EXHIBIT 4.4
EXECUTION COPY
National Nephrology Associates, Inc.
and
The Guarantors named herein
$160,000,000
9% Senior Subordinated Notes due 2011
Purchase Agreement
dated October 16, 0000
Xxxx xx Xxxxxxx Securities LLC
X.X. Xxxxxx Securities Inc.
RBC Dominion Securities Corporation
Xxxxxx Xxxxxxx Corp.
Table of Contents
SECTION 1. Representations and Warranties.........................................................2
(a) No Registration Required........................................................................2
(b) No Integration of Offerings or General Solicitation.............................................3
(c) Eligibility for Resale under Rule 144A..........................................................3
(d) The Offering Memorandum and the Preliminary Offering Memorandum.................................3
(e) The Purchase Agreement..........................................................................4
(f) The Registration Rights Agreement and DTC Agreement.............................................4
(g) Authorization of the Securities and the Exchange Securities.....................................4
(h) Authorization of the Indenture..................................................................5
(i) Description of the Securities and the Indenture.................................................5
(j) No Material Adverse Change......................................................................5
(k) Independent Accountants.........................................................................6
(l) Preparation of the Financial Statements.........................................................6
(m) Incorporation and Good Standing of the Company and its Subsidiaries.............................6
(n) Capitalization and Other Capital Stock Matters..................................................7
(o) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required......7
(p) No Material Actions or Proceedings..............................................................8
(q) Intellectual Property Rights....................................................................9
(r) All Necessary Permits, etc......................................................................9
(s) Medicare/Medicaid Participation.................................................................9
(t) Other Healthcare Regulatory Matters............................................................10
(u) Title to Properties............................................................................11
(v) Tax Law Compliance.............................................................................12
(w) Company Not an "Investment Company"............................................................12
(x) Insurance......................................................................................12
(y) No Price Stabilization or Manipulation.........................................................12
(z) Solvency.......................................................................................12
(aa) No Unlawful Contributions or Other Payments....................................................13
(bb) MD&A...........................................................................................13
(cc) Company's Accounting System....................................................................13
(dd) Compliance with Environmental Laws.............................................................14
(ee) ERISA Compliance...............................................................................14
(ff) Guarantor Subsidiaries.........................................................................15
(gg) Credit Agreement...............................................................................15
(hh) Compliance with Regulation S...................................................................15
(ii) Taxes; Fees....................................................................................15
(jj) No Labor Disputes..............................................................................15
(kk) Minute Books and Records.......................................................................16
SECTION 2. Purchase, Sale and Delivery of the Securities.........................................16
(a) The Securities.................................................................................16
(b) The Closing Date...............................................................................16
(c) Delivery of the Securities.....................................................................17
(d) Delivery of Offering Memorandum to the Initial Purchasers......................................17
(e) Initial Purchasers as Qualified Institutional Buyers...........................................17
SECTION 3. Additional Covenants..................................................................17
(a) Initial Purchasers' Review of Proposed Amendments and Supplements..............................17
(b) Additional Information, Amendments and Supplements to the Offering Memorandum and Other
Securities Act Matters.........................................................................18
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(c) Copies of the Offering Memorandum..............................................................18
(d) Blue Sky Compliance............................................................................18
(e) The Depositary.................................................................................19
(f) Additional Issuer Information..................................................................19
(g) Agreement Not To Offer or Sell Additional Securities...........................................19
(h) No Integration of Offerings or General Solicitation............................................19
(i) Legended Securities............................................................................20
(j) PORTAL.........................................................................................20
SECTION 4. Payment of Expenses...................................................................20
SECTION 5. Conditions of the Obligations of the Initial Purchasers...............................21
(a) Accountants' Comfort Letter....................................................................21
(b) No Material Adverse Change or Ratings Agency Change............................................21
(c) Opinion of Counsel for the Company.............................................................21
(d) Credit Agreement Opinion.......................................................................21
(e) Opinion of Counsel for the Initial Purchasers..................................................22
(f) Officers' Certificate..........................................................................22
(g) Chief Financial Officer's Certificate..........................................................22
(h) Bring-down Comfort Letter......................................................................22
(i) PORTAL Listing.................................................................................22
(j) Other Agreements...............................................................................23
(k) Credit Agreement...............................................................................23
(l) Additional Documents...........................................................................23
SECTION 6. Reimbursement of Initial Purchasers' Expenses.........................................23
SECTION 7. Offer, Sale and Resale Procedures.....................................................24
SECTION 8. Indemnification.......................................................................25
(a) Indemnification of the Initial Purchasers......................................................25
(b) Indemnification of the Company and their Guarantors and their Directors and Officers...........26
(c) Notifications and Other Indemnification Procedures.............................................27
(d) Settlements....................................................................................27
SECTION 9. Contribution..........................................................................28
SECTION 10. Termination of this Agreement.........................................................29
SECTION 11. Representations and Indemnities to Survive Delivery...................................29
SECTION 12. Notices...............................................................................30
SECTION 13. Successors............................................................................31
SECTION 14. Partial Unenforceability..............................................................31
SECTION 15. Governing Law Provisions..............................................................31
(a) Consent to Jurisdiction........................................................................31
SECTION 16. Default of One or More of the Several Initial Purchasers..............................31
SECTION 17. Tax Disclosure........................................................................32
SECTION 18. General Provisions....................................................................32
SCHEDULE A - Initial Purchasers
EXHIBIT A - List of Subsidiaries
EXHIBIT B-1 - Form of Opinion of Xxxx Xxxxxxx LLP
EXHIBIT B-2 - Form of Opinion of Baker, Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx
PC ANNEX I - Resale Pursuant to Regulation S or Rule 144A
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Purchase Agreement
October 16, 0000
XXXX XX XXXXXXX SECURITIES LLC
X.X. XXXXXX SECURITIES INC.
RBC DOMINION SECURITIES CORPORATION
XXXXXX XXXXXXX CORP.
As Initial Purchasers
c/o BANC OF AMERICA SECURITIES LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Introductory. National Nephrology Associates, Inc., a Delaware
corporation (the "Company"), proposes to issue and sell to Banc of America
Securities LLC, X.X. Xxxxxx Securities Inc., RBC Dominion Securities Corporation
and Xxxxxx Xxxxxxx Corp. (collectively, the "Initial Purchasers"), acting
severally and not jointly, the respective amounts set forth in Schedule A of a
$160,000,000 aggregate principal amount of the Company's 9% Senior Subordinated
Notes due 2011 (the "Notes").
The Notes will be issued pursuant to an indenture, to be dated as of
October 22, 2003 (the "Indenture"), among the Company, the Guarantors (as
defined below) and Xxxxx Fargo Bank Minnesota, N.A., as trustee (the "Trustee").
Notes issued in book-entry form will be issued in the name of Cede & Co., as
nominee of The Depository Trust Company (the "Depositary") pursuant to a DTC
letter of representations, to be dated as of the Closing Date (as defined in
Section 2) (the "DTC Agreement"), among the Company, the Guarantors, the Trustee
and the Depositary.
The holders of the Notes will be entitled to the benefits of a
registration rights agreement, to be dated as of October 22, 2003 (the
"Registration Rights Agreement"), among the Company, the Guarantors and the
Initial Purchasers, pursuant to which the Company and the Guarantors will agree
to file, within 180 days of the Closing Date, a registration statement with the
Commission registering the Exchange Securities (as defined below) under the
Securities Act.
The payment of principal, premium and Liquidated Damages (as defined in
the Indenture), if any, and interest on the Notes and the Exchange Notes (as
defined below) will be fully and unconditionally guaranteed on a senior
subordinated unsecured basis, jointly and severally by (i) all of the wholly
owned subsidiaries of the Company and (ii) any wholly owned subsidiary of the
Company formed or acquired after the Closing Date or any other subsidiary that
executes an additional guarantee in accordance with the terms of the Indenture,
and their respective successors and assigns (collectively, the "Guarantors"),
pursuant to their guarantees (the "Guarantees"). The Notes and the Guarantees
attached thereto are herein collectively referred to as the "Securities"; and
the Exchange Notes and the Guarantees attached thereto are herein collectively
referred to as the "Exchange Securities."
At or prior to the Closing Date, the Company will enter into a new
senior secured credit facility, consisting of a $75 million five-year revolving
credit facility, with a syndicate of lenders led by Bank of America, N.A.,
substantially as described in the Offering Memorandum and as set forth in a
credit agreement, to be dated as of the Closing Date, between the Company, the
Guarantors, Bank of America, N.A. as administrative agent, L/C issuer and swing
line lender, the lender parties named therein and Banc of America Securities LLC
as sole lead arranger and sole book manager, together with any collateral and
other ancillary documents related thereto (the "Credit Agreement"). As more
specifically provided for in the Credit Agreement, it is a condition to the
closing of the Credit Agreement that the Company shall have received at least
$160 million in gross cash proceeds from the issuance and sale of the
Securities. The Company will use the net proceeds from the issuance and sale of
the Securities, along with borrowing under the Credit Agreement, to, among other
things, repay borrowings under the Company's existing credit facility.
The Company and the Guarantors understand that the Initial Purchasers
propose to make an offering of the Securities on the terms and in the manner set
forth herein and in the Offering Memorandum (as defined below) and agree that
the Initial Purchasers may resell, subject to the conditions set forth herein,
all or a portion of the Securities to purchasers (the "Subsequent Purchasers")
at any time after the date of this Agreement. The Securities are to be offered
and sold to or through the Initial Purchasers without being registered with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act," which term, as used herein, includes
the rules and regulations of the Commission promulgated thereunder), in reliance
upon exemptions therefrom. The terms of the Securities and the Indenture will
require that investors who acquire Securities expressly agree that Securities
may only be resold or otherwise transferred, after the date hereof, if such
Securities are registered for sale under the Securities Act or if an exemption
from the registration requirements of the Securities Act is available (including
the exemptions afforded by Rule 144A ("Rule 144A") or Regulation S ("Regulation
S") thereunder).
The Company and the Guarantors have prepared and delivered to each
Initial Purchaser copies of a Preliminary Offering Memorandum, dated October 6,
2003 (the "Preliminary Offering Memorandum"), and have prepared and will deliver
to each Initial Purchaser, copies of the Offering Memorandum, dated October 16,
2003, describing the terms of the Securities, each for use by such Initial
Purchaser in connection with its solicitation of offers to purchase the
Securities. As used herein, the "Offering Memorandum" shall mean, with respect
to any date or time referred to in this Agreement, the Company's Offering
Memorandum, dated October 16, 2003, including amendments or supplements thereto
and any exhibits thereto, in the most recent form that has been prepared and
delivered by the Company and the Guarantors to the Initial Purchasers in
connection with their solicitation of offers to purchase Securities.
The Company and the Guarantors hereby confirm their respective
agreements with the Initial Purchasers as follows:
SECTION 1. Representations and Warranties. Each of the Company and the
Guarantors, jointly and severally, hereby represents, warrants and covenants to
each Initial Purchaser as follows:
(a) No Registration Required. Subject to compliance by the Initial
Purchasers with the representations and warranties set forth in Section
2 hereof and with the procedures set forth in Section 7 hereof, it is
not
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necessary in connection with the issuance and sale of the Securities to
the Initial Purchasers and the offer, sale and delivery of the
Securities to each Subsequent Purchaser in the manner contemplated by
this Agreement and the Offering Memorandum to register the Securities
under the Securities Act or, until such time as the Exchange Securities
are issued pursuant to an effective registration statement, to qualify
the Indenture under the Trust Indenture Act of 0000 (xxx "Xxxxx
Xxxxxxxxx Xxx," which term, as used herein, includes the rules and
regulations of the Commission promulgated thereunder).
(b) No Integration of Offerings or General Solicitation. The Company
has not, and none of the Company's subsidiaries or Affiliates (as such
term is defined in Rule 501 under the Securities Act (each, an
"Affiliate")) have, directly or indirectly, solicited any offer to buy
or offered to sell, and will not, directly or indirectly, solicit any
offer to buy or offer to sell, in the United States or to any United
States citizen or resident, any security which is or would be
integrated with the sale of the Securities in a manner that would
require the Securities to be registered under the Securities Act. None
of the Company, the Guarantors, any of their subsidiaries or
Affiliates, or any person acting on its or any of their behalf (other
than the Initial Purchasers, as to whom the Company and the Guarantors
make no representation, warranty or covenant) has engaged or will
engage, in connection with the offering of the Securities, in any form
of general solicitation or general advertising within the meaning of
Rule 502 under the Securities Act. With respect to those Securities
sold in reliance upon Regulation S, (i) none of the Company, the
Guarantors, any of their subsidiaries or Affiliates or any person
acting on its or any of their behalf (other than the Initial
Purchasers, as to whom the Company and the Guarantors make no
representation, warranty or covenant) has engaged or will engage in any
directed selling efforts within the meaning of Regulation S and (ii)
each of the Company, the Guarantors, any of their subsidiaries or
Affiliates and any person acting on its or their behalf (other than the
Initial Purchasers, as to whom the Company and the Guarantors make no
representation, warranty or covenant) has complied and will comply with
the offering restrictions set forth in Regulation S.
(c) Eligibility for Resale under Rule 144A. The Securities are eligible
for resale pursuant to Rule 144A and will not be, at the Closing Date,
of the same class as securities listed on a national securities
exchange registered under Section 6 of the Exchange Act or quoted in a
U.S. automated interdealer quotation system.
(d) The Offering Memorandum and the Preliminary Offering Memorandum.
Each of the Offering Memorandum and Preliminary Offering Memorandum
does not, and at the Closing Date the Offering Memorandum will not,
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided that this representation, warranty and agreement shall not
apply to statements in or omissions from the Offering Memorandum made
in reliance upon and in conformity with information furnished to the
Company or any Guarantor in writing by the Initial Purchasers expressly
for use in the Offering Memorandum. Each of the Preliminary Offering
Memorandum and the Offering Memorandum, as of its date, contains all
the information specified in, and meeting the requirements of, Rule
144A. Neither the
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Company nor any of the Guarantors have distributed, and the Company and
the Guarantors will not distribute, prior to the later of the Closing
Date and the completion of the Initial Purchasers' distribution of the
Securities, any offering material in connection with the offering and
sale of the Securities other than the Preliminary Offering Memorandum
or the Offering Memorandum.
