EXECUTION COPY
Exhibit 10.54
SELECT MEDICAL CORPORATION
$175,000,000
9 1/2% Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
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June 6, 2001
X.X. XXXXXX SECURITIES INC.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
CIBC WORLD MARKETS CORP.
FIRST UNION SECURITIES, INC.
C/O X.X. XXXXXX SECURITIES INC.
000 Xxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Select Medical Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell $175,000,000 aggregate principal amount of its 9 1/2
% Senior Subordinated Notes due 2009 (the "Securities"). The Securities will be
issued pursuant to an Indenture to be dated as of June 11, 2001 (the
"Indenture") between the Company, each of the subsidiaries of the Company listed
on Schedule I hereto (each a "Guarantor" and together, the "Guarantors") and
State Street Bank and Trust Company, as trustee (the "Trustee"). The Securities
will be guaranteed on an unsecured senior subordinated basis by guarantees (the
"Guarantees", and each a "Guarantee") of the Guarantors. The Company hereby
confirms its agreement with X.X. Xxxxxx Securities Inc. ("JPMorgan") and Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, Credit Suisse First Boston
Corporation, CIBC World Markets Corp. and First Union Securities, Inc.
(collectively, together with JPMorgan, the "Initial Purchasers") concerning the
purchase of the Securities from the Company by the several Initial Purchasers.
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon an exemption therefrom. The Company has
prepared a preliminary offering memorandum dated May 29, 2001 (the "Preliminary
Offering Memorandum") and will prepare an offering memorandum dated the date
hereof (the "Offering Memorandum") setting forth information concerning the
Company, the Guarantors and the Securities. Copies of the Preliminary Offering
Memorandum have been, and copies of the Offering Memorandum will be, delivered
by the Company to the Initial Purchasers pursuant to the terms of this
Agreement. Any references herein to the Preliminary Offering Memorandum and the
Offering Memorandum shall be deemed to include all amendments and supplements
thereto, unless otherwise noted. The Company hereby confirms that it has
authorized the use of the Preliminary Offering Memorandum and the Offering
Memorandum in connection with the offering and resale of the Securities by the
Initial Purchasers in accordance with Section 2.
Holders of the Securities (including the Initial Purchasers and their
direct and indirect transferees) will, subject to the terms and conditions
thereof, be entitled to the benefits of an Exchange and Registration Rights
Agreement, substantially in the form attached hereto as Annex A (the
"Registration Rights Agreement"), pursuant to which the Company will agree to
file with the Securities and Exchange Commission (the "Commission") a
registration statement under the Securities Act (the "Exchange Offer
Registration Statement") registering an issue of senior subordinated notes of
the Company (the "Exchange Securities") and guarantees of each of the Guarantors
which are identical in all material respects to the Securities (except that the
Exchange Securities will not contain terms with respect to transfer restrictions
or additional interest) and the Guarantors and under certain circumstances, a
shelf registration statement pursuant to Rule 415 under the Securities Act (the
"Shelf Registration Statement").
Prior to or on the Closing Date (i) the Company's Amended and Restated
Credit Agreement will be amended (the "Credit Agreement Amendment") and (ii) the
Company will repay all outstanding principal and interest on its 10% Senior
Subordinated Notes due 2009 (the "Senior Subordinated Note Repayment"). The
Credit Agreement Amendment and the Senior Subordinated Note Repayment are
collectively referred to herein as the "Related Transactions".
Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Company and the
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Guarantors. The Company and the Guarantors jointly and severally represent and
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warrant to, and agree with, the several Initial Purchasers on and as of the date
hereof and the Closing Date (as defined in Section 3) that:
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(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date the
Offering Memorandum will not, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the
Company and the Guarantors make no representation or warranty as to
information contained in or omitted from the Preliminary Offering
Memorandum or the Offering Memorandum in reliance upon and in conformity
with written information relating to the Initial Purchasers furnished to
the Company or the Guarantors by or on behalf of any Initial Purchaser
specifically for use therein as specified in section 16 hereof (the
"Initial Purchasers' Information").
(b) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and warranties of the
Initial Purchasers contained in Section 2, compliance with the agreements
set forth herein, compliance by the Initial Purchasers with the offering
and transfer procedures and restrictions described in the Transaction
Documents, and the accuracy of the representations and warranties made in
accordance with the Transaction Documents by purchasers to whom the Initial
Purchasers initially resell the Securities, it is not necessary, in
connection with the issuance and sale of the Securities to the Initial
Purchasers and the offer, resale and delivery of the Securities by the
Initial Purchasers in the manner contemplated by this Agreement and the
Offering Memorandum, to register the Securities under the Securities Act or
to qualify the Indenture under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act") (it being understood that no representation is
made as to any resale subsequent to the initial resale of the Securities).
(d) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
has corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Offering Memorandum; and
the Company is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify
or to be in good standing would not result in any material adverse changes
in the condition, financial or otherwise, or in the
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earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect").
(e) (1) Each subsidiary of the Company set forth on Schedule III
hereto (which lists all (a) Guarantors and (b) other subsidiaries of the
Company that are either operating entities or holding companies, each a
"Subsidiary" and, collectively, the "Subsidiaries") has been duly organized
and is validly existing as a corporation or other entity in good standing
under the laws of the jurisdiction of its incorporation, has corporate or
other power and authority to own, lease and operate its properties and to
conduct its business as described in the Offering Memorandum and is duly
qualified as a foreign corporation or other entity to transact business and
is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect; except as set
forth on Schedule IV hereto, (a) all of the issued and outstanding capital
stock of each such Subsidiary that is a corporation has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned, by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or
equity, and (b) all of the ownership interests of each such Subsidiary that
is not a corporation have been duly authorized and are owned, by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of any Subsidiary was issued in
violation of the preemptive or similar rights of any securityholder of such
Subsidiary. The only subsidiaries of the Company are the subsidiaries
listed on Schedule I hereto and the subsidiaries listed on Schedule V
hereto (which lists all subsidiaries of the Company that are not
guaranteeing the Securities).
(2) Except to the extent disclosed in the Offering Memorandum under
the caption "Selected Consolidated Financial and Other Data" and in the
Company's consolidated financial statements included in the Offering
Memorandum, each of the specialty acute care hospitals, outpatient
rehabilitation clinics and occupational health centers (collectively, the
"Facilities") described in the Offering Memorandum as owned by the Company
is owned or leased and operated by a Subsidiary of which the Company
directly or indirectly owns 100% of the outstanding ownership interests.
Except as disclosed in the Offering Memorandum, there are no material
encumbrances or restrictions on the ability of any Subsidiary (i) to pay
any dividends or make any distributions on such Subsidiary's capital stock,
(ii) to make any loans or advances to, or investments in,
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the Company or any Subsidiary, or (iii) to transfer any of its property or
assets to the Company or any Subsidiary.
(f) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Offering Memorandum in the column entitled
"Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to reservations, agreements or employee benefit
plans referred to in the Offering Memorandum or pursuant to the exercise of
convertible securities or options referred to in the Offering Memorandum or
repurchases of an immaterial number of shares of the Company's capital
stock held by former employees). The shares of issued and outstanding
capital stock of the Company have been duly authorized and validly issued
and are fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive or
other similar rights of any securityholder of the Company that were not
subsequently waived. The shares of capital stock of the Company issued or
to be issued in connection with the exercise of any put right held by any
prior owner of a Facility that was subsequently acquired by the Company,
have been issued in compliance, in all material respects, with all federal
and state securities laws. Except as disclosed in the Offering Memorandum,
there are no outstanding options or warrants to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or
sell, shares of the Company's or any of its subsidiaries' capital stock or
other ownership interests.
(g) (i) The Company and each of the Guarantors has full right, power
and authority to execute and deliver this Agreement, the Indenture
(including the Guarantee set forth therein), the Registration Rights
Agreement, and the Securities and (ii) the Company has the full right,
power and authority to execute and deliver the Credit Agreement Amendment
((i) and (ii) above are collectively referred to as, the "Transaction
Documents") and to perform their respective obligations hereunder and
thereunder; and all corporate action required to be taken for the due and
proper authorization, execution and delivery of each of the Transaction
Documents and the consummation of the transactions contemplated thereby
have been duly and validly taken.
(h) This Agreement has been duly authorized, executed and delivered by
the Company and each of the Guarantors.
(i) The Registration Rights Agreement has been duly authorized by the
Company and each of the Guarantors and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will constitute a
valid and legally binding agreement of the Company and each of the
Guarantors enforceable
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against the Company and each of the Guarantors in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally and
by general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(j) The Indenture has been duly authorized by the Company and each of
the Guarantors and, when duly executed and delivered in accordance with its
terms by each of the parties thereto, 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 to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally and
by general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
On the Closing Date, the Indenture will conform in all material respects to
the requirements of the Trust Indenture Act and the rules and regulations
of the Commission applicable to an indenture which is qualified thereunder.
(k) The Securities have been duly authorized by the Company and each
of the Guarantors and, when duly executed, authenticated, issued and
delivered as provided in the Indenture and paid for as provided herein,
will be duly and validly issued and outstanding and will constitute valid
and legally binding obligations of the Company, as issuer and each of the
Guarantors, as guarantors, entitled to the benefits of the Indenture and
enforceable against the Company, as issuer, and each of the Guarantors, as
guarantors, in accordance with their terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing; the Securities conform to all
statements relating thereto contained in the Offering Memorandum and such
description conforms to the rights set forth in the Transaction Documents.
(l) The Guarantees have been duly authorized by each of the Guarantors
and, when the Securities have been duly executed, authenticated, issued and
delivered as provided in the Indenture and paid for as provided herein
(assuming due authorization, execution and delivery of the Indenture by the
Trustee and due authentication of the Securities by the Trustee), will
constitute valid and legally binding obligations of the Guarantors
enforceable against the Guarantors in accordance with their terms.
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(m) The Exchange Securities have been duly authorized by the Company
and the related guarantees have been duly authorized by each of the
Guarantors and, when duly executed, authenticated, issued and delivered as
provided in the Indenture and the Registration Rights Agreement (assuming
the Indenture is the valid and legally binding obligation of the Trustee)
will constitute a valid and legally binding agreement of the Company, as
issuer and each of the Guarantors, as guarantors, enforceable against the
Company, as issuer and each of the Guarantors, as guarantors, in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
(n) Each of the Transaction Documents not referred to in the preceding
clauses (h) through (l) has been duly authorized by the Company and, when
duly executed and delivered in accordance with their terms by each of the
parties thereto will constitute valid and legally binding obligations of
the Company enforceable against the Company in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally and
to general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(o) Each Transaction Document conforms in all material respects to the
description thereof contained in the Offering Memorandum.
(p) The execution, delivery and performance by the Company and each of
the Guarantors of each of the Transaction Documents to which it is a party,
the issuance, authentication, sale and delivery of the Securities and
compliance by the Company and each of the Guarantors with the terms thereof
and the consummation of the transactions contemplated by the Transaction
Documents will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to,
any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is subject
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor will
such actions result in any violation of the provisions of the charter or
by-laws of the
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Company (or other comparable organizational documents) or any of its
subsidiaries or any statute or any judgment, order, decree, rule or
regulation of any court or arbitrator or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties or assets; and no consent, approval, authorization or order of,
or filing or registration with, any such court or arbitrator or
governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, delivery and
performance by the Company and each of the Guarantors of the Transaction
Documents to which each is a party, the issuance, authentication, sale and
delivery of the Securities and compliance by the Company and each of the
Guarantors with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents, except for such consents,
approvals, authorizations, filings, registrations or qualifications which
shall have been obtained or made prior to the Closing Date and as may be
required to be obtained or made under the Securities Act and applicable
state securities laws as provided in the Registration Rights Agreement.
(q) PricewaterhouseCoopers LLC are independent certified public
accountants with respect to the Company within the applicable rules and
regulations of the Commission. The consolidated financial statements
included in the Offering Memorandum, together with the related notes,
comply in all material respects with the requirements applicable to a
registration statement on Form S-1 under the Securities Act (except that
certain supporting schedules and exhibits are omitted), present fairly the
financial position of the Company and its consolidated subsidiaries, and
NovaCare Physical Rehabilitation and Occupational Health Group, Intensiva
Healthcare Corporation and Subsidiaries, and American Transitional
Hospitals, Inc. (collectively, the "Acquired Entities"), at the dates
indicated and the statement of operations, stockholders' equity and cash
flows of the Company, its consolidated subsidiaries and the Acquired
Entities and for the periods specified; said financial statements have been
prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved. The
selected consolidated financial data and the summary consolidated financial
information of the Company included in the Offering Memorandum present
fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Offering Memorandum. The statement of operations data and balance sheet
data of Sports Orthopedic Rehabilitation Services, PA ("SORS") for December
31, 1996 and the year then ended and the period January 1, 1997 through
February 6, 1997 included in the Offering Memorandum under the heading
"Selected Consolidated Financial and Other Data" (the "SORS Financial
Information") was derived from the compiled financial statements of SORS.
The combined financial statements of SORS for the above referenced periods
(i) fairly
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present the financial position of SORS at the dates indicated and the
statement of operations data for the periods specified and (ii) were
prepared in conformity with GAAP, except for the absence of footnotes,
statements of cash flows and the exclusion of certain per share
information. There are no material adjustments that would be required to be
made to the SORS Financial Information if the above referenced financial
statements of SORS were reissued to be in conformity with GAAP. The pro
forma financial information and the related notes thereto included in the
Offering Memorandum present fairly the information shown therein and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein; the as adjusted financial
information included in the Offering Memorandum has been properly compiled
on the basis described therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate to
give effect to the transactions and circumstances referred to therein.
(r) There is no action, suit, proceeding, inquiry or investigation
before or brought by any court or governmental agency or body, domestic or
foreign, now pending (other than any sealed "qui tam" actions of which the
Company has no knowledge), or, to the knowledge of the Company, threatened,
against or affecting the Company or any subsidiary which might reasonably
be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties or
assets of the Company and its subsidiaries taken as a whole; the aggregate
of all pending legal or governmental proceedings to which the Company or
any subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Offering Memorandum,
including ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
(s) No action has been taken and no statute, rule, regulation or order
has been enacted, adopted or issued by any governmental agency or body
which prevents the issuance of the Securities or suspends the sale of the
Securities in any jurisdiction; no injunction, restraining order or order
of any nature by any federal or state court of competent jurisdiction has
been issued with respect to the Company or any of its subsidiaries which
would prevent or suspend the issuance or sale of the Securities or the use
of the Preliminary Offering Memorandum or the Offering Memorandum in any
jurisdiction; no action, suit or proceeding is pending against or, to the
best knowledge of the Company, threatened against or affecting the Company
or any of its subsidiaries before any court or arbitrator or any
governmental agency, body or official, domestic or foreign, which could
reasonably be expected to interfere with or adversely affect the issuance
of the Securities or in any manner draw into question the validity or
enforceability of any
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of the Transaction Documents or any action taken or to be taken pursuant
thereto; and the Company has complied with any and all requests by any
securities authority in any jurisdiction for additional information to be
included in the Preliminary Offering Memorandum and the Offering
Memorandum.
(t) Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or by-laws (or other comparable organizational
documents), (ii) in default, and no event has occurred which, with notice
or lapse of time or both, would constitute a default, in the due
performance or observance of any term, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which it is a party or by which it is bound or to which
any of its property or assets is subject (except for such defaults that
would not result in a Material Adverse Effect) or (iii) in violation in any
material respect of any law, ordinance, governmental rule, regulation or
court decree to which it or its property or assets may be subject.
