the Company may be listed.
(g) Prior to the Closing Date, the Company will furnish to the Initial
Purchasers, as soon as they have been prepared, a copy of any unaudited
interim financial statements of the Company for any period subsequent to the
period covered by the most recent financial statements appearing in the Final
Memorandum.
(h) None of the Company, any of its Affiliates or anyone acting on
behalf of the Company or any such Affiliate will sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any "security" (as
defined in the Act) which could be integrated with the sale of the Notes in a
manner which would require the registration under the Act of the Notes or the
Guarantees.
(i) The Company will not, and will not permit any of the Subsidiaries
to, engage in any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) in connection with the
offering of the Notes or in any manner involving a public offering within the
meaning of Section 4(2) of the Act.
(j) For so long as any of the Notes remain outstanding, the Company will
make available at its expense, upon request, to any holder of such Notes and
any prospective purchasers thereof the information specified in Rule
144A(d)(4) under the Act, unless the Company is then subject to Section 13 or
15(d) of the Exchange Act.
(k) The Company will use its best efforts to (i) permit the Notes to be
designated PORTAL securities in accordance with the rules and regulations
adopted by the NASD relating to trading in the Private Offerings, Resales and
Trading through Automated Linkages market (the "PORTAL MARKET") and (ii)
permit the Notes to be eligible for clearance and settlement through The
Depository Trust Company.
(l) In connection with Notes offered and sold in an offshore transaction
(as defined in Regulation S) the Company will not register any transfer of
such Notes not made in accordance with the provisions of Regulation S and will
not, except in accordance with the provisions of Regulation S, if applicable,
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issue any such Notes in the form of definitive securities.
(m) Immediately upon consummation of the Acquisition, the Company shall
cause Novacare O&P and each of its subsidiaries to execute and deliver a
supplemental indenture in which such entity agrees to be bound by the terms of
the Indenture as a Guarantor.
6. EXPENSES. The Company agrees to pay all costs and expenses incident
to the performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to (i) the printing, word processing or other production of documents
with respect to the transactions contemplated hereby, including any costs of
printing the Preliminary Memorandum and the Final Memorandum and any amendment
or supplement thereto, and any "Blue Sky" memoranda, (ii) all arrangements
relating to the delivery to the Initial Purchasers of copies of the foregoing
documents, (iii) the fees and disbursements of the counsel, the accountants
and any other experts or advisors retained by the Company, (iv) preparation
(including printing), issuance and delivery to the Initial Purchasers of the
Notes, (v) the qualification of the Notes under state securities and "Blue
Sky" laws, including filing fees and fees and disbursements of counsel for the
Initial Purchasers relating thereto, (vi) expenses in connection with any
meetings with prospective investors in the Notes, (vii) fees and expenses of
the Trustee including fees and expenses of counsel, (viii) all expenses and
listing fees incurred in connection with the application for quotation of the
Notes on the PORTAL Market and (ix) any fees charged by investment rating
agencies for the rating of the Notes. If the sale of the Notes provided for
herein is not consummated because any condition to the obligations of the
Initial Purchasers set forth in Section 7 hereof is not satisfied, because
this Agreement is terminated or because of any failure, refusal or inability
on the part of the Company to perform all obligations and satisfy all
conditions on their part to be performed or satisfied hereunder (other than
solely by reason of a default by the Initial Purchasers of their obligations
hereunder after all conditions hereunder have been satisfied in accordance
herewith), the Company agrees to promptly reimburse the Initial Purchasers
upon demand for all out-of-pocket expenses (including fees, disbursements and
charges of Xxxxxxx Xxxx & Xxxxxxxxx, counsel for the Initial Purchasers) that
shall have been incurred by the Initial Purchasers in connection with the
proposed purchase and sale of the Notes.
7. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The obligation of
the Initial Purchasers to purchase and pay for the Notes shall, in their sole
discretion, be subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have received the
opinion, dated as of the Closing Date and addressed to the Initial Purchasers,
of Xxxxxxxx, Levy, Xxxxx & Xxxxxxx, counsel for the Company and the
Guarantors, in form and substance satisfactory to counsel for the Initial
Purchasers, to the effect that:
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(i) Each of the Company and the Subsidiaries is duly incorporated,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation and has all requisite corporate (or
partnership or limited liability) power and authority to own its
properties and to conduct its business as described in the Final
Memorandum. Each of the Company and the Subsidiaries is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions 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 would not, individually or in the aggregate,
have a Material Adverse Effect.