(e) The Purchase Agreement. This Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the
Company and each of the Guarantors, enforceable in accordance with its
terms, except as rights to indemnification and contribution hereunder
may be limited by applicable law or against public policy and subject
to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other laws of general applicability relating to or
affecting the rights and remedies of creditors or by general principles
of equity (whether considered in a proceeding at law or in equity).
(f) The Registration Rights Agreement and DTC Agreement. The
Registration Rights Agreement has been duly authorized by the Company
and each of the Guarantors and, at the Closing Date, will be duly
executed and delivered by, and will be a valid and binding agreement
of, the Company and each of the Guarantors, enforceable in accordance
with its terms, except as rights to indemnification and contribution
thereunder may be limited by applicable law or against public policy
and subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other laws of general applicability
relating to or affecting the rights and remedies of creditors or by
general principles of equity (whether considered in a proceeding at law
or in equity). At the Closing Date, the DTC Agreement will be duly
authorized, executed and delivered by, and will be a valid and binding
agreement of, the Company, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other laws of general applicability
relating to or affecting the rights and remedies of creditors or by
general principles of equity (whether considered in a proceeding at law
or in equity). Pursuant to the Registration Rights Agreement, the
Company and the Guarantors each will agree to file with the Commission,
under the circumstances set forth therein, (i) a registration statement
under the Securities Act relating to another series of debt securities
of the Company with terms substantially identical to the Notes (the
"Exchange Notes") to be offered in exchange for the Notes (the
"Exchange Offer") and (ii) to the extent required by the Registration
Rights Agreement, a shelf registration statement pursuant to Rule 415
of the Securities Act relating to the resale by certain holders of the
Notes, and in each case, to use its reasonable best efforts to cause
such registration statements to be declared effective.
(g) Authorization of the Securities and the Exchange Securities. (i)
The Notes to be purchased by the Initial Purchasers from the Company
are in the form contemplated by the Indenture, have been duly
authorized for issuance and sale pursuant to this Agreement and the
Indenture and, at the Closing Date, will have been duly executed by the
Company and, when authenticated in the manner provided for in the
Indenture and delivered against payment of the purchase price therefor,
will constitute valid and binding obligations of the Company,
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
laws of general applicability relating to or affecting the rights and
remedies of creditors or by general principles of equity (whether
considered in a
4
proceeding at law or in equity) and will be entitled to the benefits of
the Indenture. (ii) The Exchange Notes have been duly and validly
authorized for issuance by the Company, and when issued and
authenticated in accordance with the terms of the Indenture, the
Registration Rights Agreement and the Exchange Offer, will constitute
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
laws of general applicability relating to or affecting the rights and
remedies of creditors or by general principles of equity (whether
considered in a proceeding at law or in equity) and will be entitled to
the benefits of the Indenture. (iii) The Guarantees of the Notes are in
the form contemplated by the Indenture, have been duly authorized for
issuance and sale pursuant to this Agreement and the Indenture and, at
the Closing Date, will have been duly executed by each of the
Guarantors and, when the Notes have been authenticated in the manner
provided for in the Indenture and delivered against payment of the
purchase price therefor, will constitute valid and binding agreements
of the Guarantors, enforceable in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other laws of general applicability relating to or
affecting the rights and remedies of creditors or by general principles
of equity (whether considered in a proceeding at law or in equity) and
will be entitled to the benefits of the Indenture. (iv) The Guarantees
of the Exchange Notes will be in the form contemplated by the
Indenture, will have been duly authorized for issuance and sale
pursuant to the Indenture and when issued and authenticated in
accordance with the terms of the Indenture, will constitute valid and
binding agreements of the Guarantors, enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other laws of general applicability
relating to or affecting the rights and remedies of creditors or by
general principles of equity (whether considered in a proceeding at law
or in equity) and will be entitled to the benefits of the Indenture.
(h) Authorization of the Indenture. The Indenture has been duly
authorized by the Company and each of the Guarantors and, at the
Closing Date, will have been duly executed and delivered by the Company
and each of the Guarantors and will constitute a valid and 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 the enforcement thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of
creditors or by general equitable principles (whether considered in a
proceeding at law or in equity).
(i) Description of the Securities and the Indenture. The Notes, the
Guarantees of the Notes and the Indenture conform, or will conform, in
all material respects to the respective statements relating thereto
contained in the Offering Memorandum. The Exchange Notes and the
Guarantees of the Exchange Notes will conform in all material respects
to the respective statements relating thereto contained in the Offering
Memorandum and the registration statement relating to the Exchange
Securities at the time such registration statement becomes effective.
(j) No Material Adverse Change. Except as otherwise disclosed in the
Offering Memorandum, subsequent to the
5
respective dates as of which information is given in the Offering
Memorandum: (i) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business,
operations or prospects, whether or not arising from transactions in
the ordinary course of business, of the Company and its subsidiaries,
considered as one entity (any such change is called a "Material Adverse
Change"); (ii) the Company and its subsidiaries, considered as one
entity, have not incurred any material liability or obligation (in any
such case, other than with respect to any fees payable in connection
with the offering of the Securities), indirect, direct or contingent,
not in the ordinary course of business nor entered into any material
transaction or agreement not in the ordinary course of business; and
(iii) except for the accrual of dividends on the Company's Series C
Preferred Stock, there has been no dividend or distribution of any kind
declared, paid or made by the Company or, except for dividends paid to
the Company or other subsidiaries, any of its subsidiaries on any class
of capital stock or repurchase or redemption by the Company or any of
its subsidiaries of any class of capital stock.
(k) Independent Accountants. KPMG LLP, who have expressed their opinion
with respect to the financial statements (which term as used in this
Agreement includes the related notes thereto) included in the Offering
Memorandum, are independent public or certified public accountants
within the meaning of Regulation S-X under the Securities Act and the
Exchange Act.
(l) Preparation of the Financial Statements. The financial statements,
together with the related schedules and notes, included in the Offering
Memorandum present fairly, in all material respects, the consolidated
financial position of the Company and its subsidiaries as of and at the
dates indicated and the results of their operations and cash flows for
the periods specified, subject, in the case of interim financial
statements, to year-end adjustments. Such financial statements have
been prepared in conformity with generally accepted accounting
principles as applied in the United States of America, applied on a
consistent basis throughout the periods involved, except as may be
expressly stated in the related notes thereto. The financial statements
included in the Offering Memorandum comply as to form with the
requirements applicable to registration statements on Form S-1 under
the Securities Act. The financial data set forth in the Offering
Memorandum under the captions "Offering Memorandum Summary--Summary
Financial Data" and "Selected Consolidated Financial Data" present
fairly the historical financial information set forth therein on a
basis consistent with that of the audited and unaudited financial
statements contained in the Offering Memorandum. No pro forma financial
statements would be required by Regulation S-X under the Securities Act
to be included in the Offering Memorandum if the Offering Memorandum
were a registration statement on Form S-1 under the Securities Act.
(m) Incorporation and Good Standing of the Company and its
Subsidiaries. Each of the Company and its subsidiaries has been duly
incorporated or formed and is validly existing as a corporation,
partnership or limited liability company in good standing under the
laws of the jurisdiction of its incorporation or formation and has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Offering Memorandum
and, in the case of the Company and
6
the Guarantors, to enter into and perform its obligations under each of
this Agreement, the Registration Rights Agreement, the DTC Agreement,
the Securities, the Exchange Securities, the Indenture and the Credit
Agreement to which it is a party. Each of the Company and each
subsidiary is duly qualified as a foreign corporation, partnership or
limited liability company, as applicable, to transact business and is
in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except for such jurisdictions where the
failure to so qualify or to be in good standing would not, individually
or in the aggregate, result in a Material Adverse Change.
(n) Capitalization and Other Capital Stock Matters. At June 30, 2003,
on a consolidated basis, after giving pro forma effect to the issuance
and sale of the Securities pursuant hereto, the application of the net
proceeds therefrom and the closing of the Credit Agreement, the Company
would have an authorized and outstanding capitalization as set forth in
the Offering Memorandum under the caption "Capitalization" (other than
for subsequent issuances of capital stock, if any, pursuant to employee
benefit plans described in the Offering Memorandum or upon exercise or
conversion of outstanding options or convertible securities described
in the Offering Memorandum). All of the outstanding shares of capital
stock of the Company have been duly authorized and validly issued, are
fully paid and nonassessable and have been issued in compliance with
federal and state securities laws. None of the outstanding shares of
Common Stock were issued in violation of any preemptive rights, rights
of first refusal or other similar rights to subscribe for or purchase
securities of the Company. There are no authorized or outstanding debt
securities convertible into or exchangeable or exercisable for any
capital stock of the Company or any of its subsidiaries other than
those accurately described in the Offering Memorandum. The description
of the Company's stock option plan, and the options or other rights
granted thereunder, set forth in the Offering Memorandum accurately and
fairly describes such plans. All of the issued and outstanding capital
stock or limited liability company interests of each subsidiary has
been duly authorized and validly issued, is fully paid and
nonassessable and, to the extent owned by the Company, directly or
through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim. The Company does not own
or control, directly or indirectly, any corporation, association or
other entity other than the subsidiaries listed in Exhibit A hereto.
(o) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any of
its subsidiaries is in violation of its charter or by-laws or is in
default (or, with the giving of notice or lapse of time, would be in
default) ("Default") under any indenture, mortgage, loan or credit
agreement, note, contract, franchise, lease, license or other
instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject
(each, an "Existing Instrument"), except for such Defaults as would
not, individually or in the aggregate, result in a Material Adverse
Change and except for Defaults that have been waived or suspended in
writing and disclosed in the Offering Memorandum. The execution,
delivery and performance of this Agreement, the Registration Rights
Agreement, the Credit Agreement and the Indenture by the Company and
each Guarantor party thereto, the Company's execution, delivery and
performance of the DTC Agreement and the issuance and delivery of the
Securities or the Exchange Securities, and consummation of
7
the transactions contemplated hereby and thereby and by the Offering
Memorandum (i) will not result in any violation of the provisions of
the charter, by-laws, partnership agreement, operating agreement or
other similar constitutive document of the Company or any subsidiary,
(ii) will not conflict with or constitute a breach of, or Default or a
Debt Repayment Triggering Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant
to, or require the consent of any other party to, any Existing
Instrument, except for such conflicts, breaches, Defaults, liens,
charges or encumbrances as would not, individually or in the aggregate,
result in a Material Adverse Change, and (iii) will not result in any
violation of any law, administrative regulation or administrative or
court decree applicable to the Company or any subsidiary. No consent,
approval, authorization or other order of, or registration or filing
with, any court or other governmental or regulatory authority or
agency, is required for the Company's or any Guarantor's execution,
delivery and performance of this Agreement, the Registration Rights
Agreement, the DTC Agreement, the Credit Agreement or the Indenture, to
which it is a party, or the issuance and delivery of the Securities or
the Exchange Securities, or consummation of the transactions
contemplated hereby and thereby and by the Offering Memorandum, except
such as have been obtained or made by the Company or the Guarantors and
are in full force and effect under the Securities Act, applicable state
securities or blue sky laws and except such as may be required by
federal and state securities laws with respect to the Company's and the
Guarantors' obligations under the Registration Rights Agreement and
issuance of the Exchange Securities and the Guarantees thereof. As used
herein, a "Debt Repayment Triggering Event" means any event or
condition which gives, or with the giving of notice or lapse of time
would give, the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right
to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any of its subsidiaries.
(p) No Material Actions or Proceedings. Except as otherwise disclosed
in the Offering Memorandum, to the Company's or any Guarantor's
knowledge, there are no legal or governmental actions, suits,
investigations or proceedings pending or threatened against or
affecting the Company or any of its subsidiaries, or the officers,
directors, employees or agents (as defined in 42 C.F.R. Part 420
Subpart C and 42 C.F.R. Section 1001.1001(a)(2)) of the Company or any
of its subsidiaries, which has as the subject thereof any property
owned or leased by, the Company or any of its subsidiaries, where in
any such case there is a reasonable possibility that such action, suit
or proceeding might be determined adversely to the Company or such
subsidiary and any such action, suit, investigation or proceeding, if
so determined adversely, would reasonably be expected to result in a
Material Adverse Change or materially and adversely affect the
consummation of the transactions contemplated by this Agreement,
including, without limitation, any such action, suit, investigation or
proceeding pursuant to federal or state laws or regulations (i)
prohibiting the payment or receipt of remuneration for patient
referrals, (ii) prohibiting the filing of false claims, (iii)
prescribing conditions of participation for certification by the
Medicare and Medicaid programs and any other federal or state
healthcare program or (iv) providing for coverage and reimbursement
under Medicare, Medicaid and any other federal or state healthcare
program.
8
(q) Intellectual Property Rights. The Company and its subsidiaries own,
possess or license sufficient trademarks, trade names, patent rights,
copyrights, licenses, approvals, trade secrets and other similar rights
(collectively, "Intellectual Property Rights") reasonably necessary to
conduct their businesses as now conducted; and the expected expiration
of any of such Intellectual Property Rights would not result in a
Material Adverse Change. Neither the Company nor any of its
subsidiaries has received any notice of infringement or conflict with
asserted Intellectual Property Rights of others, which infringement or
conflict, if the subject of an unfavorable decision, ruling or filing
would result in a Material Adverse Change. Neither the Company nor any
of its subsidiaries is in default under the terms of any license or
similar agreement related to any Intellectual Property Rights necessary
to conduct their business as now conducted or contemplated except as
would not result in a Material Adverse Change.