(u) The Company and its subsidiaries possess all required permits,
licenses, provider numbers, certificates, approvals (including without
limitation, certificate of need approvals), consents, orders,
certifications (including, without limitation, certification under the
Medicare and Medicaid programs), accreditations (including, without
limitation, accreditation by the Joint Commission on Accreditation of
Healthcare Organizations) and other authorizations (collectively,
"Governmental Licenses") issued by, and have made all required declarations
and filings with, the appropriate federal, state, local or foreign
regulatory agencies or bodies necessary to conduct the business now
operated by them (including, without limitation, Government Licenses as are
required (i) under such federal and state healthcare laws as are applicable
to the Company and its subsidiaries and (ii) with respect to those
facilities operated by the Company or any of its subsidiaries that
participate in the Medicare and/or Medicaid programs, to receive
reimbursement thereunder), except where the failure to possess such
Government Licenses or to make such declarations would not reasonably be
expected to result in a Material Adverse Effect; the Company and its
subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, reasonably be expected to result in a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to be in full force and effect
would not reasonably be expected to result in a Material Adverse Effect;
and neither the Company nor any of its subsidiaries has received any notice
of proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would reasonably be expected to
result in a Material
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Adverse Effect. All of the long-term acute care hospitals operated by
the Company and its subsidiaries and all of the Company's and its
subsidiaries' outpatient clinics that operate as "rehabilitation
agencies" are "providers of service" as defined in the Social Security
Act and the regulations promulgated thereunder and are eligible to
participate in the Medicare and (to the extent disclosed in the
Offering Memorandum) Medicaid programs.
(v) The accounts receivable of the Company and its subsidiaries
have been adjusted to reflect material changes in the reimbursement
policies of third party payors such as Medicare, Medicaid, private
insurance companies, health maintenance organizations, preferred
provider organizations, managed care systems and other third party
payors (including, without limitation, Blue Cross plans). The accounts
receivable, after giving effect to the allowance for doubtful
accounts, relating to such third party payors do not materially exceed
amounts the Company and its subsidiaries are entitled to receive.
(w) Neither the Company nor, to the knowledge of the Company,
any officers, directors or stockholders, employees or other agents of
the Company or any of its subsidiaries or the hospitals operated by
them, has engaged in any activities which are prohibited under Federal
Medicare and Medicaid statutes including, but not limited to, 42
U.S.C. (S)(S) 1320a-7 (Program Exclusion), (S) 1320a-7a (Civil
Monetary Penalties), 1320a-7b (the Anti-kickback Statute), (S) 1395nn
and 1396b (the "Xxxxx" law, prohibiting certain self-referrals), or
any other federal healthcare law, including, but not limited to, the
federal TRICARE statute, 10 U.S.C. (S) 1071 et seq., the Federal Civil
False Claims Act, 31 U.S.C. (S)(S) 3729-32, Federal Criminal False
Claims Act, 18 U.S.C. (S) 287, False Statements Relating to Health
Care Matters, 18 U.S.C. (S) 1035, Health Care Fraud, 18 U.S.C. (S)
1347, or the federal Food, Drug & Cosmetics Act, 21 U.S.C. (S)
360aaa, or any regulations promulgated pursuant to such statutes, or
related state or local statutes or regulations or any rules of
professional conduct, including but not limited to the following: (i)
knowingly and willfully making or causing to be made a false statement
or representation of a material fact in any applications for any
benefit or payment under the Medicare or Medicaid program or from any
third party (where applicable federal or state law prohibits such
payments to third parties); (ii) knowingly and willfully making or
causing to be made any false statement or representation of a material
fact for use in determining rights to any benefit or payment under the
Medicare or Medicaid program or from any third party (where applicable
federal or state law prohibits such payments to third parties); (iii)
failing to disclose knowledge by a claimant of the occurrence of any
event affecting the initial or continued right to any benefit or
payment under the Medicare or Medicaid program or from any third party
(where applicable federal or state law prohibits such payments to
third parties) on its own behalf or on behalf of another,
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with intent to secure such benefit or payment fraudulently; (iv)
knowingly and willfully offering, paying, soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly or
indirectly, overtly or covertly, in cash or in kind (a) in return for
referring an individual to a person for the furnishing or arranging
for the furnishing of any item or service for which payment may be
made in whole or in part by Medicare or Medicaid or any third party
(where applicable federal or state law prohibits such payments to
third parties), or (b) in return for purchasing, leasing or ordering
or arranging for or recommending the purchasing, leasing or ordering
of any good, facility, service, or item for which payment may be made
in whole or in part by Medicare or Medicaid or any third party (where
applicable federal or state law prohibits such payments to third
parties); (v) knowingly and willfully referring an individual to a
person with which they have ownership or certain other financial
arrangements (where applicable federal law prohibits such referrals);
and (vi) knowingly and willfully violating any enforcement initiative
instituted by any governmental agency (including, without limitation,
the Office of the Inspector General and the Department of Justice),
except for any such activities which are specifically described in the
Offering Memorandum or which would not, singly or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(x) Neither of the Company or any of its subsidiaries or any of
the Facilities operated by any of them has failed to file with
applicable regulatory authorities any statement, report, information
or form required by any applicable law, regulation or order, except
where the failure to be so in compliance could not, individually or in
the aggregate, have a Material Adverse Effect. Except as described in
the Offering Memorandum, all such filings or submissions were in
compliance with applicable laws when filed and no deficiencies have
been asserted by any regulatory commission, agency or authority with
respect to any such filings or submissions, except for any such
failures to be in compliance or deficiencies which would not, singly
or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(y) The Company and its subsidiaries have timely filed all
federal, state, local and foreign tax returns that are required to be
filed or has duly requested extensions thereof and all such tax
returns are true, correct and complete, except to the extent that any
failure to file or request an extension, or any incorrectness would
not reasonably be expected to result in a Material Adverse Effect. The
Company and its subsidiaries have timely paid all taxes shown as due
on such filed tax returns (including any related assessments, fines or
penalties), except to the extent that any such taxes are being
contested in good faith and by appropriate proceedings, or to the
extent that any failure to pay would not reasonably be expected to
result in a Material Adverse Effect; and adequate charges, accruals
and
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reserves have been provided for in the financial statements referred
to in Section 1(q) above in accordance with GAAP in respect of all
Federal, state, local and foreign taxes for all periods as to which
the tax liability of the Company and its subsidiaries has not been
finally determined or remains open to examination by applicable taxing
authorities except (A) for taxes incurred after the date of the
financial statements referred to in Section 1(q) or (B) where the
failure to provide for such charges, accruals and reserves would not
reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any of its subsidiaries is a "United States real
property holding corporation" within the meaning of Section 897(c)(2)
of the Internal Revenue Code of 1986, as amended (the "Code").
(z) Neither the Company nor any of its subsidiaries is (i) an
"investment company" or a company "controlled by" an investment
company within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the rules and regulations
of the Commission thereunder or (ii) a "holding company" or a
"subsidiary company" of a holding company or an "affiliate" thereof
within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(aa) The Company and each of its subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted
only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(bb) The Company and each of its subsidiaries and each of the
Facilities owned, leased or operated by them are insured by insurers
of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the healthcare
industry; neither the Company nor any of its subsidiaries or any of
the hospitals owned, leased or operated by them has been refused any
material insurance coverage sought or applied for since January 1,
1999; and the Company has no reason to believe that it or any of the
Facilities owned, leased or operated by it or any of its subsidiaries,
will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain coverage consistent with such
coverage in all material respects from insurers with comparable
financial strength and claims paying ability ratings as may be
necessary to continue its operations except where the failure to renew
or maintain such coverage would not reasonably be expected to result
in a Material Adverse Effect.
13
The officers and directors of the Company are insured by insurers of
recognized financial responsibility against such losses and risks and
in such amounts as the Company believes are prudent and customary for
officers' and directors' liability insurance of a public company and
as the Company believes would cover claims which would reasonably be
expected to be made in connection with the issuance of the Securities;
and the Company has no reason to believe that it will not be able to
renew its existing directors' and officers' liability insurance
coverage as and when such coverage expires or to obtain coverage
consistent with such coverage in all material respects from insurers
with comparable financial strength and claims paying ability ratings
as may be necessary to cover its officers and directors.
(cc) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade
names or other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business now operated by them in
all material respects, and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances
which would render any Intellectual Property invalid or inadequate to
protect the interest of the Company or any of its subsidiaries
therein, and which infringement or conflict (if the subject of any
unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.
(dd) The Company and its subsidiaries have good and marketable
title to all real property owned by them and good title to all other
properties owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the
Offering Memorandum or (b) do not, singly or in the aggregate, in a
manner that would reasonably be expected to result in a Material
Adverse Effect, affect the value of such property or interfere with
the use made or proposed to be made of such property by the Company or
any of its subsidiaries; and all of the leases and subleases of the
Company and its subsidiaries, considered as one enterprise, and under
which the Company or any of its subsidiaries holds properties
described in the Offering Memorandum, are in full force and effect,
and neither the Company or any of its subsidiaries has any notice of
any claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any of its subsidiaries under any of the
leases or subleases mentioned above, or affecting or questioning the
rights of the Company or such subsidiary to the continued possession
of the leased or subleased premises under any such lease or sublease,
14
except where the failure to be in full force and effect or such claim
would not reasonably be expected to have a Material Adverse Effect.
(ee) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent,
and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or any subsidiary's
principal suppliers, manufacturers, customers or contractors, which,
in either case, may reasonably be expected to result in a Material
Adverse Effect.
(ff) No "prohibited transaction" (as defined in Section 406 of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code")) or "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or any of the events
set forth in Section 4043(b) of ERISA (other than events with respect
to which the 30-day notice requirement under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan of
the Company or any of its subsidiaries which could reasonably be
expected to have a Material Adverse Effect; each such employee benefit
plan is in compliance in all material respects with applicable law,
including ERISA and the Code; the Company and each of its subsidiaries
have not incurred and do not expect to incur liability under Title IV
of ERISA with respect to the termination of, or withdrawal from, any
pension plan for which the Company or any of its subsidiaries would
have any liability; and each such pension plan 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 could reasonably be expected to cause the loss
of such qualification.
(gg) Except as described in the Offering Memorandum, (A) neither
the Company nor any of its subsidiaries or any of the Facilities
owned, leased or operated by them is in violation of any material
federal, state, local or foreign statute, law, rule, regulation,
standard, guide, ordinance, code, policy or rule of common law or any
judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances (including, without
limitation, asbestos, polychlorinated biphenyls, urea formaldehyde
insulation, petroleum or petroleum products) (collectively, "Hazardous
Materials") or to the manufacture, processing,
15
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials (collectively, "Environmental Laws"), (B) the
Company and its subsidiaries and each of the Facilities owned, leased
or operated by them have all material permits, authorizations and
approvals required under any applicable Environmental Laws and are
each in compliance with their requirements, (C) there are no pending
or threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, investigations or proceedings relating to any Environmental
Law against the Company or any of its subsidiaries or any of the
Facilities owned, leased or operated by them except as would not,
singly or in the aggregate, result in a Material Adverse Effect and
(D) there are no events or circumstances that might reasonably be
expected to form the basis of an order for clean-up or remediation, or
an action, suit or proceeding by any private party or governmental
body or agency, against or affecting the Company or any of its
subsidiaries or any of the Facilities owned, leased or operated by
them relating to Hazardous Materials or any Environmental Laws except
for such events or circumstances that would not, singly or in the
aggregate, result in a Material Adverse Effect.
(hh) Neither the Company nor any of its subsidiaries, nor to the
best knowledge of the Company, any director, officer, agent, employee
or other person associated with or acting on behalf of the Company or
any of its subsidiaries has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating
to political activity, made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate
funds, violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977, or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(ii) On and immediately after the Closing Date, the Company
(after giving effect to the issuance of the Securities and to the
other transactions related thereto as described in the Offering
Memorandum) will be Solvent. As used in this paragraph, the term
"Solvent" means, with respect to a particular date, that on such date
the present fair market value (or present fair saleable value) of the
assets of the Company is not less than the total amount required to
pay the probable liabilities of the Company on its total existing
debts and liabilities (including contingent liabilities) as they
become absolute and matured, the Company is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations
and commitments as they mature and become due in the normal course of
business, assuming the sale of the Securities as contemplated by this
Agreement and the Offering Memorandum, the Company is not incurring
debts or liabilities beyond its ability to pay as such debts and
liabilities mature and the Company is not engaged in any business or
transaction, and is not about to engage in any business or
16
transaction, for which its property would constitute unreasonably
small capital after giving due consideration to the prevailing
practice in the industry in which the Company is engaged. In computing
the amount of such contingent liabilities at any time, it is intended
that such liabilities will be computed at the amount that, in the
light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an
actual or matured liability.
(jj) Neither the Company nor any of its subsidiaries owns any
"margin securities" as that term is defined in Regulations G and U of
the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), and none of the proceeds of the sale of the
Securities will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of
reducing or retiring any indebtedness which was originally incurred to
purchase or carry any margin security or for any other purpose which
might cause any of the Securities to be considered a "purpose credit"
within the meanings of Regulation T, U or X of the Federal Reserve
Board.
(kk) Other than as provided for or contemplated by this
Agreement, neither the Company nor any of its subsidiaries is a party
to any contract, agreement or understanding with any person that would
give rise to a valid claim against the Company or the Initial
Purchasers for a brokerage commission, finder's fee or like payment in
connection with the offering and sale of the Securities.
(ll) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(mm) None of the Company, nor any of its affiliates or any person
acting on its or their behalf has engaged or will engage in any
directed selling efforts (as such term is defined in Regulation S
under the Securities Act ("Regulation S")), and all such persons have
complied and will comply with the offering restrictions requirement of
Regulation S to the extent applicable.
(nn) Neither the Company nor any of its affiliates has, directly
or through any agent, sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of, any security (as such term is
defined in the Securities Act), which is or will be integrated with
the sale of the Securities in a manner that would require registration
of the Securities under the Securities Act.
(oo) None of the Company or any of its affiliates or any other
person acting on its or their behalf has engaged, in connection with
the offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the
Securities Act.
17
(pp) Neither the Company nor its subsidiaries or, to the best of
the Company's knowledge, any of their respective directors, officers
or affiliates has taken or will take, directly or indirectly, any
action designed to, or that could be reasonably expected to, cause or
result in stabilization or manipulation of the price of the Securities
in violation of Regulation M under the Exchange Act.
(qq) No forward-looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Preliminary Offering Memorandum or the Offering
Memorandum has been made or reaffirmed without a reasonable basis or
has been disclosed other than in good faith.
(rr) Except as disclosed in the Offering Memorandum, there are no
outstanding loans, advances, or guarantees of indebtedness by the
Company or any of its subsidiaries to or for the benefit of any of the
executive officers or directors of the Company or any of the members
of the families of any of them that would be required to be so
disclosed under the Securities Act, the regulations thereunder of Form
S-1 pursuant to the Securities Act.
(ss) The statistical and market-related data included in the
Offering Memorandum is derived from sources which the Company
reasonably and in good faith believes to be accurate, reasonable and
reliable in all material respects and the statistical and market-
related data included in the Offering Memorandum agrees with the
sources from which it was derived in all material respects.
