$450,000,000
INTEGRATED HEALTH SERVICES, INC.
9 1/2% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
May 22, 1997
XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXXX XXXXXXX & CO. INCORPORATED
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
SALOMON BROTHERS INC
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Integrated Health Services, Inc., a Delaware corporation (the "Company"),
proposes, upon the terms and conditions set forth herein, to issue and sell to
you, as the initial purchasers (the "Initial Purchasers"), $450,000,000
aggregate principal amount of its 9 1/2% Senior Subordinated Notes due 2007 (the
"Notes"). The Notes will be issued pursuant to the provisions of an Indenture,
to be dated as of May 30, 1997 (the "Indenture"), between the Company and First
Union National Bank of Virginia, as Trustee (the "Trustee").
The Company wishes to confirm as follows its agreement with the Initial
Purchasers in connection with the purchase and resale of the Notes.
1. Preliminary Offering Memorandum and Offering Memorandum. The Notes will
be offered and sold to the Initial Purchasers without registration under the
Securities Act of 1933, as amended (the "Act"), in reliance on an exemption
pursuant to Section 4(2) under the Act. The Company has prepared a preliminary
offering memorandum, dated May 15, 1997 (the "Preliminary Offering Memorandum"),
and an offering memorandum, dated May 22, 1997 (the "Offering Memorandum"),
setting forth information regarding the Company and the Notes. Any references
herein to the Preliminary Offering Memorandum and the Offering Memorandum shall
be deemed to include all amendments and supplements thereto and any documents
filed under the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder (collectively, the "Exchange Act") which are incorporated by
reference therein. As used herein, the term "Incorporated Documents" means the
documents which at the time are incorporated by reference in the Preliminary
Offering Memorandum, the Offering Memorandum or any amendment or supplement
thereto. 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 Notes by the Initial Purchasers.
The Company understands that the Initial Purchasers propose to make offers
and sales (the "Exempt Resales") of the Notes purchased by the Initial
Purchasers hereunder only on the terms and in the manner set forth in the
Offering Memorandum and Section 2 hereof, as soon as the Initial Purchasers deem
advisable after this Agreement has been executed and delivered to persons whom
the Initial Purchasers reasonably believe to be qualified institutional buyers
("Qualified Institutional Buyers") as defined in Rule 144A under the Act, as
such rule may be amended from time to time ("Rule 144A"), in transactions under
Rule 144A (such persons being referred to herein as the "Eligible Purchasers").
It is understood and acknowledged that upon original issuance thereof, and
until such time as the same is no longer required under the applicable
requirements of the Act, the Notes (and all securities issued in exchange
therefor or in substitution thereof) shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, REGISTRATION UNDER SUCH LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON THE
HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT
THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (a)(2),
(a)(3) OR (a)(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND IN EACH OF THE FOREGOING
CASES SUCH OFFER, SALE OR OTHER TRANSFER IS IN COMPLIANCE WITH ANY APPLICABLE
STATE SECURITIES LAWS, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A
CERTIFICATE OF TRANSFER IN THE FORM PROVIDED FOR IN THE INDENTURE (A COPY OF
WHICH MAY BE OBTAINED FROM THE TRUSTEE) IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF
THE THEN HOLDER OF THIS SECURITY AFTER THE RESALE RESTRICTION TERMINATION
DATE. ANY TRANSFEREE OF THIS SECURITY SHALL BE DEEMED TO HAVE REPRESENTED
EITHER (A) THAT IT IS NOT USING THE ASSETS OF AN EMPLOYEE BENEFIT PLAN
SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT ("ERISA") OR THE
INTERNAL REVENUE CODE (THE "CODE") TO PURCHASE THIS SECURITY OR (B) THAT ITS
PURCHASE AND CONTINUED HOLDING OF THE SECURITY WILL BE COVERED BY A U.S.
DEPARTMENT OF LABOR CLASS EXEMPTION WITH RESPECT TO PROHIBITED TRANSACTIONS
UNDER SECTION 406(a) OF ERISA.
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It is also understood and acknowledged that holders (including subsequent
transferees) of the Notes will have the registration rights set forth in the
registration rights agreement (the "Registration Rights Agreement"), to be dated
the date hereof, in substantially the form of Exhibit A hereto. Pursuant to the
Registration Rights Agreement, the Company will agree (i) to file with the
Commission, under the circumstances set forth therein, a registration statement
on the appropriate form under the Act relating to a proposed exchange offer (the
"Registered Exchange Offer") to the holders of the Notes to issue and deliver to
such holders, in exchange for the Notes, a like principal amount of debt
securities of the Company identical in all material respects to the Notes (the
"New Notes") and (ii) to use its reasonable best efforts to cause such
registration statement to be declared effective. If (a) the Company is not
permitted to effect the Registered Exchange Offer because the Registered
Exchange Offer would violate any applicable law or the applicable
interpretations of the Commission's staff or because of any change in currently
prevailing interpretations of the Commission's staff or (b) the Registered
Exchange Offer has not been consummated for any other reason within 240 days
after the Closing Date (as defined herein), then the Company shall file and use
its reasonable best efforts to cause to be declared effective a registration
statement on an appropriate form under the Act relating to the offer and sale of
the Notes by the holders thereof from time to time in accordance with the
methods of distribution set forth in such registration statement and Rule 415
under the Act. The registration statement to be filed under the Act pursuant to
the Registration Rights Agreement is hereinafter referred to as the
"Registration Statement." This Agreement, the Indenture and the Registration
Rights Agreement are hereinafter referred to collectively as the "Operative
Documents".
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Indenture or the Offering Memorandum.
2. Agreements to Sell, Purchase and Resell. (a) The Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
each Initial Purchaser and, upon the basis of the representations, warranties
and agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Initial Purchaser agrees, severally and not
jointly, to purchase from the Company, at a purchase price of 97.375% of the
principal amount thereof, the principal amount of Notes set forth opposite the
name of such Initial Purchaser in Schedule I hereto.
(b) The Initial Purchasers have advised the Company that they propose to
offer the Notes for sale upon the terms and conditions set forth in this
Agreement and in the Offering Memorandum. Each Initial Purchaser hereby
represents and warrants to, and agrees with, the Company that such Initial
Purchaser (i) is purchasing the Notes pursuant to a private sale exempt from
registration under the Act, (ii) will not solicit offers for, or offer or sell,
the Notes by means of any form of general solicitation or general advertising or
in any manner involving a public offering within the meaning of Section 4(2) of
the Act, and (iii) will solicit offers for the Notes only from, and will offer,
sell or deliver the Notes as part of its initial offering, only to persons whom
the Initial Purchasers reasonably believe to be Qualified Institutional Buyers,
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 the Initial Purchasers 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 under Rule
144A. The Initial Purchasers have advised the Company that they will offer the
Notes to Eligible Purchasers at a price initially equal to 100% of the principal
amount thereof, plus accrued interest, if any, from the date of issuance of the
Notes. Such price may be changed by the Initial Purchasers at any time
thereafter without notice.