(r) All Necessary Permits, etc. The Company and each subsidiary possess
such valid and current certificates, authorizations, qualifications,
licenses, permits, consents or approvals (including certificates of
need, licenses, pharmacy licenses, Medicare and Medicaid provider
agreements, accreditations and other similar documentation, or
approvals of any local health departments) issued by the appropriate
municipal, state, federal or foreign regulatory agencies or bodies
necessary to conduct their respective businesses as now conducted
except as would not result in a Material Adverse Change, and neither
the Company nor any subsidiary has received any notice of proceedings
relating to the revocation or modification of, or non-compliance with,
any such certificate, authorization or permit which, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would not reasonably be expected to result in a Material
Adverse Change.
(s) Medicare/Medicaid Participation. To the knowledge of the Company
and each subsidiary, none of the Company, any of its subsidiaries, any
existing or designated officers or directors of the Company or the
respective subsidiary, any agent (as defined in 42 C.F.R. Section
1001.1001(a)(2)) acting on behalf of the Company, or managing employee
(as defined in SSA Section 1126(b) or any regulations promulgated
thereunder) acting on behalf of the Company: (1) has had a material
civil monetary penalty assessed against it under Section 1128A of the
SSA or any regulations promulgated thereunder; (2) has been excluded
from participation under the Medicare program or a federal or state
healthcare program; or (3) has been convicted (as that term in defined
in 42 C.F.R. Section 1001.2) of any of the following categories of
offenses as described in SSA Section 1128(a) and (b)(1), (2), (3) or
any regulations promulgated thereunder: (i) criminal offenses relating
to the delivery of an item or service under Medicare or any federal or
state healthcare program; (ii) criminal offenses under federal or state
law relating to patient neglect or abuse in connection with the
delivery of a healthcare item or service; criminal offenses under
federal or state law relating to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct in connection
with the delivery of a healthcare item or service or with respect to
any act or omission in a program operated by or financed in whole or in
part by any federal, state or local governmental agency; (iii) federal
or state laws relating to the interference with or obstruction of any
investigation into any criminal offense described above in this
paragraph; or (iv) criminal offenses under federal or state law
relating to the unlawful manufacture, distribution, prescription or
dispensing of a controlled substance. The Company, a subsidiary, or an
entity owned in whole or in part
9
by the Company or a subsidiary has a Medicare provider number, and
materially meets all applicable Medicare conditions of participation,
in each locale, as applicable, in which the Company, such subsidiary or
such entity bills directly to Medicare for services furnished by the
Company, such subsidiary or such entity. The Company, a subsidiary, or
an entity owned in whole or in part by the Company or a subsidiary has
a Medicaid provider number, and a participating provider agreement, and
materially satisfies all applicable Medicaid conditions of coverage, in
each state, as applicable, in which the Company, such subsidiary, or
such other entity bills directly to such state's Medicaid agency for
services provided by the Company, such subsidiary, or such other entity
for Medicaid patients.
The Company, the Guarantors and their officers and directors,
and persons who provide professional services under agreements with the
Company and the employees of the subsidiaries of the Company have not,
on behalf of the Company, knowingly and willfully, except where,
individually or in the aggregate, it would not reasonably be expected
to result in a Material Adverse Change: (i) made or caused to be made a
false statement or representation of a material fact in any application
for any benefit or payment; (ii) made or caused to be made any false
statement or representation of a material fact for use in determining
rights to any benefit or payment; (iii) presented or caused to be
presented a claim for reimbursement under Medicare, Medicaid or other
federal or state healthcare program that is (A) for an item or service
that the person presenting or causing to be presented knows or should
know was not provided as claimed, or (B) for an item or service and the
person presenting knows or should know that the claim is false or
fraudulent; (iv) failed to disclose knowledge of the occurrence of any
event affecting the initial or continued right of a claimant to any
benefit or payment on its own behalf or on behalf of another, with
intent to fraudulently secure such benefit or payment in a greater
amount or quantity than is due or when no such benefit or payment is
authorized if such event results in an improper benefit to the Company;
or (v) made or caused to be made or induced or sought to induce the
making of any false statement or representation (or knowingly and
willfully omitted to state a fact required to be stated therein or
necessary to make the statements contained therein not misleading) of a
material fact with respect to (a) the conditions or operations of a
facility in order that the facility may qualify for Medicare, Medicaid
or other federal or state healthcare program certification, or (b)
information required to be provided under Section 1124A of the Social
Security Act (42 U.S.C. Section 1320a-3a).
To the knowledge of the Company and the Guarantors, there are
no Medicare or Medicaid recoupment or recoupments of any other
third-party payor being sought, threatened, requested or claimed
against the Company or any Subsidiary that could reasonably be expected
to result in a Material Adverse Change.
(t) Other Healthcare Regulatory Matters. To the knowledge of the
Company and each Guarantor, except as otherwise described in the
Offering Memorandum, none of (i) the Company, any of its subsidiaries,
or the officers, directors, employees, or agents (as defined in 42
C.F.R. Part 420 Subpart C and 42 C.F.R. Section 1001.1001(a)(2)) of the
Company or any of its subsidiaries, or (ii) any entity which the
Company or any of its subsidiaries manages ("Managed Entity") has (and
with respect to the officers, directors, agents and employees of the
Company or any of its subsidiaries or any employee of any Managed
Entity as described above, only as to any activity during their
employment or association with the Company, any subsidiary of the
Company or any Managed Entity) (A) been charged with, or has been or is
being
10
investigated with respect to, any activity that materially contravenes
or could materially contravene or constitutes or could constitute a
material violation of any Healthcare Law (defined below), or (B)
knowingly and willfully engaged in any activity that materially
contravenes or constitutes a material violation of any Healthcare Law
during their employment or association with the Company, any
subsidiary, or any Managed Entity, which could reasonably be expected
to result in a Material Adverse Change. To the knowledge of the Company
and each Guarantor, no person who has a direct or indirect ownership
interest of 5% or more (as those terms are defined in 42 C.F.R. Part
420 Subpart C and 42 C.F.R. Section 1001.1001(a)(2)) in the Company or
any subsidiary, has been charged with, or has been or is being
investigated with respect to, any activity involving the Company or any
subsidiary that materially contravenes or could materially contravene
or constitutes or could constitute a material violation of any
Healthcare Law except as described in the Offering Memorandum. To the
knowledge of the Company and each Guarantor and except as described in
the Offering Memorandum, none of the officers, directors and agents of
any Managed Entity has been charged with, or has (A) been or is being
investigated with respect to, any activity during their employment or
association with any Managed Entity that materially contravenes or
could materially contravene or constitutes or could constitute a
material violation of any Healthcare Law, or (B) engaged in any
activity during their employment or association with the Company, any
subsidiary or any Managed Entity that materially contravenes or
constitutes a material violation of any Healthcare Law. To the
knowledge of the Company and each Guarantor and except as described in
the Offering Memorandum, no person who has a direct or indirect
ownership interest of 5% or more (as those terms are defined in 42
C.F.R. Part 420 Subpart C and 42 C.F.R. Section 1001.1001(a)(2)) in a
Managed Entity has been charged with, or has been or is being
investigated with respect to, any activity in connection with the
Managed Entity that materially contravenes or could materially
contravene or constitutes or could constitute a material violation of
any Healthcare Law. "Healthcare Law" means the following laws or
regulations relating to the regulation of the healthcare industry or to
payment for services rendered by healthcare providers: (i) Sections
1877, 1128, 1128A or 1128B of the Social Security Act ("SSA"); (ii) any
prohibition on the making of any false statement or misrepresentation
of material facts to any governmental agency that administers a federal
or state healthcare program (including, but not limited to, Medicare,
Medicaid, and the federal Civilian Health and Medical Plan of the
Uniformed Services); (iii) the licensure, certification or registration
requirements of healthcare facilities, services or equipment; (iv) any
state certificate of need or similar law governing the establishment of
healthcare facilities or services or the making of healthcare capital
expenditures; (v) any state law relating to fee-splitting or the
corporate practice of medicine; (vi) any state physician self-referral
prohibition or state anti-kickback law; (vii) any criminal offense
relating to the delivery of, or claim for payment for, a healthcare
item or service under any federal or state healthcare program; (viii)
any federal or state law relating to the interference with or
obstruction of any investigation into any criminal offense; and (ix)
any criminal offense under federal or state law relating to the
unlawful distribution, prescription or dispensing of a controlled
substance.
(u) Title to Properties. The Company and each of its subsidiaries has
good and marketable title to all the properties and assets reflected as
owned in the financial statements referred to in Section 1(l) above (or
elsewhere in the Offering Memorandum), in each case free and clear of
any security interests, mortgages, liens, encumbrances, equities,
claims and other defects, except as would not reasonably expected to
result in a Material Adverse Change.
11
The real property, improvements, equipment and personal property held
under lease by the Company or any subsidiary are held under valid and
enforceable leases, with such exceptions as would not reasonably be
expected to result in a Material Adverse Change.
(v) Tax Law Compliance. The Company and its subsidiaries have filed all
material federal, state and foreign income and franchise tax returns
required to have been filed and have paid all taxes shown on such
returns as due and payable and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them. The
Company and each Guarantor have made adequate charges, accruals and
reserves in accordance with generally accepted accounting principles
applied in the United States in the applicable financial statements
referred to in Section 1(l) above in respect of all federal, state and
foreign income and franchise taxes for all periods as to which the tax
liability of the Company or any of its subsidiaries has not been
finally determined except when such failure would not reasonably be
expected to result in a Material Adverse Change.
(w) Company Not an "Investment Company". The Company has been advised
of the rules and requirements under the Investment Company Act of 1940,
as amended (the "Investment Company Act"). The Company is not, and
after receipt of payment for the Securities will not be, an "investment
company" within the meaning of Investment Company Act and will conduct
its business in a manner so that it will not become subject to the
Investment Company Act.
(x) Insurance. Each of the Company and its subsidiaries are insured by
recognized, financially sound institutions (or are self-insured at
prudent levels) with policies in such amounts and with such deductibles
and policy limits and covering such risks as are generally deemed
adequate and customary for their businesses including, but not limited
to, policies covering professional liability and malpractice. The
Company has no reason to believe that it or any subsidiary will not be
able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain adequate and comparable coverage as
may be necessary or appropriate to conduct its business as now
conducted and at a cost that would not result in a Material Adverse
Change.
(y) No Price Stabilization or Manipulation. None of the Company, the
Guarantors or any of their respective Affiliates has taken or will
take, directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Securities.
(z) Solvency. The Company and each of the Guarantors is (except to the
extent the Company and/or such Guarantors may be deemed insolvent by
reason of a default under its existing credit facility), and
immediately after the Closing Date will be, Solvent. As used herein,
the term "Solvent" means, with respect to the Company or any Guarantor
on a particular date, that on such date (i) the fair market value of
the assets of the Company or such Guarantor, as the case may be, is
greater than the total amount of liabilities (including
12
contingent liabilities) of the Company or such Guarantor, as the case
may be, (ii) the present fair salable value of the assets of the
Company or such Guarantor, as the case may be, is greater than the
amount that will be required to pay the probable liabilities of the
Company or such Guarantor, as the case may be, on its debts as they
become absolute and matured, (iii) the Company or such Guarantor, as
the case may be, is able to realize upon its assets and pay its debts
and other liabilities, including contingent obligations, as they
mature, (iv) the Company or such Guarantor, as the case may be, does
not intend to, and does not believe that it will, incur debts or
liabilities beyond such entity's ability to realize upon its assets and
pay its debts and other liabilities, including contingent obligations,
as they mature in their ordinary course, and (v) the Company or such
Guarantor, as the case may be, does not have unreasonably small
capital.
(aa) No Unlawful Contributions or Other Payments. Neither the Company
nor any of its subsidiaries nor, to the best of the Company's and the
Guarantors' knowledge, any employee or agent of the Company or any
subsidiary, has made any contribution or other payment to any official
of, or candidate for, any federal, state or foreign office in violation
of any law or of the character necessary to be disclosed in the
Offering Memorandum in order to make the statements therein not
misleading.
(bb) MD&A. There are no transactions, arrangements or other
relationships, including but not limited to off balance sheet
transactions, which would be required to be included in the Offering
Memorandum by Item 303 of Regulation S-K under the Securities Act if
the issuance of the Securities were being registered under the
Securities Act, which are not so described in the Offering Memorandum.
(cc) Company's Accounting System. The Company on a consolidated basis,
and each of the Company's subsidiaries, maintain a system of accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles applied in the United States and to
maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization;
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences; (v) material information relating to the
Company and its consolidated subsidiaries is promptly made known to the
officers responsible for establishing and maintaining the system of
internal control over financial reporting; and (vi) any significant
deficiencies or material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely
to materially and adversely affect the Company's ability to record,
process, summarize and report financial information, and any fraud
whether or not material that involves management or other employees who
have a significant role in the Company's internal control over
financial reporting, are adequately and promptly disclosed to the
Company's independent auditors and the audit committee of the Company's
board of directors.
13
(dd) Compliance with Environmental Laws. Except as would not,
individually or in the aggregate, result in a Material Adverse Change
(i) the Company and each of its subsidiaries have all permits,
authorizations and approvals required under any Environmental Laws (as
defined below) and are in compliance with their requirements, (ii)
neither the Company nor any of its subsidiaries is in violation of any
federal, state, local or foreign law or regulation relating to
pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including without
limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances, petroleum and petroleum
products (collectively, "Materials of Environmental Concern"), or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern (collectively, "Environmental Laws"), which
violation includes, but is not limited to, noncompliance with any
permits or other governmental authorizations required for the operation
of the business of the Company or its subsidiaries under applicable
Environmental Laws, or noncompliance with the terms and conditions
thereof, nor has the Company or any of its subsidiaries received any
written communication, whether from a governmental authority, citizens
group, employee or otherwise, that alleges that the Company or any of
its subsidiaries is in violation of any Environmental Law; (iii) there
is no claim, action or cause of action filed with a court or
governmental authority, no investigation with respect to which the
Company has received written notice, and no written notice by any
person or entity alleging potential liability for investigatory costs,
cleanup costs, governmental responses costs, natural resources damages,
property damages, personal injuries, attorneys' fees or penalties
arising out of, based on or resulting from the presence, or release
into the environment, of any Material of Environmental Concern at any
location owned, leased or operated by the Company or any of its
subsidiaries, now or in the past (collectively, "Environmental
Claims"), pending or, to the best of the Company's or any Guarantors'
knowledge, threatened against the Company or any of its subsidiaries or
any person or entity whose liability for any Environmental Claim the
Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law; and (iv) to the Company's and the
Guarantors knowledge, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of
any Material of Environmental Concern, that reasonably could result in
a violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries or
against any person or entity whose liability for any Environmental
Claim the Company or any of its subsidiaries has retained or assumed
either contractually or by operation of law.
