Exhibit 1.1
$180,000,000
TEAM HEALTH, INC.
9% Senior Subordinated Notes due 2012
Purchase Agreement
March 12, 2004
▇.▇. ▇▇▇▇▇▇ Securities Inc.
As Representative of the
several Initial Purchasers in Schedule 1 hereto
c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Team Health, Inc., a Tennessee corporation (the "Company"), proposes to
issue and sell to the several Initial Purchasers listed in Schedule 1 hereto
(the "Initial Purchasers"), for whom you are acting as representative (the
"Representative"), $180,000,000 principal amount of its 9% Senior Subordinated
Notes due 2012 (the "Securities"). The Securities will be issued pursuant to an
Indenture to be dated as of March 23, 2004 (the "Indenture") among the Company,
the guarantors listed in Schedule 2 hereto (the "Guarantors") and The Bank of
New York, as trustee (the "Trustee"), and will be guaranteed on an unsecured
senior subordinated basis by each of the Guarantors (the "Guarantees").
The Securities will be 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 March 2, 2004 (the "Preliminary Offering Memorandum")
and will prepare an offering memorandum dated the date hereof (the "Offering
Memorandum") setting forth information concerning the Company 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. 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 the
manner contemplated by this Agreement. Capitalized terms used but not defined
herein shall have the meanings given to such terms in the Offering Memorandum.
Holders of the Securities (including the Initial Purchasers and their
direct and indirect transferees) will be entitled to the benefits of a
Registration Rights Agreement, to be dated the Closing Date (as defined below)
and substantially in the form attached hereto as Exhibit A (the "Registration
Rights Agreement"), pursuant to which the Company and the Guarantors will agree
to file one or more registration statements with the Securities and Exchange
Commission (the "Commission") providing for the registration under the
Securities Act of the Securities or the Exchange Securities referred to (and as
defined) in the Registration Rights Agreement.
The Securities are being offered and sold by the Company in connection
with the refinancing of certain indebtedness of the Company (the "Refinancing"),
which includes indebtedness currently outstanding under the Credit Agreement
dated as of May 1, 2002 among the Company, Bank of America, N.A. and the other
financial institutions party thereto and $100 million of indebtedness evidenced
by the Company's 12% Senior Subordinated Notes due 2009 (the "Existing Notes").
In connection with the Refinancing, the Company will (i) enter into a new $250.0
million senior secured credit facility (the "Credit Agreement" and together with
all other agreements related to such facility, the "Credit Documents") with Banc
of America LLC and ▇.▇. ▇▇▇▇▇▇ Securities Inc. as joint lead arrangers and the
other agents and the lenders party thereto (ii) redeem $162.8 million of its
outstanding preferred stock (the "Redemption"), (iii) offer to purchase all of
the Existing Notes pursuant to a tender offer and consent solicitation (the
"Tender Offer") and redeem any Existing Notes not tendered in the tender offer
and (iv) fund up to a $30 million dividend to its existing shareholders.
This Agreement, the Securities, the Guarantees, the Indenture, the
Exchange Securities and the Registration Rights Agreement are hereinafter
sometimes referred to collectively as the "Note Documents." The Note Documents
and the Credit Documents are hereinafter sometimes referred to collectively as
the "Transaction Documents."
The Company hereby confirms its agreement with the several Initial
Purchasers concerning the purchase and resale of the Securities, as follows:
1. Purchase and Resale of the Securities.(a) (a) The Company
agrees to issue and sell the Securities to the several Initial Purchasers as
provided in this Agreement, and each Initial Purchaser, on the basis of the
representations, warranties and agreements set forth herein and subject to the
conditions set forth herein, agrees, severally and not jointly, to purchase from
the Company the respective principal amount of Securities set forth opposite
such Initial Purchaser's name in Schedule 1 hereto at a price equal to 98.125%
of the principal amount thereof plus accrued interest, if any, from March 23,
2004 to the Closing Date. The
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Company will not be obligated to deliver any of the Securities except upon
payment for all the Securities to be purchased as provided herein.
(b) The Company understands that the Initial Purchasers intend to
offer the Securities for resale on the terms set forth in the Offering
Memorandum. Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) it is a qualified institutional buyer within the
meaning of Rule 144A under the Securities Act (a "QIB") and an
accredited investor within the meaning of Rule 501(a) 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 not solicited offers for, or offered or sold,
and will not solicit offers for, or offer or sell, the Securities as
part of their initial offering except:
(A) within the United States to persons whom it
reasonably believes to be QIBs in transactions pursuant to
Rule 144A under the Securities Act ("Rule 144A") and in
connection with each such sale, it has taken or will take
reasonable steps to ensure that the purchaser of the
Securities is aware that such sale is being made in reliance
on Rule 144A; or
(B) in accordance with the restrictions set
forth in Annex A hereto.
(c) Each Initial Purchaser acknowledges and agrees that the
Company and, for purposes of the opinions to be delivered to the Initial
Purchasers pursuant to Sections 5(f) and 5(g), counsel for the Company and
counsel for the Initial Purchasers, respectively, may rely upon the accuracy of
the representations and warranties of the Initial Purchasers, and compliance by
the Initial Purchasers with their agreements, contained in paragraph (b) above
(including Annex A hereto), and each Initial Purchaser hereby consents to such
reliance.
(d) The Company acknowledges and agrees that the Initial
Purchasers may offer and sell Securities to or through any affiliate of an
Initial Purchaser in accordance with this Agreement and that any such affiliate
may offer and sell Securities purchased by it to or through any Initial
Purchaser.
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2. Payment and Delivery. a) Payment for and delivery of the
Securities will be made at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 A.M., New York City time, on March
23, 2004, or at such other time or place on the same or such other date, not
later than the fifth business day thereafter, as the Representative and the
Company may agree upon in writing. The time and date of such payment and
delivery is referred to herein as the "Closing Date".
(a) Payment for the Securities shall be made by wire transfer in
immediately available funds to the account(s) specified by the Company to the
Representative against delivery to the nominee of The Depository Trust Company,
for the account of the Initial Purchasers, of one or more global notes
representing the Securities (collectively, the "Global Note"), with any transfer
taxes payable in connection with the sale of the Securities duly paid by the
Company. The Global Note will be made available for inspection by the
Representative not later than 1:00 P.M., New York City time, on the business day
prior to the Closing Date.
3. Representations and Warranties of the Company and the
Guarantors. The Company and the Guarantors jointly and severally represent and
warrant to each Initial Purchaser that:
(a) Offering Memorandum. The Preliminary Offering Memorandum, as
of its date, did not, and the Offering Memorandum, in the form first used by the
Initial Purchasers to confirm sales of the Securities and as of the Closing
Date, will not, contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that
the Company and the Guarantors make no representation or warranty with respect
to any statements or omissions made in reliance upon and in conformity with
information relating to any Initial Purchaser furnished to the Company in
writing by such Initial Purchaser through the Representative expressly for use
in the Preliminary Offering Memorandum and the Offering Memorandum.
(b) Financial Statements. The financial statements and the related
notes thereto included in the Preliminary Offering Memorandum and the Offering
Memorandum present fairly the financial position of the Company and its
subsidiaries as of the dates indicated and the results of their operations and
the changes in their cash flows for the periods specified; such financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods covered thereby;
the other financial information included in the Preliminary Offering Memorandum
and the Offering Memorandum has been derived from the accounting records of the
Company and its subsidiaries and presents fairly the information shown thereby;
and the pro forma financial data included in the Preliminary Offering Memorandum
and the Offering Memorandum has been
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prepared in accordance with the Commission's rules and guidance with respect to
pro forma financial data, and the assumptions underlying such pro forma
financial data are reasonable and are set forth in the Preliminary Offering
Memorandum and the Offering Memorandum.