(ii) The Company has the authorized, issued and outstanding
capitalization set forth in the Final Memorandum; all of the outstanding
shares of capital stock of the Company and the Subsidiaries have been
duly authorized and validly issued, are fully paid and nonassessable and
were not issued in violation of any preemptive or similar rights; all of
the outstanding shares of capital stock of the Subsidiaries are owned,
directly or indirectly, by the Company (except for Hanger Europe, N.V.),
free and clear of all perfected security interests and, to the knowledge
of such counsel, free and clear of all other liens, encumbrances,
equities and claims or restrictions on transferability (other than those
imposed by the Act and the securities or "Blue Sky" laws of certain
jurisdictions) or voting.
(iii) Except as set forth in the Final Memorandum (A) no options,
warrants or other rights to purchase from the Company or any Subsidiary
shares of capital stock or ownership interests in the Company or any
Subsidiary are outstanding, (B) no agreements or other obligations to
issue, or other rights to convert, any obligation into, or exchange any
securities for, shares of capital stock or ownership interests in the
Company or any Subsidiary are outstanding and (C) no holder of
securities of the Company or any Subsidiary is entitled to have such
securities registered under a registration statement filed by the
Company pursuant to the Registration Rights Agreement.
(iv) The Company and each Guarantor has all requisite corporate
(or partnership or limited liability company) power and authority to
execute, deliver and perform each of its obligations under the
Indenture, the Notes, the Exchange Notes and the Private Exchange Notes;
the Indenture meets the requirements for qualification under the TIA;
the Indenture has been duly and validly authorized by the Company and
each Guarantor and, when duly executed and delivered by the Company and
each Guarantor (assuming the due authorization, execution and delivery
thereof by the Trustee), will constitute the valid and legally binding
agreement of the Company and each Guarantor, enforceable against the
Company and each Guarantor in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
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(v) The Notes are in the form contemplated by the Indenture. The
Notes have each been duly and validly authorized by the Company and,
when duly executed and delivered by the Company and paid for by the
Initial Purchasers in accordance with the terms of this Agreement
(assuming the due authorization, execution and delivery of the Indenture
by the Trustee and due authentication and delivery of the Notes by the
Trustee in accordance with the Indenture), will constitute the valid and
legally binding obligations of the Company, entitled to the benefits of
the Indenture, and enforceable against the Company in accordance with
their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought.
(vi) The Exchange Notes and the Private Exchange Notes have been
duly and validly authorized by the Company, and when the Exchange Notes
and the Private Exchange Notes have been duly executed and delivered by
the Company in accordance with the terms of the Registration Rights
Agreement and the Indenture (assuming the due authorization, execution
and delivery of the Indenture by the Trustee and due authentication and
delivery of the Exchange Notes and the Private Exchange Notes by the
Trustee in accordance with the Indenture), will constitute the valid and
legally binding obligations of the Company, entitled to the benefits of
the Indenture, and enforceable against the Company in accordance with
their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought.
(vii) The Company and each Guarantor has all requisite corporate
(or partnership or limited liability company) power and authority to
execute, deliver and perform its obligations under the Registration
Rights Agreement; the Registration Rights Agreement has been duly and
validly authorized by the Company and each Guarantor and, when duly
executed and delivered by the Company and each Guarantor (assuming due
authorization, execution and delivery thereof by the Initial
Purchasers), will constitute the valid and legally binding agreement of
the Company and each Guarantor, enforceable against the Company and each
Guarantor in accordance with its terms, except that (A) the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity and
the discretion of the court before which any proceeding therefor may be
brought and (B) an rights to indemnity or contribution thereunder may be
limited by federal and state securities laws and public policy
considerations.