(ee) ERISA Compliance. The Company and its subsidiaries and any
"employee benefit plan" (as defined under the Employee Retirement
Income Security Act of 1974, as amended, and the regulations and
published interpretations thereunder (collectively, "ERISA"))
established or maintained by the Company, its subsidiaries or their
"ERISA Affiliates" (as defined below) are in compliance in all respects
with ERISA, except where any non-compliance would not result reasonably
be expected to result in a Material Adverse Change. "ERISA Affiliate"
means, with respect to the Company or a subsidiary, any member of any
group of organizations described in Sections 414(b), (c), (m) or (o) of
the Internal Revenue Code of 1986, as amended, and the regulations and
published interpretations thereunder (the "Code") of which the Company
or such subsidiary is a member. No "reportable event" (as defined under
ERISA) has occurred or is reasonably expected to occur with respect to
14
any "employee benefit plan" established or maintained by the Company,
its subsidiaries or any of their ERISA Affiliates. No "employee benefit
plan" established or maintained by the Company, its subsidiaries or any
of their ERISA Affiliates, if such "employee benefit plan" were
terminated, would have any "amount of unfunded benefit liabilities" (as
defined under ERISA). Neither the Company, its subsidiaries nor any of
their ERISA Affiliates has incurred or reasonably expects to incur any
liability under Title IV of ERISA with respect to termination of, or
withdrawal from, any "employee benefit plan" or (ii) Sections 412,
4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of
their ERISA Affiliates that is intended to be qualified under Section
401 of the Code is so qualified and nothing has occurred, whether by
action or failure to act, which would cause the loss of such
qualification.
(ff) Guarantor Subsidiaries. All of the wholly owned subsidiaries of
the Company are Guarantors.
(gg) Credit Agreement. The Credit Agreement has been duly and validly
authorized by the Company and the guarantors thereto and, when duly
executed and delivered by the Company and the guarantors thereto, will
be the valid and legally binding obligation of the Company and the
guarantors thereto, enforceable in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles.
(hh) Compliance with Regulation S. The Company, the Guarantors and
their respective subsidiaries and Affiliates and all authorized persons
acting on their behalf (other than the Initial Purchasers, as to whom
the Company and the Guarantors make no representation, warranty or
covenant) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the
offering of the Securities outside the United States and, in connection
therewith, the Offering Memorandum will contain the disclosure required
by Rule 902. The Securities sold in reliance on Regulation S will be
represented upon issuance by a temporary global security that may not
be exchanged for definitive securities until the expiration of the
40-day restricted period referred to in Rule 903 of the Securities Act
and only upon certification of beneficial ownership of such Securities
by non-U.S. persons or U.S. persons who purchased such Securities in
transactions that were exempt from the registration requirements of the
Securities Act.
(ii) Taxes; Fees. There are no stamp or other issuance or transfer
taxes or duties or other similar fees or charges required to be paid in
connection with the execution and delivery of this Agreement or the
issuance or sale by the Company of the Securities.
(jj) No Labor Disputes. As of the date hereof, (i) there is no unfair
labor practice complaint pending against the Company or any of its
subsidiaries or, to the knowledge of the Company, threatened
15
against any of them, before the National Labor Relations Board or any
state or local labor relations board, and no significant grievance or
significant arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Company or
any of its subsidiaries or, to the knowledge of the Company, threatened
against any of them, (ii) there is no material strike, labor dispute,
slowdown or stoppage pending against the Company or any of its
subsidiaries or, to the knowledge of the Company, threatened against
the Company and (iii) the Company is not aware of any existing,
threatened or imminent labor disturbance by the employees of any of its
principal customers, suppliers, manufacturers or contractors, in the
case of (i), (ii) or (iii), which would reasonably likely result in a
Material Adverse Change.
(kk) Minute Books and Records. The minute books and records of meetings
of the Company's stockholders, board of directors and committees
thereof, as furnished to Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx,
counsel for the Initial Purchasers, for the purpose of examination in
connection with the preparation of the Offering Memorandum, are the
original minute books and records or are true, correct and complete
copies thereof, and such minute books and records represent
descriptions which are accurate in all material respects of the
business actually transacted at such meetings since December 12, 2000,
with respect to the Company. Other than meetings or consents or actions
of the board of directors or any committees thereof or meetings or
consents or actions of the stockholders of the Company that are
evidenced by minutes or written consents attached to the secretary's
certificate to be delivered on the Closing Date to the Initial
Purchasers, no other meetings or consents or actions of the board of
directors or any committees thereof or meetings or consents or actions
of the stockholders of the Company have been convened or made, as
applicable, since August 1, 2003, and there have been no material
changes, additions or alterations in said minute books or records.
Any certificate signed by an officer of the Company or any
Guarantor and delivered to the Initial Purchasers or to counsel for the
Initial Purchasers pursuant to this Agreement shall be deemed to be a
representation and warranty by the Company or such Guarantor to each Initial
Purchaser as to the matters set forth therein.
SECTION 2. Purchase, Sale and Delivery of the Securities.
(a) The Securities. The Company and the Guarantors agree to issue and
sell to the several Initial Purchasers, severally and not jointly, all
of the Securities upon the terms herein set forth. On the basis of the
representations, warranties and agreements of the Company and the
Guarantors herein contained, and upon the terms but subject to the
conditions herein set forth, the Initial Purchasers agree, severally
and not jointly, to purchase from the Company and the Guarantors the
aggregate principal amount of Securities set forth opposite their names
on Schedule A, at a purchase price of 97.421875% of the principal
amount thereof payable on the Closing Date.
(b) The Closing Date. Delivery of certificates for the Securities in
definitive form to be purchased by the Initial Purchasers and payment
therefor shall be made at the offices of Fried, Frank, Harris, Xxxxxxx
& Xxxxxxxx, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or such other
16
place as may be agreed to by the Company and Banc of America Securities
LLC) at 9:00 a.m. New York City time, on October 22, 2003 or such other
time and date as Banc of America Securities LLC shall designate by
notice to the Company (the time and date of such closing are called the
"Closing Date"). The Company hereby acknowledges that circumstances
under which the Initial Purchasers may provide notice to postpone the
Closing Date as originally scheduled include, but are in no way limited
to, any determination by the Company or the Initial Purchasers to
recirculate to investors copies of an amended or supplemented Offering
Memorandum or a delay as contemplated by the provisions of Section 16.
(c) Delivery of the Securities. The Company shall deliver, or cause to
be delivered, to Banc of America Securities LLC for the accounts of the
Initial Purchasers certificates for the Notes and the Guarantees at the
Closing Date against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price
therefor. The certificates for the Notes shall be in such denominations
and registered in the name of Cede & Co., as nominee of the Depository,
pursuant to the DTC Agreement, and shall be made available for
inspection on the business day preceding the Closing Date at a location
in New York City, as Banc of America Securities LLC may designate. Time
shall be of the essence, and delivery at the time and place specified
in this Agreement is a further condition to the obligations of the
Initial Purchasers.
(d) Delivery of Offering Memorandum to the Initial Purchasers. Not
later than 12:00 p.m. New York City time on the second business day
following the date of this Agreement, the Company shall deliver or
cause to be delivered copies of the Offering Memorandum in such
quantities and at such places as the Initial Purchasers shall
reasonably request.
(e) Initial Purchasers as Qualified Institutional Buyers. Each Initial
Purchaser severally and not jointly represents and warrants to, and
agrees with, the Company that (i) it is a "qualified institutional
buyer" within the meaning of Rule 144A (a "Qualified Institutional
Buyer") and an "accredited investor" within the meaning of Rule 501
under the Securities Act (an "Accredited Investor") and (ii) with
respect to those securities sold in reliance on Regulation S: (A) it
has not engaged and will not engage in any direct selling efforts
within the meaning of Regulation S; and (B) it has complied and will
comply with the offering restrictions requirements of Regulation S.
SECTION 3. Additional Covenants. Each of the Company and the Guarantors, jointly
and severally, further covenant and agree with each Initial Purchaser as
follows:
(a) Initial Purchasers' Review of Proposed Amendments and Supplements.
Prior to amending or supplementing the Offering Memorandum, the Company
and the Guarantors shall furnish to the Initial Purchasers for review a
copy of each such proposed amendment or supplement, and the Company and
the Guarantors shall not use any such
17
proposed amendment or supplement to which any Initial Purchaser
reasonably objects in writing within three business days (with advice
from its independent counsel).
(b) Additional Information, Amendments and Supplements to the Offering
Memorandum and Other Securities Act Matters. Prior to the completion of
the placement of the Securities by the Initial Purchasers with the
Subsequent Purchasers, the Company and the Guarantors will immediately
notify each Initial Purchaser, and confirm such notice in writing, of
(x) any filing made by the Company or any Guarantor with any securities
exchange or any other securities regulatory body in the United States
or any other jurisdiction or (y) any press release issued by the
Company or any Guarantor. If, prior to the completion of the placement
of the Securities by the Initial Purchasers with the Subsequent
Purchasers, any event shall occur or condition exist as a result of
which it is necessary to amend or supplement the Offering Memorandum in
order to make the statements therein, in the light of the circumstances
when the Offering Memorandum is delivered to a purchaser, not
misleading, or if in the reasonable opinion of the Initial Purchasers
or counsel for the Initial Purchasers it is otherwise necessary to
amend or supplement the Offering Memorandum to comply with law, the
Company and the Guarantors agree to promptly prepare (subject to
Section 3 hereof), and furnish at its own expense to the Initial
Purchasers, amendments or supplements to the Offering Memorandum so
that the statements in the Offering Memorandum as so amended or
supplemented will not, in the light of the circumstances when the
Offering Memorandum is delivered to a purchaser, be misleading or so
that the Offering Memorandum, as amended or supplemented, will comply
with law.
The Company and the Guarantors hereby expressly acknowledge
that the indemnification and contribution provisions of Sections 8 and
9 hereof are specifically applicable and relate to each offering
memorandum, registration statement, prospectus, amendment or supplement
referred to in this Section 3.
(c) Copies of the Offering Memorandum. The Company agrees to furnish
the Initial Purchasers, without charge, as many copies of the Offering
Memorandum and any amendments and supplements thereto as they shall
have reasonably requested prior to or at the time of the original
printing of the Offering Memorandum or any amendment or supplement
thereto.
(d) Blue Sky Compliance. The Company and the Guarantors shall cooperate
with the Initial Purchasers and counsel for the Initial Purchasers to
qualify or register the Securities for sale under (or obtain exemptions
from the application of) the Blue Sky or state securities laws of those
jurisdictions designated by the Initial Purchasers, shall comply with
such laws and shall continue such qualifications, registrations and
exemptions in effect so long as required for the distribution of the
Securities. The Company and each of the Guarantors shall not be
required to qualify as a foreign corporation or to take any action that
would subject it to general service of process in any such jurisdiction
where it is not presently qualified or where it would be subject to
taxation as a foreign corporation. The Company and the Guarantors will
advise the Initial Purchasers promptly of the suspension of the
qualification or registration of (or any such exemption relating to)
the Securities for offering, sale or trading in any jurisdiction or any
initiation or threat of any proceeding
18
for any such purpose, and in the event of the issuance of any order
suspending such qualification, registration or exemption, the Company
shall use its reasonable best efforts to obtain the withdrawal thereof
at the earliest possible moment.
(e) The Depositary. The Company will cooperate with the Initial
Purchasers and use its reasonable best efforts to permit the Securities
to be eligible for clearance and settlement through the facilities of
the Depositary.
(f) Additional Issuer Information. The Company and the Guarantors agree
that, for so long as Securities (but not the Exchange Securities)
remain outstanding, they will furnish to holders and beneficial owners
of Securities and to securities analysts and prospective purchasers of
Securities, upon their request, the information (together with the
documents referred to in the second sentence of this paragraph, the
"Additional Issuer Information") required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.
(g) Agreement Not To Offer or Sell Additional Securities. During the
period of 180 days following the date of the Offering Memorandum, the
Company and each of the Guarantors will not, without the prior written
consent of Banc of America Securities LLC (which consent may be
withheld at the sole discretion of Banc of America Securities LLC),
directly or indirectly, sell, offer, contract or grant any option to
sell, pledge, transfer or establish an open "put equivalent position"
within the meaning of Rule 16a-1 under the Exchange Act, or otherwise
dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any debt
securities of the Company or securities exchangeable for or convertible
into debt securities of the Company, in each case pursuant to an
offering registered under the Securities Act, an offering under Rule
144A or any other private placement transaction utilizing a placement
agent (other than as contemplated by this Agreement and to register the
Exchange Securities).