(c) No Material Adverse Change. Since the date of the most recent
financial statements of the Company included in the Preliminary Offering
Memorandum and the Offering Memorandum, (i) there has not been any material
change in the capital stock or any increase in long-term debt of the Company or
any of its subsidiaries, or any dividend or distribution of any kind declared,
set aside for payment, paid or made by the Company on any class of capital
stock, or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the business, properties,
management, financial position or results of operations of the Company and its
subsidiaries taken as a whole; (ii) neither the Company nor any of its
subsidiaries has entered into any transaction or agreement that is material to
the Company and its subsidiaries taken as a whole or incurred any liability or
obligation, direct or contingent, that is material to the Company and its
subsidiaries taken as a whole; and (iii) neither the Company nor any of its
subsidiaries has sustained any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor disturbance or dispute or any action, order or
decree of any court or arbitrator or governmental or regulatory authority,
except in each case as otherwise disclosed in the Preliminary Offering
Memorandum and the Offering Memorandum.
(d) Organization and Good Standing. The Company and each of its
subsidiaries have been duly organized and are validly existing and in good
standing under the laws of their respective jurisdictions of organization, are
duly qualified to do business and are in good standing in each jurisdiction in
which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to conduct
the businesses in which they are engaged, except where the failure to be so
qualified or have such power or authority would not, individually or in the
aggregate, have a material adverse effect on the business, properties,
management, financial position, results of operations or prospects of the
Company and its subsidiaries taken as a whole or on the performance by the
Company and the Guarantors of their obligations under the Securities and the
Guarantees (a "Material Adverse Effect"). The Company does not own or control,
directly or indirectly, any corporation, association or other entity other than
the subsidiaries listed in Schedule 2 to this Agreement.
(e) Capitalization. The Company has an authorized capitalization
as set forth in the Preliminary Offering Memorandum and the Offering Memorandum
under the heading "Capitalization"; and all the outstanding shares of capital
stock or other equity interests of each subsidiary of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable and are
owned directly or indirectly by the Company, free and clear
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of any lien, charge, encumbrance, security interest, restriction on voting or
transfer or any other claim of any third party (other than security interests
granted pursuant to the Credit Documents).
(f) Due Authorization. The Company and each of the Guarantors have
full right, power and authority to execute and deliver the Transaction Documents
and to perform their respective obligations hereunder and thereunder; and all
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 has been duly and validly taken.
(g) The Indenture. 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 as enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability (collectively,
the "Enforceability Exceptions"); and on the Closing Date, the Indenture will
conform in all material respects to the requirements of the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations
of the Commission applicable to an indenture that is qualified thereunder.
(h) The Securities and the Guarantees. The Securities have been
duly authorized by the Company 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 enforceable against the Company in accordance
with their terms, subject to the Enforceability Exceptions, and will be entitled
to the benefits of the Indenture; and 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, will be valid and legally binding obligations of each of the
Guarantors, enforceable against each of the Guarantors in accordance with their
terms, subject to the Enforceability Exceptions, and will be entitled to the
benefits of the Indenture.
(i) The Exchange Securities. On the Closing Date, the Exchange
Securities (including the related guarantees) will have been duly authorized by
the Company and each of the Guarantors and, when duly executed, authenticated,
issued and delivered as contemplated by the Registration Rights Agreement, 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
guarantor, enforceable against the Company and each of the Guarantors in
accordance
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with their terms, subject to the Enforceability Exceptions, and will be
entitled to the benefits of the Indenture.
(j) Purchase and Registration Rights Agreements. This Agreement
has been duly authorized, executed and delivered by the Company and each of the
Guarantors; and 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 against the Company and each of the Guarantors in accordance with
its terms, subject to the Enforceability Exceptions, and except that rights to
indemnity and contribution thereunder may be limited by applicable law and
public policy.
(k) Descriptions of the Transaction Documents. Each Transaction
Document conforms in all material respects to the description thereof contained
in the Preliminary Offering Memorandum and the Offering Memorandum.
(l) No Violation or Default. Neither the Company nor any of its
subsidiaries is (i) in violation of its charter or by-laws or similar
organizational documents; (ii) in default, and no event has occurred that, with
notice or lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in 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; or
(iii) in violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory authority,
except, in the case of clauses (ii) and (iii) above, for any such default or
violation that would not, individually or in the aggregate, have a Material
Adverse Effect.
(m) No Conflicts. The execution, delivery and performance by the
Company and each of the Guarantors of each of the Transaction Documents to which
each is a party, the issuance and sale of the Securities (including the
Guarantees) 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 (i) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or, other than as created pursuant to the Credit Documents, 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, (ii) result in any violation
of the provisions of the charter or by-laws or similar organizational documents
of the Company or any of its subsidiaries or (iii) result in the violation of
any law or statute or any judgment, order, rule or
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result in violation of any law or statute or any judgement, order, rule,
regulation of any court or arbitrator or governmental or regulatory authority,
except, in the case of clauses (i) and (iii) above, for any such conflict,
breach or violation that would not, individually or in the aggregate, have a
Material Adverse Effect.
(n) No Consents Required. No consent, approval, authorization,
order, registration or qualification of or with any court or arbitrator or
governmental or regulatory authority is required for the execution, delivery and
performance by the Company and each of the Guarantors of each of the Transaction
Documents to which each is a party, the issuance and sale of the Securities
(including the Guarantees) 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, orders and registrations or qualifications as may be required
(i) under applicable state securities laws in connection with the purchase and
resale of the Securities by the Initial Purchasers and (ii) with respect to the
Exchange Securities (including the related guarantees) under the Securities Act
and applicable state securities laws as contemplated by the Registration Rights
Agreement.
(o) Legal Proceedings. Except as described in the Preliminary
Offering Memorandum and the Offering Memorandum, there are no legal,
governmental or regulatory investigations, actions, suits or proceedings pending
to which the Company or any of its subsidiaries is or may be a party or to which
any property of the Company or any of its subsidiaries is or may be the subject
that, individually or in the aggregate, if determined adversely to the Company
or any of its subsidiaries, could reasonably be expected to have a Material
Adverse Effect; and no such investigations, actions, suits or proceedings are
threatened or, to the best knowledge of the Company and each of the Guarantors,
contemplated by any governmental or regulatory authority or threatened by
others.
(p) Independent Accountants. Ernst & Young LLP, who have certified
certain financial statements of the Company and its subsidiaries, are
independent public accountants with respect to the Company and its subsidiaries
within the meaning of Rule 101 of the Code of Professional Conduct of the
American Institute of Certified Public Accountants and its interpretations and
rulings thereunder.
(q) Title to Real and Personal Property. The Company and its
subsidiaries have good and marketable title in fee simple to, or have valid
rights to lease or otherwise use, all items of real and personal property that
are material to the respective businesses of the Company and its subsidiaries,
in each case free and clear of all liens, encumbrances, claims and defects and
imperfections of title except those that (i) do not materially interfere with
the use made and proposed to be made of such property by the Company and its
subsidiaries, (ii) could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect or (iii) as created pursuant to the
Credit Documents.
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(r) Title to Intellectual Property. The Company and its
subsidiaries own or possess adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark registrations,
service ▇▇▇▇ registrations, copyrights, licenses and know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) necessary for the conduct of their
respective businesses; and the conduct of their respective businesses will not
conflict in any material respect with any such rights of others, and the Company
and its subsidiaries have not received any notice of any claim of infringement
of or conflict with any such rights of others.
(s) Investment Company Act. Neither the Company nor any of its
subsidiaries is, and after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described in the
Offering Memorandum none of them will be, an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, and the rules and regulations of the Commission
thereunder (collectively, "Investment Company Act").
(t) Taxes. The Company and its subsidiaries have paid all federal,
state, local and foreign taxes and filed all tax returns required to be paid or
filed through the date hereof; and except as otherwise disclosed in the
Preliminary Offering Memorandum and the Offering Memorandum, there is no tax
deficiency that has been, or could reasonably be expected to be, asserted
against the Company or any of its subsidiaries or any of their respective
properties or assets.
(u) Licenses and Permits. The Company and its subsidiaries possess
all licenses, certificates, permits and other authorizations issued by, and have
made all declarations and filings with, the appropriate federal, state, local or
foreign governmental or regulatory authorities that are necessary for the
ownership or lease of their respective properties or the conduct of their
respective businesses as described in the Preliminary Offering Memorandum and
the Offering Memorandum, except where the failure to possess or make the same
would not, individually or in the aggregate, have a Material Adverse Effect; and
except as described in the Preliminary Offering Memorandum and the Offering
Memorandum, neither the Company nor any of its subsidiaries has received notice
of any revocation or modification of any such license, certificate, permit or
authorization or has any reason to believe that any such license, certificate,
permit or authorization will not be renewed in the ordinary course.