(tt) Since the respective dates as of which information is given
in the Offering Memorandum, except as otherwise stated therein, (A)
there has been no material adverse change or any development involving
a prospective material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs, management or
business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business, (B) neither the Company nor any of its subsidiaries has
incurred any liability or obligation, direct or contingent, other than
those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one
enterprise, (C) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise, and (D) there has not
been any change in the capital stock (other than pursuant to issuances
of common stock in connection with the exercise of options or put
rights) or long-term debt of the Company or any dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
18
2. Purchase and Resale of the Securities.
-------------------------------------
(a) On the basis of the representations, warranties and agreements
contained herein, and subject to the terms and conditions set forth herein, the
Company agrees to issue and sell to each of the Initial Purchasers, severally
and not jointly, and each of the Initial Purchasers, severally and not jointly,
agrees to purchase from the Company, the principal amount of Securities set
forth opposite the name of such Initial Purchaser on Schedule II hereto at a
purchase price equal to 97.50% of the principal amount thereof. The Company
shall not be obligated to deliver any of the Securities except upon payment for
all of the Securities to be purchased as provided herein.
(b) The Initial Purchasers have advised the Company that they propose
to offer the Securities for resale upon the terms and subject to the conditions
set forth herein and in the Offering Memorandum. Each Initial Purchaser,
severally and not jointly, represents, warrants and agrees that (i) it is an
accredited investor within the meaning of Regulation D under the Securities Act
and it is purchasing the Securities pursuant to a private sale exempt from
registration under the Securities Act, (ii) it has not solicited offers for, or
offered or sold, and will not solicit offers for, or offer or sell, the
Securities by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D under the Securities Act
("Regulation D") or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act and (iii) it has solicited and will
solicit offers for the Securities only from, and has offered or sold and will
offer, sell or deliver the Securities, as part of their initial offering, only
(A) within the United States to persons whom it reasonably believes to be
qualified institutional buyers ("Qualified Institutional Buyers"), as defined in
Rule 144A under the Securities Act ("Rule 144A"), 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 it that each such
account is a Qualified Institutional Buyer 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 in accordance with Rule 144A and (B) outside the United States
to persons other than U.S. persons in reliance on Regulation S under the
Securities Act ("Regulation S").
(c) In connection with the offer and sale of Securities in reliance
on Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) the Securities have not been registered under the Securities Act
and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except pursuant to an
exemption from, or in transactions not subject to, the
registration requirements of the Securities Act;
19
(ii) such Initial Purchaser has offered and sold the Securities, and
will offer and sell the Securities, (A) as part of their
distribution at any time and (B) otherwise until 40 days after
the later of the commencement of the offering of the Securities
and the Closing Date, only in accordance with Regulation S or
Rule 144A or any other available exemption from registration
under the Securities Act;
(iii) none of such Initial Purchaser or any of its affiliates or any
other person acting on its or their behalf has engaged or will
engage in any directed selling efforts (as such term is defined
in Regulation S) with respect to the Securities, and all such
persons have complied and will comply with the offering
restrictions requirement of Regulation S;
(iv) at or prior to the confirmation of sale of any Securities sold
in reliance on Regulation S, it will have sent to each
distributor, dealer or other person receiving a selling
concession, fee or other remuneration that purchases Securities
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 U.S. Securities Act of
1933, as amended (the "Securities Act"), and
may not be offered or sold within the United
States or to, or for the account or benefit of,
U.S. persons (i) as part of their distribution
at any time or (ii) otherwise until 40 days
after the later of the commencement of the
offering of the Securities and the date of
original issuance of the Securities, except in
accordance with Regulation S or Rule 144A or
any other available exemption from registration
under the Securities Act. Terms used above have
the meanings given to them by Regulation S"; and
(v) it has not and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the
Securities, except with its affiliates or with the prior
written consent of the Company.
Terms used in this Section 2(c) have the meanings given to them by Regulation S.
20
(d) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that (i) it has not offered or sold and prior to the date
six months after the Closing Date will not offer or sell any Securities to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 and the Public Offers
of Securities Regulations 1995 with respect to anything done by it in relation
to the Securities in, from or otherwise involving the United Kingdom; and (iii)
it has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996,
as amended, or is a person to whom such document may otherwise lawfully be
issued or passed on.
(e) Each Initial Purchaser, severally and not jointly, agrees that,
prior to or simultaneously with the confirmation of sale by such Initial
Purchaser to any purchaser of any of the Securities purchased by such Initial
Purchaser from the Company pursuant hereto, such Initial Purchaser shall furnish
to that purchaser a copy of the Offering Memorandum (and any amendment or
supplement thereto that the Company shall have furnished to such Initial
Purchaser prior to the date of such confirmation of sale). In addition to the
foregoing, each Initial Purchaser acknowledges and agrees that the Company and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Section 5(d) and (e), counsel for the Company and for the Initial Purchasers,
respectively, may rely upon the accuracy of the representations and warranties
of the Initial Purchasers and their compliance with their agreements contained
in this Section 2, and each Initial Purchaser hereby consents to such reliance.
(f) The Company acknowledges and agrees that the Initial Purchasers
may sell Securities to any affiliate of an Initial Purchaser and that any such
affiliate may sell Securities purchased by it to an Initial Purchaser.
3. Delivery of and Payment for the Securities.
------------------------------------------
(a) Delivery of and payment for the Securities shall be made at the
offices of Debevoise and Xxxxxxxx, New York, New York, or at such other place as
shall be agreed upon by the Initial Purchasers and the Company, at 10:00 A.M.,
New York City time, on June 11, 2001, or at such other time or date, not later
than seven full business days thereafter, as shall be agreed upon by the Initial
Purchasers and the Company (such date and time of payment and delivery being
referred to herein as the "Closing Date").
21
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of same-
day funds to such account or accounts as the Company shall specify prior to the
Closing Date or by such other means as the parties hereto shall agree prior to
the Closing Date against delivery to the Initial Purchasers of the certificates
evidencing the Securities. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligations of the Initial Purchasers hereunder. Upon delivery, the
Securities shall be in global form, registered in such names and in such
denominations as JPMorgan on behalf of the Initial Purchasers shall have
requested in writing not less than two full business days prior to the Closing
Date. The Company agrees to make one or more global certificates evidencing the
Securities available for inspection by JPMorgan on behalf of the Initial
Purchasers in New York, New York no later than 1 P.M. on the day prior to the
Closing Date.
4. Further Agreements of the Company. Each of the Company and the
---------------------------------
Guarantors agree with each of the Initial Purchasers:
(a) to advise the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes
any statement of a material fact made in the Offering Memorandum untrue or
which requires the making of any additions to or changes in the Offering
Memorandum (as amended or supplemented from time to time) in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; to advise the Initial Purchasers promptly of any
order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum, of any suspension of the
qualification of the Securities for offering or sale in any jurisdiction
and of the initiation or threatening of any proceeding for any such
purpose; and to use its best efforts to prevent the issuance of any such
order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum or suspending any such qualification
and, if any such suspension is issued, to obtain the lifting thereof at the
earliest possible time;
(b) to furnish promptly to each of the Initial Purchasers and counsel
for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers and
counsel for the Initial Purchasers and not to effect any such amendment or
supplement to which the Initial Purchasers shall reasonably object by
notice to the Company after a reasonable period to review;
22
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel for
the Initial Purchasers or counsel for the Company, to amend or supplement
the Offering Memorandum in order that the Offering Memorandum will 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 existing at the time it is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, to promptly prepare such
amendment or supplement as may be necessary to correct such untrue
statement or omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act,
to furnish to holders of the Securities and prospective purchasers of the
Securities designated by such holders, upon request of such holders or such
prospective purchasers, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act, unless the Company is then
subject to and in compliance with Section13 or 15(d) of the Exchange Act
(the foregoing agreement being for the benefit of the holders from time to
time of the Securities and prospective purchasers of the Securities
designated by such holders);
(f) for so long as the Securities are outstanding, to furnish to the
Initial Purchasers copies of any annual reports, quarterly reports and
current reports filed by the Company with the Commission on Forms 10-K, 10-
Q and 8-K, or such other similar forms as may be designated by the
Commission, and such other documents, reports and information as shall be
furnished by the Company to the Trustee or to the holders of the Securities
pursuant to the Indenture or the Exchange Act or any rule or regulation of
the Commission thereunder;
(g) to promptly take from time to time such actions as the Initial
Purchasers may reasonably request to qualify the Securities for offering
and sale under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchasers may designate and to continue such qualifications in
effect for so long as required for the resale of the Securities; and to
arrange for the determination of the eligibility for investment of the
Securities under the laws of such jurisdictions as the Initial Purchasers
may reasonably request; provided that the Company and its subsidiaries
shall not be obligated to qualify as foreign corporations in any
jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction;
23
(h) to assist the Initial Purchasers in arranging for the Securities
to be designated Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
("NASD") relating to trading in the PORTAL Market and for the Securities to
be eligible for clearance and settlement through The Depository Trust
Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as such term is defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require
registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may
be, not to, and to cause its affiliates not to, and not to authorize or
knowingly permit any person acting on their behalf to, solicit any offer to
buy or offer to sell the Securities by means of any form of general
solicitation or general advertising within the meaning of Regulation D or
in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act; and not to offer, sell, contract to sell or
otherwise dispose of, directly or indirectly, any securities under
circumstances where such offer, sale, contract or disposition would cause
the exemption afforded by Section 4(2) of the Securities Act to cease to be
applicable to the offering and sale of the Securities as contemplated by
this Agreement and the Offering Memorandum;
(k) for a period of 90 days from the date of the Offering Memorandum,
not to offer for sale, sell, contract to sell or otherwise dispose of,
directly or indirectly, or file a registration statement for, or announce
any offer, sale, contract for sale of or other disposition of any debt
securities issued or guaranteed by the Company or any of its subsidiaries
(other than the Securities) without the prior written consent of XX Xxxxxx,
it being understood that the foregoing shall not prohibit the Company or
any subsidiary from issuing seller notes to the seller in connection with
any acquisition by the Company or any subsidiary as permitted under the
Indenture or making borrowings under the Credit Agreement;
(l) during the period from the Closing Date until three years after
the Closing Date or, if earlier, the completion of the Exchange Offer,
without the prior written consent of the Initial Purchasers, not to, and
not permit any of its affiliates (as defined in Rule144 under the
Securities Act) to, resell any of the Securities that have been reacquired
by them, except for Securities purchased by the Company or any of its
affiliates and resold in a transaction registered under the Securities Act;
24
(m) not to, for so long as the Securities are outstanding or, if
earlier, until such time as the Securities are not "restricted securities"
(as defined in Rule 144 under the Securities Act), be or become, or be or
become owned by, an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered
under Section 8 of the Investment Company Act, and not to be or become, or
be or become owned by, a closed-end investment company required to be
registered, but not registered thereunder;
(n) in connection with the offering of the Securities, until JPMorgan
on behalf of the Initial Purchasers shall have notified the Company of the
completion of the resale of the Securities, not to, and to cause its
affiliated purchasers (as defined in Regulation M under the Exchange Act)
not to, either alone or with one or more other persons, bid for or
purchase, for any account in which it or any of its affiliated purchasers
has a beneficial interest, any Securities, or attempt to induce any person
to purchase any Securities; and not to, and to cause its affiliated
purchasers not to, make bids or purchase for the purpose of creating
actual, or apparent, active trading in or of raising the price of the
Securities;
(o) in connection with the offering of the Securities, to make its
officers, employees, independent accountants and legal counsel reasonably
available upon request by the Initial Purchasers;
(p) to furnish to each of the Initial Purchasers on the date hereof a
copy of the independent accountants' report included in the Offering
Memorandum signed by the accountants rendering such report;
(q) to do and perform all things required to be done and performed by
it under this Agreement that are within its control prior to or after the
Closing Date, and to use its best efforts to satisfy all conditions
precedent on its part to the delivery of the Securities;
(r) to not take any action prior to the execution and delivery of the
Indenture which, if taken after such execution and delivery, would have
violated any of the covenants contained in the Indenture;
(s) to not take any action prior to the Closing Date which would
require the Offering Memorandum to be amended or supplemented pursuant to
Section 4(d);
(t) prior to the Closing Date, not to issue any press release or
other communication directly or indirectly or hold any press conference
with respect to the Company, its condition, financial or otherwise, or
earnings, business affairs or business prospects (except for routine oral
marketing communications in the
25
ordinary course of business and consistent with the past practices of the
Company and of which the Initial Purchasers are notified), without the
prior written consent of the Initial Purchasers, which consent shall not be
unreasonably withheld or delayed, unless in the judgment of the Company and
its counsel, and after notification to the Initial Purchasers, such press
release or communication is required by law; and
(u) to apply the net proceeds from the sale of the Securities in all
material respects as set forth in the Offering Memorandum under the heading
"Use of Proceeds".
5. Conditions of Initial Purchasers' Obligations. The respective
---------------------------------------------
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company and the Guarantors contained
herein, to the accuracy of the statements of the Company, the Guarantors and
their respective officers made in any certificates delivered pursuant hereto, to
the performance by the Company and each of the Guarantors of their obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial Purchasers
may agree; and no stop order suspending the sale of the Securities in any
jurisdiction shall have been issued and no proceedings for that purpose
shall have been commenced or shall be pending or threatened.
(b) None of the Initial Purchasers shall have discovered and
disclosed to the Company on or prior to the Closing Date that the Offering
Memorandum or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the Initial
Purchasers, is material or omits to state any fact which, in the opinion of
such counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of the Transaction Documents and
the Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby, shall be
satisfactory in all material respects to the Initial Purchasers, and the
Company and the Guarantors shall have furnished to the Initial Purchasers
all documents and information that they or their counsel may reasonably
request to enable them to pass upon such matters.
26
(d) Dechert shall have furnished to the Initial Purchasers their
written opinion, as counsel to the Company and the Guarantors, addressed to
the Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set
forth in Annex B hereto.
(e) Xxxxxxx X. Xxxxxx shall have furnished to the Initial Purchasers
his written opinion, as general counsel to the Company, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers substantially to the
effect set forth in Annex C hereto.
(f) Xxxx Xxxxx shall have furnished to the Initial Purchasers their
written opinion, as special regulatory counsel to the Company and the
Guarantors, addressed to the Initial Purchasers and dated the Closing Date,
in form and substance reasonably satisfactory to the Initial Purchasers,
substantially to the effect set forth in Annex D hereto.
(g) Xxxx's shall have furnished to the Initial Purchasers their
written opinion, as special Canadian counsel to the Company and the
Guarantors, addressed to the Initial Purchasers and dated the Closing Date,
in form and substance reasonably satisfactory to the Initial Purchasers,
substantially to the effect set forth in Annex E hereto.
(h) The Initial Purchasers shall have received from Debevoise &
Xxxxxxxx, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Initial
Purchasers may reasonably require, and the Company shall have furnished to
such counsel such documents and information as they request for the purpose
of enabling them to pass upon such matters.
(i) The Company shall have furnished to the Initial Purchasers a
letter (the "Initial Letter") of PricewaterhouseCoopers LLP, addressed to
the Initial Purchasers and dated the date hereof, in form and substance
satisfactory to the Initial Purchasers, substantially to the effect set
forth in Annex F hereto.
(j) The Company shall have furnished to the Initial Purchasers a
letter (the "Bring-Down Letter") of PricewaterhouseCoopers LLP, addressed
to the Initial Purchasers and dated the Closing Date (A) confirming that
they are independent public accountants with respect to the Company within
the applicable rules and regulations adopted by the Commission, (B)
stating, as of the date of the Bring-Down Letter (or, with respect to
matters involving changes or developments since
27
the respective dates as of which specified financial information is given
in the Offering Memorandum, as of a date not more than three business days
prior to the date of the Bring-Down Letter), that the conclusions and
findings of such accountants with respect to the financial information and
other matters covered by the Initial Letter are accurate and (C) confirming
in all material respects the conclusions and findings set forth in the
Initial Letter.