(viii) The Company has all requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement and
to consummate the transactions contemplated hereby; and this Agreement
and the consummation by the Company of the transactions contemplated
-14-
hereby have been duly and validly authorized by the Company. This
Agreement has been duly executed and delivered by the Company.
(ix) The Indenture, the Notes, the Guarantees and the Registration
Rights Agreement conform in all material respects to the descriptions
thereof contained in the Final Memorandum.
(x) No legal or governmental proceedings are pending or, to the
knowledge of such counsel, threatened to which any of the Company or the
Subsidiaries is a party or to which the property or assets of the
Company or any Subsidiary is subject which, if determined adversely to
the Company or the Subsidiaries, would result, individually or in the
aggregate, in a Material Adverse Effect, or which seeks to restrain,
enjoin, prevent the consummation of or otherwise challenge the issuance
or sale of the Notes to be sold hereunder or the consummation of the
other transactions described in the Final Memorandum under the caption
"The Acquisition and Related Financing Transactions."
(xi) None of the Company or the Subsidiaries is (i) in violation
of its certificate of incorporation or bylaws (or similar organizational
document), (ii) to the knowledge such counsel, in breach or violation of
any statute, judgment, decree, order, rule or regulation applicable to
any of them or any of their respective properties or assets, except for
any such breach or violation which would not, individually or in the
aggregate, have a Material Adverse Effect, or (iii) in breach or default
under (nor has any event occurred which, with notice or passage of time
or both, would constitute a default under) or in violation of any of the
terms or provisions of any Contract known to such counsel (including in
any event any of the foregoing which have been filed by the Company with
the Commission), except for any such breach, default, violation or event
which would not, individually or in the aggregate, have a Material
Adverse Effect.
(xii) The execution, delivery and performance of this Agreement,
the Indenture, the Registration Rights Agreement and the consummation of
the transactions contemplated hereby and thereby (including, without
limitation, the issuance and sale of the Notes to the Initial
Purchasers) will not conflict with or constitute or result in a breach
or a default under (or an event which with notice or passage of time or
both would constitute a default under) or violation of any of (i) the
terms or provisions of any Contract known to such counsel (including in
any event any of the foregoing which have been filed by the Company with
the Commission), except for any such conflict, breach, violation,
default or event which would not, individually or in the aggregate, have
a Material Adverse Effect, (ii) the certificate of incorporation or
bylaws (or similar organizational document) of the Company or any of the
Subsidiaries, or (iii) (assuming compliance with all applicable state
securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties of the Initial Purchasers in Section 8
hereof) any statute, judgment, decree, order, rule or regulation known
to such counsel to be applicable to the Company or any of the
-15-
Subsidiaries or any of their respective properties or assets, except for
any such conflict, breach or violation which would not, individually or
in the aggregate, have a Material Adverse Effect.
(xiii) No consent, approval, authorization or order of any
governmental authority is required for the issuance and sale by the
Company of the Notes to the Initial Purchasers, the issuance by any
Guarantor of its Guarantee or the consummation by the Company or any
Guarantor of the other transactions contemplated hereby, except such as
may be required under Blue Sky laws, as to which such counsel need
express no opinion, and those which have previously been obtained.
(xiv) The Company and the Subsidiaries have obtained all Permits
necessary to conduct the businesses now or proposed to be conducted by
them as described in the Final Memorandum, the lack of which would,
individually or in the aggregate, have a Material Adverse Effect; and
each of the Company and the Subsidiaries has fulfilled and performed all
of its obligations with respect to such Permits and no event has
occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such Permit.
(xv) To the best of such counsel's knowledge, the Company and the
Subsidiaries own or possess adequate licenses or other rights to use all
patents, trademarks, service marks, trade names, copyrights and know-how
necessary to conduct the businesses now or proposed to be operated by
them as described in the Final Memorandum, and none of the Company or
the Subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any patents, trademarks,
service marks, trade names, copyrights or know-how which, if such
assertion of infringement or conflict were sustained, would have a
Material Adverse Effect.
(xvi) To the knowledge of such counsel, there are no legal or
governmental proceedings involving or affecting the Company or the
Subsidiaries or any of their respective properties or assets which would
be required to be described in a prospectus pursuant to the Act that are
not described in the Final Memorandum, nor are there any material
contracts or other documents which would be required to be described in
a prospectus pursuant to the Act that are not described in the Final
Memorandum.