(v) No Labor Disputes. No labor disturbance by or dispute with
employees of the Company or any of its subsidiaries exists or, to the best
knowledge of the Company and each of the Guarantors, is contemplated or
threatened.
(w) Compliance With Environmental Laws. The Company and its
subsidiaries (i) are in compliance with any and all applicable federal, state,
local and foreign laws, rules,
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regulations, decisions and orders relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants (collectively, "Environmental Laws"); (ii) have received and are
in compliance with all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses; and
(iii) have not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants, except in any such case for
any such failure to comply with, or failure to receive required permits,
licenses or approvals, or liability, as would not, individually or in the
aggregate, have a Material Adverse Effect.
(x) Compliance With ERISA. Each employee benefit plan, within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), that is maintained, administered or contributed to by the
Company or any of its affiliates for employees or former employees of the
Company and its affiliates has been maintained in compliance with its terms and
the requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of 1986, as
amended (the "Code"); no prohibited transaction, within the meaning of Section
406 of ERISA or Section 4975 of the Code, has occurred with respect to any such
plan excluding transactions effected pursuant to a statutory or administrative
exemption; and for each such plan that is subject to the funding rules of
Section 412 of the Code or Section 302 of ERISA, no "accumulated funding
deficiency" as defined in Section 412 of the Code has been incurred, whether or
not waived, and the fair market value of the assets of each such plan (excluding
for these purposes accrued but unpaid contributions) exceeds the present value
of all benefits accrued under such plan determined using reasonable actuarial
assumptions.
(y) Accounting Controls. The Company and its subsidiaries maintain
systems 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.
(z) Insurance. The Company and its subsidiaries have insurance or
self-insurance covering their respective properties, operations, personnel and
businesses, including business interruption insurance, which insurance is in
amounts and insures against such losses and risks as are adequate to protect the
Company and its subsidiaries and their respective businesses; and neither the
Company nor any of its subsidiaries has (i) received notice from any insurer or
agent of such insurer that capital improvements or other expenditures are
required or necessary to be made in order to continue such insurance or (ii) any
reason to believe that it will not be able to
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renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage at reasonable cost from similar insurers or to provide
self-insurance as may be necessary to continue its business.
(aa) No Unlawful Payments. Neither the Company nor any of its
subsidiaries nor, to the best knowledge of the Company and each of the
Guarantors, any director, officer, agent, employee or other person associated
with or acting on behalf of the Company or any of its subsidiaries has (i) used
any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.
(bb) Solvency. On and immediately after the Closing Date, the
Company (after giving effect to the issuance of the Securities and 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 (i) 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 liabilities of the Company on its total existing
debts and liabilities (including contingent liabilities) as they become absolute
and matured; (ii) 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; (iii) assuming
consummation of the issuance of the Securities as contemplated by this Agreement
and the Offering Memorandum and the initial borrowings under the Credit
Agreement, the Company is not incurring debts or liabilities beyond its ability
to pay as such debts and liabilities mature; (iv) the Company is not engaged in
any business or transaction, and does not propose to engage in any business or
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; and (v) the Company is not a defendant in any
civil action that would result in a judgment that the Company is or would become
unable to satisfy.
(cc) No Restrictions on Subsidiaries. Except as disclosed in the
Offering Memorandum, no subsidiary of the Company is currently prohibited,
directly or indirectly, under any agreement or other instrument to which it is a
party or is subject, from paying any dividends to the Company, from making any
other distribution on such subsidiary's capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's properties or assets to the Company or any
other subsidiary of the Company.
(dd) No Broker's Fees. Neither the Company nor any of its
subsidiaries is a party to any contract, agreement or understanding with any
person (other than this Agreement) that
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would give rise to a valid claim against any of them or any Initial Purchaser
for a brokerage commission, finder's fee or like payment in connection with the
offering and sale of the Securities.
(ee) Rule 144A Eligibility. On the Closing Date, the Securities
will not be of the same class as securities listed on a national securities
exchange registered under Section 6 of the Exchange Act or quoted in an
automated inter-dealer quotation system; and each of the Preliminary Offering
Memorandum and the Offering Memorandum, as of its respective date, contains or
will contain all 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.
(ff) No Integration. Neither the Company nor any of its affiliates
(as defined in Rule 501(b) of Regulation D) has, directly or through any agent,
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act), that 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.
(gg) No General Solicitation or Directed Selling Efforts. None of
the Company or any of its affiliates or any other person acting on its or their
behalf (other than the Initial Purchasers, as to which no representation is
made) has (i) solicited offers for, or offered or sold, the Securities by means
of any form of general solicitation or general advertising within the meaning of
Rule 502(c) of Regulation D or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act or (ii) engaged in any
directed selling efforts within the meaning of Regulation S under the Securities
Act ("Regulation S"), and all such persons have complied with the offering
restrictions requirement of Regulation S.
(hh) Securities Law Exemptions. Assuming the accuracy of the
representations and warranties of the Initial Purchasers contained in Section
1(b) (including Annex A hereto) and their compliance with their agreements set
forth therein, 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.
(ii) No Stabilization. Neither the Company nor any of the
Guarantors has taken, directly or indirectly, any action designed to or that
could reasonably be expected to cause or result in any stabilization or
manipulation of the price of the Securities.
(jj) Margin Rules. Neither the issuance, sale and delivery of the
Securities nor the application of the proceeds thereof by the Company as
described in the Offering Memorandum
12
will violate Regulation T, U or X of the Board of Governors of the Federal
Reserve System or any other regulation of such Board of Governors.
(kk) Forward-Looking Statements. 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 and the Offering
Memorandum has been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith.
(ll) Statistical and Market Data. Nothing has come to the attention
of the Company that has caused the Company to believe that the statistical and
market-related data included in the Preliminary Offering Memorandum and the
Offering Memorandum is not based on or derived from sources that are reliable
and accurate in all material respects.
(mm) Compliance With Ownership and Operation Statutes, Rules and
Regulations. Except as described in the Offering Memorandum or except for such
violations which, singly or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect, to the Company's knowledge, neither the
Company nor any of its subsidiaries has violated any federal, state or local
statutes, rules or regulations governing the ownership or operation of
physician-staffing companies or any other health care related statues, rules or
regulations. Except for such violations which, singly or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect, to the Company's
knowledge, neither the Company nor any of its subsidiaries has engaged in a
pattern or practice of making payments intended to obtain or induce patient
referrals for any of their operations.
(nn) Compliance With Anti-Fraud and Self-Referral Laws and
Regulations. To the best of the Company's knowledge, neither (a) the Company,
(b) any subsidiary of the Company, nor (c) any affiliated entity, including
without limitation any professional corporation, partnership or association,
with which the Company or any of its subsidiaries contracts and through which
services are provided (each, a "Group Member" and collectively, the "Group
Members") has received any indication or notice, written or oral, from
representatives of the Medicare, Medicaid or Champus programs (collectively, the
"Programs") or any other federal or state agency that any of the Group Members'
agreements or arrangements are contrary to any federal or state fraud and abuse
laws or regulations or federal or state self-referral laws or regulations. Any
Group Members providing items and services are eligible to participate in the
Programs. The Group Members employ personnel familiar with the various laws and
regulations governing reimbursement under the Programs and conduct periodic
audits of the Group Members' billing and collection procedures. To the best of
the Company's knowledge, (i) each Group Member is in substantial compliance with
those laws and regulations; and (ii) except as otherwise indicated in the
Offering Memorandum, no Group Member has received any indication or notice,
written or oral, from representatives of the Programs or any other federal or
state agency that any of the Group Members' billing procedures will be audited.
