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EXHIBIT 4.2
$110,000,000
UROHEALTH Systems, Inc.
12.5% Senior Subordinated Notes due 2004
PURCHASE AGREEMENT
April 3, 1997
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PURCHASE AGREEMENT
April 3, 1997
Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
UROHEALTH Systems, Inc., a corporation organized and existing
under the laws of Delaware (the "Company") proposes, subject to the terms and
conditions stated herein, to issue and sell to you (the "Initial Purchaser")
110,000 units (the "Securities") consisting of (i) $110,000,000 aggregate
principal amount of its 12.5% Senior Subordinated Notes due 2004 (the "Notes"),
to be issued pursuant to an indenture dated as of April 10, 1997 (the
"Indenture") among the Company, the Guarantors signatory hereto (the
"Guarantors") and The Bank of New York, as trustee (the "Trustee") and (ii)
warrants (the "Warrants") to purchase an aggregate (subject to certain
contingencies) of 996,451 shares of the common stock, par value $.001 per share
of the Company (the "Common Stock"). The Securities are to be guaranteed (the
"Guarantees") by the Guarantors. The Guarantees shall be in the form contained
in the Indenture. Unless the context requires otherwise, all references herein
to the Notes shall be deemed to include the Guarantees. The shares of Common
Stock issuable upon exercise of the Warrants are collectively referred to
herein as the "Warrant Shares." The Warrants are to be issued pursuant to the
provisions of a warrant agreement to be dated as of April 10, 1997 (the
"Warrant Agreement"), by and between the Company and The Bank of New York, as
warrant agent (the "Warrant Agent").
The Securities will be offered and sold to the Initial
Purchaser without being registered under the Securities Act of 1933, as amended
(the "Act"), in reliance on an exemption therefrom. The Company has prepared a
preliminary offering memorandum, dated March 14, 1997 (such preliminary
offering memorandum being hereinafter referred to as the "Preliminary Offering
Memorandum"),
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and an offering memorandum, dated April 3, 1997 (such offering memorandum, in
the form first furnished to the Initial Purchaser for use in connection with
the offering of Securities, being hereinafter referred to as the "Offering
Memorandum"), setting forth information regarding the Company and the
Securities. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum in connection with
the offering and resale of the Securities. All capitalized terms used and not
defined herein shall have the meaning set forth in the Offering Memorandum.
The Securities shall be immediately separable into Notes and
Warrants. Unless the context requires otherwise, references herein to
"Securities" shall be deemed to include the Notes and Warrants following any
such separation.
The Company understands that you propose to make an offering
of the Securities on the terms set forth in the Offering Memorandum, as soon as
you deem advisable after this Agreement has been executed and delivered, (i) to
persons in the United States whom you reasonably believe to be qualified
institutional buyers ("Qualified Institutional Buyers") as defined in Rule 144A
promulgated by the Securities and Exchange Commission (the "Commission") under
the Act, as such rule may be amended from time to time ("Rule 144A"), in a
transaction under Rule 144A and (ii) to institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Act).
1. PURCHASE, SALE AND DELIVERY OF THE SECURITIES. On the
basis of the representations, warranties, covenants and agreements herein
contained, but subject to the terms and conditions herein set forth, (i) the
Company hereby agrees to issue and sell the Securities to the Initial
Purchaser, and (ii) the Initial Purchaser hereby agrees to purchase from the
Company, at a purchase price of $ 106.7 million (the "Purchase Price"), $110
million aggregate principal amount of Securities.
Delivery of and payment of the Purchase Price for the
Securities shall be made in your offices at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, or at such other place as the Initial Purchaser shall reasonably
designate. Such delivery and payment shall be made at 9:00 a.m., local time,
on April 10, 1997, or at such other time as shall be agreed upon by you and the
Company. The time and date of such delivery and payment are herein called the
"Closing Date." Delivery of the Securities shall be made to you for your
account against payment of the purchase price for the Securities by wire
transfer of immediately available funds to
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an account or accounts to be designated by the Company at least one business
day prior to the Closing Date.
The Securities shall be registered in such name or names and
in such authorized denominations as you may request in writing at least two
full business days prior to the Closing Date. The Company will permit you to
examine and package such Securities for delivery at least one full business day
prior to the Closing Date.