(k) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its chief executive officer, its
chief operating officer and its chief financial officer stating that as of
the Closing Date, the representations and warranties of the Company and the
Guarantors in this Agreement are true and correct in all material respects
(including without limitation Section 1(a)), the Company and the Guarantors
have complied with all agreements and satisfied all conditions on its part
to be performed or satisfied hereunder on or prior to the Closing Date, and
subsequent to the date of the most recent financial statements contained in
the Offering Memorandum, there has been no material adverse change in the
financial position or results of operation of the Company or any of its
subsidiaries, or any change, or any development including a prospective
change, in or affecting the condition (financial or otherwise), results of
operations, business or prospects of the Company and its subsidiaries taken
as a whole, except as set forth in the Offering Memorandum.
(l) The Initial Purchasers shall have received a certificate of the
Chief Financial Officer and the Controller of the Company concerning the
financial information of SORS contained in the Offering Memorandum, dated
the Closing Date, in form and substance reasonably satisfactory to the
Initial Purchasers, substantially to the effect set forth in Annex G
hereto.
(m) The Initial Purchasers shall have received a certificate of
Xxxxxxx X. Xxxxxx, Senior Vice President and General Counsel of the
Company, dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set
forth in Annex H hereto.
(n) The Initial Purchasers shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of the Company and each of the Guarantors.
(o) The Indenture shall have been duly executed and delivered by the
Company, the Guarantors and the Trustee, and the Securities shall have been
duly executed and delivered by the Company and duly authenticated by the
Trustee.
28
(p) The Securities shall have been approved by the NASD for trading
in the PORTAL Market.
(q) If any event shall have occurred that requires the Company under
Section 4(d) to prepare an amendment or supplement to the Offering
Memorandum, then such amendment or supplement shall have been prepared, the
Initial Purchasers shall have been given a reasonable opportunity to
comment thereon, and copies thereof shall have been delivered to the
Initial Purchasers reasonably in advance of the Closing Date.
(r) There shall not have occurred any invalidation of Rule144A under
the Securities Act by any court or any withdrawal or proposed withdrawal of
any rule or regulation under the Securities Act or the Exchange Act by the
Commission or any amendment or proposed amendment thereof by the Commission
which in the judgment of the Initial Purchasers would materially impair the
ability of the Initial Purchasers to purchase, hold or effect resales of
the Securities as contemplated hereby.
(s) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any change in the capital stock (other than pursuant to
issuances of common stock in connection with the exercise of options or put
rights) or long-term debt or any change, or any development involving a
prospective change, in or affecting the condition (financial or otherwise),
results of operations, business or prospects of the Company and its
subsidiaries taken as a whole, the effect of which, in any such case
described above, is, in the judgment of the Initial Purchasers, so material
and adverse as to make it impracticable or inadvisable to proceed with the
sale or delivery of the Securities on the terms and in the manner
contemplated by this Agreement and the Offering Memorandum (exclusive of
any amendment or supplement thereto).
(t) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance or
sale of the Securities; and no injunction, restraining order or order of
any other nature by any federal or state court of competent jurisdiction
shall have been issued as of the Closing Date which would prevent the
issuance or sale of the Securities.
(u) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Securities or
any of the Company's other debt securities or preferred stock by a
"nationally recognized
29
statistical rating organization", as such term is defined by the Commission
for purposes of Rule 436(g)(2) of the rules and regulations of the
Commission under the Securities Act and (ii) no such organization shall
have publicly announced that it has under surveillance or review (other
than an announcement with positive implications of a possible upgrading),
its rating of the Securities or any of the Company's other debt securities
or preferred stock.
(v) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange, the
Nasdaq National Market or the over-the-counter market shall have been
suspended or limited, or minimum prices shall have been established on any
such exchange or market by the Commission, by any such exchange or by any
other regulatory body or governmental authority having jurisdiction, or
trading in any securities of the Company on any exchange (including without
limitation, the Nasdaq National Market) or in the over-the-counter market
shall have been suspended or (ii) any moratorium on commercial banking
activities shall have been declared by Federal or New York state
authorities or (iii) an outbreak or escalation of hostilities or a
declaration by the United States of a national emergency or war or (iv) a
material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) the effect of which, in the
case of this clause (iv), is, in the judgment of the Initial Purchasers, so
material and adverse as to make it impracticable or inadvisable to proceed
with the sale or the delivery of the Securities on the terms and in the
manner contemplated by this Agreement and in the Offering Memorandum
(exclusive of any amendment or supplement thereto).
(w) The Credit Agreement Amendment has been executed and delivered by
all of the parties thereto.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to Debevoise & Xxxxxxxx.
6. Termination. The obligations of the Initial Purchasers hereunder
-----------
may be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Company prior to delivery of and payment for
the Securities if, (i) prior to that time, any of the events described in
Section 5(v) shall have occurred and be continuing or (ii) as of the Closing
Date, any of the terms and conditions set forth in Section 5 shall not have been
satisfied in all respects.
30
7. Defaulting Initial Purchasers.
------------------------------
(a) If, on the Closing Date, any Initial Purchaser defaults on its
obligation to purchase the Securities that it has agreed to purchase hereunder,
the non-defaulting Initial Purchasers may in their discretion arrange for the
purchase of such Securities by other persons satisfactory to the Company on the
terms contained in this Agreement. If, within 36 hours after any such default by
any Initial Purchaser, the non-defaulting Initial Purchasers do not arrange for
the purchase of such Securities, then the Company shall be entitled to a further
period of 36 hours within which to procure other persons satisfactory to the
non- defaulting Initial Purchasers to purchase such Securities on such terms. If
other persons become obligated or agree to purchase the Securities of a
defaulting Initial Purchaser, either the non-defaulting Initial Purchasers or
the Company may postpone the Closing Date for up to five full Business Days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the Initial Purchasers may be necessary in the Offering Memorandum
or in any other document or arrangement, and the Company agrees to promptly
prepare any amendment or supplement to the Offering Memorandum that effects any
such changes. As used in this Agreement, the term "Initial Purchaser" includes,
for all purposes of this Agreement unless the context otherwise requires, any
person not listed in Schedule II hereto that, pursuant to this Section 7,
purchases Securities that a defaulting Initial Purchaser agreed but failed to
purchase.
(b) If, after giving effect to any arrangements, if any, for the purchase
of the Securities of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and the Company as provided in paragraph (a)
above, the aggregate principal amount of such Securities that remains
unpurchased does not exceed one-tenth of the aggregate principal amount of all
the Securities, then the Company shall have the right to require each
non-defaulting Initial Purchaser to purchase the principal amount of Securities
that such Initial Purchaser agreed to purchase hereunder plus such Initial
Purchaser's pro rate share (based on the principal amount of Securities that
such Initial Purchaser agreed to purchase hereunder in relation to the principal
amount of Securities that all non-defaulting Initial Purchasers agreed to
purchase hereunder) of the Securities of such defaulting Initial Purchaser or
Initial Purchasers for which such arrangement have not been made.
(c) If, after giving effect to arrangements, if any, for the purchase of
the Securities of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and the Company as provided in paragraph (a)
above, the aggregate principal amount of such Securities that remains
unpurchased exceeds one-tenth of the aggregate principal amount of all the
Securities, or if the Company shall not exercise the right described in
paragraph (b) above, then this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers, the Company or the
Guarantors, except that the Company and each of the Guarantors will continue to
be liable
31
for the payment of expenses as set forth in Sections 8 and 12 hereof and except
that the provisions of Sections 9 or 10 hereof shall not terminate and shall
remain in effect.
(d) Nothing contained herein shall relieve a defaulting Initial Purchaser
of any liability it may have to the Company, the Guarantors or any
non-defaulting Initial Purchaser for damages caused by its default.
8. Reimbursement of Initial Purchasers' Expenses. If (a) this Agreement
---------------------------------------------
shall have been terminated pursuant to Section 6 or 7, (b) the Company shall
fail to tender the Securities for delivery to the Initial Purchasers for any
reason permitted under this Agreement or (c) the Initial Purchasers shall
decline to purchase the Securities for any reason permitted under this
Agreement, the Company and the Guarantors shall reimburse the Initial Purchasers
for such out-of-pocket expenses (including reasonable fees and disbursements of
counsel) as shall have been reasonably incurred by the Initial Purchasers in
connection with this Agreement and the proposed purchase and resale of the
Securities. If this Agreement is terminated pursuant to Section 7 by reason of
the default of one or more of the Initial Purchasers, neither the Company nor
the Guarantors shall be obligated to reimburse any defaulting Initial Purchaser
on account of such expenses.
9. Indemnification.
---------------
(a) The Company and each of the Guarantors shall jointly and
severally indemnify and hold harmless each Initial Purchaser, its affiliates,
their respective officers, directors, employees, representatives and agents, and
each person, if any, who controls any Initial Purchaser within the meaning of
the Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 9(a) and Section 10 as an Initial Purchaser), from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, without limitation, any loss, claim, damage, liability or
action relating to purchases and sales of the Securities), to which that Initial
Purchaser may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or in any information provided by the Company or any Guarantor pursuant
to Section 4(e) or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and shall reimburse each Initial Purchaser promptly upon
demand for any legal or other expenses reasonably incurred by that Initial
Purchaser in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
32
however, that the Company and the Guarantors shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon and in
conformity with any Initial Purchasers' Information; and provided, further, that
with respect to any such untrue statement in or omission from the Preliminary
Offering Memorandum, the indemnity agreement contained in this Section 9(a)
shall not inure to the benefit of any such Initial Purchaser to the extent that
the sale to the person asserting any such loss, claim, damage, liability or
action was an initial resale by such Initial Purchaser and any such loss, claim,
damage, liability or action of or with respect to such Initial Purchaser results
from the fact that both (A) to the extent required by applicable law, a copy of
the Offering Memorandum was not sent or given to such person at or prior to the
written confirmation of the sale of such Securities to such person and (B) the
untrue statement in or omission from the Preliminary Offering Memorandum was
corrected in the Offering Memorandum unless, in either case, such failure to
deliver the Offering Memorandum was a result of non-compliance by the Company
with Section 4(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, each of the Guarantors and their
respective affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 9(b) and Section 10 as the Company),
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Offering Memorandum or the Offering Memorandum
or in any amendment or supplement thereto or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with any Initial
Purchasers' Information, and shall reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending or preparing to defend against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to
33
Section 9(a) or 9(b), notify the indemnifying party in writing of the claim or
the commencement of that action; provided, however, that the failure to notify
the indemnifying party shall not relieve it from any liability which it may have
under this Section 9 except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure; and,
provided, further, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 9. If any such claim or action shall be
brought against an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying party
to the indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under this Section 9 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that an indemnified party
shall have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel for the indemnified party will be at
the expense of such indemnified party unless (1) the employment of counsel by
the indemnified party has been authorized in writing by the indemnifying party,
(2) the indemnified party has reasonably concluded (based upon advice of counsel
to the indemnified party) that there may be legal defenses available to it or
other indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential conflict exists
(based upon advice of counsel to the indemnified party) between the indemnified
party and the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the indemnified
party) or (4) the indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm of attorneys (in addition to any local counsel) at any one time
for all such indemnified party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 9(a) and 9(b), shall
use all reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No
34
indemnifying party shall, without the prior written consent of the indemnified
party (which consent shall not be unreasonably withheld), effect any settlement
of any pending or threatened proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
The obligations of the Company, the Guarantors and the Initial
Purchasers in this Section 9 and in Section 10 are in addition to any other
liability that the Company, the Guarantors or the Initial Purchasers, as the
case may be, may otherwise have, including in respect of any breaches of
representations, warranties and agreements made herein by any such party.
10. Contribution. If the indemnification provided for in Section 9 is
------------
unavailable or insufficient to hold harmless an indemnified party under Section
9(a) or 9(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company and the Guarantors on the one hand and the
Initial Purchasers on the other from the offering of the Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Guarantors on the one hand and the Initial Purchasers on the other with
respect to the statements or omissions that resulted in such loss, claim, damage
or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors on the one hand and the Initial Purchasers on the other with respect
to such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities purchased under this Agreement
(before deducting expenses) received by or on behalf of the Company and the
Guarantors, on the one hand, and the total discounts and commissions received by
the Initial Purchasers with respect to the Securities purchased under this
Agreement, on the other, bear to the total gross proceeds from the sale of the
Securities under this Agreement. The relative fault 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 and the Guarantors on the one
hand or to any Initial Purchasers' Information on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omissions. The Company, the
Guarantors and the Initial Purchasers agree that it would not be just and
equitable if contributions pursuant to this Section 10 were to be determined by
pro rata allocation (even if the Initial Purchasers were treated as one entity
for such purpose) or by any other method of allocation that does not take into
35
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 10
shall be deemed to include, for purposes of this Section 10, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 10, no Initial Purchaser shall be
required to contribute any amount in excess of the amount by which the total
discounts and commissions received by such Initial Purchaser with respect to the
Securities purchased by it under this Agreement exceeds the amount of any
damages which such Initial Purchaser has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations to contribute as provided in this Section 10 are several
in proportion to their respective purchase obligations and not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement shall
----------------------------------------
inure to the benefit of and be binding upon the Initial Purchasers, the Company,
the Guarantors and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 9 and 10 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Company, the
Guarantors and the Initial Purchasers and in Section 4(e) with respect to
holders and prospective purchasers of the Securities. Nothing in this Agreement
is intended or shall be construed to give any person, other than the persons
referred to in this Section 11, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
12. Expenses. The Company and each of the Guarantors agrees with the
--------
Initial Purchasers to pay (a) the costs incident to the authorization, issuance,
sale, preparation and delivery of the Securities and any taxes payable in that
connection; (b) the costs incident to the preparation, printing and distribution
of the Preliminary Offering Memorandum, the Offering Memorandum and any
amendments or supplements thereto; (c) the costs of reproducing and distributing
each of the Transaction Documents; (d) the costs incident to the preparation,
printing and delivery of the certificates evidencing the Securities, including
stamp duties and transfer taxes, if any, payable upon issuance of the
Securities; (e) the fees and expenses of the Company's counsel and independent
accountants; (f) the fees and expenses of qualifying the Securities under the
securities laws of the several jurisdictions as provided in Section 4(g) and of
preparing, printing and distributing Blue Sky Memoranda (including related fees
and expenses of counsel for the Initial Purchasers); (g) any fees charged by
rating agencies for rating the Securities; (h) the fees and expenses of the
Trustee and any paying agent (including related fees and expenses of any counsel
to such parties); (i) all expenses and application fees incurred in connection
36
with the application for the inclusion of the Securities on the PORTAL Market
and the approval of the Securities for book-entry transfer by DTC; and (j) all
other costs and expenses incident to the performance of the obligations of the
Company under this Agreement which are not otherwise specifically provided for
in this Section 12; provided, however, that except as provided in this Section
12 and Section 8, the Initial Purchasers shall pay their own costs and expenses.