13
(oo) Compliance with Licensure and Fee-Splitting Laws and
Regulations. To the best of the Company's knowledge, the Group Members are in
compliance with the laws and regulations pertaining to (i) physician licensure
and (ii) physician fee-splitting in all states in which they are organized and
otherwise authorized to conduct business, and are not engaged, either directly
or indirectly, in either the unauthorized or unlicensed practice of medicine or
in prohibited physician fee-splitting arrangements.
(pp) Communications with Government Agencies and other Bodies. To
the best of the Company's knowledge, no Group Member, or any individual or
business entity with which a Group Member contracts and through which services
are provided, has received any indication or notice, written or oral, from
representatives of the United States Department of Health and Human Services or
any other federal or state agency or accrediting body regarding any matters,
including but not limited to the revocation, suspension, termination or
modification of any applicable licenses, certifications, accreditations or
supplier numbers, which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect.
4. Further Agreements of the Company and the Guarantors. The
Company and each of the Guarantors jointly and severally covenant and agree with
each Initial Purchaser that:
(a) Delivery of Copies. The Company will deliver to the Initial
Purchasers as many copies of the Preliminary Offering Memorandum and the
Offering Memorandum (including all amendments and supplements thereto) as the
Representative may reasonably request.
(b) Amendments or Supplements. Before making or distributing any
amendment or supplement to the Preliminary Offering Memorandum or the Offering
Memorandum, the Company will furnish to the Representative and counsel for the
Initial Purchasers a copy of the proposed amendment or supplement for review,
and will not distribute any such proposed amendment or supplement to which the
Representative reasonably objects.
(c) Notice to the Representative. The Company will advise the
Representative promptly, and confirm such advice in writing, (i) of the issuance
by any governmental or regulatory authority of any order preventing or
suspending the use of the Preliminary Offering Memorandum or the Offering
Memorandum or the initiation or threatening of any proceeding for that purpose;
(ii) of the occurrence of any event at any time prior to the completion of the
initial offering of the Securities as a result of which the Offering Memorandum
as then amended or supplemented would include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing when the Offering Memorandum
is delivered to a purchaser, not misleading;
14
and (iii) of the receipt by the Company of any notice with respect to any
suspension of the qualification of the Securities for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; and the Company will use its reasonable 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 of the Securities and, if any such order is issued, will obtain as
soon as possible the withdrawal thereof.
(d) Ongoing Compliance of the Offering Memorandum. If at any time
prior to the completion of the initial offering of the Securities (i) any event
shall occur or condition shall exist as a result of which the Offering
Memorandum as then amended or supplemented would include any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances existing when the
Offering Memorandum is delivered to a purchaser, not misleading or (ii) it is
necessary to amend or supplement the Offering Memorandum to comply with law, the
Company will immediately notify the Initial Purchasers thereof and forthwith
prepare and, subject to paragraph (b) above, furnish to the Initial Purchasers
such amendments or supplements to the Offering Memorandum as may be necessary so
that the statements in the Offering Memorandum as so amended or supplemented
will not, in the light of the circumstances existing when the Offering
Memorandum is delivered to a purchaser, be misleading or so that the Offering
Memorandum will comply with law.
(e) Blue Sky Compliance. The Company will qualify the Securities
for offer and sale under the securities or Blue Sky laws of such jurisdictions
as the Representative shall reasonably request and will continue such
qualifications in effect so long as required for the offering and resale of the
Securities; provided that neither the Company nor any of the Guarantors shall be
required to (i) qualify as a foreign corporation or other entity or as a dealer
in securities in any such jurisdiction where it would not otherwise be required
to so qualify, (ii) file any general consent to service of process in any such
jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it
is not otherwise so subject.
(f) Clear Market. During the period from the date hereof through
and including the date that is 90 days after the date hereof, the Company and
each of the Guarantors will not, without the prior written consent of the
Representative, offer, sell, contract to sell or otherwise dispose of any debt
securities issued or guaranteed by the Company or any of the Guarantors and
having a tenor of more than one year.
(g) Use of Proceeds. The Company will apply the net proceeds from
the sale of the Securities as described in the Offering Memorandum under the
heading "Use of Proceeds".
15
(h) Supplying Information. While the Securities remain outstanding
and are "restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, the Company and each of the Guarantors will, during any period
in which the Company is not subject to and in compliance with Section 13 or
15(d) of the Exchange Act, furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon the request of
such holders or such prospective purchasers, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
(i) PORTAL and DTC. The Company will 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").
(j) No Resales by the Company. Until the issuance of the Exchange
Securities, the Company will not, and will not permit any of its controlled
affiliates (as defined in Rule 144 under the Securities Act) to, resell any of
the Securities that have been acquired by any of them, except for Securities
purchased by the Company or any of its controlled affiliates and resold in a
transaction registered under the Securities Act.
(k) No Integration. Neither the Company nor any of its controlled
affiliates (as defined in Rule 501(b) of Regulation D) will, directly or through
any agent, sell, offer for sale, solicit offers to buy or otherwise negotiate in
respect of, any security (as defined in the Securities Act), that 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.
(l) No General Solicitation or Directed Selling Efforts. None of
the Company or any of its controlled affiliates or any other person acting on
its or their behalf (other than the Initial Purchasers, as to which no covenant
is given) will (i) 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 or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act or (ii) engage in any directed
selling efforts within the meaning of Regulation S, and all such persons will
comply with the offering restrictions requirement of Regulation S.
(m) No Stabilization. Neither the Company nor any of the
Guarantors will take, directly or indirectly, any action designed to or that
could reasonably be expected to cause or result in any stabilization or
manipulation of the price of the Securities.
16
5. Conditions of Initial Purchasers' Obligations. The obligation
of each Initial Purchaser to purchase Securities on the Closing Date as provided
herein is subject to the performance by the Company and each of the Guarantors
of their respective covenants and other obligations hereunder and to the
following additional conditions:
(a) Representations and Warranties. The representations and
warranties of the Company and the Guarantors contained herein shall be true and
correct on the date hereof and on and as of the Closing Date; and the statements
of the Company, the Guarantors and their respective officers made in any
certificates delivered pursuant to this Agreement shall be true and correct on
and as of the Closing Date.
(b) No Downgrade. Subsequent to the execution and delivery of this
Agreement, (i) no downgrading shall have occurred in the rating accorded the
Securities or any other debt or any preferred stock issued or guaranteed by the
Company or any of the Guarantors by any "nationally recognized statistical
rating organization", as such term is defined by the Commission for purposes of
Rule 436(g)(2) under the Securities Act; and (ii) no such organization shall
have publicly announced that it has under surveillance or review, or has changed
its outlook with respect to, its rating of the Securities or of any other debt
or any preferred stock issued or guaranteed by the Company or any of the
Guarantors (other than an announcement with positive implications of a possible
upgrading).
(c) No Material Adverse Change. Subsequent to the execution and
delivery of this Agreement, no event or condition of a type described in Section
3(c) hereof shall have occurred or shall exist, which event or condition is not
described in the Offering Memorandum (excluding any amendment or supplement
thereto) and the effect of which in the reasonable judgment of the
Representative makes it impracticable or inadvisable to proceed with the
offering, sale or delivery of the Securities on the terms and in the manner
contemplated by this Agreement and the Offering Memorandum.
(d) Officer's Certificate. The Representative shall have received
on and as of the Closing Date a certificate of an executive officer of the
Company and of each Guarantor who has specific knowledge of the Company's or
such Guarantor's financial matters and is satisfactory to the Representative (i)
confirming that such officer has carefully reviewed the Offering Memorandum and,
to the best knowledge of such officer, the representation set forth in Section
3(a) hereof is true and correct, (ii) confirming that the other representations
and warranties of the Company and the Guarantors in this Agreement are true and
correct and that the Company and the Guarantors have complied with all
agreements and satisfied all conditions on their part to be performed or
satisfied hereunder at or prior to the Closing Date and (iii) to the effect set
forth in paragraphs (b) and (c) above.
17
(e) Comfort Letters. On the date of this Agreement and on the
Closing Date, Ernst & Young LLP shall have furnished to the Representative, at
the request of the Company, letters, dated the respective dates of delivery
thereof and addressed to the Initial Purchasers, in form and substance
reasonably satisfactory to the Representative, containing statements and
information of the type customarily included in accountants' "comfort letters"
to underwriters with respect to the financial statements and certain financial
information contained in the Preliminary Offering Memorandum and the Offering
Memorandum; provided that the letter delivered on the Closing Date shall use a
"cut-off" date no more than three business days prior to the Closing Date.