(xvii) None of the Company or the Subsidiaries is, or immediately
after the sale of the Notes to be sold hereunder and the application of
the proceeds from such sale (as described in the Final Memorandum under
the caption "Sources and Uses of Funds") will be, an "investment
company" as such term is defined in the Investment Company Act of 1940,
as amended.
(xviii) No registration under the Act of the Notes or the
Guarantees is required in connection with the sale of the Notes to the
Initial Purchasers as contemplated by this Agreement and the Final
Memorandum or in connection with the initial resale of the Notes by the
-16-
Initial Purchasers in accordance with Section 8 of this Agreement, and
prior to the commencement of the Exchange Offer (as defined in the
Registration Rights Agreement) or the effectiveness of the Shelf
Registration Statement (as defined in the Registration Rights
Agreement), the Indenture is not required to be qualified under the TIA,
in each case assuming (i) (A) that the purchasers who buy such Notes in
the initial resale thereof are qualified institutional buyers as defined
in Rule 144A promulgated under the Act ("QIBS") or accredited investors
as defined in Rule 501(a) (1), (2), (3) or (7) promulgated under the Act
("ACCREDITED INVESTORS") or (B) that the offer or sale of the Notes is
made in an offshore transaction as defined in Regulation S, (ii) the
accuracy of the Initial Purchasers' representations in Section 8 and
those of the Company contained in this Agreement regarding the absence
of a general solicitation in connection with the sale of such Notes to
the Initial Purchasers and the initial resale thereof and (iii) the due
performance by the Initial Purchasers of the agreements set forth in
Section 8 hereof.
(xix) Neither the consummation of the transactions contemplated by
this Agreement nor the sale, issuance, execution or delivery of the
Notes will violate Regulation T, U or X of the Board of Governors of the
Federal Reserve System.
At the time the foregoing opinion is delivered, Xxxxxxxx, Levy, Xxxxx &
Xxxxxxx shall additionally state that it has participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company, representatives of the Initial
Purchasers and counsel for the Initial Purchasers, at which conferences the
contents of the Final Memorandum and related matters were discussed, and,
although it has not independently verified and is not passing upon and assumes
no responsibility for the accuracy, completeness or fairness of the statements
contained in the Final Memorandum (except to the extent specified in
subsection 7(a)(ix)), no facts have come to its attention which lead it to
believe that the Final Memorandum, on the date thereof or at the Closing Date,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading (it being understood that such firm need express no
opinion with respect to the financial statements and related notes thereto and
the other financial, statistical and accounting data included in the Final
Memorandum). The opinion of Xxxxxxxx, Xxxx, Xxxxx & Xxxxxxx described in this
Section 7(a) shall be rendered to the Initial Purchasers at the request of the
Company and shall so state therein.
References to the Final Memorandum in this subsection (a) shall include
any amendment or supplement thereto prepared in accordance with the provisions
of this Agreement at the Closing Date.
(b) On the Closing Date, the Initial Purchasers shall have received the
opinion, in form and substance satisfactory to the Initial Purchasers, dated
as of the Closing Date and addressed to the Initial Purchasers, of Xxxxxxx
Xxxx & Xxxxxxxxx, counsel for the Initial Purchasers, with respect to certain
legal matters relating to this Agreement and such other related matters as the
-17-
Initial Purchasers may reasonably require. In rendering such opinion, Xxxxxxx
Xxxx & Xxxxxxxxx shall have received and may rely upon such certificates and
other documents and information as it may reasonably request to pass upon such
matters.
(c) The Initial Purchasers shall have received from the Independent
Accountants a comfort letter or letters dated the date hereof and the Closing
Date, in form and substance satisfactory to counsel for the Initial
Purchasers.