(h) No Integration of Offerings or General Solicitation. The Company
agrees that it will not and will cause its Affiliates and subsidiaries
not to make any offer or sale of securities of the Company or any of
its subsidiaries of any class if, as a result of the doctrine of
"integration" referred to in Rule 502 under the Securities Act, such
offer or sale would render invalid (for the purpose of (i) the sale of
the Securities by the Company to the Initial Purchasers, (ii) the
resale of the Securities by the Initial Purchasers to Subsequent
Purchasers or (iii) the resale of the Securities by such Subsequent
Purchasers to others) the exemption from the registration requirements
of the Securities Act provided by Section 4 thereof or by Rule 144A or
by Regulation S thereunder or otherwise. Neither the Company, the
Guarantors, nor any of their respective subsidiaries or Affiliates, or
any person acting on its or any of their behalf (other than the Initial
Purchasers, as to whom the Company and the Guarantors make no
representation, warranty or covenant) will engage, in connection with
the offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502 under the Securities
Act. With respect to those Securities sold in reliance upon Regulation
S, (i) none of the Company, the Guarantors, any of their subsidiaries
or Affiliates or any person acting on its or any of their behalf (other
than the Initial Purchasers, as to
19
whom the Company and the Guarantors make no representation, warranty or
covenant) will engage in any directed selling efforts within the
meaning of Regulation S and (ii) each of the Company, the Guarantors,
any of their subsidiaries or Affiliates and any person acting on its or
their behalf (other than the Initial Purchasers, as to whom the Company
and the Guarantors make no representation, warranty or covenant) will
comply with the offering restrictions set forth in Regulation S.
(i) Legended Securities. Each certificate for a Note will bear a legend
substantially similar to the legend contained in "Notice to Investors"
in the Offering Memorandum for the time period and upon the other terms
stated in the Offering Memorandum.
(j) PORTAL. The Company will use its reasonable best efforts to cause
such Notes to be eligible for the National Association of Securities
Dealers, Inc. PORTAL market (the "PORTAL market").
Banc of America Securities LLC, on behalf of the several Initial
Purchasers, may, in its sole discretion, waive in writing the performance by the
Company or Guarantors of any one or more of the foregoing covenants or extend
the time for their performance.
SECTION 4. Payment of Expenses. The Company and the Guarantors agree to pay all
costs, fees and expenses incurred in connection with the performance of its
obligations hereunder and in connection with the transactions contemplated
hereby, including without limitation (i) all necessary issue, transfer and other
stamp taxes in connection with the issuance and sale of the Securities to the
Initial Purchasers, (ii) all fees and expenses of the Company's and the
Guarantors' counsel, independent public or certified public accountants and
other advisors, (iii) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of each preliminary
Offering Memorandum and the Offering Memorandum (including financial statements
and exhibits), and all amendments and supplements thereto (iv) all filing fees,
attorneys' fees and expenses incurred by the Company or the Initial Purchasers
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Securities for offer
and sale under the Blue Sky laws and, if requested by the Initial Purchasers,
preparing and printing a "Blue Sky Survey" or memorandum, and any supplements
thereto, advising the Initial Purchasers of such qualifications, registrations
and exemptions, such fees and expenses under this clause (iv) not to exceed
$20,000, (v) the fees and expenses of the Trustee, including the fees and
disbursements of counsel for the Trustee in connection with the Indenture, the
Securities and the Exchange Securities, (vi) any fees payable in connection with
the rating of the Securities or the Exchange Securities with the ratings
agencies and the listing of the Securities with the PORTAL market, and (vii) all
fees and expenses (including reasonable fees and expenses of counsel) of the
Company and the Guarantors in connection with approval of the Securities by DTC
for "book-entry" transfer, and the performance by the Company and the Guarantors
of their respective other obligations under this Agreement. Except as provided
in this Section 4, Section 6, Section 8 and Section 9 hereof, the Initial
Purchasers shall pay their own expenses, including fees and disbursements for
their counsel, and shall be responsible for all expenses associated with the
road show for the marketing of the Securities, including, without limitation,
any expenses associated with lodging or transportation.
20
SECTION 5. Conditions of the Obligations of the Initial Purchasers. The
obligations of the several Initial Purchasers to purchase and pay for the
Securities as provided herein on the Closing Date shall be subject to the
accuracy of the representations and warranties on the part of the Company and
each of the Guarantors set forth in Section 1 hereof as of the date hereof and
as of the Closing Date as though then made and to the timely performance by the
Company and each of the Guarantors of their respective covenants and other
obligations hereunder, and to each of the following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the Initial
Purchasers shall have received from KPMG LLP, independent public or
certified public accountants for the Company, a letter dated the date
hereof addressed to the Initial Purchasers, in form and substance
satisfactory to the Initial Purchasers, containing statements and
information of the type ordinarily included in accountant's "comfort
letters" to Initial Purchasers, delivered according to Statement of
Auditing Standards Nos. 72 and 76 (or any successor bulletins), with
respect to the audited and unaudited financial statements and certain
financial information contained in the Offering Memorandum.
(b) No Material Adverse Change or Ratings Agency Change. For the period
from and after the date of this Agreement and prior to the Closing
Date:
(i) in the reasonable judgment of the Initial Purchasers there
shall not have occurred any Material Adverse Change; and
(ii) the Securities shall be rated at least B3 by Xxxxx'x
Investors Service, Inc. ("Moody's") and B- by Standard & Poor's Rating Services,
a division of McGraw Hill, Inc. ("S&P"), in each case with a stable outlook, or
there shall not have occurred any downgrading or the giving of any notice of any
intended or potential downgrading, or of any review for a possible change that
does not indicate the direction of the possible change, in each case to a rating
of the Securities by Moody's or S&P below B3 or B-, respectively.
(c) Opinion of Counsel for the Company. On the Closing Date the Initial
Purchasers shall have received an opinion of Xxxx Xxxxxxx LLP and an
opinion of Baker, Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx, PC, each
counsel for the Company, each dated as of such Closing Date, in
substantially the forms attached as Exhibit B-1 and Exhibit B-2,
respectively.
(d) Credit Agreement Opinion. On the Closing Date the Initial
Purchasers shall have received a reliance letter from Xxxx Xxxxxxx LLP
and a reliance letter from Baker, Donelson, Bearman, Xxxxxxxx &
Xxxxxxxxx, PC, each counsel for the Company with respect to the Credit
Agreement, each dated as of such Closing Date, authorizing the Initial
Purchasers to rely upon the opinions of each of such counsel,
respectively, each dated as of the Closing Date, in each case addressed
and delivered to Bank of America, N.A., as administrative agent under
the Credit Agreement, with the same force and effect as if the Initial
Purchasers were named as addressees of each such opinion.
21
(e) Opinion of Counsel for the Initial Purchasers. On the Closing Date
the Initial Purchasers shall have received an opinion of Fried, Frank,
Harris, Xxxxxxx & Xxxxxxxx, counsel for the Initial Purchasers, dated
as of such Closing Date, with respect to such matters as may be
reasonably requested by the Initial Purchasers.
(f) Officers' Certificate. On the Closing Date the Initial Purchasers
shall have received a written certificate executed by the Chairman of
the Board, Chief Executive Officer or President of the Company and the
Chief Financial Officer or Chief Accounting Officer of the Company,
dated as of the Closing Date, to the effect that:
(i) for the period from and after the date of this Agreement
and prior to the Closing Date there has not occurred any Material Adverse
Change;
(ii) the representations, warranties and covenants of the
Company and the Guarantors, as the case may be, set forth in Section 1 of this
Agreement are true and correct with the same force and effect as though
expressly made on and as of the Closing Date; and
(iii) the Company and the Guarantors have complied with all
the agreements and satisfied all the conditions on their part to be performed or
satisfied at or prior to the Closing Date.
(g) Chief Financial Officer's Certificate. On the Closing Date the
Initial Purchasers shall have received a written certificate executed
by the Chief Financial Officer of the Company, dated as of the Closing
Date, to the effect that the statements contained in the Preliminary
Offering Memorandum and the Offering Memorandum, as applicable, under
the section "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Recent Developments" with respect
to the Company's net revenue and income from operations for the quarter
ended September 30, 2003 are, to his knowledge, consistent with the
Company's current expectations in all material respects as of the
Closing Date.
(h) Bring-down Comfort Letter. On the Closing Date the Initial
Purchasers shall have received from KPMG LLP, independent public or
certified public accountants for the Company, a letter dated such date,
in form and substance satisfactory to the Initial Purchasers, to the
effect that they reaffirm the statements made in the letter furnished
by them pursuant to subsection (a)(i) of this Section 5, except that
the specified date referred to therein for the carrying out of
procedures shall be no more than three business days prior to the
Closing Date.
(i) PORTAL Listing. At the Closing Date the Notes shall have been
designated for trading on the PORTAL market.
22
(j) Other Agreements. The Company and the Guarantors shall have entered
into the Registration Rights Agreement and the Indenture and the
Initial Purchasers shall have received executed counterparts thereof.
(k) Credit Agreement. At the Closing Date and upon consummation of the
transactions contemplated hereby, (i) the Company and the Guarantors
shall have duly authorized, executed and delivered the Credit
Agreement, (ii) upon execution and delivery thereof by the lenders
thereunder, the Credit Agreement shall constitute a valid and legally
binding obligation of the Company and each of the Guarantors,
enforceable against the Company and each of the Guarantors in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of
creditors or by general equitable principles, (iii) no default shall
have occurred or be continuing under the Credit Agreement, (iv) as
described in the Offering Memorandum, the Company shall be prepared to
(A) repay all outstanding indebtedness under the Company's existing
credit facility and (B) pay the redemption price of approximately $11.4
million, plus accrued and unpaid dividends, for the Company's series C
preferred stock which was issued to an affiliate of X.X. Childs Equity
Partners II, L.P., and (v) the Company and the Guarantors shall have
received all consents necessary, as required by the Credit Agreement,
to the issuance and sale of the Securities and the consummation of the
transactions contemplated hereby, in each case in a form and substance
reasonably satisfactory to the Initial Purchasers and counsel for the
Initial Purchasers. The Company and the Guarantors shall have entered
into and the Initial Purchasers shall have received executed
counterparts thereof.
(l) Additional Documents. On or before the Closing Date, the Initial
Purchasers and counsel for the Initial Purchasers shall have received
such information, documents and opinions as they may reasonably require
for the purposes of enabling them to pass upon the issuance and sale of
the Securities as contemplated herein, or in order to evidence the
accuracy of any of the representations and warranties, or the
satisfaction of any of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied
when and as required to be satisfied, this Agreement may be terminated by the
Initial Purchasers by notice to the Company and the Guarantors at any time on or
prior to the Closing Date, which termination shall be without liability on the
part of any party to any other party, except that Section 4, Section 6, Section
8 and Section 9 shall at all times be effective and shall survive such
termination.
SECTION 6. Reimbursement of Initial Purchasers' Expenses. If the sale to the
Initial Purchasers of the Securities on the Closing Date is not consummated
because of any refusal, inability or failure on the part of the Company or any
of the Guarantors to perform in all material respects any agreement herein or to
comply in all material respects with any provision hereof, the Company agrees to
reimburse the Initial Purchasers (or such Initial Purchasers as have terminated
this Agreement with respect to themselves), severally, upon demand for all
out-of-pocket costs and expenses that shall have been reasonably incurred by the
Initial Purchasers in connection with the proposed purchase and the offering and
sale of the Securities, including but not limited to reasonable fees and
disbursements of counsel, printing
23
expenses, travel expenses, expenses associated with the road show for the
marketing of the Securities, postage, facsimile and telephone charges.
SECTION 7. Offer, Sale and Resale Procedures. Each of the Initial Purchasers, on
the one hand, and the Company and each of the Guarantors, on the other hand,
hereby establish and agree to observe the following procedures in connection
with the offer and sale of the Securities:
(A) Offers and sales of the Securities will be made only by
the Initial Purchasers or Affiliates thereof qualified to do so in the
jurisdictions in which such offers or sales are made. Each such offer or sale
shall only be made to persons whom the offeror or seller reasonably believes to
be qualified institutional buyers (as defined in Rule 144A under the Securities
Act) or non-U.S. persons outside the United States to whom the offeror or seller
reasonably believes offers and sales of the Securities may be made in reliance
upon Regulation S under the Securities Act, upon the terms and conditions set
forth in Annex I hereto, which Annex I is hereby expressly made a part hereof.
(B) No general solicitation or general advertising (within the
meaning of Rule 502 under the Securities Act) will be used in the United States
in connection with the offering of the Securities.
(C) Upon original issuance by the Company, and until such time
as the same is no longer required under the applicable requirements of the
Securities Act, the Notes (and all securities issued in exchange therefor or in
substitution thereof, other than the Exchange Securities) shall bear the
following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER XXXXXXX 0 XX XXX XXXXXX XXXXXX SECURITIES ACT OF 1933
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT,
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION
S UNDER THE SECURITIES ACT, PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF APPLICABLE) OR IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE
24
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), TO THE
COMPANY OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF
THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE SECURITY
EVIDENCED HEREBY."
Following the sale of the Securities by the Initial Purchasers to Subsequent
Purchasers pursuant to the terms hereof, the Initial Purchasers shall not be
liable or responsible to the Company or any Guarantor for any losses, damages or
liabilities suffered or incurred by the Company or any Guarantor, including any
losses, damages or liabilities under the Securities Act, arising from or
relating to any resale or transfer of any Security.
SECTION 8. Indemnification.