The Initial Purchasers understand that the Company and, for purposes of the
opinions to be delivered to the Initial Purchasers pursuant to Sections
7(c)(xiii) and 7(e) hereof, counsel to the Company and counsel to the Initial
Purchasers, will rely upon the accuracy and truth of the foregoing
representations and agreements and the Initial Purchasers hereby consent to such
reliance.
3. Delivery of the Notes and Payment Therefor. Delivery to the Initial
Purchasers of and payment for the Notes shall be made at the office of Xxxxx
Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 A.M., New York
City time, on May 30, 1997 (the "Closing Date"). The place of closing for
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the Notes and the Closing Date may be varied by agreement between the Initial
Purchasers and the Company.
The Notes will be delivered to the Initial Purchasers against payment of
the purchase price therefor by wire transfer of federal or other same day funds
to an account or accounts designated by the Company. The Notes will be evidenced
by one or more global securities in definitive form (the "Global Note") and will
be registered in the name of Cede & Co. as nominee of The Depository Trust
Company ("DTC"). The Notes to be delivered to the Initial Purchasers shall be
made available to the Initial Purchasers in New York City for inspection not
later than 9:30 a.m., New York City time, on the business day next preceding the
Closing Date.
4. Agreements of the Company. The Company agrees with the Initial
Purchasers as follows:
(a) The Company will advise the Initial Purchasers promptly and, if
requested by them, will confirm such advice in writing, within the period of
time referred to in paragraph (e) below, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations, or of the happening of any event, which makes any
statement made in the Offering Memorandum (as then amended or supplemented)
untrue or which requires the making of any additions to or changes in the
Offering Memorandum (as then amended or supplemented) in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Offering Memorandum (as then amended or supplemented) to comply with any
law.
(b) The Company will furnish to the Initial Purchasers, without charge, as
of the date of the Offering Memorandum, such number of copies of the Offering
Memorandum as may then be amended or supplemented as they may reasonably
request.
(c) The Company will not make any amendment or supplement to the
Preliminary Offering Memorandum or to the Offering Memorandum of which the
Initial Purchasers shall not previously have been advised or to which they shall
reasonably object after being so advised or file any document which upon filing
becomes an Incorporated Document, without delivering a copy of such document to
the Initial Purchasers, prior to or concurrently with such filing.
(d) Prior to the execution and delivery of this Agreement, the Company has
delivered or will deliver to the Initial Purchasers, without charge, in such
quantities as the Initial Purchasers shall have requested or may hereafter
reasonably request, copies of the Preliminary Offering Memorandum. The Company
consents to the use, in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Notes are offered by the Initial Purchasers and by
dealers, prior to the date of the Offering Memorandum, of each Preliminary
Offering Memorandum so furnished by the Company. The Company consents to the use
of the Offering Memorandum (and of any amendment or supplement thereto) in
accordance with the securities or Blue Sky laws of the jurisdictions in which
the Notes are offered by the Initial Purchasers and by all dealers to whom Notes
may be sold, in connection with the offering and sale of the Notes.
(e) If, at any time prior to completion of the distribution of the Notes by
the Initial Purchasers to Eligible Purchasers, any event shall occur that in the
judgment of the Company or in the opinion of counsel for the Initial Purchasers
should be set forth in the Offering Memorandum (as then amended or supplemented)
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Offering Memorandum, or to file under the Exchange Act any document
which upon filing becomes an Incorporated Document, to comply with any law, the
Company will forthwith prepare an appropriate supplement or amendment thereto or
such document, and will expeditiously furnish to the Initial Purchasers and
dealers a reasonable number of copies thereof. In the event that the Company and
the Initial Purchasers agree that the Offering Memorandum should be amended or
supplemented, or that a document should be filed under the Exchange Act which
upon filing becomes an Incorporated Document, the Company, if requested by the
Initial Purchasers, will promptly issue a press release announcing or disclosing
the matters to be covered by the proposed amendment or supplement or such
document.
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(f) The Company will cooperate with the Initial Purchasers and with their
counsel in connection with the qualification of the Notes for offering and sale
by the Initial Purchasers and by dealers under the securities or Blue Sky laws
of such jurisdictions as the Initial Purchasers may designate and will file such
consents to service of process or other documents necessary or appropriate in
order to effect such qualification; provided that in no event shall the Company
be obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action which would subject it to service of process
in suits, other than those arising out of the offering or sale of the Notes, in
any jurisdiction where it is not now so subject.
(g) So long as any of the Notes are outstanding, the Company will furnish
to the Initial Purchasers (i) as soon as available, a copy of each report of the
Company mailed to stockholders or filed with the Commission, and (ii) from time
to time such other information concerning the Company as the Initial Purchasers
may request.
(h) If this Agreement shall terminate or shall be terminated after
execution and delivery pursuant to any provisions hereof (otherwise than
pursuant to Section 10 hereof or by notice given by the Initial Purchasers
terminating this Agreement pursuant to Section 9 or Section 11 hereof) or if
this Agreement shall be terminated by the Initial Purchasers because of any
failure or refusal on the part of the Company to comply with the terms or
fulfill any of the conditions of this Agreement, the Company agrees to reimburse
the Initial Purchasers for all out-of-pocket expenses (including fees and
expenses of its counsel) reasonably incurred by it in connection herewith, but
without any further obligation on the part of the Company for loss of profits or
otherwise.
(i) The Company will apply the net proceeds from the sale of the Notes to
be sold by it hereunder substantially in accordance with the description set
forth in the Offering Memorandum.
(j) Except as stated in this Agreement and in the Preliminary Offering
Memorandum and Offering Memorandum, the Company has not taken, nor will it take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Notes to facilitate the sale or resale of the Notes. Except as permitted by the
Act, the Company will not distribute any offering material in connection with
the Exempt Resales.
(k) The Company will use its best efforts to cause the Notes to be eligible
for trading on The PORTAL Market.
(l) From and after the Closing Date, so long as any of the Notes are
outstanding and are "Restricted Securities" within the meaning of the Rule
144(a)(3) under the Act or, if earlier, until two years after the Closing Date,
and during any period in which the Company is not subject to Section 13 or 15(d)
of the Exchange Act, the Company will furnish to holders of the Notes and
prospective purchasers of Notes 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 Act to permit compliance with Rule 144A in
connection with resale of the Notes.
(m) The Company agrees not to sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Notes in a manner that would require
the registration under the Act of the sale to the Initial Purchasers or the
Eligible Purchasers of the Notes.
(n) The Company agrees to comply with all of the terms and conditions of
the Registration Rights Agreement, and all agreements set forth in
representation letters of the Company to DTC relating to the approval of the
Notes by DTC for "book entry" transfer.
(o) The Company agrees that prior to any registration of the Notes pursuant
to the Registration Rights Agreement, or at such earlier time as may be so
required, the Indenture shall be qualified
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under the Trust Indenture Act of 1939 (the "1939 Act") and will cause to be
entered into any necessary supplemental indentures in connection therewith.