(d) The representations and warranties of the Company contained in this
Agreement (including, without limitation, the representations and warranties
referenced in the penultimate paragraph of Section 2) shall be true and
correct on and as of the date hereof and on and as of the Closing Date as if
made on and as of the Closing Date; the statements of the Company's officers
made pursuant to any certificate delivered in accordance with the provisions
hereof shall be true and correct on and as of the date made and on and as of
the Closing Date; the Company shall have performed all covenants and
agreements and satisfied all conditions on their part to be performed or
satisfied hereunder at or prior to the Closing Date; and, except as described
in the Final Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), subsequent to the date of the most recent financial
statements in such Final Memorandum, there shall have been no event or
development, and no information shall have become known, that, individually or
in the aggregate, has or would be reasonably likely to have a Material Adverse
Effect.
(e) The sale of the Notes hereunder shall not be enjoined (temporarily
or permanently) on the Closing Date.
(f) Subsequent to the date of the most recent financial statements in
the Final Memorandum (exclusive of any amendment or supplement thereto after
the date hereof), none of the Company, any of the Subsidiaries, NovaCare O&P,
or any of its subsidiaries shall have sustained any loss or interference with
respect to its business or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any strike, labor
dispute, slow down or work stoppage or from any legal or governmental
proceeding, order or decree, which loss or interference, individually or in
the aggregate, has or would be reasonably likely to have a Material Adverse
Effect.
(g) The Initial Purchasers shall have received a certificate of the
Company, dated the Closing Date, signed on behalf of the Company by its
Chairman of the Board, President or any Senior Vice President and the Chief
Financial Officer, to the effect that:
(i) The representations and warranties of the Company contained in
this Agreement (including, without limitation, the representations and
warranties referenced in the penultimate paragraph of Section 2) are
true and correct on and as of the date hereof and on and as of the
Closing Date, and the Company has performed all covenants and agreements
and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date;
-18-
(ii) At the Closing Date, since the date hereof or since the date
of the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), no event or development has occurred, and no information has
become known, that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect; and
(iii) The sale of the Notes hereunder has not been enjoined
(temporarily or permanently).
(h) On the Closing Date, the Initial Purchasers shall have received the
Registration Rights Agreement executed by the Company and each Guarantor and
such agreement shall be in full force and effect at all times from and after
the Closing Date.
On or before the Closing Date, the Initial Purchasers and counsel for
the Initial Purchasers shall have received such further documents, opinions,
certificates, letters and schedules or instruments relating to the business,
corporate, legal and financial affairs of the Company and the Subsidiaries as
they shall have heretofore reasonably requested from the Company.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the
provisions hereof only if they are reasonably satisfactory in all material
respects to the Initial Purchasers and counsel for the Initial Purchasers. The
Company shall furnish to the Initial Purchasers such conformed copies of such
documents, opinions, certificates, letters, schedules and instruments in such
quantities as the Initial Purchasers shall reasonably request.
8. OFFERING OF NOTES; RESTRICTIONS ON TRANSFER. (a) Each of the Initial
Purchasers represents and warrants (as to itself only) that it is a QIB. Each
of the Initial Purchasers agrees with the Company (as to itself only) that (i)
it has not and will not solicit offers for, or offer or sell, the Notes by any
form of general solicitation or general advertising (as those terms are used
in Regulation D under the Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Act; and (ii) it has and will
solicit offers for the Notes only from, and will offer the Notes only to (A)
in the case of offers inside the United States, (x) persons whom such Initial
Purchaser reasonably believes to be QIBs or, if any such person is buying for
one or more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to such Initial
Purchasers that each such account is a QIB, to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A, and, in each
case, in transactions under Rule 144A or (y) a limited number of other
institutional investors reasonably believed by such Initial Purchaser to be
Accredited Investors that, prior to their purchase of the Notes, deliver to
such Initial Purchaser a letter containing the representations and agreements
set forth in the applicable exhibit to the Indenture and (B) in the case of
offers outside the United States, to persons other than U.S. persons ("FOREIGN
PURCHASERS," which term shall include dealers or other professional
fiduciaries in the United States acting on a discretionary basis for foreign
beneficial owners (other than an estate or trust)); PROVIDED, HOWEVER, that,
in the case of this clause (B), in purchasing such Notes such persons are
-19-
deemed to have represented and agreed as provided under the caption "Transfer
Restrictions" contained in the Final Memorandum (or, if the Final Memorandum
is not in existence, in the most recent Memorandum).