(a) Indemnification of the Initial Purchasers. The Company and each
Guarantor, jointly and severally, agree to indemnify and hold harmless
each Initial Purchaser, its directors, officers and employees, and each
person, if any, who controls any Initial Purchaser within the meaning
of the Securities Act and the Exchange Act against any loss, claim,
damage, liability or expense, as incurred, to which such Initial
Purchaser or such controlling person may become subject, under the
Securities Act, the Exchange Act or other federal or state statutory
law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the
written consent of the Company), insofar as such loss, claim, damage,
liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based (i) 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 the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; or (ii) in whole or in part upon any inaccuracy in the
representations and warranties of the Company or any Guarantor
contained herein; or (iii) in whole or in part upon any failure of the
Company or any Guarantor to perform its obligations hereunder or under
law; or (iv) any act or failure to act or any alleged act or failure to
act by any Initial Purchaser in connection with, or relating in any
manner to, the offering contemplated hereby, and which is included as
part of or referred to in any loss, claim, damage, liability or action
arising out of or based upon any matter covered by clause (i) above to
the extent such loss, claim, damage, liability or expense is not
covered in clauses (i) through (iii) (subject to the limitation set
forth below), provided that the Company and the Guarantors shall not be
liable under this clause (iv) to the extent that a court of competent
jurisdiction shall have determined by a final judgment that such loss,
claim, damage, liability or action resulted directly from any such acts
or failures to act undertaken or omitted to be taken by such Initial
Purchaser through its gross negligence or willful misconduct; and to
reimburse each Initial Purchaser and each such controlling person for
any and all expenses (including the reasonable fees and disbursements
of counsel chosen by Banc of America
25
Securities LLC) as such expenses are reasonably incurred by such
Initial Purchaser or such controlling person in connection with
investigating, defending, settling, compromising or paying any such
loss, claim, damage, liability, expense or action; provided, however,
that the foregoing indemnity agreement shall not apply to any loss,
claim, damage, liability or expense to the extent, but only to the
extent, arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished to the Company or
any Guarantor by the Initial Purchasers expressly for use in any
Preliminary Offering Memorandum or the Offering Memorandum (or any
amendment or supplement thereto). The indemnity agreement set forth in
this Section 8 shall be in addition to any liabilities that the Company
and each of the Guarantors may otherwise have.
(b) Indemnification of the Company and their Guarantors and their
Directors and Officers. Each Initial Purchaser agrees, severally and
not jointly, to indemnify and hold harmless the Company, the Guarantors
and each of their directors, officers and employees and each person, if
any, who controls the Company within the meaning of the Securities Act
or the Exchange Act, against any loss, claim, damage, liability or
expense, as incurred, to which the Company, any Guarantor or any such
director, officer or employee or controlling person may become subject,
under the Securities Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with
the written consent of such Initial Purchaser), insofar as such loss,
claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or
alleged untrue statement of a material fact contained in any
Preliminary Offering Memorandum or the Offering Memorandum (or any
amendment or supplement thereto), or arises out of or is based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Offering Memorandum or the
Offering Memorandum (or any amendment or supplement thereto), in
reliance upon and in conformity with written information furnished to
the Company and the Guarantors by the Initial Purchasers expressly for
use therein; and to reimburse the Company and the Guarantors, or any
such director, officer or employee or controlling person for any and
all expenses (including reasonable fees and disbursements of counsel)
as such expenses are reasonably incurred by the Company or the
Guarantors, or any such director or controlling person in connection
with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action. The Company and
the Guarantors hereby acknowledge that the only information that the
Initial Purchasers have furnished (prior to the date hereof) to the
Company expressly for use in the Preliminary Offering Memorandum or the
Offering Memorandum (or any amendment or supplement thereto) are the
statements set forth in (A) the first sentence of the sixth full
paragraph on introductory page ii of the Offering Memorandum, (B) the
second sentence of the second paragraph under the caption "Risk Factors
- No public trading market for the Notes exists and the Notes contain
restrictions on transfer." in the Offering Memorandum and (C) the
second sentence of the second paragraph, the first and second sentences
of the fourth paragraph, the fourth sentence of the sixth paragraph,
the eighth paragraph and the eleventh paragraph under the caption "Plan
of Distribution" in the Offering Memorandum; and the Initial Purchasers
confirm that such
26
statements are correct. The indemnity agreement set forth in this
Section 8 shall be in addition to any liabilities that each Initial
Purchaser may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement
thereof, but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified
party for contribution or otherwise than under the indemnity agreement
contained in this Section 8 or to the extent it is not materially
prejudiced as a proximate result of such failure. In case any such
action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in and, to the
extent that it shall elect, jointly with all other indemnifying parties
similarly notified, by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however,
if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have
reasonably concluded that a conflict may arise between the positions of
the indemnifying party and the indemnified party in conducting the
defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in
the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such
indemnified party of such indemnifying party's election so to assume
the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified
party under this Section 8 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof (other than the reasonable costs of investigation) unless (i)
the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (together with local
counsel), approved by the indemnifying party (Banc of America
Securities LLC in the case of Section 8(b)), representing the
indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel shall
be at the expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 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 non-appealable judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party against any loss, claim,
damage, liability or expense by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by
Section 8 hereof,
27
the indemnifying party agrees that it 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
such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement;
provided, however, that the indemnifying party shall not be liable for
any reimbursement to the indemnified party for fees and expenses of
counsel pursuant to this sentence to the extent, and only for so long
as, the indemnifying party is contesting such reimbursement in good
faith. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or
proceeding in respect of which any indemnified party is or could have
been a party and indemnity was or could have been sought hereunder by
such indemnified party, unless such settlement, compromise or consent
includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding and does not include any statement as to or any admission of
fault, culpability or failure to act by or on behalf of any indemnified
party.
SECTION 9. Contribution.
If the indemnification provided for in Section 8 is for any
reason held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to
therein (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 hand, from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Guarantors, on the one hand, and
the Initial Purchasers, on the other hand, in connection with the statements or
omissions or inaccuracies in the representations and warranties herein which
resulted in such losses, claims, damages, liabilities or expenses, 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 hand, in connection with the offering of the Securities pursuant to
this Agreement shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the Securities pursuant to this
Agreement (before deducting expenses) received by the Company and the
Guarantors, and the total discount received by the Initial Purchasers bear to
the aggregate initial offering price of the Securities. The relative fault of
the Company or any Guarantor, on the one hand, and the Initial Purchasers, on
the other hand, shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact or any such inaccurate or alleged
inaccurate representation or warranty relates to information supplied by the
Company or any Guarantor, on the one hand, or the Initial Purchasers, on the
other hand, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Section 8, any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8 with respect to notice of commencement of any action shall apply if a
claim for contribution is to be made under this Section 9; provided, however,
that no additional notice shall
28
be required with respect to any action for which notice has been given under
Section 8 for purposes of indemnification.
The Company, the Guarantors and the Initial Purchasers agree
that it would not be just and equitable if contribution pursuant to this Section
9 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
which does not take account of the equitable considerations referred to in this
Section 9.
Notwithstanding the provisions of this Section 9, no Initial
Purchaser shall be required to contribute any amount in excess of the discount
received by such Initial Purchaser in connection with the Securities distributed
by it. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11 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 9 are several,
and not joint, in proportion to their respective commitments as set forth
opposite their names in Schedule A. For purposes of this Section 9, each
director, officer and employee of an Initial Purchaser and each person, if any,
who controls an Initial Purchaser within the meaning of the Securities Act and
the Exchange Act shall have the same rights to contribution as such Initial
Purchaser, and each director, officer and employee of the Company and each of
the Guarantors and each person, if any, who controls the Company or any of the
Guarantors within the meaning of the Securities Act and the Exchange Act shall
have the same rights to contribution as the Company.
SECTION 10. Termination of this Agreement. Prior to the Closing Date, this
Agreement may be terminated by the Initial Purchasers by notice given to the
Company if at any time (i) trading in securities generally on either the Nasdaq
Stock Market or the New York Stock Exchange shall have been suspended or
materially limited, or minimum or maximum prices shall have been generally
established on any of such stock exchanges by the Commission or the NASD; (ii) a
general banking moratorium shall have been declared by any of federal or New
York authorities; (iii) there shall have occurred any outbreak or escalation of
national or international hostilities or any crisis or calamity, or any change
in the United States or international financial markets, or any substantial
change or development involving a prospective substantial change in United
States' or international political, financial or economic conditions, all as in
the judgment of the Initial Purchasers is material and adverse and makes it
impracticable or inadvisable to proceed with the offering or delivery of the
Securities in the manner and on the terms described in the Offering Memorandum
or to enforce contracts for the sale of securities; (iv) in the reasonable
judgment of the Initial Purchasers there shall have occurred any Material
Adverse Change; or (v) the Company shall have sustained a loss by strike, fire,
flood, earthquake, accident or other calamity of such character as in the
reasonable judgment of the Initial Purchasers may interfere materially with the
conduct of the business and operations of the Company and the Guarantors, taken
as a whole, regardless of whether or not such loss shall have been insured. Any
termination pursuant to this Section 10 shall be without liability on the part
of (i) the Company to any Initial Purchaser, except that the Company shall be
obligated to reimburse the expenses of the Initial Purchasers pursuant to
Section 4 hereof, (ii) any Initial Purchaser to the Company or any Guarantor, or
(iii) of any party hereto to any other party except that the provisions of
Section 8 and Section 9 shall at all times be effective and shall survive such
termination.
SECTION 11. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties and other
29
statements of the Company and each of the Guarantors, of their respective
officers and of the several Initial Purchasers set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Initial Purchaser or the Company or
any of the Guarantors or any of its or their partners, officers or directors or
any controlling person, as the case may be, and will survive delivery of and
payment for the Securities sold hereunder and any termination of this Agreement.
SECTION 12. Notices. All communications hereunder shall be in writing and shall
be mailed, hand delivered or telecopied and confirmed to the parties hereto as
follows:
If to the Initial Purchasers:
Banc of America Securities LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxx
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxx Jacob, Esq.
If to the Company or any of the Guarantors:
National Nephrology Associates, Inc.
000 Xxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
with a copies to:
X.X. Childs Associates, L.P.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxx
and to:
30
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, including any substitute Initial Purchasers
pursuant to Section 16 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 8 and Section 9, and in
each case their respective successors, and no other person will have any right
or obligation hereunder. The term "successors" shall not include any purchaser
of the Securities as such from any of the Initial Purchasers merely by reason of
such purchase.
SECTION 14. Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
SECTION 15. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
(a) Consent to Jurisdiction. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions
contemplated hereby ("Related Proceedings") may be instituted in the
federal courts of the United States of America located in the City and
County of New York or the courts of the State of New York in each case
located in the City and County of New York (collectively, the
"Specified Courts"), and each party irrevocably submits to the
exclusive jurisdiction (except for proceedings instituted in regard to
the enforcement of a judgment of any such court (a "Related Judgment"),
as to which such jurisdiction is non-exclusive) of such courts in any
such suit, action or proceeding. Service of any process, summons,
notice or document by mail to such party's address set forth above
shall be effective service of process for any suit, action or other
proceeding brought in any such court. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any suit,
action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court
that any such suit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.
SECTION 16. Default of One or More of the Several Initial Purchasers. If any one
or more of the several Initial Purchasers shall fail or refuse to
31
purchase Securities that it or they have agreed to purchase hereunder on the
Closing Date, and the aggregate number of Securities which such defaulting
Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase
does not exceed 10% of the aggregate number of the Securities to be purchased on
such date, the other Initial Purchasers shall be obligated, severally, in the
proportions that the number of Securities set forth opposite their respective
names on Schedule A bears to the aggregate number of Securities set forth
opposite the names of all such non-defaulting Initial Purchasers, or in such
other proportions as may be specified by the Initial Purchasers with the consent
of the non-defaulting Initial Purchasers, to purchase the Securities which such
defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused
to purchase on such date. If any one or more of the Initial Purchasers shall
fail or refuse to purchase Securities and the aggregate number of Securities
with respect to which such default occurs exceeds 10% of the aggregate number of
Securities to be purchased on the Closing Date, and arrangements satisfactory to
the Initial Purchasers and the Company for the purchase of such Securities are
not made within 48 hours after such default, this Agreement shall terminate
without liability of any party to any other party except that the provisions of
Section 4, Section 8 and Section 9 shall at all times be effective and shall
survive such termination. In any such case either the Initial Purchasers or the
Company shall have the right to postpone the Closing Date, as the case may be,
but in no event for longer than seven days in order that the required changes,
if any, to the Offering Memorandum or any other documents or arrangements may be
effected.
As used in this Agreement, the term "Initial Purchaser" shall
be deemed to include any person substituted for a defaulting Initial Purchaser
under this Section 10. Notwithstanding anything to the contrary herein, any
action taken under this Section 16, including, without limitation, the
termination of this Agreement, shall not relieve any defaulting Initial
Purchaser from liability in respect of any default of such Initial Purchaser
under this Agreement.
SECTION 17. Tax Disclosure. Notwithstanding anything to the contrary contained
herein, each of the Initial Purchasers, the Company and the Guarantors shall be
permitted to disclose the tax treatment and tax structure of any transaction
contemplated by this Agreement or the Offering Memorandum (including any
materials, opinions or analyses relating to such tax treatment or tax structure,
but without disclosure of identifying information of any person or, except to
the extent relating to such tax structure or tax treatment, any nonpublic
commercial or financial information); provided, however, that if such
transaction is not consummated for any reason, the provisions of this sentence
shall cease to apply with respect to such transaction.
SECTION 18. General Provisions. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof. This Agreement may be executed in two or
more counterparts, each one of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement may not be amended or modified unless in writing by all of the parties
hereto, and no condition herein (express or implied) may be waived unless waived
in writing by each party whom the condition is meant to benefit. The Table of
Contents and the section headings herein are for the convenience of the parties
only and shall not affect the construction or interpretation of this Agreement.