5. Representations and Warranties of the Company. The Company represents
and warrants to the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and Offering Memorandum with
respect to the Notes have been prepared by the Company for use by the Initial
Purchasers in connection with the Exempt Resales. No order or decree preventing
the use of the Preliminary Offering Memorandum or the Offering Memorandum or any
amendment or supplement thereto, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act, has been issued and no proceeding for that purpose has commenced or is
pending or, to the knowledge of the Company, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum as of
their respective dates and the Offering Memorandum as of the Closing Date, did
not or will not at any time contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, except that this representation and
warranty does not apply to statements in or omissions from the Preliminary
Offering Memorandum and Offering Memorandum made in reliance upon and in
conformity with information relating to the Initial Purchasers furnished to the
Company in writing by or on behalf of the Initial Purchasers expressly for use
therein.
(c) The Incorporated Documents heretofore filed were filed in a timely
manner and, when they were filed (or, if any amendment with respect to any such
document was filed, when such document was filed), conformed in all material
respects to the requirements of the Exchange Act and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
any further Incorporated Documents will, when so filed, be filed in a timely
manner and conform in all material respects to the requirements of the Exchange
Act and will not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(d) The Indenture has been duly and validly authorized by the Company and,
upon its execution, delivery and performance by the Company and assuming due
authorization, execution, delivery and performance by the Trustee, will be a
valid and binding agreement of the Company, enforceable in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally, and conforms in all
material respects to the description thereof in the Offering Memorandum; and no
qualification of the Indenture under the 1939 Act is required in connection with
the offer and sale of the Notes contemplated hereby or in connection with the
Exempt Resales.
(e) The Notes have been duly authorized by the Company and, when executed
by the Company and authenticated by the Trustee in accordance with the Indenture
and delivered to the Initial Purchasers against payment therefor in accordance
with the terms hereof, will have been validly issued and delivered, and will
constitute valid and binding obligations of the Company entitled to the benefits
of the Indenture and enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally, and the Notes
will conform in all material respects to the description thereof in the Offering
Memorandum.
(f) All the outstanding shares of capital stock of the Company have been
duly authorized and validly issued, are fully paid and nonassessable and are
free of any preemptive or, except as set forth in the Offering Memorandum,
similar rights and were issued and sold in compliance with all applicable
Federal and state securities laws; and the authorized capital stock of the
Company conforms to the description thereof in the Offering Memorandum.
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(g) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify does not have a material adverse effect on the condition
(financial or other), business, prospects, properties, net worth or results of
operations of the Company and the Subsidiaries (as hereinafter defined) taken as
a whole (a "Material Adverse Effect").
(h) All the Company's subsidiaries (as defined in the Act) included in
Exhibit 21 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, are referred to herein individually as a "Subsidiary" and
collectively as the "Subsidiaries." Each Subsidiary is a corporation or limited
partnership duly organized, validly existing and in good standing in the
jurisdiction of its organization, with full corporate or partnership power and
authority to own, lease and operate its properties and to conduct its business
as described in the Offering Memorandum, and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction or place where
the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify or be in good standing does not have a Material Adverse Effect. None of
the subsidiaries of the Company other than the Subsidiaries is engaged in any
business activities or operations or has any material assets or liabilities. All
the outstanding shares of capital stock of each of the Subsidiaries which is a
corporation have been duly authorized and validly issued, are fully paid and
nonassessable, and are wholly owned by the Company directly or indirectly
through one of the other Subsidiaries, free and clear of any lien, adverse
claim, security interest, equity or other encumbrance, except as described in
the Offering Memorandum and except for the shares of capital stock of certain
Subsidiaries pledged to Citibank, N.A., as administrative agent ("Citibank"), in
connection with the Company's Revolving Credit Agreement dated as of May 15,
1996 with Citibank and the lenders from time to time party thereto (the "Credit
Agreement") and/or to Meditrust Mortgage Investments, Inc. and/or any of its
affiliates (collectively, "Meditrust"). Each limited partnership agreement
pursuant to which the Company or a Subsidiary holds a general partnership
interest in a limited partnership which is a Subsidiary is in full force and
effect and constitutes the legal, valid and binding agreement of the parties
thereto, enforceable against such parties in accordance with the terms thereof,
except as enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles; and there has been no material breach of or
default under, and no event which with notice or lapse of time would constitute
a material breach of or default under, such agreements by the Company or any
Subsidiary or, to the Company's best knowledge, any other party to such
agreements.
(i) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or to which
any of their respective properties, is subject, that are not disclosed in the
Offering Memorandum and which, if adversely decided, are reasonably likely to
cause a Material Adverse Effect or materially affect the issuance of the Notes
or the consummation of the transactions contemplated by the Operative Documents.
There are no material agreements, contracts, indentures, leases or other
instruments that are not described in the Offering Memorandum or that are
required to be filed as an exhibit to any Incorporated Document that are not so
filed. Neither the Company nor any Subsidiary is involved in any strike, job
action or labor dispute with any group of employees, and, to the Company's
knowledge, no such action or dispute is threatened, which is reasonably likely
to have a Material Adverse Effect.
(j) Neither the Company nor any of the Subsidiaries is (i) in violation of
its certificate or articles of incorporation or by-laws or other organizational
documents, or of any law, ordinance, administrative or governmental rule or
regulation applicable to the Company or any of the Subsidiaries or of any decree
of any court or governmental agency or body having jurisdiction over the Company
or any of the Subsidiaries, except where any such violation or violations in the
aggregate would not have a Material Adverse Effect or (ii) in default in any
material respect in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any material agreement, indenture,
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lease or other instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective properties may be
bound, except as may be disclosed in the Offering Memorandum.
(k) Neither the issuance, offer, sale or delivery of the Notes, the
execution, delivery or performance of this Agreement, the Indenture or the
Registration Rights Agreement by the Company nor the consummation by the Company
of the transactions contemplated hereby or thereby (i) requires any consent,
approval, authorization or other order of, or registration or filing with, any
court, regulatory body, administrative agency or other governmental body, agency
or official (except such as may be required in connection with the registration
under the Act of the Notes and/or the New Notes in accordance with the
Registration Rights Agreement, the qualification of the Indenture under the 1939
Act and except for compliance with the securities or Blue Sky laws of various
jurisdictions) or conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws, or other organizational documents, of the Company or
any of the Subsidiaries or (ii) conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, in any material respect, any
material agreement, indenture, lease or other instrument to which the Company or
any of the Subsidiaries is a party or by which any of them or any of their
respective properties may be bound, or violates or will violate in any material
respect any statute, law, regulation or filing or judgment, injunction, order or
decree applicable to the Company or any of the Subsidiaries or any of their
respective properties, or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject.
(l) The accountants, KPMG Peat Marwick LLP, who have certified or shall
certify the financial statements included as part of the Offering Memorandum (or
any amendment or supplement thereto), are independent certified public
accountants under Rule 101 of the AICPA's Code of Professional Conduct, and its
interpretation and rulings.