(f) Opinion of Counsel for the Company. (i) ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP,
counsel for the Company, shall have furnished to the Representative, at the
request of the Company, their written opinion, dated the Closing Date and
addressed to the Initial Purchasers, in form and substance reasonably
satisfactory to the Representative, to the effect set forth in Annexes B-1 and
B-2 hereto (with respect to New York and Delaware Guarantors).
(ii) Local counsels for the Guarantors organized under the
laws of each of Alabama, Florida, Missouri, New Jersey, North Carolina, Ohio,
Utah, West Virginia and Washington, shall have furnished to the Representative,
at the request of the Company, their written opinion, dated the Closing Date and
addressed to the Initial Purchasers, in form and substance reasonably
satisfactory to the Representative, to the effect set forth in Annex B-2 hereto.
(iii) Tennessee counsel for the Company shall have furnished
to the Representative, at the request of the Company, their written opinion,
dated the Closing Date and addressed to the Initial Purchasers, in form and
substance reasonably satisfactory to the Representative, to the effect set forth
in Annex B-3 hereto.
(iv) Special healthcare regulatory counsel for the Company
and/or the General Counsel of the Company, shall have furnished to the
Representative, at the request of the Company, their written opinion(s) relating
to healthcare regulatory disclosure in the Offering Memorandum, dated the
Closing Date and addressed to the Initial Purchasers, in form and substance
reasonably satisfactory to the Representative.
(g) Opinion of Counsel for the Initial Purchasers. The
Representative shall have received on and as of the Closing Date an opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the Initial Purchasers, with respect to
such matters as the Representative may reasonably request, and such counsel
shall have received such documents and information as they may reasonably
request to enable them to pass upon such matters.
18
(h) No Legal Impediment to Issuance. No action shall have been
taken and no statute, rule, regulation or order shall have been enacted, adopted
or issued by any federal, state or foreign governmental or regulatory authority
that would, as of the Closing Date, prevent the issuance or sale of the
Securities or the issuance of the Guarantees; and no injunction or order of any
federal, state or foreign court shall have been issued that would, as of the
Closing Date, prevent the issuance or sale of the Securities or the issuance of
the Guarantees.
(i) Good Standing. The Representative shall have received on and
as of the Closing Date satisfactory evidence of the good standing of the Company
and its subsidiaries in their respective jurisdictions of organization and their
good standing in such other jurisdictions as the Representative may reasonably
request, in each case in writing or any standard form of telecommunication, from
the appropriate governmental authorities of such jurisdictions.
(j) Registration Rights Agreement. The Initial Purchasers shall
have received a counterpart of the Registration Rights Agreement that shall have
been executed and delivered by a duly authorized officer of the Company and each
of the Guarantors.
(k) PORTAL and DTC. The Securities shall have been approved by the
NASD for trading in the PORTAL Market and shall be eligible for clearance and
settlement through DTC.
(l) Credit Documents. The Company and the Subsidiaries parties
thereto shall have executed and delivered the Credit Documents and the Initial
Purchasers shall have received copies thereof. Each condition to the closing
contemplated by the Credit Documents (other than the issuance and sale of the
Securities pursuant hereto) will, on or prior to the Closing Date, have been
satisfied or waived. There shall not exist at, and as of, the Closing Date
(after giving effect to the transactions contemplated by this Agreement) any
conditions that would constitute a default (or an event that with notice or the
lapse of time, or both, would constitute a default) under the Credit Documents.
(m) Additional Actions. At or simultaneously with the Closing
Date, (1) all of the Existing Notes tendered in the Tender Offer shall have been
accepted by the Company in accordance with the terms of the offer to purchase
and consent solicitation statement dated February 24, 2004 (the "Offer to
Purchase"), (2) the supplemental indenture contemplated by the Offer to Purchase
shall have been executed and delivered by all parties thereto, and the only
condition to its becoming operative shall be the payment for the Existing Notes
tendered and (3) in accordance with the redemption provisions of the indenture
governing the Existing Notes, the Company shall have issued an irrevocable
notice of redemption relating to the Existing Notes not purchased pursuant to
the Offer to Purchase and irrevocably deposited with the trustee the redemption
price for such Existing Notes.
19
(n) Additional Documents. On or prior to the Closing Date, the
Company and the Guarantors shall have furnished to the Representative such
further certificates and documents as the Representative may reasonably request.
All opinions, letters, certificates and evidence 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 counsel for the Initial Purchasers.
6. Indemnification and Contribution.
(a) Indemnification of the Initial Purchasers. The Company and
each of the Guarantors jointly and severally agree to indemnify and hold
harmless each Initial Purchaser, its affiliates, directors and officers and each
person, if any, who controls such Initial Purchaser within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including, without
limitation, reasonable legal fees and other expenses incurred in connection with
any suit, action or proceeding or any claim asserted, as such fees and expenses
are incurred), joint or several, that arise out of, or are based upon, any
untrue statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum (or any amendment or
supplement thereto) or any omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except insofar as
such losses, claims, damages or liabilities arise out of, or are based upon, any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to any Initial
Purchaser furnished to the Company in writing by such Initial Purchaser through
the Representative expressly for use therein; provided, that with respect to any
such untrue statement in or omission from the Preliminary Offering Memorandum,
the indemnity agreement contained in this paragraph (a) shall not inure to the
benefit of any Initial Purchaser to the extent that the sale to the person
asserting any such loss, claim, damage or liability was an initial resale by
such Initial Purchaser and any such loss, claim, damage or liability of or with
respect to such Initial Purchaser results from the fact that both (i) 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 (ii) the
untrue statement in or omission from such 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 the provisions of Section 4 hereof.
(b) Indemnification of the Company. Each Initial Purchaser agrees,
severally and not jointly, to indemnify and hold harmless the Company, each of
the Guarantors and each person, if any, who controls the Company or any of the
Guarantors within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the
20
indemnity set forth in paragraph (a) above, but only with respect to any losses,
claims, damages or liabilities that arise out of, or are based upon, any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with any information relating to such Initial Purchaser
furnished to the Company in writing by such Initial Purchaser through the
Representative expressly for use in the Preliminary Offering Memorandum and the
Offering Memorandum (or any amendment or supplement thereto), it being
understood and agreed that the only such information consists of the following:
the information contained in the third paragraph, the fifth paragraph, the sixth
paragraph, the fifth sentence of the eighth paragraph, the tenth paragraph and
the eleventh paragraph under the heading "Plan of distribution" in the Offering
Memorandum
(c) Notice and Procedures. If any suit, action, proceeding
(including any governmental or regulatory investigation), claim or demand shall
be brought or asserted against any person in respect of which indemnification
may be sought pursuant to either paragraph (a) or (b) above, such person (the
"Indemnified Person") shall promptly notify the person against whom such
indemnification may be sought (the "Indemnifying Person") in writing; provided
that the failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have under this Section 6 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 Person shall not relieve it from any liability that it may have to
an Indemnified Person otherwise than under this Section 6. If any such
proceeding shall be brought or asserted against an Indemnified Person and it
shall have notified the Indemnifying Person thereof, the Indemnifying Person
shall retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others entitled to indemnification
pursuant to this Section 6 that the Indemnifying Person may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding, as incurred. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary; (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person; (iii) the
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to those
available to the Indemnifying Person; or (iv) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying Person shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for any Initial Purchaser,
21
its affiliates, directors and officers and any control persons of such Initial
Purchaser shall be designated in writing by ▇.▇. ▇▇▇▇▇▇ Securities Inc. and any
such separate firm for the Company, the Guarantors and any control persons of
the Company and the Guarantors shall be designated in writing by the Company.
The Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify each Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested that an Indemnifying
Person reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by this paragraph, the Indemnifying Person shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by the Indemnifying
Person of such request and (ii) the Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnification could have been sought hereunder by such
Indemnified Person, unless such settlement (x) includes an unconditional release
of such Indemnified Person, in form and substance reasonably satisfactory to
such Indemnified Person, from all liability on claims that are the subject
matter of such proceeding and (y) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf of any
Indemnified Person.