The Initial Purchaser has advised the Company that the Initial
Purchaser proposes to offer the Securities for resale upon the terms and
conditions set forth in this Agreement and in the Offering Memorandum. The
Initial Purchaser hereby represents and warrants to, and agrees with, the
Company that it (i) has not and will not solicit offers for, or offer or sell,
such Securities by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Act, (ii) will solicit offers for such Securities pursuant to Rule 144A or
resales not involving a public offering, as applicable, only from, and will
offer, sell or deliver such Securities, as part of its distribution thereof,
only to, respectively, (A) persons in the United States whom it reasonably
believes to be Qualified Institutional Buyers and (B) institutional "accredited
investors," as defined in Rule 501(a)(1), (2), (3) or (7) under the Act,
provided, however, that each such "accredited investor" must complete and
deliver to such Initial Purchaser an investment letter substantially in the
form of Appendix A to the Offering Memorandum prior to acceptance of any order,
(iii) is a Qualified Institutional Buyer, with such knowledge and experience in
financial and business matters as are necessary in order to evaluate the merits
and risks of an investment in the Securities and (iv) will, during its initial
distribution of the Securities, unless prohibited by applicable law, furnish to
each person to whom it offers any Securities a copy of the Preliminary Offering
Memorandum and will, during its initial distribution of the Securities, furnish
to each person to whom it sells any Securities a copy of the Offering
Memorandum.
2. AGREEMENTS OF THE COMPANY AND THE GUARANTORS. Each of the
Company and the Guarantors hereby agrees with each of you that:
(a) The Company and each Guarantor will cooperate
with the Initial Purchaser in endeavoring to qualify the Securities for sale
under the securities laws of such jurisdictions as the Initial Purchaser may
reasonably have
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designated in writing and will make such applications, file such documents, and
furnish such information as may be reasonably required for that purpose;
provided that neither the Company nor any Guarantor shall be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to
file such a consent. The Company and the Guarantors will, from time to time,
prepare and file such statements, reports, and other documents, as are or may
be required to continue such qualifications in effect for so long a period as
the Initial Purchaser may reasonably request for distribution of the
Securities.
(b) At any time prior to the completion of the
distribution of the Securities by the Initial Purchaser, the Company will give
the Initial Purchaser notice of its intention to prepare any supplement or
amendment to the Offering Memorandum, will furnish the Initial Purchaser with
copies of any such amendment, supplement or other document a reasonable amount
of time prior to such proposed use, and will not use any such amendment or
supplement to which the Initial Purchaser or counsel for the Initial Purchaser
shall reasonably object within five days of being furnished a copy thereof.
(c) The Company has furnished or will furnish to the
Initial Purchaser such number of copies of the Offering Memorandum (as amended
or supplemented) as the Initial Purchaser may reasonably request.
(d) At any time prior to the completion of the
distribution of the Securities by the Initial Purchaser, the Company will
advise you promptly and, if requested by you, confirm such advice in writing,
of the happening of any event that makes any statement of a material fact made
in the Offering Memorandum (as amended or supplemented from time to time)
untrue or which requires the making of any additions to or changes in the
Offering Memorandum (as amended or supplemented from time to time) in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. If, during the period specified in the first
sentence of this paragraph, any event shall occur as a result of which it is
necessary, in the reasonable judgment of the Initial Purchaser, to amend or
supplement the Offering Memorandum in order to make the Offering Memorandum not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, the Company will forthwith amend or supplement the
Offering Memorandum (in form and substance reasonably satisfactory to the
Initial Purchaser) so that, as so amended or supplemented, the Offering
Memorandum will not include an untrue statement of material fact or omit to
state a material fact
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necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to the purchaser, not
misleading, and the Company will furnish to the Initial Purchaser of copies of
such amendment or supplement in an amount reasonably requested by the Initial
Purchaser.
(e) At any time prior to completion of the
distribution of the Securities by the Initial Purchaser, the Company and each
of its direct and indirect subsidiaries (including without limitation
Microsurge, Inc., but excluding all inactive subsidiaries incorporated outside
of the United States, the "Subsidiaries") will, as required, file promptly all
documents required to be filed with the Commission pursuant to Section 13, 14,
or 15(d) of the Exchange Act.
(f) Neither the Company nor the Guarantors will
solicit any offer to buy or offer or sell the Securities by means of any form
of general solicitation or general advertising.