(m) The historical financial statements, together with the related
schedules and notes forming part of the Offering Memorandum (and any amendment
or supplement thereto), comply as to form with the requirements of the Exchange
Act and present fairly in all material respects the consolidated financial
position, results of operations and changes in stockholders' equity and cash
flows of the Company and the Subsidiaries on the basis stated in the Offering
Memorandum at the respective dates or for the respective periods to which they
apply; such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the other
financial and statistical information and data set forth in the Offering
Memorandum (and any amendment or supplement thereto) is accurately presented
and, to the extent such information and data is derived from the financial books
and records of the Company, is prepared on a basis consistent with such
financial statements and the books and records of the Company. The pro forma
financial statements and other pro forma financial information included or
incorporated by reference in the Offering Memorandum have been prepared in
accordance with the Commission's rules and guidelines with respect to pro forma
financial information and have been properly compiled on the basis described
therein, and the assumptions used in the preparation thereof are, in the
Company's opinion, reasonable.
(n) The Company has all requisite power and authority to execute, deliver
and perform its obligations under this Agreement and the Registration Rights
Agreement; the execution and delivery of, and the performance by the Company of
its obligations under, this Agreement and the Registration Rights Agreement have
been duly and validly authorized by the Company, and this Agreement and the
Registration Rights Agreement have been duly executed and delivered by the
Company and constitute the valid and legally binding agreements of the Company,
enforceable against the Company in accordance with their terms, except as the
enforcement hereof and thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and
subject to the applicability of general principles of equity, and except as
rights to indemnity and contribution hereunder and thereunder may be limited by
Federal or state securities laws or principles of public policy.
-8-
(o) Except as disclosed in the Offering Memorandum (or any amendment or
supplement thereto), subsequent to the date as of which such information is
given in the Offering Memorandum (or any amendment or supplement thereto),
neither the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any material change in the
capital stock, or material increase in the short-term or long-term debt, of the
Company or any of the Subsidiaries, or any material adverse change, or any
development involving or which could reasonably be expected to involve a
prospective material adverse change, in the condition (financial or other),
business, properties, net worth or results of operations of the Company and the
Subsidiaries taken as a whole.
(p) Each of the Company and the Subsidiaries has good and marketable title
to all property (real and personal) described in the Offering Memorandum as
being owned by it, free and clear of all liens, claims, security interests or
other encumbrances except such as are described in the Offering Memorandum or in
an Incorporated Document or exhibit thereto, and all the property described in
the Offering Memorandum as being held under lease by each of the Company and the
Subsidiaries is held by it under valid, subsisting and enforceable leases, with
only such exceptions as in the aggregate are not materially burdensome and do
not interfere in any material respect with the conduct of the business of the
Company and the Subsidiaries taken as a whole.
(q) Except as permitted by the Act, the Company has not distributed and,
prior to the later to occur of the Closing Date and completion of the
distribution of the Notes, will not distribute any offering material in
connection with the offering and sale of the Notes other than the Preliminary
Offering Memorandum and Offering Memorandum.
(r) Each of the Company and the Subsidiaries and, to the Company's
knowledge, the owners of the facilities and other businesses managed by the
Company or any Subsidiary have such permits, licenses, franchises, certificates
and other approvals or authorizations of governmental or regulatory authorities
("Permits") as are necessary under applicable law to own their respective
properties and to conduct their respective business in the manner described in
the Offering Memorandum (including, without limitation, such Permits as are
required under such federal, state and other health care laws, and under such
HMO or similar licensure laws and such insurance laws and regulations, as are
applicable thereto), and with respect to those facilities and other businesses
that participate in Medicare and/or Medicaid, to receive reimbursement under
Medicare and Medicaid, subject in each case to such qualifications as may be set
forth in the Offering Memorandum and except to the extent that the failure to
have such Permits would not have a Material Adverse Effect; the Company and each
of the Subsidiaries have fulfilled and performed in all material respects, all
their respective material obligations with respect to the Permits, and no event
has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material impairment of
the rights of the holder of any such Permit, subject in each case to such
qualification as may be set forth in the Offering Memorandum and except to the
extent that any such revocation or termination would not have a Material Adverse
Effect; and, except as described in the Offering Memorandum, none of the Permits
contains any restriction that is materially burdensome to the Company or any of
the Subsidiaries.
(s) The business practices of the Company and each of its Subsidiaries do
not violate in any material respect any applicable provisions of federal or
state law governing Medicare or any state Medicaid program, including without
limitation, Sections 1320a-7a and 1320a-7b of Title 42 of the United States
Code, and no individual with an ownership or control interest, as defined in 42
U.S.C. ss.1320a-3(a)(3), in the Company or any of its Subsidiaries, or who is an
officer, director, or managing employee, as defined in 42 U.S.C. ss.1320a-5(b),
of the Company or any of its Subsidiaries is a person described in 42 U.S.C.
ss.1320a- 7(b)(8)(B), and the Company's and each of its Subsidiaries' business
practices do not violate in any material respect any applicable provisions of
federal or state law regarding physician ownership of, or financial relationship
with, or referral to entities providing health care related goods or services,
or laws requiring disclosure of financial interests held by physicians in
entities to which they may refer patients for the provision of health care
related goods or services.
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(t) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(u) Neither the Company nor any of the Subsidiaries nor, to the Company's
knowledge, any employee or agent of the Company or any Subsidiary has made any
payment of funds of the Company or any Subsidiary or received or retained any
funds in violation of any law, rule or regulation, which violation would have a
Material Adverse Effect.
(v) Except as disclosed in the Offering Memorandum, the Company and each of
the Subsidiaries have filed all tax returns required to be filed, which returns
are true and correct in all material respects, and neither the Company nor any
Subsidiary is in default in the payment of any taxes which were payable pursuant
to said returns or any assessments with respect thereto, except where the
failure to file such returns and make such payments would not have a Material
Adverse Effect.
(w) The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registration, service marks, service xxxx registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Offering Memorandum as being owned by any of them or necessary
for the conduct of their respective businesses, and the Company is not aware of
any claim to the contrary or any challenge by any other person to the rights of
the Company and the Subsidiaries with respect to the foregoing.
(x) The Company is not and, upon sale of the Notes to be issued and sold
thereby in accordance herewith and the application of the net proceeds to the
Company of such sale as described in the Offering Memorandum under the caption
"Use of Proceeds," will not be an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(y) When the Notes are issued and delivered pursuant to this Agreement,
such Notes will not be of the same class (within the meaning of Rule 144A(d)(3)
under the Act) as any security of the Company that is listed on a national
securities exchange registered under Section 6 of the Exchange Act or that is
quoted in a United States automated interdealer quotation system.
(z) Neither the Company nor any affiliate (as defined in Rule 501(b) of
Regulation D ("Regulation D") under the Act) of the Company has directly, or
through any agent (provided that no representation is made as to the Initial
Purchasers or any person acting on their behalf), (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any security (as
defined in the Act) which is or will be integrated with the offering and sale of
the Notes in a manner that would require the registration of the Notes under the
Act or (ii) engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offering of the
Notes.
(aa) The Company is not required to deliver the information specified in
Rule 144A(d)(4) in connection with the offering and resale of the Notes by the
Initial Purchasers.