(d) Contribution. If the indemnification provided for in
paragraphs (a) and (b) above is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (i) in such proportion as is 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) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the Company and the
Guarantors 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
or liabilities, 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 shall be deemed to be in the same respective
proportions as the net proceeds (before deducting expenses) received by the
Company from the sale of the Securities and the total discounts and commissions
received by the Initial Purchasers in connection therewith, as provided in this
Agreement, bear to the
22
aggregate offering price of the Securities. The relative fault of the Company
and the Guarantors on the one hand and the Initial Purchasers on the other 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 or any Guarantor
or by the Initial Purchasers and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
(e) Limitation on Liability. The Company, the Guarantors and the
Initial Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 6 were 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 account of the equitable considerations
referred to in paragraph (d) above. The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to in
paragraph (d) above shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such Indemnified Person in
connection with any such action or claim. Notwithstanding the provisions of this
Section 6, in no event shall an Initial Purchaser 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 offering of the
Securities exceeds the amount of any damages that 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 Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
pursuant to this Section 6 are several in proportion to their respective
purchase obligations hereunder and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this
Section 6 are not exclusive and shall not limit any rights or remedies that may
otherwise be available to any Indemnified Person at law or in equity.
7. Termination. This Agreement may be terminated in the absolute
discretion of the Representative, by notice to the Company, if after the
execution and delivery of this Agreement and prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on the New
York Stock Exchange or the over-the-counter market; (ii) trading of any
securities issued or guaranteed by the Company or any of the Guarantors shall
have been suspended on any exchange or in any over-the-counter market; (iii) a
general moratorium on commercial banking activities shall have been declared by
federal or New York State authorities; or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis, either within or outside the United States, that, in the
reasonable judgment of the Representative, is material and adverse and makes it
impracticable or inadvisable to proceed with the offering, sale or delivery of
the
23
Securities on the terms and in the manner contemplated by this Agreement and the
Offering Memorandum.
8. Defaulting Initial Purchaser. (a) (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 1 hereto that,
pursuant to this Section 8, purchases Securities that a defaulting Initial
Purchaser agreed but failed to purchase.
(b) If, after giving effect to any arrangements 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 rata share (based on the principal amount of Securities that
such Initial Purchaser agreed to purchase hereunder) of the Securities of such
defaulting Initial Purchaser or Initial Purchasers for which such arrangements
have not been made.
(c) If, after giving effect to any arrangements 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 except that the provisions of
Section 6 hereof shall not terminate and shall remain in effect. Any termination
of this Agreement pursuant to this Section 8 shall be without liability
24
on the part of the Company or the Guarantors, except that the Company and each
of the Guarantors will continue to be liable for the payment of expenses as set
forth in Section 9 hereof and except that the provisions of Section 6 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.
9. Payment of Expenses. (a) (a) Whether or not the transactions
contemplated by this Agreement are consummated or this Agreement is terminated,
the Company and each of the Guarantors jointly and severally agree to pay or
cause to be paid all costs and expenses incident to the performance of their
respective obligations hereunder, including without limitation, (i) the costs
incident to the authorization, issuance, sale, preparation and delivery of the
Securities and any taxes payable in that connection; (ii) the costs incident to
the preparation and printing of the Preliminary Offering Memorandum and the
Offering Memorandum (including any amendment or supplement thereto) and the
distribution thereof; (iii) the costs of reproducing and distributing each of
the Transaction Documents; (iv) the fees and expenses of the Company's and the
Guarantors' counsel and independent accountants; (v) the fees and expenses
incurred in connection with the registration or qualification and determination
of eligibility for investment of the Securities under the laws of such
jurisdictions as the Representative may designate and the preparation, printing
and distribution of a Blue Sky Memorandum (including the related fees and
expenses of counsel for the Initial Purchasers); (vi) any fees charged by rating
agencies for rating the Securities; (vii) the fees and expenses of the Trustee
and any paying agent (including related fees and expenses of any counsel to such
parties); (viii) all expenses and application fees incurred in connection 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 (ix) all expenses
incurred by the Company in connection with any "road show" presentation to
potential investors.
(b) If (i) this Agreement is terminated pursuant to Section 7,
(ii) the Company for any reason fails to tender the Securities for delivery to
the Initial Purchasers or (iii) the Initial Purchasers decline to purchase the
Securities for any reason permitted under this Agreement, the Company and each
of the Guarantors jointly and severally agrees to reimburse the Initial
Purchasers for all out-of-pocket costs and expenses (including the reasonable
fees and expenses of their counsel) reasonably incurred by the Initial
Purchasers in connection with this Agreement and the offering contemplated
hereby.
10. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and any controlling persons referred to herein, and the
affiliates, officers and directors of each Initial
25
Purchaser referred to in Section 6 hereof. Nothing in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
contained herein. No purchaser of Securities from any Initial Purchaser shall be
deemed to be a successor merely by reason of such purchase.
11. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company, the Guarantors and
the Initial Purchasers contained in this Agreement or made by or on behalf of
the Company, 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 of this Agreement or any investigation made by or on behalf
of the Company, the Guarantors or the Initial Purchasers.
12. Certain Defined Terms. For purposes of this Agreement, (a)
except where otherwise expressly provided, the term "affiliate" has the meaning
set forth in Rule 405 under the Securities Act; (b) the term "business day"
means any day other than a day on which banks are permitted or required to be
closed in New York City; (c) the term "Exchange Act" means the Securities
Exchange Act of 1934, as amended; and (d) the term "subsidiary" has the meaning
set forth in Rule 405 under the Securities Act.
13. Miscellaneous. (a) Authority of the Representative. Any action
by the Initial Purchasers hereunder may be taken by ▇.▇. ▇▇▇▇▇▇ Securities Inc.
on behalf of the Initial Purchasers, and any such action taken by ▇.▇. ▇▇▇▇▇▇
Securities Inc. shall be binding upon the Initial Purchasers.
(b) Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted and confirmed by any standard form of telecommunication. Notices to
the Initial Purchasers shall be given to the Representative c/o ▇.▇. ▇▇▇▇▇▇
Securities Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (fax: ▇▇▇-▇▇▇-▇▇▇▇);
Attention: ▇▇▇ ▇▇▇▇. Notices to the Company and the Guarantors shall be given to
them at Team Health, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
(fax: ▇▇▇-▇▇▇-▇▇▇▇); Attention: Chief Financial Officer.
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts
(which may include counterparts delivered by any standard form of
telecommunication), each of which shall be an original and all of which together
shall constitute one and the same instrument.
26
(e) Amendments or Waivers. 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.
(f) Headings. The headings herein are included for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[Signature pages follow]
27
If the foregoing is in accordance with your understanding, please
indicate your acceptance of this Agreement by signing in the space provided
below.
Very truly yours,
TEAM HEALTH, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Executive Vice President -
Finance and Administration
28
[Signature page to be provided by ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇]
[GUARANTORS]
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President and
Secretary
Accepted: March 12, 2004
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
For itself and on behalf of the
several Initial Purchasers listed
in Schedule 1 hereto.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: MD
29
Schedule 1
Initial Purchaser Principal Amount
----------------- ----------------
▇.▇. ▇▇▇▇▇▇ Securities Inc. $ 64,125,000
Banc of America Securities LLC 64,125,000
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ 42,750,000
Incorporated
ABN Amro Incorporated 9,000,000
-------------
Total $ 180,000,000
A-1
Schedule 2
ALABAMA
▇▇▇▇▇▇ & ▇▇▇▇▇▇, Inc.
CALIFORNIA
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Partnership
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc.
Team Health Anesthesia Management Services, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Inc.
Mt. Diablo Emergency Physicians, a California General Practice
Physicians Integration Consulting Services, Inc.
Quantum Plus, Inc.
DELAWARE
American Clinical Resources, Inc.
Spectrum Cruise Care, Inc.
Spectrum Healthcare Resources of Delaware, Inc.
Spectrum Healthcare Resources, Inc.