(g) Neither the Company nor the Guarantors nor any
affiliate of any of them (as defined in Rule 501(b) of the Act) will offer,
sell or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the Act) which will be integrated with the sale of the
Securities in a manner that would require the registration of the Securities
under the Act.
(h) During the period from the Closing Date to three
years after the Closing Date, neither the Company, the Guarantors nor their
respective subsidiaries will, and will not permit any "affiliate" (as defined
in Rule 144 under the Act) of any of them to, resell any of the Securities that
have been reacquired by them, except for Securities purchased by the Company,
the Guarantors, or any of their respective affiliates and resold in a
transaction registered under the Act.
(i) The Company will, so long as the Securities are
outstanding and any Securities are "restricted securities" within the meaning
of Rule 144(a)(3) under the Act, either (i) timely file reports and other
information with the Commission under Section 13 or 15(d) of the Exchange Act,
or (ii) in the event it is not subject to Section 13 or 15(d) of the Exchange
Act, make available to holders of the Securities and prospective purchasers of
the Securities designated by such holders, upon request of such prospective
purchasers, the information required to be delivered pursuant to Rule
144A(d)(4) under the Act to permit compliance with Rule 144A in connection with
resales of the Securities.
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(j) The Company will, if requested by the Initial
Purchaser, use its best efforts in cooperation with the Initial Purchaser to
permit the Securities to be eligible for clearance and settlement through The
Depository Trust Company.
(k) Each of the Securities will bear the legend
contained in "Notice to Investors" in the Offering Memorandum and upon the
other terms stated therein, except after such Securities are resold or
exchanged pursuant to a registration statement effective under the Act.
(l) The Company will, for the shorter of the period
the Securities remain outstanding and five years from the Closing Date, deliver
to the Initial Purchaser copies of annual reports and copies of all other
documents, reports and information furnished by the Company or any of the
Guarantors to their securityholders or filed with any securities exchange
pursuant to the requirements of such exchange or with the Commission pursuant
to the Act or the Exchange Act.
(m) The Company and the Guarantors shall apply the
net proceeds of their sale of the Securities as set forth in the Offering
Memorandum including, without limitation, depositing funds into escrow in an
amount sufficient to satisfy the payment of interest on the Notes on each of
the first three Interest Payment Dates pursuant to the terms of an escrow
agreement (the "Escrow Agreement") to be dated as of April 10, 1997, by and
between the Company and The Bank of New York, as escrow agent (the "Escrow
Agent").
(n) The Company and the Guarantors shall not invest,
or otherwise use the proceeds received by them from their sale of the
Securities in such a manner as would require the Company or any of the
Subsidiaries to register as an investment company under the 1940 Act or the
rules and regulations thereunder.
(o) The Company and the Guarantors will not claim
the benefit of any usury laws against any holders of Securities or Guarantees,
respectively.
(p) The Company will use its reasonable best efforts
to do and perform all things required to be done and performed under this
Agreement by it prior to or after the Closing Date and to satisfy all
conditions precedent on its part to the delivery of the Securities.
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(q) During the period beginning on the date of this
Agreement and continuing to and including the Closing Date, except as described
in the Offering Memorandum, there will be no transactions entered into by the
Company or any of the Guarantors which are material with respect to the Company
and the Subsidiaries taken as a whole, and during such period there will be no
dividend or distribution of any kind declared, paid or made by the Company on
any class of capital stock or other equity interests.