(b) Each of the Initial Purchasers represents and warrants (as to itself
only) with respect to offers and sales outside the United States that (i) it
has complied and will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers Notes or has in
its possession or distributes any Memorandum or any such other material, in
all cases at its own expense; (ii) the Notes have not been and will not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except in accordance with Regulation S under the Act or
pursuant to an exemption from the registration requirements of the Act; (iii)
it has offered the Notes and will offer and sell the Notes (A) as part of its
distribution at any time and (B) otherwise until 40 days after the later of
the commencement of the offering and the Closing Date, only in accordance with
Rule 903 of Regulation S and, accordingly, neither it nor any persons acting
on its behalf have engaged or will engage in any directed selling efforts
(within the meaning of Regulation S) with respect to the Notes, and any such
persons have complied and will comply with the offering restrictions
requirement of Regulation S; and (iv) it agrees that, at or prior to
confirmation of sales of the Notes, it will have sent to each distributor,
dealer or person receiving a selling concession, fee or other remuneration
that purchases Notes from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Securities covered hereby have not been registered
under the United States Securities Act of 1933 (the
"Securities Act") and may not be offered and sold within the
United States or to, or for the account or benefit of, U.S.
persons (i) as part of the distribution of the Securities at
any time or (ii) otherwise until 40 days after the later of
the commencement of the offering and the closing date of the
offering, except in either case in accordance with
Regulation S (or Rule 144A if available) under the
Securities Act. Terms used above have the meaning given to
them in Regulation S."
Terms used in this Section 8 and not defined in this Agreement have the
meanings given to them in Regulation S.
9. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to indemnify
and hold harmless the Initial Purchasers, and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities to which any Initial Purchaser or such controlling person may
become subject under the Act, the Exchange Act or otherwise, insofar as any
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon:
-20-
(i) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or supplement
thereto or any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Notes under the securities or "Blue
Sky" laws thereof or filed with any securities association or securities
exchange (each an "APPLICATI "); or
(ii) the omission or alleged omission to state, in any Memorandum
or any amendment or supplement thereto or any Application, a material
fact required to be stated therein or necessary to make the statements
therein not misleading,
and will reimburse, as incurred, the Initial Purchasers and each such
controlling person for any legal or other expenses incurred by the Initial
Purchasers or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; PROVIDED, HOWEVER, the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in any
Memorandum or any amendment or supplement thereto or any Application in
reliance upon and in conformity with written information concerning the
Initial Purchasers furnished to the Company by the Initial Purchasers
specifically for use therein. This indemnity agreement will be in addition to
any liability that the Company may otherwise have to the indemnified parties.
The Company shall not be liable under this Sectio 9 for any settlement of any
claim or action effected without its prior written consent, which shall not be
unreasonably withheld.
(b) The Initial Purchasers agree to indemnify and hold harmless the
Company, its directors, its officers and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or supplement
thereto or any Application, or (ii) the omission or the alleged omission to
state therein a material fact required to be stated in any Memorandum or any
amendment or supplement thereto or any Application, or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information concerning such Initial Purchaser, furnished to the Company by the
Initial Purchasers specifically for use therein; and subject to the limitation
set forth immediately preceding this clause, will reimburse, as incurred, any
legal or other expenses incurred by the Company or any such director, officer
or controlling person in connection with investigating or defending against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action in respect thereof. This indemnity agreement will
be in addition to any liability that the Initial Purchasers may otherwise have
-21-
to the indemnified parties. The Initial Purchasers shall not be liable under
this Section 9 for any settlement of any claim or action effected without
their consent, which shall not be unreasonably withheld. The Company shall
not, without the prior written consent of the Initial Purchasers, effect any
settlement or compromise of any pending or threatened proceeding in respect of
which any Initial Purchaser is or could have been a party, or indemnity could
have been sought hereunder by any Initial Purchaser, unless such settlement
(A) includes an unconditional written release of the Initial Purchasers and
all respective controlling persons party to such proceeding, in form and