Spectrum Healthcare Services, Inc.
Spectrum Healthcare, Inc.
Spectrum Primary Care of Delaware, Inc.
Spectrum Primary Care, Inc.
Team Health Southwest, L.P.
FLORIDA
After Hours Pediatric Practices, Inc.
Correctional Healthcare Advantage, Inc.
Cullman Emergency Physicians, Inc.
Drs. Sheer, ▇▇▇▇▇▇ & Associates, Inc.
IMBS, Inc.
InPhyNet Contracting Services, Inc.
InPhyNet Hospital Services, Inc.
InPhyNet South Broward, Inc.
Medical Management Resources, Inc.
Paragon Contracting Services, Inc.
Paragon Healthcare Limited Partnership
Rosendorf, Marguiles, Borushok & ▇▇▇▇▇▇▇▇▇▇ Radiology Associates of Hollywood,
Inc.
The Emergency Associates for Medicine, Inc.
MISSOURI
TH Contracting Midwest, LLC
A-2
NEW JERSEY
Emergency Physician Associates, Inc.
NORTH CAROLINA
MetroAmerican Radiology, Inc.
Team Radiology, Inc.
OHIO
Emergency Professional Services, Inc.
Erie Shores Emergency Physicians, Inc.
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Co.
TENNESSEE
Clinic Management Services, Inc.
Emergency Coverage Corporation
Med:Assure Systems, Inc.
Southeastern Emergency Physicians of Memphis, Inc.
Southeastern Emergency Physicians, Inc.
Team Anesthesia, Inc.
Team Health Billing Services, L.P.
Team Health Financial Services, Inc.
Team Health, Inc.
UTAH
Access Nurse PM, Inc.
WASHINGTON
Northwest Emergency Physicians, Inc.
WEST VIRGINIA
Greenbrier Emergency Physicians, Inc.
Health Care Alliance, Inc.
▇▇▇▇▇ Medical Services Corporation
Medical Services, Inc.
A-3
Annex A
Restrictions on Offers and Sales Outside the United States
In connection with offers and sales of Securities outside the United
States:
(a) Each Initial Purchaser acknowledges that 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.
(b) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) 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 under the Securities
Act ("Regulation S") or Rule 144A or any other available exemption from
registration under the Securities Act.
(ii) 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 with respect to
the Securities, and all such persons have complied and will comply with
the offering restrictions requirement of Regulation S.
(iii) At or prior to the confirmation of sale of any
Securities sold in reliance on Regulation S, such Initial Purchaser
will have sent to each distributor, dealer or other person receiving a
selling concession, fee or other remuneration that purchase Securities
from it during the distribution compliance 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."
A-4
(iv) Such Initial Purchaser 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 paragraph (a) and this paragraph (b) and not otherwise defined in
this Agreement have the meanings given to them by Regulation S.
(c) 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 United Kingdom Public Offers of Securities
Regulations 1995 (as amended);
(ii) it has only communicated or caused to be communicated
and will only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning of
Section 21 of the United Kingdom Financial Services and Markets Act
2000 (the "FSMA")) received by it in connection with the issue or sale
of any Securities in circumstances in which Section 21(1) of the FSMA
does not apply to the Company or the Guarantors; and
(iii) it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in relation
to the Securities in, from or otherwise involving the United Kingdom.
(d) Each Initial Purchaser acknowledges that no action has been or
will be taken by the Company that would permit a public offering of the
Securities, or possession or distribution of the Preliminary Offering
Memorandum, the Offering Memorandum or any other offering or publicity material
relating to the Securities, in any country or jurisdiction where action for that
purpose is required.
▇-▇
▇▇▇▇▇ ▇-▇
Form of Opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
1. Each of the Delaware Guarantors is a corporation existing and in good
standing under the General Corporation Law of the State of Delaware, is
qualified to do business and in good standing in each of the
jurisdictions set forth opposite its name on Schedule C hereto, and has
the corporate power to own and lease 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 to which it is
a party.
2. Each of the California Guarantors is a corporation existing and in good
standing under the laws of the General Corporation Law of the State of
California, is qualified to do business and in good standing in each of
the jurisdictions set forth opposite its name on Schedule C hereto, and
has the corporate power to own and lease 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 to which it
is a party.
3. The Registration Rights Agreement has been duly authorized, executed
and delivered by the Delaware Guarantors and the California Guarantors
and, assuming the due authorization, execution and delivery by the
Company, the Foreign Guarantors and the Initial Purchasers, the
Registration Rights Agreement is a valid and binding obligation of the
Company and each Guarantor, enforceable in accordance with its terms.
4. The Indenture has been duly authorized, executed and delivered by the
Delaware Guarantors and the California Guarantors and, assuming the due
authorization, execution and delivery by the Company, the Foreign
Guarantors and the Trustee, the Indenture is a valid and binding
obligation of the Company and each Guarantor, enforceable in accordance
with its terms; and the Indenture conforms in all material respects
with the requirements of the Trust Indenture Act of 1939, as amended
(the "TIA") and the rules and regulations of the Securities and
Exchange Commission applicable to an indenture that is qualified
thereunder.
5. The Purchase Agreement has been duly authorized, executed and delivered
by the Delaware Guarantors and the California Guarantors.
6. When the Securities are paid for by the Initial Purchasers in
accordance with the terms of the Purchase Agreement (assuming the due
authentication and delivery of the Securities by the Trustee in
accordance with the Indenture and the due authorization, execution and
delivery of the Securities and the Guarantees by the Company and the
Foreign Guarantors), the Securities and the Guarantees will constitute
valid and binding obligations of the Company and the Guarantors,
enforceable against each of them in accordance with their respective
terms and entitled to the benefits of the Indenture.
7. The Exchange Securities and the Guarantees have been duly authorized by
the Delaware Guarantors and the California Guarantors. When the
Exchange Securities and the Exchange Guarantees have been duly executed
and delivered by the Company and the Guarantors in accordance with the
terms of the Registration Rights Agreement, the Exchange Offer and the
Indenture (assuming the due authentication and delivery of the Exchange
Securities by the Trustee in accordance with the Indenture), the
Exchange Securities and the Exchange Guarantees thereof will constitute
the valid and binding obligations of the Company and the Guarantors,
enforceable against each of them in accordance with their respective
terms and entitled to the benefits of the Indenture.
8. The Securities and the Indenture conform in all material respects to
the descriptions thereof contained in the Offering Memorandum under the
heading "Description of the notes."
9. The statements in the Offering Memorandum under the heading "Certain
United States federal income tax considerations" to the extent that
such information summarizes laws, governmental rules or regulations,
fairly summarizes in all material respects, such laws, rules and
regulations.
10. No consent, approval, authorization or order of any court or
governmental authority is required for the issuance and sale by the
Company of the Securities to the Initial Purchasers, the issuance of
the Guarantees by the Guarantors or the consummation by the Company and
the Guarantors of the other transactions contemplated by the
Transaction Documents, except such as may be required under the
Securities Act of 1933, as amended (the "Securities Act"), the Exchange
Act of 1934, as amended (the "Exchange Act"), the TIA, the securities
or blue sky laws of the various states (and the rules and regulations
thereunder), as to which we express no opinion in this paragraph.
11. The execution and delivery by the Company and the Guarantors of the
Transaction Documents to which each is a party and the consummation of
the transactions contemplated thereby (including, without limitation,
the issuance and sale of the Securities to the Initial Purchasers and
the issuance of the Guarantees) do not conflict with or constitute or
result in a breach or default under (or an event which with notice or
the passage of time or both would constitute a default under) or
violation of any of, (i) the charter or bylaws of the Delaware
Guarantors or the California Guarantors, (ii) any Applicable Law (as
defined below), or (iii) the terms or provisions of any Specified
Contract (provided that we express no opinion with respect to any
financial test or the triggering of a cross-default provision in any
Specified Contract as a result of a default caused under any other
contract), except for (i) any such conflict, breach, violation, default
or event which would not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the general affairs,
management, business, condition (financial or other), properties,
prospects or results of operations of the Company and its subsidiaries,
taken as a whole and (ii) any such conflict, breach,
violation or default which has been waived by the party or parties with
the power to waive such conflict, breach, violation or default.