(r) Whether or not the transactions contemplated
hereby are consummated or this Agreement is terminated, the Company and the
Guarantors agree with you, jointly and severally, that they will pay and be
responsible for all costs, charges, liabilities, expenses, fees and taxes
incurred in connection with or incident to (i) the preparation, printing
(including word processing), distribution and delivery of the Offering
Memorandum (including financial statements and exhibits), each preliminary
offering memorandum, and all amendments and supplements to any of them, (ii)
the preparation, printing (including word processing), execution, distribution
and delivery of this Agreement, the Indenture, the Registration Rights
Agreement, the registration rights agreement relating to the Warrant Shares
(the "Warrant Shares Registration Rights Agreement") the Escrow Agreement, the
Warrant Agreement, the certificates representing the Securities, the
preliminary and final Blue Sky memoranda and all other agreements, memoranda,
correspondence and other documents printed, distributed and delivered in
connection with the offering and sale of the Securities (excluding in each case
any fees and disbursements of counsel for the Initial Purchaser, other than
such fees and disbursements relating to the printing and delivery of the
preliminary and final Blue Sky Memoranda specified in clause (iii) below),
(iii) the qualification of the Securities for offer and sale under the
securities or Blue Sky laws of the jurisdictions referred to in paragraph 2(a)
(including in each case the reasonable fees and disbursements of counsel for
the Initial Purchaser relating to such qualification and any memoranda relating
thereto and any filing fees in connection therewith), (iv) furnishing such
copies of the Offering Memorandum, the Preliminary Offering Memorandum and all
amendments and supplements thereto as may be reasonably requested for use in
connection with the offering or sale of the Securities by the Initial Purchaser
or by dealers to whom Securities may be sold, (v) the rating of the Securities
by one or more rating agencies, (vi) the fees and expenses of the Trustee, the
Warrant Agent, the Escrow Agent and any of their agents and the fees and
disbursements of counsel for the Trustee, the Warrant Agent and the Escrow
Agent in connection with the Indenture, the Warrant Agreement, the Escrow
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Agreement and the Securities and (vii) the performance by the Company and the
Guarantors of their other obligations under this Agreement, including (without
limitation) the cost of printing and engraving the certificates representing
the Securities and all expenses and taxes incident to the sale and delivery of
the Securities to you. The Company hereby agrees and acknowledges that the
Initial Purchaser shall not be responsible for any fees or expenses of the
Company or the Guarantors in connection with the performance by any of them of
their obligations under this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
GUARANTORS. Each of the Company and Guarantors, jointly and severally,
represents and warrants to, and agrees with, you that:
(a) As of their respective dates, the Preliminary
Offering Memorandum and the Offering Memorandum do not, and at the Closing Date
(as defined herein) the Offering Memorandum will not, contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
contained in this paragraph (a) shall not apply to statements in or omissions
from the Preliminary Offering Memorandum or the Offering Memorandum (or any
supplement or amendment to them) made in reliance upon and in conformity with
information relating to the Initial Purchaser furnished to the Company in
writing by or on behalf of the Initial Purchaser expressly for use therein.
The Company acknowledges for all purposes under this Agreement that the last
paragraph on the cover page, and the fifth paragraph and the last sentence of
the seventh paragraph under the caption "Plan of Distribution" in the Offering
Memorandum constitute the only written information (the "Initial Purchaser
Information") furnished to the Company by the Initial Purchaser expressly for
use in the Preliminary Offering Memorandum (or the Offering Memorandum) and
that the Initial Purchaser shall not be deemed to have provided any other
information (and therefore is not responsible for any such statement or
omission) pertaining to any arrangement or agreement with respect to any party
other than the Initial Purchaser.
(b) No action has been taken and no statute, rule,
regulation or order has been enacted, adopted or issued by any governmental
body, agency or official which prevents the issuance of the Securities,
prevents or suspends the use of the Offering Memorandum or the Preliminary
Offering Memorandum or suspends the sale of the Securities in any jurisdiction
referred to in Section 2(a)
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hereof; no injunction, restraining order or order of any nature by any foreign,
Federal or state court of competent jurisdiction has been issued with respect
to the Company or any of the Subsidiaries which would prevent or suspend the
issuance or sale of the Securities or the use of the Offering Memorandum or the
Preliminary Offering Memorandum in any jurisdiction referred to in Section 2(a)
hereof; and no action, suit or proceeding before any court or arbitrator or any
governmental body, agency or official, domestic or foreign, is pending against
or, to the best of the Company's and the Guarantors' knowledge, threatened
against, the Company or any of the Subsidiaries which, if adversely determined,
could interfere with or adversely affect the issuance of the Securities or in
any manner draw into question the validity of this Agreement, the Securities,
the Indenture, the Registration Rights Agreement, the Warrant Shares
Registration Rights Agreement, the Warrant Agreement or the Escrow Agreement.
(c) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Offering Memorandum under the
caption, "Capitalization"; all of the shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and are fully
paid, nonassessable and not subject to any preemptive or similar rights; the
capital stock of the Company conforms in all material respects to all
statements relating thereto in the Preliminary Offering Memorandum and the
Offering Memorandum; and neither the issuance of the Securities nor the
issuance of the Warrant Shares by the Company will be subject to preemptive or
other similar rights.