13. Survival. The respective indemnities, rights of contribution,
--------
representations, warranties and agreements of the Company, each of the
Guarantors and the Initial Purchasers contained in this Agreement or made by or
on behalf of the Company, each of the Guarantors or the Initial Purchasers
pursuant to this Agreement or any certificate delivered pursuant hereto shall
survive the delivery of and payment for the Securities and shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any of them or any of
their respective affiliates, officers, directors, employees, representatives,
agents or controlling persons.
14. Notices, etc. All statements, requests, notices and agreements
------------
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by mail
or telecopy transmission to X.X. Xxxxxx Securities Inc., 000 Xxxx Xxxxxx,
0xx xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxx (telecopier
no.: (000) 000-0000) with a copy to Debevoise & Xxxxxxxx, 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, xxxxxxxxx of Xxxxx X. Xxxxxxxxxx, facsimile (212)
909-6836; or
(b) if to the Company, shall be delivered or sent by mail or telecopy
transmission to the address of the Company set forth in the Offering
Memorandum, Attention: Xxxxxxx X. Xxxxxx, Senior Vice President, Secretary
and General Counsel (telecopier no.: (000) 000-0000) with a copy to
Dechert, 4000 Bell Atlantic Tower, 0000 Xxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000, attention of Xxxxxxxxxxx X. Xxxxxx, Facsimile (215)
994-2222;
provided that any notice to an Initial Purchaser pursuant to Section 9(c) shall
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchasers by JPMorgan.
15. Definition of Terms. For purposes of this Agreement, (a) the term
-------------------
"business day" means any day on which the New York Stock Exchange, Inc. is open
for
37
trading, (b) the term "subsidiary" has the meaning set forth in Rule 405
under the Securities Act and (c) except where otherwise expressly provided, the
term "affiliate" has the meaning set forth in Rule405 under the Securities Act.
16. Initial Purchasers' Information. The parties hereto acknowledge
-------------------------------
and agree that, for all purposes of this Agreement, the Initial Purchasers'
Information consists solely of the following information in the Preliminary
Offering Memorandum and the Offering Memorandum: the statements concerning the
Initial Purchasers contained in the (i) the second sentence of the fourth
paragraph on the front cover page, and (ii) the third paragraph, the fourth,
fifth and sixth sentences of the eighth paragraph, the ninth paragraph and the
tenth paragraph under the heading "Plan of Distribution".
17. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York.
18. Counterparts. This Agreement may be executed in one or more
------------
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed agreement counterparts shall
each be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
19. Amendments. No amendment or waiver of any provision of this
----------
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
20. Headings. The headings herein are inserted for convenience of
--------
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
38
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company, the Guarantors
and the several Initial Purchasers in accordance with its terms.
Very truly yours,
SELECT MEDICAL CORPORATION
By: Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
SELECTMARK, INC.
By: Xxxxxx X. Xxxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Vice President
SELECT HOSPITAL INVESTORS, INC.
By: Xxxxxx X. Xxxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Vice President
SLMC FINANCE CORPORATION
By: Xxxxxx X. Xxxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Treasurer
EACH OF THE GUARANTORS LISTED ON
SCHEDULE I HERETO OTHER THAN
SELECTMARK, INC., SELECT HOSPITAL
INVESTORS, INC. AND SLMC FINANCE
CORPORATION
By Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
39
Accepted:
X.X. XXXXXX SECURITIES INC.
By Xxxxx Xxxxx
----------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
0 Xxxxx Xxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
CIBC WORLD MARKETS CORP.
FIRST UNION SECURITIES, INC.
By Xxxxx Xxxxx
----------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
Attention:
40
SCHEDULE I
Xxxx Center for Rehabilitation Therapies, Inc.
Xxxx Healthcare Network, Inc.
Affiliated Physical Therapists, Ltd.
Allegany Hearing and Speech, Inc.
American Transitional Hospitals, Inc.
Athens Sports Medicine Clinic, Inc.
Ather Sports Injury Clinic, Inc.
Atlantic Health Group, Inc.
Atlantic Rehabilitation Services, Inc.
Avalon Rehabilitation & Healthcare, L.L.C.
Boca Rehab Agency, Inc.
Buendel Physical Therapy, Inc.
C.E.R. - West, Inc.
C.O.A.S.T. Institute Physical Therapy, Inc.
CCISUB, Inc.
CMC Center Corporation
Cenla Physical Therapy & Rehabilitation Agency, Inc.
Center for Evaluation & Rehabilitation, Inc.
Center for Physical Therapy & Sports Rehabilitation, Inc.
CenterTherapy, Inc.
Champion Physical Therapy, Inc.
Connecticut NovaCare Ventures, Inc.
Xxxxxx Physical Therapy Associates, Inc.
Xxxxxxx Physical Therapy Clinic, Inc.
Xxxxxxx Xxxxx & Associates, Ltd.
Xxxxxxx X. Xxxxxxxx, R.P.T., Physical Therapy, Inc.
Elk County Physical Therapy, Inc.
Fine, Xxxxxx & Wah, Inc.
Xxxxxxx Xxxxxxx, Xx. & Xxxxxxx Xxxx Physical Therapists, Inc.
Gallery Physical Therapy Center, Inc.
Georgia NovaCare Ventures, Inc.
Georgia Physical Therapy of West Georgia, Inc.
Georgia Physical Therapy, Inc.
GP Therapy, L.L.C.
Greater Sacramento Physical Therapy Associates, Inc.
Grove City Physical Therapy and Sports Medicine, Inc.
Gulf Breeze Physical Therapy, Inc.
Gulf Coast Hand Specialists, Inc.
Hand Therapy Associates, Inc.
Hand Therapy and Rehabilitation Associates, Inc.
Hangtown Physical Therapy, Inc.
Xxxxxx Physical Therapy, Inc.
Human Performance and Fitness, Inc.
Indianapolis Physical Therapy and Sports Medicine, Inc.
Intensiva Healthcare Corporation
Intensiva Hospital of Greater St. Louis, Inc.
Xxxxxx Sports Science Institute, Inc.
Xxxxxx Sportmedicine Institute, Inc.
Kentucky Rehabilitation Services, Inc.
Xxxxxxxx Physical Therapy, Inc.
Xxxx X. Xxxxxxx, Inc.
Xxxx Xxxxxx Physical Therapy Center, Inc.
Metro Rehabilitation Services, Inc.
Michigan Therapy Centre, Inc.
MidAtlantic Health Group, Inc.
Monmouth Rehabilitation, Inc.
2
New England Health Group, Inc.
New Mexico Physical Therapists, Inc.
Northside Physical Therapy, Inc.
NovaCare Health Group, L.L.C.
NovaCare Occupational Health Services, Inc.
NovaCare Outpatient Rehabilitation, Inc.
NovaCare Outpatient Rehabilitation East, Inc.
NovaCare Outpatient Rehabilitation West, Inc.
NovaCare Rehabilitation, Inc.
NW Rehabilitation Associates, L.P.
Ortho Rehab Associates, Inc.
Orthopedic and Sports Physical Therapy of Cupertino, Inc.
P.T. Services Company
P.T. Services, Inc.
P.T. Services Rehabilitation, Inc.
Xxxxx Xxxxxxx R.P.T. Physical Therapy Clinic, Orthopaedic Rehabilitation &
Sports Medicine, Ltd.
Xxxxxx, Xxxxxxx & Xxxxxxx Physical Therapy Corporation
Physical Focus, Inc.
Physical Rehabilitation Partners, Inc.
Physical Therapy Enterprises, Inc.
Physical Therapy Institute, Inc.
Physical Therapy Services of the Jersey Cape, Inc.
Physio - Associates, Inc.
Pro Active Therapy, Inc.
Pro Active Therapy of Ahoskie, Inc.
Pro Active Therapy of Xxxxxxx, Inc.
Pro Active Therapy of Greenville, Inc.
Pro Active Therapy of North Carolina, Inc.
3
Pro Active Therapy of South Carolina, Inc.
Pro Active Therapy of Virginia, Inc.
Pro Active Therapy of Rocky Mount, Inc.
Professional Therapeutic Services, Inc.
Quad City Management, Inc.
RCI (Colorado), Inc.
RCI (Exertec), Inc.
RCI (Michigan), Inc.
RCI (S.P.O.R.T.), Inc.
RCI (WRS), Inc.
RCI Nevada, Inc.
Rebound Oklahoma, Inc.
Redwood Pacific Therapies, Inc.
Rehab Advantage, Inc.
Rehab Managed Care of Arizona, Inc.
Rehab Provider Network - California, Inc.
Rehab Provider Network - Delaware, Inc.
Rehab Provider Network - Georgia, Inc.
Rehab Provider Network - Indiana, Inc.
Rehab Provider Network - Maryland, Inc.
Rehab Provider Network - Michigan, Inc.
Rehab Provider Network - New Jersey, Inc.
Rehab Provider Network - Ohio, Inc.
Rehab Provider Network - Oklahoma, Inc.
Rehab Provider Network - Pennsylvania, Inc.
Rehab Provider Network - Virginia, Inc.
Rehab Provider Network - Washington, D.C., Inc.
Rehab Provider Network of Colorado, Inc.
Rehab Provider Network of Florida, Inc.
4
Rehab Provider Network of Nevada, Inc.
Rehab Provider Network of New Mexico, Inc.
Rehab Provider Network of North Carolina, Inc.
Rehab Provider Network of Texas, Inc.
Rehab Provider Network of Wisconsin, Inc.
Rehab World, Inc.
Rehab/Work Hardening Management Associates, Ltd.
RehabClinics, Inc.
RehabClinics (COAST), Inc.
RehabClinics (GALAXY), Inc.
RehabClinics (New Jersey), Inc.
RehabClinics (PTA), Inc.
RehabClinics (SPT), Inc.
RehabClinics Abilene, Inc.
RehabClinics Dallas, Inc.
RehabClinics Pennsylvania, Inc.
Rehabilitation Network, Inc.
Xxxxxx X. Xxxxx, R.P.T. Physical Therapy, Inc.
S.T.A.R.T., Inc.
Select Air Corporation
Select Employment Services, Inc.
Select Hospital Investors, Inc.
SelectMark, Inc.
Select Medical of Kentucky, Inc.
Select Medical of Maryland, Inc.
Select Medical of New Jersey, Inc.
Select Medical of New York, Inc.
Select Medical of Ohio, Inc.
Select Medical of Pennsylvania, Inc.
5
Select Software Ventures, L.L.C.
Select Specialty Hospital - Akron, Inc.
Select Specialty Hospital - Akron II, Inc.
Select Specialty Hospital - Xxx Arbor, Inc.
Select Specialty Hospital - Battle Creek, Inc.
Select Specialty Hospital - Beech Grove, Inc.
Select Specialty Hospital - Camp Hill, Inc.
Select Specialty Hospital - Camp Hill, L.P.
Select Specialty Hospital - Central Detroit, Inc.
Select Specialty Hospital - Charleston, Inc.
Select Specialty Hospital - Cincinnati, Inc.
Select Specialty Hospital - Columbus, Inc.
Select Specialty Hospital - Columbus/University, Inc.
Select Specialty Hospital - Dallas, Inc.
Select Specialty Hospital - Denver, Inc.
Select Specialty Hospital - Durham, Inc.
Select Specialty Hospital - Erie, Inc.
Select Specialty Hospital - Evansville, Inc.
Select Specialty Hospital - Flint, Inc.
Select Specialty Hospital - Fort Xxxxx, Inc.
Select Specialty Hospital - Fort Xxxxx, Inc.
Select Specialty Hospital - Greensburg, Inc.
Select Specialty Hospital - Houston, Inc.
Select Specialty Hospital - Indianapolis, Inc.
Select Specialty Hospital - Xxxxxxx, Inc.
Select Specialty Hospital - Johnstown, Inc.
Select Specialty Hospital - Kansas City, Inc.
Select Specialty Hospital - Knoxville, Inc.
Select Specialty Hospital - Little Rock, Inc.
6
Select Specialty Hospital - Louisville, Inc.
Select Specialty Hospital - Macomb County, Inc.
Select Specialty Hospital - Memphis, Inc.
Select Specialty Hospital - Mesa, Inc.
Select Specialty Hospital - Miami, Inc.
Select Specialty Hospital - Milwaukee, Inc.
Select Specialty Hospital - Morgantown, Inc.
Select Specialty Hospital - Nashville, Inc.
Select Specialty Hospital - New Orleans, Inc.
Select Specialty Hospital - North Knoxville, Inc.
Select Specialty Hospital - Northwest Detroit, Inc.
Select Specialty Hospital - Northwest Indiana, Inc.
Select Specialty Hospital - Oklahoma City, Inc.
Select Specialty Hospital - Oklahoma City/East Campus, Inc.
Select Specialty Hospital - Omaha, Inc.
Select Specialty Hospital - Philadelphia/AEMC, Inc.
Select Specialty Hospital - Phoenix, Inc.
Select Specialty Hospital - Pittsburgh, Inc.
Select Specialty Hospital - Pontiac, Inc.
Select Specialty Hospital - Reno, Inc.
Select Specialty Hospital - San Antonio, Inc.
Select Specialty Hospital - Sioux Falls, Inc.
Select Specialty Hospital - Topeka, Inc.
Select Specialty Hospital - TriCities, Inc.
Select Specialty Hospital - Tulsa, Inc.
Select Specialty Hospital - West Columbus, Inc.
Select Specialty Hospital - Western Michigan, Inc.
Select Specialty Hospital - Wichita, Inc.
Select Specialty Hospital - Wilmington, Inc.
7
Select Specialty Hospital - Wyandotte, Inc.
Select Specialty Hospital - Youngstown, Inc.
Select Specialty Hospitals, Inc.
Select Synergos, Inc.
Select Unit Management, Inc.
SLMC Finance Corporation
SMC of Florida, Inc.
South Jersey Physical Therapy Associates, Inc.
South Jersey Rehabilitation and Sports Medicine Center, Inc.
Southpointe Fitness Center, Inc.
Southwest Emergency Associates, Inc.
Southwest Medical Supply Company, Inc.
Southwest Physical Therapy, Inc.
Southwest Therapists, Inc.
Sporthopedics Sports and Physical Therapy Centers, Inc.
Sports & Orthopedic Rehabilitation Services, Inc.
Sports Therapy and Arthritis Rehabilitation, Inc.
Star Physical Therapy, Inc.
Xxxxxxxxxx-Xxxxx, Inc.
The Center for Physical Therapy and Rehabilitation, Inc.
The Orthopedic Sports and Industrial Rehabilitation Network, Inc.
TJ Partnership I
Xxxxxxxx, Inc.
Union Square Center for Rehabilitation & Sports Medicine, Inc.
Valley Group Physical Therapists, Inc.
Vanguard Rehabilitation, Inc.
Wayzata Physical Therapy Center, Inc.
West Penn Rehabilitation Services, Inc.
West Side Physical Therapy, Inc.
8
West Suburban Health Partners, Inc.
Yuma Rehabilitation Center, Inc.
9
SCHEDULE II
Principal
Amount
Initial Purchasers of Securities
------------------ -------------
X.X. Xxxxxx Securities Inc. $ 78,750,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated 35,000,000
Credit Suisse First Boston Corporation 26,250,000
CIBC World Markets Corp. 17,500,000
First Union Securities Inc. 17,500,000
Total $ 175,000,000
SCHEDULE III
Xxxx Center for Rehabilitation Therapies, Inc.
Xxxx Healthcare Network, Inc.
Affiliated Physical Therapists, Ltd.
Allegany Hearing and Speech, Inc.
American Transitional Hospitals, Inc.
Athens Sports Medicine Clinic, Inc.
Ather Sports Injury Clinic, Inc.