12. Neither the Company, nor any Guarantor, will immediately after the sale
of the Securities to the Initial Purchasers and application of the net
proceeds therefrom as described in the Offering Memorandum under the
caption "Use of Proceeds" be, an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
13. To our knowledge, there is no action, suit, proceeding or investigation
before or by any court or governmental agency or body, domestic or
foreign, pending or threatened against the Company or any of its
subsidiaries that (i) has caused us to conclude that such action, suit,
proceeding or investigation would be required to be described in the
Offering Memorandum if the Offering Memorandum were a registration
statement on Form S-1, but is not so described or (ii) would be
reasonably likely to adversely affect the consummation of the other
transactions contemplated by the Purchase Agreement or the Indenture
including, without limitation, the issuance of the Securities.
14. Assuming (i) the accuracy of the representations and warranties of the
Company in Sections 3(ee), 3(ff) and 3(gg) set forth in the Purchase
Agreement and the accuracy of your representations and warranties set
forth in the Purchase Agreement, (ii) the due performance of the
Company and you of the covenants and agreements set forth in the
Purchase Agreement, (iii) your compliance with the offering and
transfer procedures and restrictions described in the Offering
Memorandum, and (iv) the accuracy of the representations and warranties
made to you in accordance with the Purchase Agreement and the Offering
Memorandum by the purchasers to whom you initially resell the
Securities, the offer, sale and delivery of the Securities to you in
the manner contemplated by the Purchase Agreement and the Offering
Memorandum and the initial resale of the Securities by you in the
manner contemplated by the Purchase Agreement and Offering Memorandum
do not require registration under the Securities Act, and prior to the
commencement of the Exchange Offer or the filing of a shelf
registration statement as contemplated by the Registration Rights
Agreement, the Indenture is not required to be qualified under the TIA,
it being understood that we do not express any opinion as to any
subsequent resale of any Security.
*********
The purpose of our professional engagement was not to establish factual
matters, and preparation of the Offering Memorandum involved many determinations
of a wholly or partially nonlegal character. We make no representation that we
have independently verified the accuracy, completeness or fairness of the
Offering Memorandum or that the actions taken in connection with the preparation
of the Offering Memorandum (including the actions described in the next
paragraph) were sufficient to cause the Offering Memorandum to be accurate,
complete or fair. We are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the Offering Memorandum except to
the extent otherwise explicitly indicated in numbered paragraphs 8 and 9 above.
We can, however, confirm that we have participated in conferences with
representatives of the Company and the Guarantors, representatives of the
Initial Purchasers, counsel for the Initial Purchasers and representatives of
the independent accountants for the Company and Guarantors during which
disclosures in the Offering Memorandum and related matters were discussed. In
addition, we have reviewed certain corporate records furnished to us by the
Company and the Guarantors.
Based upon our participation in the conferences and our document review
identified in the preceding paragraph, our understanding of applicable law and
the experience we have gained in our practice thereunder and relying as to
materiality to the extent we deem reasonable upon the opinions and statements of
officers of the Company, we can, however, advise you that nothing has come to
our attention that has caused us to conclude that the Offering Memorandum, at
the date it bears or on the date of this letter, contained or contains 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 light of the circumstances
under which they were made, not misleading.
Annex B-2
Form of Local Counsel Opinion
(a) Each of the Guarantors incorporated under the laws of the
State of [ ] (the "Specified Guarantors") have been duly organized and are
validly existing and in good standing under the laws of [ ], are duly
qualified to do business and are in good standing in each jurisdiction in which
their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to conduct
the businesses in which they are engaged, except where the failure to be so
qualified or have such power or authority would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) All the outstanding shares of capital stock or other equity
interests of each Specified Guarantor have been duly and validly authorized and
issued, are fully paid and non-assessable.
(c) Each of the Specified Guarantors have full right, power and
authority to execute and deliver each of the Transaction Documents to which each
is a party and to perform their respective obligations thereunder; and all
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 has been duly and validly taken.
(d) Each of the Indenture, the Guarantees, this Agreement and the
Registration Rights Agreement has been duly authorized, executed and delivered
by each of the Specified Guarantors.
(e) The Exchange Securities (including the related guarantees)
have been duly authorized by each of the Specified Guarantors.
(f) The execution, delivery and performance by each of the
Specified Guarantors of each of the Transaction Documents to which each is a
party, the issuance and sale of the Securities (including the Guarantees) and
compliance by the Company and each of the Specified Guarantors with the terms
thereof and the consummation of the transactions contemplated by the Transaction
Documents will not (i) result in any violation of the provisions of the charter
or by-laws or similar organizational documents of any of the Specified
Guarantors or (ii) result in the violation of any law statute rule or regulation
of the State of [ ], or any judgment, order or decree of any court or
arbitrator or governmental or regulatory authority of the State of [ ],
except, in the case of clause (ii) above, for any such conflict, breach or
violation that would not, individually or in the aggregate, have a Material
Adverse Effect.
(g) No consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental or regulatory
authority of the State of [ ] is required for the execution, delivery and
performance by the Company and each of the Specified Guarantors of each of the
Transaction Documents to which each is a party, the issuance and sale
of the Securities (including the Guarantees) and compliance by the Company and
each of the Specified Guarantors with the terms thereof and the consummation of
the transactions contemplated by the Transaction Documents, except for such
consents, approvals, authorizations, orders and registrations or qualifications
as may be required (i) under state securities laws in connection with the
purchase and resale of the Securities by the Initial Purchasers and (ii) with
respect to the Exchange Securities (including the related guarantees) under the
Securities Act and applicable state securities laws as contemplated by the
Registration Rights Agreement.
Annex B-3
Form of Opinion of Tennessee Counsel
(a) The Company and each of the Guarantors incorporated under the
laws of the State of Tennessee (the "Tennessee Guarantors") are existing and in
good standing under Tennessee law and has the corporate power to own or lease
its properties and to conduct its business, except where the failure to have
such power would not, individually or in the aggregate, have a material adverse
effect on the general affairs, condition (financial or otherwise), business,
properties, management, financial position, results of operations or prospects
of the Company and its subsidiaries taken as a whole.
(b) The Company and each of the Tennessee Guarantors have the
corporate power and authority to execute and deliver each of the Transaction
Documents to which it is a party and to perform its respective obligations
thereunder; and all action required to be taken by the Company and each of the
Tennessee Guarantors for the due and proper authorization, execution and
delivery of each of the Transaction Documents and the consummation of the
transactions contemplated thereby has been duly and validly taken.
(c) Each of the Indenture, this Agreement and the Registration
Rights Agreement has been duly authorized, executed and delivered by the Company
and each of the Tennessee Guarantors.
(d) The Securities have been duly authorized, executed and
delivered by the Company and, when duly authenticated as provided in the
Indenture and paid for as provided in this Agreement, will be duly and validly
issued and outstanding; and the Guarantees have been duly authorized, executed
and delivered by each of the Tennessee Guarantors.
(e) The Exchange Securities (including the related guarantees)
have been duly authorized by the Company and each of the Tennessee Guarantors.
(f) The execution, delivery and performance by the Company and
each of the Tennessee Guarantors of each of the Transaction Documents to which
each is a party and the consummation of the transactions contemplated by the
Transaction Documents will not (i) result in any violation of the Charter and/or
Certificate of Limited Partnership or Bylaws, as applicable, of the Subject
Companies or (ii) result in the violation of any law, statute, rule or
regulation of the state of Tennessee, or any judgement, order or decree of any
court or arbitrator or governmental or regulatory authority of the state of
Tennessee, except, in the case of clause (ii) above, for any such conflict,
breach or violation that would not, individually or in the aggregate, have a
Material Adverse Effect.
(g) No consent, approval, authorization or order of any Tennessee
court or Tennessee governmental authority is required for the execution and
delivery by the Company and
each of the Tennessee Guarantors of the Transaction Documents to which each is a
party and the consummation of the transactions contemplated by the Transaction
Documents, except as may be required under state securities laws, as to which we
express no opinion.
Exhibit A
[Form of Registration Rights Agreement]