(d) This Agreement has been duly authorized and
validly executed and delivered by the Company and the Guarantors, and
constitutes a valid and binding agreement of each of them, enforceable against
each of them in accordance with its terms (assuming due authorization,
execution and delivery by all other parties hereto), subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except to the extent that indemnification
from liability in connection with the Federal securities laws may be
unenforceable.
(e) The execution and delivery of this Agreement,
the issuance and sale, as applicable, of the Securities, the performance of
this Agreement, the Indenture, the Registration Rights Agreement, the Warrant
Shares Registration Rights Agreement, the Warrant Agreement, the Escrow
Agreement and the con-
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summation of the transactions contemplated hereby and thereby will not conflict
with or constitute or result in a breach or violation of (or an event which,
with notice or lapse of time, or both, would constitute a breach or violation
of) the charters or bylaws of the Company or any of the Guarantors or any of
the terms or provisions of, or constitute a default or cause an acceleration of
any obligation under or result in the imposition or creation of (or the
obligation to create or impose) any security interest, mortgage, pledge, claim,
lien, encumbrance or adverse interest of any nature (each, a "Lien") with
respect to, any material obligation, bond, agreement, note, debenture, or other
evidence of indebtedness, or any indenture, mortgage, deed of trust or other
agreement, lease, license or instrument to which the Company, or any of the
Subsidiaries, is a party or by which it or any of them is bound, or to which
any properties of the Company or any of the Subsidiaries is or may be subject,
or any order of any court or governmental agency, body or official having
jurisdiction over the Company or any of the Subsidiaries or any of their
properties, or violate or conflict with any statute, judgment, decree, order,
rule or regulation of any court, governmental agency or other body or
self-regulatory organization applicable to the Company or any of the
Subsidiaries, or any of their respective assets or properties.
(f) Assuming the accuracy of the representations of
the Initial Purchaser in Section 1 hereof, no authorization, approval or
consent or order of, or filing with, any court or governmental body, agency or
official is necessary in connection with the transactions contemplated by this
Agreement, the Indenture, the Registration Rights Agreement, the Warrant Shares
Registration Rights Agreement, the Warrant Agreement or the Escrow Agreement,
except such as will be obtained and made under the Federal and state securities
or Blue Sky laws or regulations and, with respect to the Registration Rights
Agreement and the Warrant Shares Registration Rights Agreement, the Act and, if
applicable, the regulations of the National Association of Securities Dealers,
Inc. (the "NASD").
(g) Each Subsidiary is a Guarantor signatory hereto.
All of the inactive subsidiaries (the "Inactive Subsidiaries") of the Company
excluded from the definition of the term "Subsidiaries" are, taken as a whole,
immaterial to the business and operations of the Company and its subsidiaries
taken as a whole and such Inactive Subsidiaries, taken as a whole, account for
less than 1% of the income and less than 1% of the assets of the Company and
its subsidiaries taken as a whole. The Company and each of the Subsidiaries
has been duly organized, is validly existing as a corporation in good standing
under the laws of its respective
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jurisdiction of incorporation and has the requisite power and authority to
carry on its business as it is currently being conducted, to own, lease and
operate its properties and, as applicable, to authorize the offering of the
Securities, to execute, deliver and perform its respective obligations under
this Agreement, the Indenture, the Registration Rights Agreement the Warrant
Shares Registration Rights Agreement, the Warrant Agreement, and the Escrow
Agreement, as applicable, and to issue, sell and deliver the Securities, as
applicable, and each is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction where the operation,
ownership or leasing of property or the conduct of its business requires such
qualification, except for those cases in which failure to be so qualified or in
good standing would not have a Material Adverse Effect (as defined below).
Neither the Company nor any of the Subsidiaries is in violation of any statute,
judgment, decree, order, rule or regulation applicable to any of them or any of
their respective properties or assets, which violation could have a material
adverse effect on the properties, facilities, business, results of operations,
general affairs, management, condition (financial or otherwise), prospects, or
business affairs of the Company and the Subsidiaries, taken as a whole (a
"Material Adverse Effect").
(h) All of the issued and outstanding shares of
capital stock of, or other ownership interests in, each Subsidiary have been
duly authorized and validly issued, and all of the shares of capital stock of,
or other ownership interests in, each Subsidiary are owned, directly or through
Subsidiaries, by the Company, except as disclosed in the Offering Memorandum.