Atlantic Health Group, Inc.
Atlantic Rehabilitation Services, Inc.
Avalon Rehabilitation & Healthcare, L.L.C.
Boca Rehab Agency, Inc.
Buendel Physical Therapy, Inc.
Canadian Back Institute Limited*
CBI Brampton Limited Partnership*
CBI Calgary Limited Partnership*
CBI Fraser Valley Limited Partnership*
CBI Holdings Ltd.*
CBI Physiotherapists Corporation*
CBI Professional Services Inc.*
CBI South Calgary Limited Partnership*
CBI Vancouver Limited Partnership*
CBI Victoria Limited Partnership*
CBI Windsor Limited Partnership*
C.E.R. - West, Inc.
C.O.A.S.T. Institute Physical Therapy, Inc.
CCISUB, Inc.
CMC Center Corporation
Cenla Physical Therapy & Rehabilitation Agency, Inc.
Center for Evaluation & Rehabilitation, Inc.
Center for Physical Therapy & Sports Rehabilitation, Inc.
CenterTherapy, Inc.
Champion Physical Therapy, Inc.
Connecticut NovaCare Ventures, Inc.
Xxxxxx Physical Therapy Associates, Inc.
Xxxxxxx Physical Therapy Clinic, Inc.
Xxxxxxx Xxxxx & Associates, Ltd.
Xxxxxxx X. Xxxxxxxx, R.P.T., Physical Therapy, Inc.
Dynamic Rehabilitation Inc.*
Elk County Physical Therapy, Inc.
Fine, Xxxxxx & Wah, Inc.
Xxxxxxx Xxxxxxx, Xx. & Xxxxxxx Xxxx Physical Therapists, Inc.
Gallery Physical Therapy Center, Inc.
Georgia NovaCare Ventures, Inc.
Georgia Physical Therapy of West Georgia, Inc.
Georgia Physical Therapy, Inc.
GP Therapy, L.L.C.
Greater Sacramento Physical Therapy Associates, Inc.
Grove City Physical Therapy and Sports Medicine, Inc.
Gulf Breeze Physical Therapy, Inc.
Gulf Coast Hand Specialists, Inc.
Hand Therapy Associates, Inc.
Hand Therapy and Rehabilitation Associates, Inc.
Hangtown Physical Therapy, Inc.
Xxxxxx Physical Therapy, Inc.
Human Performance and Fitness, Inc.
Indianapolis Physical Therapy and Sports Medicine, Inc.
2
Intensiva Healthcare Corporation
Intensiva Hospital of Greater St. Louis, Inc.
Xxxxxx Sports Science Institute, Inc.
Xxxxxx Sportmedicine Institute, Inc.
Kentucky Orthopedic Rehabilitation, LLC*
Kentucky Rehabilitation Services, Inc.
Xxxxxxxx Physical Therapy, Inc.
Xxxx X. Xxxxxxx, Inc.
Xxxx Xxxxxx Physical Therapy Center, Inc.
Medical Information Management Systems, LLC*
Metro Rehabilitation Services, Inc.
Michigan Therapy Centre, Inc.
MidAtlantic Health Group, Inc.
Millenium Rehab Services, L.L.C.*
Monmouth Rehabilitation, Inc.
New England Health Group, Inc.
New Mexico Physical Therapists, Inc.
Northside Physical Therapy, Inc.
NovaCare Health Group, L.L.C.
NovaCare Occupational Health Services, Inc.
NovaCare Outpatient Rehabilitation, Inc.
NovaCare Outpatient Rehabilitation East, Inc.
NovaCare Outpatient Rehabilitation West, Inc.
NovaCare Rehabilitation, Inc.
NW Rehabilitation Associates, L.P.
1263568 Ontario Limited (London Group)*
Ortho Rehab Associates, Inc.
Orthopedic and Sports Physical Therapy of Cupertino, Inc.
P.T. Services Company
3
P.T. Services, Inc.
P.T. Services Rehabilitation, Inc.
Xxxxx Xxxxxxx R.P.T. Physical Therapy Clinic, Orthopaedic Rehabilitation &
Sports Medicine, Ltd.
Xxxxxx, Xxxxxxx & Xxxxxxx Physical Therapy Corporation
Physical Focus, Inc.
Physical Rehabilitation Partners, Inc.
Physical Therapy Enterprises, Inc.
Physical Therapy Institute, Inc.
Physical Therapy Services of the Jersey Cape, Inc.
Physio - Associates, Inc.
Pro Active Therapy, Inc.
Pro Active Therapy of Ahoskie, Inc.
Pro Active Therapy of Xxxxxxx, Inc.
Pro Active Therapy of Greenville, Inc.
Pro Active Therapy of North Carolina, Inc.
Pro Active Therapy of Rocky Mount, Inc.
Pro Active Therapy Services of South Carolina, Inc.
Pro Active Therapy Services of Virginia, Inc.
Professional Therapeutic Services, Inc.
Quad City Management, Inc.
RCI (Colorado), Inc.
RCI (Exertec), Inc.
RCI (Michigan), Inc.
RCI (S.P.O.R.T.), Inc.
RCI (WRS), Inc.
RCI Nevada, Inc.
Rebound Oklahoma, Inc.
Redwood Pacific Therapies, Inc.
4
Rehab Advantage, Inc.
Rehab Advantage Therapy Services, LLC*
Rehab Health, Inc.*
Rehab Managed Care of Arizona, Inc.
Rehab Provider Network - California, Inc.
Rehab Provider Network - Delaware, Inc.
Rehab Provider Network - Georgia, Inc.
Rehab Provider Network - Indiana, Inc.
Rehab Provider Network - Maryland, Inc.
Rehab Provider Network - Michigan, Inc.
Rehab Provider Network - New Jersey, Inc.
Rehab Provider Network - Ohio, Inc.
Rehab Provider Network - Oklahoma, Inc.
Rehab Provider Network - Pennsylvania, Inc.
Rehab Provider Network - Virginia, Inc.
Rehab Provider Network - Washington, D.C., Inc.
Rehab Provider Network of Colorado, Inc.
Rehab Provider Network of Florida, Inc.
Rehab Provider Network of Nevada, Inc.
Rehab Provider Network of New Mexico, Inc.
Rehab Provider Network of North Carolina, Inc.
Rehab Provider Network of Texas, Inc.
Rehab Provider Network of Wisconsin, Inc.
Rehab World, Inc.
Rehab/Work Hardening Management Associates, Ltd.
RehabClinics, Inc.
RehabClinics (COAST), Inc.
RehabClinics (GALAXY), Inc.
RehabClinics (New Jersey), Inc.
5
RehabClinics (PTA), Inc.
RehabClinics (SPT), Inc.
RehabClinics Abilene, Inc.
RehabClinics Dallas, Inc.
RehabClinics Pennsylvania, Inc.
Rehabilitation Network, Inc.
Xxxxxx X. Xxxxx, R.P.T. Physical Therapy, Inc.
S.T.A.R. Rehab, Inc.*
S.T.A.R.T., Inc.
Select Air Corporation
Select Employment Services, Inc.
Select Hospital Investors, Inc.
Select - Houston Partners, L.P.*
Select Management Services, LLC*
SelectMark, Inc.
Select Medical of Kentucky, Inc.
Select Medical of Maryland, Inc.
Select Medical of New Jersey, Inc.
Select Medical of New York, Inc.
Select Medical of Ohio, Inc.
Select Medical of Pennsylvania, Inc.
Select Software Ventures, L.L.C.
Select Specialty Hospital - Akron, Inc.
Select Specialty Hospital - Akron II, Inc.
Select Specialty Hospital - Xxx Arbor, Inc.
Select Specialty Hospital - Battle Creek, Inc.
Select Specialty Hospital - Beech Grove, Inc.
Select Specialty Hospital - Biloxi, Inc.*
Select Specialty Hospital - Camp Hill, Inc.
6
Select Specialty Hospital - Camp Hill, L.P.
Select Specialty Hospital - Central Detroit, Inc.
Select Specialty Hospital - Charleston, Inc.
Select Specialty Hospital - Cincinnati, Inc.
Select Specialty Hospital - Columbus, Inc.
Select Specialty Hospital - Columbus/University, Inc.
Select Specialty Hospital - Dallas, Inc.
Select Specialty Hospital - Denver, Inc.
Select Specialty Hospital - Durham, Inc.
Select Specialty Hospital - Erie, Inc.
Select Specialty Hospital - Evansville, Inc.
Select Specialty Hospital - Flint, Inc.
Select Specialty Hospital - Fort Xxxxx, Inc.
Select Specialty Hospital - Fort Xxxxx, Inc.
Select Specialty Hospital - Greensburg, Inc.
Select Specialty Hospital - Houston, Inc.
Select Specialty Hospital - Indianapolis, Inc.
Select Specialty Hospital - Xxxxxxx, Inc.
Select Specialty Hospital - Johnstown, Inc.
Select Specialty Hospital - Kansas City, Inc.
Select Specialty Hospital - Knoxville, Inc.
Select Specialty Hospital - Little Rock, Inc.
Select Specialty Hospital - Louisville, Inc.
Select Specialty Hospital - Macomb County, Inc.
Select Specialty Hospital - Memphis, Inc.
Select Specialty Hospital - Mesa, Inc.
Select Specialty Hospital - Miami, Inc.
Select Specialty Hospital - Milwaukee, Inc.
Select Specialty Hospital - Morgantown, Inc.
7
Select Specialty Hospital - Nashville, Inc.
Select Specialty Hospital - New Orleans, Inc.
Select Specialty Hospital - North Knoxville, Inc.
Select Specialty Hospital - Northwest Detroit, Inc.
Select Specialty Hospital - Northwest Indiana, Inc.
Select Specialty Hospital - Oklahoma City, Inc.
Select Specialty Hospital - Oklahoma City/East Campus, Inc.
Select Specialty Hospital - Omaha, Inc.
Select Specialty Hospital - Philadelphia/AEMC, Inc.
Select Specialty Hospital - Phoenix, Inc.
Select Specialty Hospital - Pittsburgh, Inc.
Select Specialty Hospital - Pontiac, Inc.
Select Specialty Hospital - Reno, Inc.
Select Specialty Hospital - San Antonio, Inc.
Select Specialty Hospital - Sioux Falls, Inc.
Select Specialty Hospital - Topeka, Inc.
Select Specialty Hospital - TriCities, Inc.
Select Specialty Hospital - Tulsa, Inc.
Select Specialty Hospital - West Columbus, Inc.
Select Specialty Hospital - Western Michigan, Inc.
Select Specialty Hospital - Wichita, Inc.
Select Specialty Hospital - Wilmington, Inc.
Select Specialty Hospital - Wyandotte, Inc.
Select Specialty Hospital - Youngstown, Inc.
Select Specialty Hospitals, Inc.
Select Synergos, Inc.
Select Unit Management, Inc.
SLMC Finance Corporation
SMC of Florida, Inc.
8
South Jersey Physical Therapy Associates, Inc.
South Jersey Rehabilitation and Sports Medicine Center, Inc.
Southpointe Fitness Center, Inc.
Southwest Emergency Associates, Inc.
Southwest Medical Supply Company, Inc.
Southwest Physical Therapy, Inc.
Southwest Therapists, Inc.
Sporthopedics Sports and Physical Therapy Centers, Inc.
Sports & Orthopedic Rehabilitation Services, Inc.
Sports Therapy and Arthritis Rehabilitation, Inc.
Star Physical Therapy, Inc.
Xxxxxxxxxx-Xxxxx, Inc.
The Center for Physical Therapy and Rehabilitation, Inc.
The Orthopedic Sports and Industrial Rehabilitation Network, Inc.
TJ Corporation I, L.L.C.*
TJ Partnership I
Xxxxxxxx, Inc.
Union Square Center for Rehabilitation & Sports Medicine, Inc.
Valley Group Physical Therapists, Inc.
Vanguard Rehabilitation, Inc.
Wayzata Physical Therapy Center, Inc.
West Penn Rehabilitation Services, Inc.
West Side Physical Therapy, Inc.
West Suburban Health Partners, Inc.
Yuma Rehabilitation Center, Inc.
*Non-Guarantor Subsidiary
9
SCHEDULE IV
Xxxx Center for Rehabilitation Therapies, Inc.
Xxxx Healthcare Network, Inc.
Affiliated Physical Therapists, Ltd.
Allegany Hearing and Speech, Inc.
American Transitional Hospitals, Inc.
Athens Sports Medicine Clinic, Inc.
Ather Sports Injury Clinic, Inc.
Atlantic Health Group, Inc.
Atlantic Rehabilitation Services, Inc.
Avalon Rehabilitation & Healthcare, L.L.C.
Boca Rehab Agency, Inc.
Buendel Physical Therapy, Inc.
Canadian Back Institute Limited**
CBI Brampton Limited Partnership*
CBI Calgary Limited Partnership**
CBI Fraser Valley Limited Partnership*
CBI Holdings Ltd.*
CBI Physiotherapists Corporation*
CBI Professional Services Inc.*
CBI South Calgary Limited Partnership**
CBI Vancouver Limited Partnership*
CBI Victoria Limited Partnership**
CBI Windsor Limited Partnership*
C.E.R. - West, Inc.
C.O.A.S.T. Institute Physical Therapy, Inc.
CCISUB, Inc.
CMC Center Corporation
Cenla Physical Therapy & Rehabilitation Agency, Inc.
Center for Evaluation & Rehabilitation, Inc.
Center for Physical Therapy & Sports Rehabilitation, Inc.
CenterTherapy, Inc.
Champion Physical Therapy, Inc.
Connecticut NovaCare Ventures, Inc.
Xxxxxx Physical Therapy Associates, Inc.
Xxxxxxx Physical Therapy Clinic, Inc.
Xxxxxxx Xxxxx & Associates, Ltd.
Xxxxxxx X. Xxxxxxxx, R.P.T., Physical Therapy, Inc.
Dynamic Rehabilitation Inc.*
Elk County Physical Therapy, Inc.
Fine, Xxxxxx & Wah, Inc.
Xxxxxxx Xxxxxxx, Xx. & Xxxxxxx Xxxx Physical Therapists, Inc.
Gallery Physical Therapy Center, Inc.
Georgia NovaCare Ventures, Inc.
Georgia Physical Therapy of West Georgia, Inc.
Georgia Physical Therapy, Inc.
GP Therapy, L.L.C.
Greater Sacramento Physical Therapy Associates, Inc.
Grove City Physical Therapy and Sports Medicine, Inc.
Gulf Breeze Physical Therapy, Inc.
Gulf Coast Hand Specialists, Inc.
Hand Therapy Associates, Inc.
Hand Therapy and Rehabilitation Associates, Inc.
Hangtown Physical Therapy, Inc.
Xxxxxx Physical Therapy, Inc.
Human Performance and Fitness, Inc.
Indianapolis Physical Therapy and Sports Medicine, Inc.
2
Intensiva Healthcare Corporation
Intensiva Hospital of Greater St. Louis, Inc.
Xxxxxx Sports Science Institute, Inc.
Xxxxxx Sportmedicine Institute, Inc.
Kentucky Orthopedic Rehabilitation, LLC*
Kentucky Rehabilitation Services, Inc.
Xxxxxxxx Physical Therapy, Inc.
Xxxx X. Xxxxxxx, Inc.
Xxxx Xxxxxx Physical Therapy Center, Inc.
Medical Information Management Systems, LLC*
Metro Rehabilitation Services, Inc.
Michigan Therapy Centre, Inc.
MidAtlantic Health Group, Inc.