(bb) Assuming (i) that the representations and warranties in Section 2
hereof are true, (ii) the Initial Purchasers comply with the covenants set forth
in Section 2 hereof and (iii) that each person to whom the Initial Purchasers
offer, sell or deliver the Notes is a Qualified Institutional Buyer, the
purchase and sale of the Notes pursuant hereto (including the Initial
Purchasers' proposed offering of the Notes on the terms and in the manner set
forth in the Offering Memorandum and Section 2 hereof) is exempt from the
registration requirements of the Act.
(cc) The execution and delivery of this Agreement, the other Operative
Documents and the sale of the Notes to the Initial Purchasers or by the Initial
Purchasers to Eligible Purchasers will not involve any prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the Code. The
representation made by the Company in the preceding sentence is made in reliance
upon and subject to the accuracy of, and compliance with, the representations
and covenants made or deemed made by the Eligible Purchasers as set forth in the
Offering Memorandum under the section entitled "Notice to Investors."
-10-
6. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Initial Purchaser and each person, if any, who controls
any Initial Purchaser within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or Offering
Memorandum or in any amendment or supplement thereto, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to such Initial
Purchaser furnished in writing to the Company by or on behalf of such Initial
Purchaser expressly for use in connection therewith; provided, however, that the
indemnification contained in this paragraph (a) with respect to the Preliminary
Offering Memorandum shall not inure to the benefit of any Initial Purchaser (or
to the benefit of any person controlling any Initial Purchaser) on account of
any such loss, claim, damage, liability or expense arising from the sale of the
Notes by such Initial Purchaser to any person if the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
the Preliminary Offering Memorandum was corrected in the Offering Memorandum and
such Initial Purchaser sold Notes to that person without sending or giving at or
prior to the written confirmation of such sale, a copy of the Offering
Memorandum (as then amended or supplemented) if the Company has previously
furnished sufficient copies thereof to such Initial Purchaser. The foregoing
indemnity agreement shall be in addition to any liability which the Company may
otherwise have.
(b) If any action, suit or proceeding shall be brought against any Initial
Purchaser or any person controlling any Initial Purchaser in respect of which
indemnity may be sought against the Company, such Initial Purchaser or such
controlling person shall promptly notify the parties against whom
indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Initial Purchaser or any
such controlling person shall have the right to employ separate counsel in any
such action, suit or proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Initial
Purchaser or such controlling person unless (i) the indemnifying parties have
agreed in writing to pay such fees and expenses, (ii) the indemnifying parties
have failed to assume the defense and employ counsel, or (iii) the named parties
to any such action, suit or proceeding (including any impleaded parties) include
both such Initial Purchaser or such controlling person and the indemnifying
parties and such Initial Purchaser or such controlling person shall have been
advised by its counsel that representation of such indemnified party and any
indemnifying party by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by the
same counsel has been proposed) due to actual or potential differing interests
between them (in which case the indemnifying party shall not have the right to
assume the defense of such action, suit or proceeding on behalf of such Initial
Purchaser or such controlling person). It is understood, however, that the
indemnifying parties shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Initial Purchasers and controlling persons not having actual or
potential differing interests with the Initial Purchasers or among themselves,
which firm shall be designated in writing by Xxxxx Xxxxxx Inc., and that all
such fees and expenses shall be reimbursed as they are incurred. The
indemnifying parties shall not be liable for any settlement of any such action,
suit or proceeding effected without their written consent, but if settled with
such written consent, or if there be a final judgment for the plaintiff in any
such action, suit or proceeding, the indemnifying parties agree to indemnify and
hold harmless any Initial Purchaser, to the extent provided in
-11-
paragraph (a), and any such controlling person from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment.
(c) Each Initial Purchaser agrees, severally and not jointly, to indemnify
and hold harmless the Company, and its directors and officers, and any person
who controls the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act to the same extent as the indemnity from the Company to
each Initial Purchaser set forth in paragraph (a) hereof, but only with respect
to information relating to such Initial Purchaser furnished in writing by or on
behalf of such Initial Purchaser expressly for use in the Preliminary Offering
Memorandum or Offering Memorandum or any amendment or supplement thereto. If any
action, suit or proceeding shall be brought against the Company, any of its
directors or officers, or any such controlling person based on the Preliminary
Offering Memorandum or Offering Memorandum, or any amendment or supplement
thereto, and in respect of which indemnity may be sought against such Initial
Purchaser pursuant to this paragraph (c), such Initial Purchaser shall have the
rights and duties given to the Company by paragraph (b) above (except that if
the Company shall have assumed the defense thereof such Initial Purchaser shall
not be required to do so, but may employ separate counsel therein and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at such Initial Purchaser's expense), and the Company, its directors
and officers, and any such controlling person shall have the rights and duties
given to the Initial Purchasers by paragraph (b) above. The foregoing indemnity
agreement shall be in addition to any liability which the Initial Purchasers may
otherwise have.
(d) If the indemnification provided for in this Section 6 is unavailable to
an indemnified party under paragraphs (a) or (c) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Initial Purchasers on the other hand from the offering of
the Notes, 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 on the one hand and the Initial Purchasers on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Initial Purchasers on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total discounts and commissions
received by the Initial Purchasers, in each case as set forth in the table on
the cover page of the Offering Memorandum. The relative fault of the Company on
the one hand and the Initial Purchasers on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or by the Initial
Purchasers on the other hand and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
(e) The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 6 were determined by a
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 6, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price of the Notes purchased and resold by it as contemplated
hereby exceeds the amount of any damages which such Initial Purchaser has
otherwise been required to pay by reason of such 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 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
-12-
(f) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action,
suit or 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 action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 6 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Initial Purchaser or any person
controlling any Initial Purchaser, the Company, its directors or officers or any
person controlling the Company, (ii) acceptance of any Notes and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
any Initial Purchaser or any person controlling any Initial Purchaser, or to the
Company, its directors or officers or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 6.
7. Conditions of the Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers to purchase the Notes hereunder are
subject to the following conditions:
(a) At the time of execution of this Agreement and on the Closing Date, no
order or decree preventing the use of the Offering Memorandum or any amendment
or supplement thereto, or any order asserting that the transactions contemplated
by this Agreement are subject to the registration requirements of the Act shall
have been issued and no proceedings for that purpose shall have been commenced
or shall be pending or, to the knowledge of the Company, be contemplated. No
stop order suspending the sale of the Notes in any jurisdiction designated by
the Initial Purchasers shall have been issued and no proceedings for that
purpose shall have been commenced or shall be pending or, to the knowledge of
the Company, shall be contemplated.
(b) Subsequent to the effective date of this Agreement, there shall not
have occurred (i) any change, or any development involving a prospective change,
in or affecting the condition (financial or other), business, properties, net
worth, or results of operations of the Company or the Subsidiaries not
contemplated by the Offering Memorandum, which in the opinion of the Initial
Purchasers, would materially adversely affect the market for the Notes, or (ii)
any event or development relating to or involving the Company or any officer or
director of the Company which makes any statement made in the Offering
Memorandum untrue or which, in the opinion of the Company and its counsel or the
Initial Purchasers and their counsel, requires the making of any addition to or
change in the Offering Memorandum in order to state a material fact required by
any law to be stated therein or necessary in order to make the statements
therein not misleading, if amending or supplementing the Offering Memorandum to
reflect such event or development would, in the opinion of the Initial
Purchasers, materially adversely affect the market for the Notes.