All such shares of capital stock are fully paid and nonassessable, are not
subject to any preemptive or similar rights, and are owned free and clear of
any Lien. There are no outstanding subscriptions, rights, warrants, options,
calls, convertible or exchangeable securities, commitments of sale, or Liens
related to or entitling any person to purchase or otherwise to acquire any
shares of the capital stock of, or other ownership interest in, any Subsidiary.
(i) Neither the Company nor any of the Subsidiaries
is in violation of its respective charter or bylaws or in default in the
performance of any obligation, bond, agreement, debenture, note or any other
evidence of indebtedness, or any indenture, mortgage, deed of trust or other
contract, lease, license, permit, certificate or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of them is bound,
or to which any of the property or assets of the Company or of any of the
Subsidiaries is subject, which could result in a Material Adverse Effect.
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(j) There is no action, suit, or proceeding before
or by any court or governmental agency or body, or arbitration board or
tribunal, domestic or foreign, pending against or affecting the Company or any
of the Subsidiaries, or any of their respective assets or properties
(including, without limitation, patents, trademarks and other intellectual
property), which could have, singly or in the aggregate, a Material Adverse
Effect, or which could materially and adversely affect the Company's
performance of its obligations pursuant to this Agreement or the transactions
contemplated hereby, and to the best of the Company's and the Guarantors'
knowledge, no such action, suit, or proceeding is contemplated or threatened.
Neither the Company nor any of the Subsidiaries is subject to any judgment,
order, decree, rule or regulation of any court, governmental authority or
arbitration board or tribunal which could have a Material Adverse Effect.
(k) Neither the Company nor any of the Subsidiaries
is in violation of any Federal, state or local laws and regulations relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata), including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases of toxic or
hazardous substances, materials or wastes, or petroleum and petroleum products
("Materials of Environmental Concern"), or otherwise relating to the protection
of human health and safety, or the storage, disposal, transport or handling of
Materials of Environmental Concern (collectively, "Environmental Laws"),
including without limitation any violation or noncompliance with any permits or
other governmental authorizations held by the Company or any Subsidiary, in
each case which could have a Material Adverse Effect. Neither the Company nor
any Subsidiary has received any communication (written or oral), whether from a
governmental authority or otherwise, alleging any such violation or
noncompliance and, to the best knowledge of the Company after due inquiry,
there are no circumstances, either past, present or that are reasonably
foreseeable, that are likely to lead to such violation in the future; there is
no pending or threatened claim, action, investigation or notice (written or
oral) by any person or entity alleging potential liability for investigatory,
cleanup, or governmental responses costs, or natural resources or property
damages, or personal injuries, attorney's fees or penalties relating to (x) the
presence, or release into the environment, of any Materials of Environmental
Concern at any location owned or operated by the Company or any Subsidiary,
now or in the past, or (y) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law (collectively, "Environmental
Claims"); and there are
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no past or present actions, activities, circumstances, conditions, events or
incidents, that are likely to form the basis of any Environmental Claim against
the Company or any Subsidiary or against any person or entity whose liability
for any Environmental Claim the Company or any Subsidiary has retained or
assumed either contractually or by operation of law, in each case which could
have a Material Adverse Effect. In the ordinary course of its business, the
Company conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of the Company and the Subsidiaries, in the
course of which it identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or
any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties); on the basis of
such review, the Company has reasonably concluded that such associated costs
and liabilities could not, singly or in the aggregate, have a Material Adverse
Effect.