Millenium Rehab Services, L.L.C.*
Monmouth Rehabilitation, Inc.
New England Health Group, Inc.
New Mexico Physical Therapists, Inc.
Northside Physical Therapy, Inc.
NovaCare Health Group, L.L.C.
NovaCare Occupational Health Services, Inc.
NovaCare Outpatient Rehabilitation, Inc.
NovaCare Outpatient Rehabilitation East, Inc.
NovaCare Outpatient Rehabilitation West, Inc.
NovaCare Rehabilitation, Inc.
NW Rehabilitation Associates, L.P.
1263568 Ontario Limited (London Group)*
Ortho Rehab Associates, Inc.
Orthopedic and Sports Physical Therapy of Cupertino, Inc.
P.T. Services Company
3
P.T. Services, Inc.
P.T. Services Rehabilitation, Inc.
Xxxxx Xxxxxxx R.P.T. Physical Therapy Clinic, Orthopaedic Rehabilitation &
Sports Medicine, Ltd.
Xxxxxx, Xxxxxxx & Xxxxxxx Physical Therapy Corporation
Physical Focus, Inc.
Physical Rehabilitation Partners, Inc.
Physical Therapy Enterprises, Inc.
Physical Therapy Institute, Inc.
Physical Therapy Services of the Jersey Cape, Inc.
Physio - Associates, Inc.
Pro Active Therapy, Inc.
Pro Active Therapy of Ahoskie, Inc.
Pro Active Therapy of Xxxxxxx, Inc.
Pro Active Therapy of Greenville, Inc.
Pro Active Therapy of North Carolina, Inc.
Pro Active Therapy of Rocky Mount, Inc.
Pro Active Therapy Services of South Carolina, Inc.
Pro Active Therapy Services of Virginia, Inc.
Professional Therapeutic Services, Inc.
Quad City Management, Inc.
RCI (Colorado), Inc.
RCI (Exertec), Inc.
RCI (Michigan), Inc.
RCI (S.P.O.R.T.), Inc.
RCI (WRS), Inc.
RCI Nevada, Inc.
Rebound Oklahoma, Inc.
Redwood Pacific Therapies, Inc.
4
Rehab Advantage, Inc.
Rehab Advantage Therapy Services, LLC*
Rehab Health, Inc.**
Rehab Managed Care of Arizona, Inc.
Rehab Provider Network - California, Inc.
Rehab Provider Network - Delaware, Inc.
Rehab Provider Network - Georgia, Inc.
Rehab Provider Network - Indiana, Inc.
Rehab Provider Network - Maryland, Inc.
Rehab Provider Network - Michigan, Inc.
Rehab Provider Network - New Jersey, Inc.
Rehab Provider Network - Ohio, Inc.
Rehab Provider Network - Oklahoma, Inc.
Rehab Provider Network - Pennsylvania, Inc.
Rehab Provider Network - Virginia, Inc.
Rehab Provider Network - Washington, D.C., Inc.
Rehab Provider Network of Colorado, Inc.
Rehab Provider Network of Florida, Inc.
Rehab Provider Network of Nevada, Inc.
Rehab Provider Network of New Mexico, Inc.
Rehab Provider Network of North Carolina, Inc.
Rehab Provider Network of Texas, Inc.
Rehab Provider Network of Wisconsin, Inc.
Rehab World, Inc.
Rehab/Work Hardening Management Associates, Ltd.
RehabClinics, Inc.
RehabClinics (COAST), Inc.
RehabClinics (GALAXY), Inc.
RehabClinics (New Jersey), Inc.
5
RehabClinics (PTA), Inc.
RehabClinics (SPT), Inc.
RehabClinics Abilene, Inc.
RehabClinics Dallas, Inc.
RehabClinics Pennsylvania, Inc.
Rehabilitation Network, Inc.
Xxxxxx X. Xxxxx, R.P.T. Physical Therapy, Inc.
S.T.A.R. Rehab, Inc.*
S.T.A.R.T., Inc.
Select Air Corporation
Select Employment Services, Inc.
Select Hospital Investors, Inc.
Select - Houston Partners, L.P.*
Select Management Services, LLC*
SelectMark, Inc.
Select Medical of Kentucky, Inc.
Select Medical of Maryland, Inc.
Select Medical of New Jersey, Inc.
Select Medical of New York, Inc.
Select Medical of Ohio, Inc.
Select Medical of Pennsylvania, Inc.
Select Software Ventures, L.L.C.
Select Specialty Hospital - Akron, Inc.
Select Specialty Hospital - Akron II, Inc.
Select Specialty Hospital - Xxx Arbor, Inc.
Select Specialty Hospital - Battle Creek, Inc.
Select Specialty Hospital - Beech Grove, Inc.
Select Specialty Hospital - Biloxi, Inc.*
Select Specialty Hospital - Camp Hill, Inc.
6
Select Specialty Hospital - Camp Hill, L.P.
Select Specialty Hospital - Central Detroit, Inc.
Select Specialty Hospital - Charleston, Inc.
Select Specialty Hospital - Cincinnati, Inc.
Select Specialty Hospital - Columbus, Inc.
Select Specialty Hospital - Columbus/University, Inc.
Select Specialty Hospital - Dallas, Inc.
Select Specialty Hospital - Denver, Inc.
Select Specialty Hospital - Durham, Inc.
Select Specialty Hospital - Erie, Inc.
Select Specialty Hospital - Evansville, Inc.
Select Specialty Hospital - Flint, Inc.
Select Specialty Hospital - Fort Xxxxx, Inc.
Select Specialty Hospital - Fort Xxxxx, Inc.
Select Specialty Hospital - Greensburg, Inc.
Select Specialty Hospital - Houston, Inc.
Select Specialty Hospital - Indianapolis, Inc.
Select Specialty Hospital - Xxxxxxx, Inc.
Select Specialty Hospital - Johnstown, Inc.
Select Specialty Hospital - Kansas City, Inc.
Select Specialty Hospital - Knoxville, Inc.
Select Specialty Hospital - Little Rock, Inc.
Select Specialty Hospital - Louisville, Inc.
Select Specialty Hospital - Macomb County, Inc.
Select Specialty Hospital - Memphis, Inc.
Select Specialty Hospital - Mesa, Inc.
Select Specialty Hospital - Miami, Inc.
Select Specialty Hospital - Milwaukee, Inc.
Select Specialty Hospital - Morgantown, Inc.
7
Select Specialty Hospital - Nashville, Inc.
Select Specialty Hospital - New Orleans, Inc.
Select Specialty Hospital - North Knoxville, Inc.
Select Specialty Hospital - Northwest Detroit, Inc.
Select Specialty Hospital - Northwest Indiana, Inc.
Select Specialty Hospital - Oklahoma City, Inc.
Select Specialty Hospital - Oklahoma City/East Campus, Inc.
Select Specialty Hospital - Omaha, Inc.
Select Specialty Hospital - Philadelphia/AEMC, Inc.
Select Specialty Hospital - Phoenix, Inc.
Select Specialty Hospital - Pittsburgh, Inc.
Select Specialty Hospital - Pontiac, Inc.
Select Specialty Hospital - Reno, Inc.
Select Specialty Hospital - San Antonio, Inc.
Select Specialty Hospital - Sioux Falls, Inc.
Select Specialty Hospital - Topeka, Inc.
Select Specialty Hospital - TriCities, Inc.
Select Specialty Hospital - Tulsa, Inc.
Select Specialty Hospital - West Columbus, Inc.
Select Specialty Hospital - Western Michigan, Inc.
Select Specialty Hospital - Wichita, Inc.
Select Specialty Hospital - Wilmington, Inc.
Select Specialty Hospital - Wyandotte, Inc.
Select Specialty Hospital - Youngstown, Inc.
Select Specialty Hospitals, Inc.
Select Synergos, Inc.
Select Unit Management, Inc.
SLMC Finance Corporation
SMC of Florida, Inc.
8
South Jersey Physical Therapy Associates, Inc.
South Jersey Rehabilitation and Sports Medicine Center, Inc.
Southpointe Fitness Center, Inc.
Southwest Emergency Associates, Inc.
Southwest Medical Supply Company, Inc.
Southwest Physical Therapy, Inc.
Southwest Therapists, Inc.
Sporthopedics Sports and Physical Therapy Centers, Inc.
Sports & Orthopedic Rehabilitation Services, Inc.
Sports Therapy and Arthritis Rehabilitation, Inc.
Star Physical Therapy, Inc.
Xxxxxxxxxx-Xxxxx, Inc.
The Center for Physical Therapy and Rehabilitation, Inc.
The Orthopedic Sports and Industrial Rehabilitation Network, Inc.
TJ Corporation I, L.L.C.*
TJ Partnership I
Xxxxxxxx, Inc.
Union Square Center for Rehabilitation & Sports Medicine, Inc.
Valley Group Physical Therapists, Inc.
Vanguard Rehabilitation, Inc.
Wayzata Physical Therapy Center, Inc.
West Penn Rehabilitation Services, Inc.
West Side Physical Therapy, Inc.
West Suburban Health Partners, Inc.
Yuma Rehabilitation Center, Inc.
All of the above-listed entities have pledged their capital stock or other
ownership interest pursuant to the Company's Amended and Restated Credit
Agreement, unless denoted with an *. The entities denoted with an * are not
wholly-owned by the Company. Entities denoted with ** have pledged their
capital stock or ownership interest pursuant
9
to the Company's Amended and Restated Credit Agreement to the extent permitted
by Canadian law
10
SCHEDULE V
Canadian Back Institute Limited
CBI Brampton Limited Partnership
CBI Calgary Limited Partnership
CBI Fraser Valley Limited Partnership
CBI Holdings Ltd.
CBI Physiotherapists Corporation
CBI Professional Services Inc.
CBI South Calgary Limited Partnership
CBI Vancouver Limited Partnership
CBI Victoria Limited Partnership
CBI Windsor Limited Partnership
Dynamic Rehabilitation Inc.
Kentucky Orthopedic Rehabilitation, LLC
Medical Information Management Systems, LLC
Millenium Rehab Services, L.L.C.
1263568 Ontario Limited (London Group)
Rehab Advantage Therapy Services, LLC
Rehab Health, Inc.
S.T.A.R. Rehab, Inc.
Select - Houston Partners, L.P.
Select Management Services, LLC
Select Specialty Hospital - Biloxi, Inc.
TJ Corporation I, L.L.C.
ANNEX B
[Form of Opinion of Dechert]
Dechert shall have furnished to the Initial Purchasers their
written opinion, as counsel to the Company and the Guarantors, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set forth
below:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
(ii) the Company has corporate power and corporate authority
to own, lease and operate its properties and to conduct its business as
described in the Offering Memorandum and to enter into and perform its
obligations under the Transaction Documents.
(iii) the Company is duly qualified as a foreign corporation
to transact business and is in good standing in the jurisdictions
listed on Exhibit A hereto.
(iv) the authorized, issued and outstanding capital stock of
the Company is as set forth in the Offering Memorandum (except for
subsequent issuances pursuant to reservations, agreements or employee
benefit plans referred to in the Offering Memorandum or pursuant to the
exercise of convertible securities or options referred to in the
Offering Memorandum or repurchases of an immaterial number of shares of
the Company's capital stock held by former employees); the shares of
issued and outstanding capital stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable;
none of the outstanding shares of capital stock of the Company was
issued in violation of the preemptive or other similar rights (that
were not subsequently waived) of any securityholder of the Company
existing by virtue of the DGCL, the restated certificate of
incorporation of the Company, the restated by-laws of the Company or
any contract to which the Company is a party identified in a
certificate of the General Counsel of the Company attached hereto as
Exhibit B (which purports to identify all material contracts or group
of similar contracts that are material in the aggregate to the Company
and its subsidiaries taken as a whole and to which the Company or any
of its subsidiaries is a party); and the shares of issued and
outstanding capital stock of the Company have been issued in
compliance, in all material respects, with all federal securities laws.
(v) based solely on a certificate from the Secretary of
State or similar government official of the respective jurisdiction of
incorporation or organization
B-1
of each subsidiary of the Company that is either an operating entity or
holding company listed on Schedule 1 hereto (each a "Subsidiary" and
collectively, the "Subsidiaries"), each Subsidiary (a) has been duly
incorporated or organized and is validly existing as a corporation or
other entity in good standing under the laws of the jurisdiction of its
incorporation or organization, has corporate or other power and
authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and (b) is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction set forth on Schedule 1 hereto (which
purports to identify all jurisdictions in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or be
in good standing would not result in a Material Adverse Effect). Except
as otherwise disclosed on Schedule 2 hereto, (x)(i) all of the issued
and outstanding capital stock of each such Subsidiary that is a
corporation has been duly authorized and validly issued, is fully paid
and non-assessable and (ii) to our knowledge, is owned by the Company,
directly or through subsidiaries and (y)(i) all of the ownership
interests of each such Subsidiary that is not a corporation have been
duly authorized and (ii) to our knowledge, are owned, by the Company,
directly or through subsidiaries.
(vi) except as disclosed in the Offering Memorandum, there
are no encumbrances or restrictions pursuant to any agreement
identified on a schedule provided by the General Counsel of the Company
attached hereto as Exhibit C (referencing agreements that impose
encumbrances or restrictions), on the ability of any Subsidiary (a) to
pay any dividends or make any distributions on such Subsidiary's
capital stock, (b) to make any loans or advances to, or investments in,
the Company or any such Subsidiary, or (c) to transfer any of its
property or assets to the Company or any such Subsidiary.
(vii) to our knowledge, (a) except as disclosed in the
Offering Memorandum, there are no material legal or governmental
proceedings or investigations pending or threatened against the Company
or any of its subsidiaries, or to which the Company or any of its
subsidiaries, or any of its properties is subject, and (b) there are no
legal or governmental proceedings or investigations pending, or
threatened in writing, that would materially affect the issuance, sale
or delivery of the Securities to the Initial Purchasers under the
Purchase Agreement or the performance by the Company of its obligations
thereunder or question the validity or enforceability of any of the
Transaction Documents.
(viii) the information in the Offering Memorandum under
"Description of Notes", "Management-Employment Agreements",
"Management - Select Medical
B-2
Corporation 1997 Amended and Restated Stock Option Plan", "Related
Party Transactions", and "Certain Federal Income Tax Consequences", to
the extent that it constitutes matters of law, summaries of legal
matters, summaries of the Company's restated certificate of
incorporation and bylaws or legal conclusions and, to our knowledge,
the information with respect to contracts and other documents to which
the Company is a party (or provisions thereof) referred to in the
Offering Memorandum, has been reviewed by us and is correct in all
material respects.