(c) The Initial Purchasers shall have received on the Closing Date an
opinion of Fulbright & Xxxxxxxx L.L.P., counsel for the Company, dated the
Closing Date and addressed to the Initial Purchasers, to the effect that:
(i) The Company is a corporation duly incorporated and validly existing
in good standing under the laws of the State of Delaware with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum (and any amendment or
supplement thereto);
-13-
(ii) Each Significant Subsidiary (as defined in Section 1.02(w) of
Regulation S-X promulgated under the Act) is a corporation validly existing and
in good standing under the laws of the jurisdiction of its organization, with
full corporate power and authority to own, lease, and operate its properties and
to conduct its business as described in the Offering Memorandum (and any
amendment or supplement thereto); and all the outstanding shares of capital
stock of each of the Significant Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable, and to the knowledge of such
counsel, are wholly owned by the Company directly, or indirectly through one of
the other Subsidiaries, free and clear of any security interest, lien, adverse
claim, equity or other encumbrance, except as described in the Offering
Memorandum and except for the shares of capital stock of certain Subsidiaries
pledged to Citibank as agent in connection with the Credit Agreement and/or to
Meditrust;
(iii) The authorized capital stock of the Company is as set forth under
the caption "Capitalization" in the Offering Memorandum;
(iv) The Company has corporate power and authority to enter into this
Agreement and the Registration Rights Agreement and to issue, sell and deliver
the Notes to be sold by it to the Initial Purchasers as provided herein, and
this Agreement and the Registration Rights Agreement have been duly authorized,
executed and delivered by the Company and are valid, legal and binding
agreements of the Company, enforceable against the Company in accordance with
their terms, except (A) as enforcement of rights to indemnity and contribution
hereunder and thereunder may be limited by Federal or state securities laws or
principles of public policy and (B) subject to the qualification that the
enforceability of the Company's obligations hereunder and thereunder may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights generally
and by general equitable principles;
(v) The Indenture has been duly and validly authorized, executed and
delivered by the Company and, assuming due authorization, execution and delivery
by the Trustee, is a valid and binding agreement of the Company, enforceable in
accordance with its terms, subject to the qualification that the enforceability
of the Company's obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles;
and no qualification of the Indenture under the 1939 Act is required in
connection with the offer and sale of the Notes contemplated hereby or in
connection with the Exempt Resales;
(vi) The Notes have been duly and validly authorized by the Company and
when executed by the Company in accordance with the Indenture and, assuming due
authentication of the Notes by the Trustee, upon delivery to the Initial
Purchasers against payment therefor in accordance with the terms hereof, will
have been validly issued and delivered, and will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture, subject to
the qualification that the enforceability of the Company's obligations
thereunder may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally and by general equitable principles;
(vii) Neither the offer, sale or delivery of the Notes, the execution,
delivery or performance by the Company of this Agreement, the Registration
Rights Agreement or the Indenture, compliance by the Company with the provisions
hereof or thereof nor consummation by the Company of the transactions
contemplated hereby or thereby constitutes or will constitute a breach or
violation of, or a default under, in any material respect, the certificate or
articles of incorporation or bylaws or other organizational documents of the
Company or any of the Significant Subsidiaries or any material agreement,
indenture, lease or other instrument to which the Company or any of the
Significant Subsidiaries is a party or by which any of them or any of their
respective properties is bound that is an exhibit to any Incorporated Document
or is known to such counsel, or will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
the Significant Subsidiaries pursuant to the terms of any material agreement or
instrument to which any of them is a party or by which any of them may be bound
or to which any of the property or assets of any of them is subject that is an
exhibit to any Incorporated Document or is
-14-
known to such counsel, nor will any such action result in any violation in any
material respect of any existing law, or any regulation, ruling (assuming
compliance with all applicable state securities and Blue Sky laws and, in the
case of the Registration Rights Agreement, the Act and the Exchange Act and the
1939 Act), judgment, injunction, order or decree known to such counsel,
applicable to the Company or the Significant Subsidiaries or any of their
respective properties;
(viii) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or official is required on the part of the
Company (except as have been obtained under the Exchange Act, or such as may be
required under state securities or Blue Sky laws governing the purchase and
distribution of the Notes, or such as may be required to qualify the Indenture
under the 1939 Act, and such as may be required in connection with the
performance by the Company of its obligations under the Registration Rights
Agreement, as to which such counsel need not express an opinion) for the valid
issuance and sale of the Notes to the Initial Purchasers as contemplated by this
Agreement;
(ix) The Incorporated Documents (except for the financial statements
and the notes thereto and the schedules and other financial and statistical data
included therein, as to which such counsel need not express any opinion), at the
time they were filed, appear on their face to have complied as to form in all
material respects with the requirements of the Exchange Act;
(x) To the knowledge of such counsel, (A) there are no legal or
governmental proceedings pending or threatened against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or any of
their property, are subject, which are not disclosed in the Offering Memorandum
and which, if adversely decided, are reasonably likely to cause a Material
Adverse Effect or materially affect the issuance of the Notes or the
consummation of the transactions contemplated by the Operative Documents and (B)
there are no material agreements, contracts, indentures, leases or other
instruments, that are not described in the Offering Memorandum (or any amendment
or supplement thereto) or that are required to be filed as an exhibit to any
Incorporated Document that are not filed as required;
(xi) The statements in the Offering Memorandum, insofar as they are
descriptions of contracts, agreements or other legal documents, or refer to
statements of law or legal conclusions, are accurate in all material respects
and present fairly the information required to be shown;
(xii) When the Notes are issued and delivered pursuant to this
Agreement, such Notes will not be of the same class (within the meaning of Rule
144A(d)(3) under the Act) as any security of the Company that is listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that is quoted in a United States automated interdealer quotation system;
(xiii) No registration of the Notes under the Act is required for the
sale of the Notes to the Initial Purchasers as contemplated in this Agreement or
for the Exempt Resales (assuming (A) that any Eligible Purchaser who buys the
Notes in the Exempt Resales is a Qualified Institutional Buyer and (B) the
accuracy of the Initial Purchasers' representations and those of the Company in
this Agreement regarding the absence of general solicitation in connection with
the Exempt Resales);
(xiv) The Company is not required to deliver the information specified
in Rule 144A(d)(4) in connection with the offering and resale of the Notes by
the Initial Purchasers; and
(xv) Although such counsel has not undertaken, except as otherwise
indicated in their opinion, to determine independently, and does not assume any
responsibility for, the accuracy, completeness or fairness of the statements in
the Offering Memorandum, such counsel has participated in the preparation of the
Offering Memorandum, including review and discussion of the contents thereof,
and has reviewed the Incorporated Documents, and, relying as to materiality to a
large extent upon the opinions of officers and other representatives of the
Company, nothing has come to the attention of such counsel that has caused them
to believe that the Offering Memorandum, as of its date and as of the Closing
Date contained an
-15-
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading or that any
amendment or supplement to the Offering Memorandum, as of its respective date,
and as of the Closing Date contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements and the notes
thereto and the schedules and other financial and statistical data included or
incorporated by reference in the Offering Memorandum and information furnished
by or on behalf of the Initial Purchasers).