substance reasonably satisfactory to the Initial Purchasers, from all
liability on claims that are the subject matter of such proceeding and (B)
does not include any statement as to an admission of fault, culpability or
failure to act by or on behalf of any Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this Section 9
of notice of the commencement of any action for which such indemnified party
is entitled to indemnification under this Section 9, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a) or (b) above unless
and to the extent such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraphs (a) and (b)
above. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party; PROVIDED, HOWEVER, that if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest, (ii) the defendants in any
such action include both the indemnified party and the indemnifying party and
the indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it and/or other indemnified parties that
are different from or additional to those available to the indemnifying party,
or (iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after receipt by the indemnifying party of notice of
the institution of such action, then, in each such case, the indemnifying
party shall not have the right to direct the defense of such action on behalf
of such indemnified party or parties and such indemnified party or parties
shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by such indemnified party of counsel appointed to
defend such action, the indemnifying party will not be liable to such
indemnified party under this Section 9 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence (it being understood, however,
that in connection with such action the indemnifying party shall not be liable
for the expenses of more than one separate counsel (in addition to local
-22-
counsel) in any one action or separate but substantially similar actions in
the same jurisdiction arising out of the same general allegations or
circumstances, designated by the Initial Purchasers in the case of paragraph
(a) of this Section 9 or the Company in the case of paragraph (b) of this
Section 9, representing the indemnified parties under such paragraph (a) or
paragraph (b), as the case may be, who are parties to such action or actions)
or (ii) the indemnifying party has authorized in writing the employment of
counsel for the indemnified party at the expense of the indemnifying party.
After such notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the prior
written consent of the indemnifying party (which consent shall not be
unreasonably withheld), unless such indemnified party waived in writing its
rights under this Section 9, in which case the indemnified party may effect
such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 9 is unavailable to, or insufficient
to hold harmless, an indemnified party in respect of any losses, claims,
damages or liabilities (or actions in respect thereof), each indemnifying
party, in order to provide for just and equitable contribution, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect (i) the relative benefits
received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Notes or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, not only such relative benefits but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative benefits received by the Company on
the one hand and any Initial Purchaser on the other shall be deemed to be in
the same proportion as the total proceeds from the offering (before deducting
expenses) received by the Company bear to the total discounts and commissions
received by such Initial Purchaser. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company on the
one hand, or such Initial Purchaser on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission or alleged statement or omission, and any other
equitable considerations appropriate in the circumstances. The Company and the
Initial Purchasers agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d).
Notwithstanding any other provision of this paragraph (d), no Initial
Purchaser shall be obligated to make contributions hereunder that in the
aggregate exceed the total discounts, commissions and other compensation
received by such Initial Purchaser under this Agreement, less the aggregate
amount of any damages that such Initial Purchaser has otherwise been required
to pay by reason of the untrue or alleged untrue statements or the omissions
or alleged omissions to state a material fact, and no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
-23-
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (d), each person,
if any, who controls an Initial Purchaser within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Initial Purchasers, and each director of the Company, each
officer of the Company and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
shall have the same rights to contribution as the Company.
10. SURVIVAL CLAUSE. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers and the Initial Purchasers set forth in this Agreement or made by or
on behalf of them pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the
Company, any of its officers or directors, the Initial Purchasers or any
controlling person referred to in Section 9 hereof and (ii) delivery of and
payment for the Notes. The respective agreements, covenants, indemnities and
other statements set forth in Sections 6, 9 and 14 hereof shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement.