32
518246
33
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
NATIONAL NEPHROLOGY ASSOCIATES, INC., a
Delaware corporation
By:__________________________
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chairman and Chief Executive Officer
NNA OF OKLAHOMA, INC., a Nevada corporation
NNA OF GEORGIA, INC., a Delaware corporation
NNA OF ALABAMA, INC., an Alabama corporation
NNA MANAGEMENT COMPANY OF KENTUCKY, INC., a
Kentucky corporation
NATIONAL NEPHROLOGY ASSOCIATES MANAGEMENT
COMPANY OF TEXAS, INC., a Texas
corporation
NNA OF NEVADA, INC., a Nevada corporation
NATIONAL NEPHROLOGY ASSOCIATES CREDIT
CORPORATION, a Tennessee corporation
NNA OF TOLEDO, INC., an Ohio corporation
NNA OF RHODE ISLAND, INC., a Rhode Island
corporation
NNA TRANSPORTATION SERVICES CORPORATION, a
Tennessee corporation
NNA PROPERTIES OF TENNESSEE, INC., a Tennessee
corporation
NNA PROPERTIES OF KENTUCKY, INC., a Kentucky
corporation
NNA PROPERTIES OF NEW JERSEY, INC., a New
Jersey corporation
NNA MANAGEMENT COMPANY OF LOUISIANA, INC., a
Louisiana corporation
RENEX CORP., a Florida corporation
RENEX MANAGEMENT SERVICES, INC., a Florida
corporation
DIALYSIS SERVICES OF ATLANTA, INC., a Georgia
corporation
RENEX DIALYSIS CLINIC OF PENN HILLS, INC., a
Pennsylvania corporation
RENEX DIALYSIS CLINIC OF SHALER, INC., a
Pennsylvania corporation
RENEX DIALYSIS CLINIC OF DOYLESTOWN, INC., a
Pennsylvania corporation
RENEX DIALYSIS CLINIC OF AMESBURY, INC., a
Massachusetts corporation
RENEX DIALYSIS CLINIC OF NORTH ANDOVER, INC.,
a Massachusetts corporation
RENEX DIALYSIS CLINIC OF SOUTH GEORGIA, INC.,
a Georgia corporation
RENEX DIALYSIS CLINIC OF CREVE COUER, INC.,
a Missouri corporation
RENEX DIALYSIS CLINIC OF ST. LOUIS, INC., a
Missouri corporation
RENEX DIALYSIS CLINIC OF BRIDGETON, INC., a
Missouri corporation
RENEX DIALYSIS CLINIC OF UNION, INC., a
Missouri corporation
RENEX DIALYSIS HOMECARE OF GREATER ST. LOUIS,
INC., a Missouri corporation
RENEX DIALYSIS CLINIC OF MAPLEWOOD, INC., a
Missouri corporation
RENEX DIALYSIS CLINIC OF UNIVERSITY CITY,
INC., a Missouri corporation
RENEX DIALYSIS FACILITIES, INC., a Mississippi
corporation
RENEX DIALYSIS CLINIC OF BLOOMFIELD, INC., a
New Jersey corporation
RENEX DIALYSIS CLINIC OF ORANGE, INC., a New
Jersey corporation
RENEX DIALYSIS CLINIC OF PHILADELPHIA, INC.,
a Pennsylvania corporation
RENEX DIALYSIS CLINIC OF PITTSBURGH, INC., a
Pennsylvania corporation
RENEX DIALYSIS CLINIC OF WOODBURY, INC., a New
Jersey corporation
RENEX DIALYSIS CLINIC OF TAMPA, INC., a
Florida corporation
DIALYSIS ASSOCIATES, LLC, a Tennessee limited
liability company
By: National Nephrology Associates, Inc., a
Delaware corporation, as sole member
DIALYSIS ASSOCIATES MEDICAL SUPPLY, LLC, a
Tennessee limited liability company
By: National Nephrology Associates, Inc., a
Delaware corporation, as sole member
NNA-SAINT BARNABAS, L.L.C., a New Jersey
limited liability company
By: Renex Dialysis Clinic of Woodbury, Inc.,
a Delaware corporation, as sole member
NNA SAINT BARNABAS - NEWARK, L.L.C., a New
Jersey limited liability company
By: NNA - Saint Barnabas, L.L.C., a New Jersey
limited liability company, as sole member
NNA OF OKLAHOMA, L.L.C., an Oklahoma limited
liability company
By: NNA of Oklahoma, Inc., a Nevada
corporation, as sole member
NNA OF LOUISIANA, LLC, a Louisiana limited
liability company
By: NNA Management Company of Louisiana, Inc.,
as sole member
DOYLESTOWN ACUTE RENAL SERVICES, L.L.C., a
Pennsylvania limited liability company
By: Renex Dialysis Clinic of Doylestown, Inc.,
a Pennsylvania corporation, as sole member
NNA OF NEWARK, L.L.C., a New Jersey limited
liability company
By: Renex Dialysis Clinic of Woodbury, Inc.,
a New Jersey corporation, as sole member
NATIONAL NEPHROLOGY ASSOCIATES OF TEXAS, L.P.,
a Texas limited partnership
By: National Nephrology Associates Management
Company of Texas, Inc., a Texas
corporation, as its general partner
By:____________________________
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chairman and Chief Executive Officer
The foregoing Purchase Agreement is hereby confirmed and accepted by
the Initial Purchasers as of the date first above written.
BANC OF AMERICA SECURITIES LLC
X.X. XXXXXX SECURITIES INC.
RBC DOMINION SECURITIES CORPORATION
XXXXXX XXXXXXX CORP.
By: Banc of America Securities LLC
By:__________________________
Name: Xxxxx Xxxxxxxx
Title: Managing Director
SCHEDULE A
AGGREGATE
PRINCIPAL AMOUNT
OF SECURITIES
INITIAL PURCHASERS TO BE PURCHASED
------------------ ---------------
Banc of America Securities LLC ........................... $ 78,000,000
X.X. Xxxxxx Securities Inc................................ 39,000,000
RBC Dominion Securities Corporation ...................... 39,000,000
Xxxxxx Xxxxxxx Corp....................................... 4,000,000
Total............................................ $160,000,000
A-1
EXHIBIT A
SUBSIDIARIES OF NATIONAL NEPHROLOGY ASSOCIATES, INC.
1. Dialysis Associates Medical Supply, LLC
2. Dialysis Associates, LLC
3. Dialysis Services of Atlanta, Inc.
4. Doylestown Acute Renal Services, L.L.C.
5. National Nephrology Associates Credit Corporation
6. National Nephrology Associates Management Company of Texas, Inc.
7. National Nephrology Associates of Texas, L.P.
8. NNA Management Company of Kentucky, Inc.
9. NNA Management Company of Louisiana, Inc.
10. NNA of Ada, L.L.C.
11. NNA of Alabama, Inc.
12. NNA of East Orange, L.L.C.
13. NNA of Xxxxxxxxx, L.L.C.
14. NNA of Florida, LLC
15. NNA of Georgia, Inc.
16. NNA of Xxxxxxxx, L.L.C.
17. NNA of Louisiana, LLC
18. NNA of Memphis, LLC
19. NNA of Nevada, Inc.
20. NNA of Newark, L.L.C.
21. NNA of Oklahoma, Inc.
22. NNA of Oklahoma, L.L.C.
23. NNA of Paducah, LLC
24. NNA of Rhode Island, Inc.
25. NNA of Toledo, Inc.
26. NNA Properties of Kentucky, Inc.
27. NNA Properties of New Jersey, Inc.
28. NNA Properties of Tennessee, Inc.
29. NNA Transportation Services Corporation
30. Renex Corp.
31. Renex Dialysis Clinic of Amesbury, Inc.
32. Renex Dialysis Clinic of Bloomfield, Inc.
33. Renex Dialysis Clinic of Bridgeton, Inc.
34. Renex Dialysis Clinic of Creve Couer, Inc.
35. Renex Dialysis Clinic of Doylestown, Inc.
36. Renex Dialysis Clinic of Maplewood, Inc.
37. Renex Dialysis Clinic of North Andover, Inc.
38. Renex Dialysis Clinic of Orange, Inc.
39. Renex Dialysis Clinic of Penn Hills, Inc.
40. Renex Dialysis Clinic of Philadelphia, Inc.
41. Renex Dialysis Clinic of Pittsburgh, Inc.
42. Renex Dialysis Clinic of Shaler, Inc.
A-1
43. Renex Dialysis Clinic of South Georgia, Inc.
44. Renex Dialysis Clinic of St. Louis, Inc.
45. Renex Dialysis Clinic of Tampa, Inc.
46. Renex Dialysis Clinic of Union, Inc.
47. Renex Dialysis Clinic of University City, Inc.
48. Renex Dialysis Clinic of Woodbury, Inc.
49. Renex Dialysis Facilities, Inc.
50. Renex Dialysis Homecare of Greater St. Louis, Inc.
51. Renex Management Services, Inc.
52. NNA-Saint Barnabas, L.L.C.
53. NNA-Saint Barnabas-Newark, L.L.C.
X-0
XXXXXXX X-0
Form of Opinion of Xxxx Xxxxxxx LLP to be delivered pursuant
to Section 5(c) of the Purchase Agreement.
(i) The Company is validly existing as a corporation in good standing
under the laws of the State of Delaware.
(ii) The Company has the corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Offering Memorandum and to enter into and perform its obligations under the
Purchase Agreement, the Registration Rights Agreement, the Indenture, the
Securities, the Exchange Securities and the DTC Agreement.
(iii) Based solely on certificates of public officials and officers of
the Company, including the organizational documents referred to therein, the
Company is duly qualified as a foreign corporation to transact business and is
in good standing in each of the jurisdictions set forth on Schedule 1 hereto.
(iv) The description of the Company's stock option plan set forth in
the Offering Memorandum fairly describes in all material respects such plan.
(v) The issuance and sale of the Notes by the Company will not be
subject to any preemptive right, right of first refusal or other similar right
to subscribe for or purchase securities of the Company arising (i) by operation
of the certificate of incorporation or by-laws of the Company or the General
Corporation Law of the State of Delaware, or (ii) under any agreement of the
Company set forth on Schedule 2 hereto (the "Material Agreements").
(vi) The Purchase Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company, enforceable
in accordance with its terms, except as rights to indemnification and
contribution thereunder may be limited by applicable law or against public
policy and subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors and by general principles of equity (regardless
of whether considered in a proceeding at law or in equity).
(vii) The Registration Rights Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the Company,
enforceable in accordance with its terms, except as rights to indemnification
and contribution thereunder may be limited by applicable law or against public
policy and subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors and by general principles of equity (regardless
of whether considered in a proceeding at law or in equity).
(viii) The DTC Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of the Company, enforceable
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors and by general principles of
equity (regardless of whether considered in a proceeding at law or in equity).
B-1-1
(ix) The Indenture has been duly authorized, executed and delivered by
the Company and (assuming the due authorization, execution and delivery thereof
by the Trustee) constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnification and contribution thereunder may be limited by applicable law
or against public policy and subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors and by general principles of
equity (regardless of whether considered in a proceeding at law or in equity).
(x) The Notes are in the form contemplated by the Indenture, have been
duly authorized by the Company for issuance and sale pursuant to the Purchase
Agreement and the Indenture and, when executed by the Company and authenticated
by the Trustee in the manner provided in the Indenture (assuming the due
authorization, execution and delivery of the Indenture by the Trustee) and
delivered against payment of the purchase price therefor, will constitute valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors and by general principles of
equity (regardless of whether considered in a proceeding at law or in equity).
(xi) The Exchange Notes have been duly and validly authorized for
issuance by the Company.
(xii) Each of the Purchase Agreement, Registration Rights Agreement and
Indenture is a valid and binding agreement of the Guarantors, enforceable in
accordance with their respective terms, except as rights to indemnification and
contribution thereunder may be limited by applicable law or against public
policy, and subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors and by general principles of equity (regardless
of whether considered in a proceeding at law or in equity).
(xiii) The Guarantees of the Notes are in the form contemplated by the
Indenture, and, when the Notes have been executed by the Company and
authenticated by the Trustee in the manner provided for in the Indenture and
delivered against payment of the purchase price therefor, will constitute valid
and binding obligations of the Guarantors, enforceable against the applicable
Guarantors in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws relating
to or affecting the rights and remedies of creditors and by general principles
of equity (regardless of whether considered in a proceeding at law or in equity)
and will be entitled to the benefits of the Indenture.
(xiv) The Notes, the Guarantees of the Notes, the Indenture and the
Registration Rights Agreement conform in all material respects to the
descriptions thereof contained in the Offering Memorandum.
(xv) The statements in the Offering Memorandum under the captions "Risk
Factors - Risks Relating to Our Debt, Including the Notes," "Management -
Employment Agreements and Executive Compensation," "Management - Benefit Plans -
Stock Option Plans," "Description of Notes," "Certain Federal Income Tax
Considerations" and "Notice to Investors," insofar as such statements constitute
matters of law, summaries of legal matters or legal
B-1-2
conclusions, have been reviewed by us and fairly present, in all material
respects, the matters referred to therein.
(xvi) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory
authority or agency of the federal government of the United States or the State
of New York or any court or other governmental or regulatory authority acting
pursuant to the General Corporation Law of the State of Delaware, is required
for the Company's execution, delivery and performance of the Purchase Agreement,
the Registration Rights Agreement, the DTC Agreement or the Indenture or the
issuance and delivery of the Notes, or consummation of the transactions
contemplated thereby, except as may be required under the Securities Act,
Exchange Act, the Trust Indenture Act and applicable state securities or blue
sky laws.
(xvii) The execution and delivery of the Purchase Agreement, the
Registration Rights Agreement, the DTC Agreement, the Notes and the Indenture by
the Company and the performance by the Company of its obligations thereunder
(other than performance by the Company of its obligations under the
indemnification and contribution sections of such agreements, as applicable, as
to which we render no opinion) (i) will not result in any violation of the
provisions of the certificate of incorporation of by-laws of the Company; (ii)
will not constitute a breach of, or Default or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company pursuant to, with respect to the Company, any material agreements listed
on Schedule I hereto; and (iii) to the best of our knowledge, will not result in
any violation of any law, statute, rule or administrative regulation of the
federal government of the United States or the State of New York or the General
Corporation Law of the State of Delaware which a lawyer exercising customary
professional diligence would reasonably recognize as being directly applicable
to the Company or any subsidiary with respect to transactions contemplated by
the Purchase Agreement, the Registration Rights Agreement, the Indenture and the
Notes. We express no opinion herein as to the applicability or effect of
Healthcare Laws.