The opinion of such counsel shall be limited to the laws of the United
States, the State of New York and the internal corporation law of the State of
Delaware.
(d) The Initial Purchasers shall have received on the Closing Date an
opinion of Xxxxxxxx X. Xxxxxx, Esq., General Counsel of the Company, dated the
Closing Date and addressed to the Initial Purchasers to the effect that:
(i) The Company is duly registered and qualified to conduct its
business and is in good standing as a foreign corporation in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify or to be in good standing does not have a Material Adverse
Effect;
(ii) All the shares of capital stock of the Company outstanding prior
to the issuance of the Notes have been duly authorized and validly issued, are
fully paid and nonassessable;
(iii) Each Subsidiary is duly registered and qualified to conduct its
business and is in good standing as a foreign corporation or limited partnership
in each jurisdiction or place where the nature of its properties or the conduct
of its business requires such registration or qualification, except where the
failure so to register or qualify or to be in good standing does not have a
Material Adverse Effect; (iv) Neither the Company nor any of the Subsidiaries is
in violation in any material respect of its respective certificate or articles
of incorporation or bylaws, or other organizational documents, or to the best
knowledge of such counsel after reasonable inquiry, is in default in any
material respect in the performance of any material obligation, agreement or
condition contained in any bond, debenture, note or other evidence of
indebtedness or in any material agreement, indenture, lease or other instrument
to which the Company or any of the Subsidiaries is a party or by which any of
them or any of their respective properties may be bound, except as disclosed in
the Offering Memorandum and except to the extent that any such violation or
default would not have a Material Adverse Effect;
(v) Such counsel has no reason to believe that the Company and its
Subsidiaries do not have all Permits (including, without limitation, such
Permits as are necessary under such federal and state health care laws and under
such HMO and similar licensure laws and such insurance laws and regulations as
are applicable to the Company and its Subsidiaries) as are necessary to own,
lease and operate its properties and conduct its business, except to the extent
that the failure to have such Permits would not have a Material Adverse Effect;
and to the best knowledge of such counsel after reasonable inquiry there are no
proceedings pending or threatened against the Company or any of its Subsidiaries
that may cause any such Permit that is material to the conduct of the business
of the Company or any of its Subsidiaries to be revoked, withdrawn, cancelled,
suspended or not renewed;
(vi) Such counsel has no reason to believe that (a) the business
practices of the Company or any of its Subsidiaries violate in any material
respect any applicable provisions of federal or state law governing Medicare or
any state Medicaid program, including without limitation, Sections 1320a-7a and
1320a-7b of Title 42 of the United States Code, or that any individual with an
ownership or control interest, as defined in 42 U.S.C. ss.1320a-3(a)(3), in the
Company or any of its Subsidiaries or who is an officer, director, or managing
employee as defined in 42 U.S.C. ss.1320a-5(b), of the Company or any of its
Subsidiaries is a
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person described in 42 U.S.C. ss.1320a-7(b)(8)(B), or that (b) the Company's or
any Subsidiary's business practices violate in any material respect any
applicable provisions of federal or state law regarding physician ownership of,
or financial relationship with, or referral to entities providing health care
related goods or services, or laws requiring disclosure of financial interests
held by physicians in entities to which they may refer patients for the
provision of health care related goods or services; and to the best knowledge of
such counsel after reasonable inquiry, neither the Company nor any of its
Subsidiaries is in violation of any other law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of its
Subsidiaries or of any decree of any court or governmental agency or body having
jurisdiction over the Company or any of its Subsidiaries, except to the extent
that any such violation would not have a Material Adverse Effect; and
(vii) Although such counsel has not undertaken, except as otherwise
indicated in such counsel's opinion, to determine independently, and does not
assume any responsibility for, the accuracy, completeness or fairness of the
statements in the Offering Memorandum, such counsel has participated in the
preparation of the Offering Memorandum and the Incorporated Documents, and
nothing has come to the attention of such counsel that has caused such counsel
to believe that the Offering Memorandum, as of its date and as of the Closing
Date, contained an untrue statement of material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading or that any amendment or supplement to the Offering Memorandum, as of
its respective date, and as of the Closing Date contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and the notes thereto and the schedules and other financial and
statistical data included or incorporated by reference in the Offering
Memorandum and information furnished by or on behalf of the Initial Purchasers).
(e) The Initial Purchasers shall have received on the Closing Date an
opinion of Xxxxx Xxxxxxxxxx, counsel for the Initial Purchasers, dated the
Closing Date, and addressed to the Initial Purchasers, with respect to the
matters referred to in clauses (iv), (v), (vi), (xiii) and (xv) of the foregoing
paragraph (c) and such other related matters as the Initial Purchasers may
request.
(f) The Initial Purchasers shall have received letters addressed to the
Initial Purchasers, and dated the date hereof and the Closing Date from KPMG
Peat Marwick LLP, independent certified public accountants, substantially in the
forms heretofore approved by the Initial Purchasers.
(g)(i) There shall not have been any material change in the capital stock
of the Company nor any material increase in the short-term or long-term debt of
the Company (other than in the ordinary course of business) from that set forth
or contemplated in the Offering Memorandum (or any amendment or supplement
thereto); (ii) there shall not have been, since the respective dates as of which
information is given in the Offering Memorandum (or any amendment or supplement
thereto), except as may otherwise be stated in the Offering Memorandum (or any
amendment or supplement thereto), any material adverse change in the condition
(financial or other), business, prospects, properties, net worth or results of
operations of the Company and the Subsidiaries taken as a whole; (iii) the
Company and the Subsidiaries shall not have any liabilities or obligations,
direct or contingent (whether or not in the ordinary course of business), that
are material to the Company and the Subsidiaries, taken as a whole, other than
those reflected in the Offering Memorandum (or any amendment or supplement
thereto); and (iv) all the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
on and as of the date hereof and on and as of the Closing Date as if made on and
as of the Closing Date, and the Initial Purchasers shall have received a
certificate, dated the Closing Date and signed by the chief executive officer
and the chief accounting officer of the Company (or such other officers as are
acceptable to the Initial Purchasers), to the effect set forth in this Section
7(g) and in Section 7(h) hereof.
(h) The Company shall not have failed at or prior to the Closing Date to
have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it
-17-
hereunder at or prior to the Closing Date.
(i) The Initial Purchasers shall have received certificates dated the date
hereof and the Closing Date signed by the chief accounting officer of the
Company substantially in the forms heretofore approved by the Initial
Purchasers, respecting the Company's compliance with the financial covenants set
forth in each of the Company's indentures, the Credit Agreement and certain
other agreements of the Company.