11. TERMINATION. (a) This Agreement may be terminated in the sole
discretion of the Initial Purchasers by notice to the Company given prior to
the Closing Date in the event that the Company shall have failed, refused or
been unable to perform all obligations and satisfy all conditions on its part
to be performed or satisfied hereunder at or prior thereto or, if at or prior
to the Closing Date:
(i) any of the Company, the Subsidiaries or NovaCare O&P or any of
its subsidiaries shall have sustained any loss or interference with
respect to its businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from
any strike, labor dispute, slow down or work stoppage or any legal or
governmental proceeding, which loss or interference, in the sole
judgment of the Initial Purchasers, has had or has a Material Adverse
Effect, or there shall have been, in the sole judgment of the Initial
Purchasers, any event or development that, individually or in the
aggregate, has or could be reasonably likely to have a Material Adverse
Effect (including without limitation a change in control of the Company
or the Subsidiaries), except in each case as described in the Final
Memorandum (exclusive of any amendment or supplement thereto);
(ii) trading in securities of the Company or in securities
generally on the New York Stock Exchange, American Stock Exchange or the
Nasdaq National Market shall have been suspended or minimum or maximum
prices shall have been established on any such exchange or market;
(iii) a banking moratorium shall have been declared by New York or
United States authorities;
-24-
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial
markets of the United States which, in the case of (A), (B) or (C) above
and in the sole judgment of the Initial Purchasers, makes it
impracticable or inadvisable to proceed with the offering or the
delivery of the Notes as contemplated by the Final Memorandum; or
(v) any securities of the Company shall have been downgraded or
placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11 shall be
without liability of any party to any other party except as provided in
Section 10 hereof.
12. INFORMATION SUPPLIED BY THE INITIAL PURCHASERS. The statements set
forth in the second and third sentences of the fifth paragraph and the first,
second, third and fourth sentences of the seventh paragraph under the heading
"Private Placement" in the Final Memorandum (to the extent such statements
relate to the Initial Purchasers) constitute the only information furnished by
the Initial Purchasers to the Company for the purposes of Sections 2(a) and 9
hereof.
13. NOTICES. All communications hereunder shall be in writing and, if
sent to the Initial Purchasers, shall be mailed or delivered to Deutsche Bank
Securities Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Corporate Finance Department, with a copy to Xxxxxxx Xxxx & Xxxxxxxxx, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxx, Xx.,
and if sent to the Company, shall be mailed or delivered to the Company at
0000 Xxx Xxxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx, Attention: Xxxx X. Xxxxx; with a
copy to Xxxxxxxx, Xxxx, Xxxxx & Xxxxxxx, Washington Square, 0000 Xxxxxxxxxxx
Xxxxxx, X.X., Xxxxxxxxxx, X.X,. 00000-5366, Attention: Xxx X. Xxxxxxxx.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; and one
business day after being timely delivered to a next-day air courier.
14. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any other person any
legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of such persons and for the benefit of no other person
except that (i) the indemnities of the Company contained in Section 9 of this
Agreement shall also be for the benefit of any person or persons who control
the Initial Purchasers within the meaning of Section 15 of the Act or Section
-25-
20 of the Exchange Act and (ii) the indemnities of the Initial Purchasers
contained in Section 9 of this Agreement shall also be for the benefit of the
directors of the Company, its officers and any person or persons who control
the Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act. No purchaser of Notes from the Initial Purchasers will be deemed
a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO
ANY PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and the Initial Purchasers.
Very truly yours,
HANGER ORTHOPEDIC GROUP, INC.
By: /s/XXXX X. XXXXX
------------------------------------
Name: Xxxx X. Xxxxx
Title: Chairman, President and Chief
Executive Officer
DEUTSCHE BANK SECURITIES INC.
By: /s/XXXXX XXXXXXX
------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Director
CHASE SECURITIES INC.
By: /s/XXX XXXXXXXX
---------------------
Name: Xxx Xxxxxxxx
Title: Vice President
PARIBAS CORPORATION
By: /s/XXXXXX X. XXXXXX
------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
SCHEDULE 1
Principal
Amount of
Initial Purchaser Notes
----------------- -----
Deutsche Bank Securities Inc......................................... 90,000,000
Chase Securities Inc................................................. 37,500,000
Paribas Corporation.................................................. 22,500,000
------------
Total...................................................... $ 150,000,000
SCHEDULE 2
SUBSIDIARIES OF THE COMPANY
Jurisdiction of
Name Incorporation
---- -------------
Hanger Prosthetics & Orthotics, Inc. Delaware
Xxxxxx Xxxxxx & Son Orthotics & Prosthetics, Inc. Pennsylvania
Southern Prosthetic Supply, Inc. Georgia
Seattle Orthopedic Group, Inc. Delaware
OPNET, Inc. Nevada
HPO Acquisition Corp. Delaware
Hanger Europe, N.V. Belgium