(xviii) To the best of our knowledge, the execution and delivery of
each of the Purchase Agreement, Registration Rights Agreement, Indenture and the
Guarantees of the Notes by the Guarantors and the performance by the Guarantors
of their obligations thereunder (other than performance by the Guarantors of
their obligations under the indemnification and contribution sections of such
agreements, as applicable, as to which we render no opinion) will not result in
any violation of any law, statute, rule or administrative regulation of the
federal government of the United States or the State of New York or the General
Corporation Law of the State of Delaware which a lawyer exercising customary
professional diligence would reasonably recognize as being directly applicable
to the Guarantors with respect to the transactions contemplated by the Purchase
Agreement, the Registration Rights Agreement, the Indenture and the Guarantees
of the Notes.
(xix) The Company is not, nor after receipt of payment for the
Securities will it be, an "investment company" requiring it to register under
the Investment Company Act.
(xx) Assuming the accuracy of the representations, warranties and
covenants of the Company, the Guarantors and the Initial Purchasers contained in
the Purchase Agreement, no registration of the Notes or the Guarantees thereof
under the Securities Act, and no qualification of an indenture under the Trust
Indenture Act with respect thereto, is required in connection with the purchase
of the Securities by the Initial Purchasers or the initial resale of the
Securities by the
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Initial Purchasers to Qualified Institutional Buyers or pursuant to Regulation S
under the Securities Act in the manner contemplated by the Purchase Agreement
and the Offering Memorandum other than any registration or qualification that
may be required in connection with the Exchange Offer contemplated by the
Offering Memorandum or in connection with the Registration Rights Agreement. We
need express no opinion, however, as to when or under what circumstances any
Initial Notes initially sold by the Initial Purchasers may be reoffered or
resold.
(xxi) To our knowledge, other than as described in the Offering
Memorandum, there are no pending or threatened legal or governmental proceedings
to which the Company is a party that would be required to be described by Item
103 of Regulation S-K under the Securities Act if the issuance of the Securities
were being registered under the Securities Act.
(xxii) None of the sale, issuance, execution or delivery of the
Securities will contravene Regulation T (12 C.F.R. Part 220), Regulation U (12
C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors
of the Federal Reserve System.
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SCHEDULE 1
Jurisdictions Where the Company is Qualified to do Business
as a Foreign Corporation
Tennessee
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SCHEDULE 2
Material Agreements
1. Securityholders Agreement, dated as of December 23, 1998, among the
Company, X.X. Childs Equity Partners II, L.P. and certain other parties
thereto, as amended by Amendment No. 1 to Securityholders Agreement,
dated as of January 22, 1999, Amendment No. 2 to Securityholders
Agreement, dated as of April 30, 1999, and Amendment No. 3 to
Securityholders Agreement, dated as of February 8, 2002.
2. Advisory Services Agreement, dated as of December 23, 1998, among X.X.
Childs Associates, L.P., Credit Agricole Indosuez and the Company.
3. Employment Agreement, dated as of December 1, 1998, between the Company
and Xxxxxxx X. Xxxxx.
4. Employment Agreement, dated as of December 1, 1998, between the Company
and M. Xxxxxxx Xxxxxxxx.
5. Employment Agreement, dated as of September 1, 1999, between the
Company and Xxxx Xxxxxx.
6. Epogen Freestanding Dialysis Center Agreement, dated April 1, 1998,
between Amgen Inc. and the Company, as amended by Amendment No. 1 to
Agreement, dated January 15, 1999, Amendment No. 2 to Agreement, dated
January 14, 2000, Amendment No. 3 to Agreement, dated March 15, 2000,
Amendment No. 4 to Agreement, dated February 9, 2001, Amendment No. 5
to Agreement, dated October 3, 2001, and Amendment No. 6 to Agreement,
dated September 26, 2002.
7. Services Agreement, dated as of August 1, 2000, between the Company and
IMRAC Corporation.
8. License and Support Agreement, dated as of August 1, 2000, between the
Company and IMRAC Corporation.
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EXHIBIT B-2
Form of Opinion of Baker, Donelson, Bearman, Xxxxxxxx &
Xxxxxxxxx, PC to be delivered pursuant to Section 5(c) of the Purchase
Agreement.
(i) Each Guarantor has been duly incorporated and is validly existing
as a corporation, limited liability company or limited partnership, as
applicable, under the laws of the jurisdiction of its incorporation or
formation, and, based solely on certificates of public officials, is in good
standing, as of the respective date of such applicable certificate, under the
laws of the jurisdiction of its incorporation or formation except for such
jurisdictions where the failure to so qualify or to be in good standing would
not, individually or in the aggregate, result in a Material Adverse Change. Each
Guarantor has the corporate, limited liability or partnership power, as
applicable, and corporate, limited liability or partnership authority, as
applicable, to own, lease and operate its properties and to conduct its business
as described in the Offering Memorandum and to enter into and perform its
obligations under the Purchase Agreement, the Registration Rights Agreement, the
Credit Agreement, the Indenture and the Securities. To our knowledge based
solely on certificates of public officials and officers of each Guarantor, each
Guarantor is, as of the respective dates of the applicable certificates, duly
qualified as a foreign corporation, limited liability company or partnership, as
applicable, to transact business and is in good standing in the respective
jurisdictions set forth in Schedule 1 (attached hereto and incorporated herein
by reference), except for such jurisdictions where the failure to so qualify or
to be in good standing would not, individually or in the aggregate, result in a
Material Adverse Change.
(ii) All of the issued and outstanding capital stock, limited liability
company or partnership interests of each Guarantor has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien or encumbrance, except for a pledge under the Company's
Second Amended and Restated Credit Agreement dated as of February 10, 2000, as
amended.
(iii) The Guarantees of the Notes and the Exchange Notes have been duly
authorized for issuance and sale pursuant to this Agreement and the Indenture
and, at the Closing Date, will have been duly executed by each of the
Guarantors.
(iv) The Purchase Agreement has been duly authorized, executed and
delivered by each of the Guarantors.
(v) The Registration Rights Agreement has been duly authorized,
executed and delivered by each of the Guarantors.
(vi) The Credit Agreement has been duly authorized, executed and
delivered by each of the Guarantors.
(vii) The Indenture has been duly authorized, executed and delivered by
each of the Guarantors.
(viii) To our knowledge: (a) the Company and each Guarantor have such
permits, licenses, franchises, certifications, accreditations and authorizations
(collectively, "Authorizations") from all regulatory or governmental officials,
bodies or tribunals as are necessary to own, lease and operate its respective
properties and to conduct its business in the
B-2-1
manner described in the Offering Memorandum except as would not reasonably be
expected to result in a Material Adverse Change; (b) the Company and each
Guarantor are eligible to participate in the Medicare and Medicaid programs as
and except to the extent described in the Offering Memorandum; (c) the Company
and each Guarantor has fulfilled and performed all of its material obligations
with respect to such Authorizations or eligibility; and (d) except as disclosed
in the Offering Memorandum, no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof except where
such revocation or termination would not result in a Material Adverse Change.
The opinion rendered in this paragraph (viii) is limited solely to any federal
or Tennessee Healthcare Laws.
(ix) No consent, approval, authorization or other order of, or
registration or filing with, any governmental or regulatory authority or agency,
or, to our knowledge, any court, of the United States federal government or the
State of Tennessee, is required for any Guarantor's execution, delivery and
performance of the Purchase Agreement, the Registration Rights Agreement, the
DTC Agreement, or the Indenture, as applicable, or the issuance and delivery of
the Guarantees of the Notes, or consummation of the transactions contemplated
thereby and by the Offering Memorandum, except as would not reasonably be
expected to result in a Material Adverse Change and except for any obligations
relating to the execution and performance of the Credit Agreement and any
documents to be delivered thereunder or as may be required under any Healthcare
Laws or the Securities Act, Exchange Act, the Trust Indenture Act, applicable
state securities or blue sky laws, and all rules and regulations promulgated
under such federal and state laws.
(x) The performance by the Company (solely with respect to clauses (b)
and (c) below) and each of the Guarantors of its obligations under the Purchase
Agreement, the Registration Rights Agreement, the DTC Agreement, the Notes, the
Guarantees of the Notes and the Indenture, as applicable, (other than
performance by the Company or any Guarantor of their indemnification and
contribution obligations under such agreements and any obligations relating to
the execution and performance of the Credit Agreement and any documents to be
delivered thereunder, as to which we render no opinion) (a) will not result in
any violation of the provisions of the certificate of incorporation, by-laws,
operating agreement or limited partnership agreement of such Guarantor; (b) will
not constitute a breach of, or a default (with or without the giving of notice
or lapse of time) of, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
Guarantor pursuant to, its obligations under any of the agreements listed in
Schedule 2 (attached hereto and incorporated herein by reference), except for
such breaches, defaults, liens, charges or encumbrances that either (y) have
been waived or suspended in writing and disclosed in the Offering Memorandum, or
(z) would not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Change; or (c) to our knowledge, will not result in
any violation of any federal or Tennessee Healthcare Law. No opinion is given
herein with respect to any financial covenants or ratios found in any of the
agreements listed in Schedule 2 for which the review or interpretation of
financial data is necessary in order to determine compliance.
(xi) The statements in the Offering Memorandum under the captions "Risk
Factors - Risks Relating to Our Business," "Business - Sources of Revenue -
Medicare Reimbursement," "Business - Sources of Revenue - Medicaid
Reimbursement," "Government Regulation," and "Business - Legal Proceedings,"
insofar as such statements constitute matters of law, summaries of legal matters
or legal conclusions, have been reviewed by us and fairly present, in all
material respects, the matters referred to therein and do not omit a material
fact necessary to make the statements contained therein not misleading.
Notwithstanding the foregoing, we render no
B-2-2
opinion as to financial statements, notes, schedules or other financial data
derived therefrom, that is included in the Offering Memorandum or any amendments
or supplements thereto.
(xii) Although we are not counsel of record, to our knowledge, the
litigation styled Xxxxxx v. National Nephrology Associates, Inc., et al. (Case
No: 01-C-1513) filed in the Circuit Court for Davidson County, Tennessee would
not be required to be described by Item 103 of Regulation S-K under the
Securities Act if the issuance of the Securities were being registered under the
Securities Act.
In addition, we have participated in conferences with officers and
other representatives of the Company and the Guarantors, representatives of the
independent public or certified public accountants for the Company and with
representatives and counsel of the Initial Purchasers at which the contents of
the Offering Memorandum, and any supplements or amendments thereto, and related
matters were discussed and revised. Because of the inherent limitations in the
independent verification of factual matters, and the character of determinations
involved in the preparation of disclosure documents, we are not passing upon,
and do not assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Offering Memorandum. However, subject to the
foregoing, on the basis of our participation in the conferences referred to
above and our examination of the documents referred to herein and relying upon
facts provided by representatives of the Company, we advise you that nothing has
come to our attention that the Offering Memorandum, as of its date or at the
Closing Date, 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 the light of the circumstances under which they were
made, not misleading (it being understood that we express no belief as to any
financial statements, notes, schedules or other financial data derived
therefrom, that is included in the Offering Memorandum or any amendments or
supplements thereto).
B-2-3
SCHEDULE 1
Jurisdictions Where Guarantors are Qualified to do Business as a Foreign Entity
National Nephrology Associates Credit Corporation, a Tennessee corporation, is
qualified to do business in Texas
NNA of Georgia, Inc., a Delaware corporation, is qualified to do business in
Georgia
Renex Dialysis Facilities, Inc., a Mississippi corporation, is qualified to do
business in Louisiana
1-1
SCHEDULE 2
Agreements
1. Asset Purchase Agreement by and between Company, NNA-Saint Barnabas,
L.L.C., Saint Barnabas Medical Center, Saint Barnabas Outpatient
Centers, Newark Xxxx Israel Medical Center, Inc., Monmouth Medical
Center, Xxxxx Mass Medical Center, and Saint Barnabas Corporation dated
August 1, 2003
2. Medical Director Services Agreements for each location listed on p. 45
of the Offering Memorandum
2-1
ANNEX I
Each Initial Purchaser understands that:
Such Initial Purchaser agrees that it has not offered or sold and will
not offer or sell the Securities in the United States or to, or for the benefit
or account of, a U.S. Person (other than a distributor), in each case, as
defined in Rule 902 under the Securities Act as part of its distribution at any
time and otherwise until 40 days after the later of the commencement of the
offering of the Securities pursuant hereto and the Closing Date, other than in
accordance with Regulation S of the Securities Act or another exemption from the
registration requirements of the Securities Act. Such Initial Purchaser agrees
that, during such 40-day restricted period, it will not cause any advertisement
with respect to the Securities (including any "tombstone" advertisement) to be
published in any newspaper or periodical or posted in any public place and will
not issue any circular relating to the Securities, except such advertisements as
permitted by and include the statements required by Regulation S.
Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Securities by it to any distributor, dealer or person
receiving a selling concession, fee or other remuneration during the 40-day
restricted period referred to in Rule 903 under the Securities Act, it will send
to such distributor, dealer or person receiving a selling concession, fee or
other remuneration 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 and sold within the United States or to, or for the
account or benefit of, U.S. persons as part of your distribution at any
time or otherwise until 40 days after the later of the commencement of
the Offering and the Closing Date, except in either case in accordance
with Regulation S under the Securities Act (or Rule 144A or to
Accredited Institutions in transactions that are exempt from the
registration requirements of the Securities Act), and in connection
with any subsequent sale by you of the Notes covered hereby in reliance
on Regulation S during the period referred to above to any distributor,
dealer or person receiving a selling concession, fee or other
remuneration, you must deliver a notice to substantially the foregoing
effect. Terms used above have the meanings assigned to them in
Regulation S."
Such Initial Purchaser agrees that the Securities offered and
sold in reliance on Regulation S will be represented upon issuance by a global
security that may not be exchanged for definitive securities until the
expiration of the 40-day restricted period referred to in Rule 903 of the
Securities Act and only upon certification of beneficial ownership of such
Securities by non-U.S. persons or U.S. persons who purchased such Securities in
transactions that were exempt from the registration requirements of the
Securities Act.
I-1