(j) There shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of Rule
436(g) under the Act, that (i) it is downgrading its rating assigned to any
class of securities of the Company, or (ii) it is reviewing its ratings assigned
to any class of securities of the Company with a view to possible downgrading,
or with negative implications, or direction not determined.
(k) The Notes shall have been approved for trading on PORTAL.
(l) Prior to the date of this Agreement, the Company shall have received
and shall have furnished to the Initial Purchasers copies of the requisite
written consent of the lenders party to the Credit Agreement to the consummation
by the Company of the transactions contemplated by the Operative Documents and
the Offering Memorandum.
(m) The Company shall have furnished or caused to be furnished to the
Initial Purchasers such further certificates and documents as the Initial
Purchasers shall have requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Initial Purchasers and counsel for the Initial
Purchasers.
Any certificate or document signed by any officer of the Company and
delivered to the Initial Purchasers, or to counsel for the Initial Purchasers,
shall be deemed a representation and warranty by the Company to the Initial
Purchasers as to the statements made therein.
8. Expenses. The Company agrees to pay the following costs and expenses and
all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction of the
Offering Memorandum (including financial statements thereto), and each amendment
or supplement thereto; (ii) the printing (or reproduction) and delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of the Offering Memorandum, the Preliminary Offering Memorandum,
the Incorporated Documents, and all amendments or supplements to any of them as
may be reasonably requested for use in connection with the offering and sale of
the Notes; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Notes, including any stamp taxes in connection
with the original issuance and sale of the Notes; (iv) the printing (or
reproduction) and delivery of this Agreement, the Indenture, the Registration
Rights Agreement, the preliminary and supplemental Blue Sky Memoranda and all
other agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Notes; (v) the application for quotation of
the Notes on PORTAL; (vi) the qualification of the Notes for offer and sale
under the securities or Blue Sky laws of the several states as provided in
Section 4(f) hereof (including the reasonable fees, expenses and disbursements
of counsel for the Initial Purchasers relating to the preparation, printing or
reproduction, and delivery of the preliminary and supplemental Blue Sky
Memoranda and such qualification); (vii) the performance by the Company of its
obligations under the Registration Rights Agreement; (viii) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company; and (ix) the
transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective purchasers of
the Notes. The Company hereby agrees that it will pay in full on the Closing
Date the fees and expenses referred to in clause (vi) of this Section 8 by
delivering to counsel for the Initial Purchasers on such date a check payable to
such counsel in the requisite amount.
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9. Effective Date of Agreement. This Agreement shall become effective upon
the execution and delivery hereof by all the parties hereto. Until such time as
this Agreement shall have become effective, it may be terminated by the Company,
by notifying the Initial Purchasers, or by the Initial Purchasers, by notifying
the Company.
Any notice under this Section 9 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
10. Default by an Initial Purchaser. If any Initial Purchaser shall fail or
refuse to purchase the Notes which it is obligated to purchase on the Closing
Date, and arrangements satisfactory to the non-defaulting Initial Purchasers and
the Company for the purchase of such Notes by the non-defaulting Initial
Purchasers or by another party or parties satisfactory to the non-defaulting
Initial Purchasers and the Company are not made within thirty-six (36) hours
after such default, this Agreement shall terminate without liability on the part
of the non-defaulting Initial Purchasers or the Company. In any such case which
does not result in termination of this Agreement, either the non-defaulting
Initial Purchasers or the Company shall have the right to postpone the Closing
Date, but in no event for longer than seven (7) days, in order that the required
changes, if any, in the Offering Memorandum or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve a defaulting Initial Purchaser from liability in respect of such default
under this Agreement. The term "Initial Purchaser" as used in this Agreement
includes, for all purposes of this Agreement, any party not identified in this
Agreement who purchases Notes which a defaulting Initial Purchaser is obligated,
but fails or refuses, to purchase.
11. Termination of Agreement. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchasers, without
liability on the part of the Initial Purchasers to the Company, by notice to the
Company, if prior to the Closing Date (i) trading in securities generally on the
New York Stock Exchange, American Stock Exchange or the Nasdaq National Market
shall have been suspended or materially limited, (ii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or state authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis or
change in political, financial or economic conditions, the effect of which on
the financial markets of the United States is such as to make it, in the
judgment of the Initial Purchasers, impracticable or inadvisable to commence or
continue the offering of the Notes on the terms set forth on the cover page of
the Offering Memorandum or to enforce contracts for the resale of the Notes by
the Initial Purchasers. Notice of such termination may be given to the Company
by telegram, telecopy or telephone and shall be subsequently confirmed by
letter.
12. Information Furnished by the Initial Purchasers. The statements set
forth in the stabilization legend on the inside front cover, the last paragraph
on the cover page and in the third paragraph under the caption "Plan of
Distribution" in the Preliminary Offering Memorandum and Offering Memorandum,
constitute the only information furnished by or on behalf of the Initial
Purchasers as such information is referred to in Sections 5(b) and 6 hereof,
except that Xxxxx Xxxxxx Inc. has furnished the information contained in the
eighth paragraph under the caption "Plan of Distribution" contained in the
Preliminary Offering Memorandum and the Offering Memorandum.
13. Miscellaneous. Except as otherwise provided in Sections 4, 9 and 11
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at 00000 Xxx Xxx Xxxxxxxxx, Xxxxxx Xxxxx, XX 00000, Attention: General
Counsel, with a copy to Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx,
XX 00000, Attention: Xxx X. Xxxxxxx, Esq. or (ii) if to the Initial Purchasers,
to Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention:
Manager, Investment Banking Division, with a copy to Xxxxx Xxxxxxxxxx, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxxxxx X. Xxxxxx, Esq.
This Agreement has been and is made solely for the benefit of the Initial
Purchasers, the Company, its directors, its officers and the controlling persons
referred to in Section 6 hereof and their respective successors and assigns, to
the extent provided herein, and no other person shall acquire or have any
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right under or by virtue of this Agreement. Neither the term "successor" nor the
term "successors and assigns" as used in this Agreement shall include a
purchaser from the Initial Purchasers of any of the Notes in his status as such
purchaser.
14. Applicable Law; Counterparts. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York without giving
effect to the choice of laws or conflict of laws principles thereof.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Initial Purchasers.
Very truly yours,
INTEGRATED HEALTH SERVICES, INC.
By: /s/
---------------------------------
Name:
Title:
Confirmed as of the date first above mentioned.
XXXXX XXXXXX INC.
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
XXXXXX XXXXXXX & CO. INCORPORATED
SALOMON BROTHERS INC
By: XXXXX XXXXXX INC.
By: /s/
---------------------------------
Name:
Title:
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SCHEDULE I
INTEGRATED HEALTH SERVICES, INC.
Initial Purchaser Principal Amount
of Notes
-------------
Xxxxx Xxxxxx Inc........................................... $247,500,000
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation................................... 67,500,000
Xxxxxx Xxxxxxx & Co. Incorporated.......................... 67,500,000
Salomon Brothers Inc....................................... 67,500,000
-------------
Total......................................................
$450,000,000
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