(ix) the Indenture conforms in all material respects with
the requirements of the Trust Indenture Act and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder;
(x) each of the Company and each of the Guarantors has full
right, power and authority to execute and deliver each of the
Transaction Documents and to perform its obligations thereunder; and
all corporate action required to be taken for the due and proper
authorization, execution and delivery of each of the Transaction
Documents and the consummation of the transactions contemplated thereby
have been duly and validly taken;
(xi) each of the Purchase Agreement and the Registration
Rights Agreement has been duly authorized, executed and delivered by
the Company and each of the Guarantors and, assuming the Registration
Rights Agreement is the valid and legally binding obligation of the
Initial Purchasers, the Registration Rights Agreement constitutes 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 to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law) and
an implied covenant of good faith and fair dealing and except to the
extent that the indemnification provisions thereof may be
unenforceable;
(xii) the Indenture has been duly authorized, executed and
delivered by the Company and each of the Guarantors and, assuming that
the Indenture is the valid and legally binding obligation of the
Trustee, constitutes 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 to the
extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights
generally, by general equitable principles (whether considered in a
B-3
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing;
(xiii) the Guarantees have been duly authorized by each of the
Guarantors and, when the Securities have been duly executed,
authenticated, issued and delivered as provided in the Indenture and
paid for as provided herein (assuming due authorization, execution and
delivery of the Indenture by the Trustee and due authentication of the
Securities by the Trustee), will constitute valid and legally binding
obligations of the Guarantors enforceable against the Guarantors in
accordance with their terms;
(xiv) the Securities have been duly authorized and issued by
the Company and each of the Guarantors and, when duly executed,
authenticated, issued and delivered as provided in the Indenture and
paid for as provided herein (assuming the Indenture is the valid and
legally binding obligation of the Trustee and the due authentication of
the Securities by the Trustee) and will be duly and validly issued and
outstanding and will constitute valid and legally binding obligations
of the Company, as issuer, and each of the Guarantors, as guarantors,
entitled to the benefits of the Indenture and enforceable against the
Company and each of the Guarantors in accordance with their terms,
except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally, by general equitable principles (whether considered
in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing;
(xv) the Exchange Securities have been duly authorized by
the Company and each of the Guarantors and, when duly executed,
authenticated, issued and delivered as provided in the Indenture and
the Registration Rights Agreement (assuming the Indenture is the valid
and legally binding obligation of the Trustee and the authentication of
the Exchange Securities by the Trustee) will constitute a valid and
legally binding obligation of the Company and each of the Guarantors
enforceable against the Company and each of the Guarantors in
accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally, by general equitable
principles (whether considered in a proceeding in equity or at law) and
an implied covenant of good faith and fair dealing;
(xvi) the Credit Agreement Amendment has been duly
authorized, executed and delivered by the Company and (assuming the
Credit Agreement Amendment is the valid and legally binding obligation
of the other parties thereto)
B-4
constitutes a valid and legally binding obligation of the Company
enforceable against the Company accordance with its terms, except to
the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights
generally, by general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing;
(xvii) each Transaction Document conforms in all material
respects to the description thereof contained in the Offering
Memorandum and the Securities conform in all material respects to the
description thereof contained in the Offering Memorandum;
(xviii) to our knowledge, the Company is not in violation of
its restated certificate of incorporation or amended and restated by-
laws, and to our knowledge, none of the U.S. Subsidiaries is in
violation of its certificate of incorporation, by-laws or analogous
organizational documents. To our knowledge, no default by the Company
or any of its subsidiaries exists in the due performance or observance
of any material obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument that is described or referred to in the
Offering Memorandum.
(xix) no filing with, or authorization, approval, consent,
license, order, registration, qualification of or with any United
States, New York, Pennsylvania or with respect to the DGCL, Delaware
court or governmental authority or agency (other than as may be
required under the securities or blue sky laws of the various states,
as to which we express no opinion) is necessary or required in
connection with the due authorization, execution and delivery and
performance by the Company and each of the Guarantors of the
Transaction Documents to which each is a party, the compliance by each
Guarantor with the terms of the Securities, the issuance,
authentication, sale and delivery of the Securities and compliance by
the Company and the Guarantors with the terms thereof and the
consummation of the transactions contemplated by the Transaction
Documents, except for such consents, approvals, authorizations,
filings, registrations, orders or qualifications (i) which shall have
been obtained or made prior to the Closing Date and (ii) as may be
required to be obtained or made under the Securities Act and applicable
state securities laws as provided in the Registration Rights Agreement.
(xx) the execution, delivery and performance by the Company
and each of the Guarantors of each of the Transaction Documents, the
issuance, authentication, sale and delivery of the Securities and
compliance by the Company
B-5
and each of the Guarantors with the terms thereof and the consummation
of the transactions contemplated by the Transaction Documents do not
and will not, whether with or without the giving of notice or lapse of
time or both, conflict with or constitute a breach of, or default under
or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or any other agreement or
instrument of the Company or any of its subsidiaries in the Certificate
of the General Counsel of the Company attached hereto as Exhibit B, to
which the Company or any of its subsidiaries is a party or by which it
or any of them may be bound, or to which any of the property or assets
of the Company or any of its subsidiaries is subject (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that
could not reasonably be expected to have a Material Adverse Effect),
nor will such action result in any violation of the provisions of the
Certificate of Incorporation or by-laws or analogous organizational
documents of the Company or any U.S. Subsidiary, or any applicable law,
statute, rule, regulation, judgment, order, writ or decree, known to
us, of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties, assets or
operations;
(xxi) neither the Company nor any of its subsidiaries is
upon the issuance and sale of the Securities as contemplated in the
Purchase Agreement and the application of the net proceeds therefrom as
described in the Offering Memorandum an "investment company" or a
company "controlled by" an investment company as such terms are defined
in the Investment Company Act;
(xxii) neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance, execution or
delivery of the Securities will violate Regulation T, U or X of the
Federal Reserve Board; and
(xxiii) assuming the accuracy of the representations and
warranties and the performance of the agreements of the Company and
each of the Guarantors and of the Initial Purchasers contained in the
Purchase Agreement, compliance by the Initial Purchasers with the
offering and transfer procedures and restrictions described in the
Transaction Documents, and the accuracy of the representations and
warranties made in accordance with the Transaction Documents by
purchasers to whom the Initial Purchasers initially resell the
Securities, no registration of the Securities under the Securities Act
or qualification of the Indenture under the Trust Indenture Act is
required in connection with the issuance and sale of the Securities by
the Company and the offer, resale and delivery of the Securities by the
Initial Purchasers in the manner contemplated by the Purchase Agreement
and
B-6
the Offering (it being understood that no opinion shall be expressed as
to any resale subsequent to the initial resale of the Securities).
As for the purposes of paragraphs (v) and (x), with respect to
Subsidiaries or Guarantors not incorporated or organized in Pennsylvania, New
York, New Jersey, Massachusetts or Delaware, we will assume with your permission
that the corporate, limited liability company, partnership or limited
partnership law of the jurisdiction of corporation or organization for such
entities is identical to that of Delaware.
As for the purposes of paragraphs (xi), (xii), (xiii), (xiv)
and (xv), with respect to the due authorization of any of the Transaction
Documents or Exchange Securities by any Subsidiary or Guarantor not incorporated
or organized in Pennsylvania, New York, New Jersey, Massachusetts or Delaware,
we will assume with your permission that the corporate, limited liability
company, partnership or limited partnership law of the jurisdiction of
incorporation or organization for such entities is identical to that of
Delaware.
[The following statement shall be set forth in a separate letter]
We have participated in conferences with officers and other
representatives of the Company and representatives of the Initial Purchasers and
their counsel during which the contents of the Preliminary Offering Memorandum
and the Offering Memorandum and related matters were discussed and reviewed and,
although we do not pass upon and do not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Offering Memorandum
(except as expressly provided in our separate opinion to you dated today), on
the basis of the information that was developed in the course of the services
referred to above, considered in the light of our understanding of the
applicable law, that, nothing has come to our attention that would lead us to
believe that the Offering Memorandum or any amendment or supplement thereto,
(except for financial statements, footnotes and schedules, other financial data
and statistical information derived from the financial statements included
therein or omitted therefrom, as to which we need make no statement), as of the
date thereof and as of the Closing Date, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
B-7
ANNEX C
[Form of Opinion of Xxxxxxx X. Xxxxxx]
(i) To my knowledge, all of the issued and outstanding capital stock of
each of the subsidiaries of the Company set forth below is owned by the Company.
Allegany Hearing and Speech, Inc.
American Transitional Hospitals, Inc.
Athens Sports Medicine Clinic, Inc.
CCISUB, Inc.
C.O.A.S.T. Institute Physical Therapy, Inc.
Center for Evaluation and Rehabilitation, Inc.
Center for Physical Therapy & Sports Rehabilitation, Inc.
Center Therapy, Inc.
CMC Center Corporation
Xxxxxx Physical Therapy Associates, Inc.
Fine, Xxxxxx & Wah, Inc.
Georgia Novacare Ventures, Inc.
Hand Therapy and Rehabilitation Associates, Inc.
Hangtown Physical Therapy, Inc.
Human Performance and Fitness, Inc.
Indianapolis Physical Therapy and Sports Medicine, Inc.
Xxxxxx Sportsmedicine Institute, Inc.
Xxxxxxxx Physical Therapy, Inc.
New Mexico Physical Therapists, Inc.
NovaCare Occupational Health Services, Inc.
Ortho Rehab Associates, Inc.
Orthopedic and Sports Physical Therapy of Cupertino, Inc.
Pro Active Therapy, Inc.
Professional Therapeutic Services, Inc.
RCI (WRS), Inc.
Rebound Oklahoma, Inc.
Redcal Information Systems, LLC
Redwood Pacific Therapies, Inc.
Rehab Advantage Therapy Services, LLC
RehabClinics, Inc.
RehabClinics (GALAXY), Inc.
RehabClinics (SPT), Inc.
Xxxxxx X. Xxxxx, R. P. T. Physical Therapy Associates
C-1
SelectMark, Inc.
Select Specialty Hospital - Columbus, Inc.
Select Specialty Hospital - Camp Hill, L.P.
South Jersey Physical Therapy Associates, Inc.
Southwest Emergency Associates, Inc.
Southwest Medical Supply Company, Inc.
Southwest Physical Therapy, Inc.
Southwest Therapists, Inc.
Valley Group Physical Therapists, Inc.
Vanguard Rehabilitation, Inc.
Wayzata Physical Therapy Centers, Inc.
West Penn Rehabilitation Services, Inc.
West Side Physical Therapy, Inc.
West Suburban Health Partners, Inc.
B-2
ANNEX D
[Form of Opinion of Xxxx Xxxxx]
(i) The information in the Offering Memorandum under "Risk
Factors --If our hospitals fail to maintain their exemption from the Medicare
prospective payment system or fail to maintain their status as a "hospital
within a hospital," our profitability may decline", "Risk Factors --We conduct
business in a heavily regulated industry, and changes in regulations or
violations of regulations may result in increased costs or sanctions that reduce
our net operating revenues and profitability", "Risk Factors --If there are
changes in the rates or methods of government reimbursements for our services,
our services, our net operating revenues and income could decline", "Our
Business--Government Regulations", to the extent that it describes any Health
Care Laws, has been reviewed by me and fairly presents the information set forth
therein in all material respects.
(ii) Each of the 56 specialty acute care hospitals described in the
Offering Memorandum as owned or operated by the Company or its subsidiaries is
duly licensed as a hospital by the state in which it is located and is certified
to participate in the federal Medicare program. This opinion is based solely
upon our examination of originals or copies of such licenses and certifications
presented to us by the Company, and a Certificate of the General Counsel of the
Company attached hereto as Exhibit A to the effect that such licenses and
certifications are currently in effect.
(iii) We have reviewed the Certificate of the General Counsel of the
Company attached hereto as Exhibit A concerning the outpatient therapy clinics
owned, leased or operated by the Company or its subsidiaries. In the course of
our representation of the Company as special regulatory counsel, nothing has
come to our attention that would lead us to believe that the Certificate is not
accurate.
(iv) Except as disclosed in the Offering Memorandum, in the course
of our representation of the Company as special regulatory counsel, we have not
become aware of any pending or threatened action, suit, proceeding, inquiry or
investigation, relating to any Health Care Law, to which the Company or any of
its subsidiaries is a party, brought by any court or governmental agency or
body, which could reasonably be expected to result in a Material Adverse Effect.
(v) No filing with, or authorization, approval, consent, license,
order, registration, qualification (collectively, "Approvals") of or with any
(A) United States governmental authority or agency, is necessary or required
under any federal Health Care Law, or (B) any Pennsylvania governmental
authority or agency is necessary or required under any Pennsylvania Health Care
Law in connection with the due authorization, execution and delivery of the
Purchase Agreement or for the offering, issuance, sale or
D-1
delivery of the Securities. Without having investigated the laws of states other
than Pennsylvania for purposes of this opinion, based on our experience as
special regulatory counsel representing other issuers owning and operating other
health care businesses, and our ongoing representation of the Company as special
regulatory counsel, we are not aware of any Approvals under any Health Care Laws
required to be obtained or made in connection with the execution delivery and
performance of the Purchase Agreement, that, if not obtained or made, would
result in a Material Adverse Effect.
In the course of our representation of the Company as special
regulatory counsel, nothing has come to our attention that would lead us to
believe that the information contained in the Offering Memorandum under "Risk
Factors --If our hospitals fail to maintain their exemption from the Medicare
prospective payment system or fail to maintain their status as a "hospital
within a hospital," our profitability may decline", "Risk Factors --We conduct
business in a heavily regulated industry, and changes in regulations or
violations of regulations may result in increased costs or sanctions that reduce
our net operating revenues and profitability", "Risk Factors --If there are
changes in the rates or methods of government reimbursements for our services,
our services, our net operating revenues and income could decline", "Our
Business-- Government Regulations" included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
For purposes of this opinion, the term "Health Care Laws" shall mean
those statutes, rules and regulations, judicial decisions, decrees or orders
specifically regulating health care providers, as such, of the type owned and
operated by the Company and its subsidiaries as described under the headings
"Risk Factors --If our hospitals fail to maintain their exemption from the
Medicare prospective payment system or fail to maintain their status as a
"hospital within a hospital," our profitability may decline", "Risk Factors -We
conduct business in heavily regulated industry, and changes in regulations or
violations of regulations may result in increased costs or sanctions that reduce
our net operating revenues and profitability", "Risk Factors --If there are
changes in the rates or methods of government reimbursements for our services,
our net operating revenues and income could decline", "Our Business --Government
Regulations" in the Prospectus, including, without limitation, (a) health care
licensure, permit and certificate of need requirements, (b) Title XVIII, XIX and
XXI of the Social Security Act; (c) the Anti-Kickback Amendments (as defined in
the Offering Memorandum) and the regulations promulgated thereunder, (d) the
Xxxxx Laws (as defined in the Offering Memorandum) and the regulations
promulgated thereunder, (e) the False Claims Act, (f) Title II of the Health
Insurance Portability and Accountability Act of 1996, (g) Title IV of the
Balanced Budget Act of 1997, (h) any initiatives under Operation Restore Trust
and (i) state statutes, rules and regulations concerning matters similar to (b)
through (h) above, but specifically
D-2
excluding statutes, ordinances, administrative decisions, rules and regulations
of counties, towns, municipalities or special political subdivisions.
D-3
ANNEX E
[Form of Opinion of Xxxx's]
(i) Each of Canadian Back Institute ("CBI") and Rehab Health Inc.
("Rehab Health") is incorporated and existing under the Business Corporations
Act (Ontario).
(ii) Each of CBI Calgary Limited Partnership, CBI Etobicoke Limited
Partnership, CBI Scarborough Limited Partnership, CBI South Calgary Limited
Partnership, CBI Toronto Limited Partnership, CBI Victoria Limited Partnership,
(collectively, the "Limited Partnerships") has been formed and exists as a
limited partnership under the Limited Partnership Act (Ontario).
(iii) CBI has the corporate power and capacity to carry on its
business as presently conducted (including, in the case of the Limited
Partnerships, the business of the Limited Partnerships) and to own its
properties and assets.
(iv) Rehab Health has the corporate power and capacity to carry on
its business as presently conducted and to own its properties and assets.
E-1