(l) Neither the Company nor any Subsidiary is in
violation of any Federal, state or local law relating to discrimination in the
hiring, promotion or pay of employees nor any applicable wage or hour laws,
which such violation would have a Material Adverse Effect. There is (A) no
unfair labor practice complaint pending against the Company or any Subsidiary
or, to the best knowledge of the Company, threatened against any of them,
before the National Labor Relations Board or any state or local labor relations
board, and no grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against the Company or
any Subsidiary or, to the best knowledge of the Company and the Guarantors,
threatened against any of them, and (B) no labor dispute in which the Company
or any Subsidiary is involved nor, to the best knowledge of the Company and the
Guarantors, is any labor dispute imminent, other than routine disciplinary and
grievance matters, in each case which, if determined adversely to the Company,
could have a Material Adverse Effect. The Company is in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and the
regulations and published interpretations thereunder; no "reportable event" (as
defined in ERISA and the regulations and published interpretations thereunder)
has occurred with respect to any "pension plan" (as defined in ERISA and the
regulations and published interpretations thereunder) established or maintained
by the Company or any of the Subsidiaries; the amount of "unfunded benefit
liabilities" (as defined in ERISA and the regulations and published
interpretations thereunder) under all "pension plans" does not exceed
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15
$100,000; neither the Company nor any of the Subsidiaries has incurred or
expects to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Section 4971,
4975 or 4980B of the Code; and each "pension plan" established or maintained by
the Company that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such qualification.
(m) Except as disclosed in the Offering Memorandum,
or as could not have, singly or in the aggregate, a Material Adverse Effect,
the Company and each Subsidiary has good and marketable title, free and clear
of all Liens, to all property and assets (including, without limitation,
patents, trademarks and other intellectual property) described in the Offering
Memorandum as being owned by it and such property and assets are in good repair
and suitable for use as so described. All leases to which the Company or any
Subsidiary is a party are valid and binding and no default has occurred or is
continuing thereunder which could result, singly or in the aggregate, in a
Material Adverse Effect, and the Company and the Subsidiaries enjoy peaceful
and undisturbed possession under all such leases to which any of them is a
party as lessee with such exceptions as do not interfere materially with the
use made by the Company or such Subsidiary.
(n) The Company and the Subsidiaries maintain
insurance at least in such amounts and covering at least such risks as is
adequate for the conduct of their respective businesses and the value of their
respective properties and as is customary for companies engaged in similar
businesses in similar industries.
(o) The firms of accountants that have certified or
shall certify the applicable consolidated financial statements and supporting
schedules and the notes thereto of the Company included in the Preliminary
Offering Memorandum and the Offering Memorandum are independent public
accountants with respect to the Company and the Subsidiaries, as required by
the Act and the Exchange Act. The consolidated financial statements, together
with related schedules and notes, set forth in the Preliminary Offering
Memorandum and the Offering Memorandum (and any amendments or supplements
thereto), comply as to form in all material respects with the requirements of
the Act and the Exchange Act and fairly present the consolidated financial
position of the Company and the Subsidiaries at the respective dates indicated
and the results of their operations and their cash flows for the respective
periods indicated, in accordance with generally
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accepted accounting principles in the United States of America ("GAAP")
consistently applied throughout such periods and in accordance with the
requirements of the Commission's Regulation S-X; and the other financial and
statistical information and data of the Company and the Subsidiaries included
in the Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto), historical and pro forma, are accurately
presented and prepared on a basis consistent with such financial statements and
the books and records of the Company.
(p) Subsequent to the respective dates as of which
information is presented in the Offering Memorandum, (i) except as disclosed in
the Offering Memorandum, neither the Company nor any of the Subsidiaries has
incurred any liabilities or obligations, direct or contingent, which are
material to the Company and the Subsidiaries taken as a whole, nor entered into
any transaction not in the ordinary course of business, (ii) there has been no
decision or judgment in the nature of litigation, settlement or arbitration to
which the Company or any Subsidiary is a party that could have, singly or in
the aggregate, a Material Adverse Effect, and (iii) there has not been any
material adverse change, or any development which would reasonably be expected
to involve, singly or in the aggregate, a material adverse change, in the
properties, facilities, business, results of operations, general affairs,
management, condition (financial or otherwise), prospects or business affairs
of the Company and the Subsidiaries taken as a whole (any of the items set
forth in clause (i), (ii) or (iii), above, a "Material Adverse Change").
(q) All Tax Returns (as hereinafter defined)
required to be filed by the Company or any of the Subsidiaries in any
jurisdiction have been filed and all material amount of Taxes (as hereinafter
defined), including withholding Taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities have been
paid, other than those being contested in good faith and for which adequate
reserves have been provided in accordance with GAAP or those currently payable
without penalty or interest. All Tax Returns filed by the Company and the
Subsidiaries prior to the date hereof were complete and accurate in all
material respects. No material claim for assessment or collection of Taxes is
presently being asserted against the Company or the Subsidiaries. Furthermore,
the Company and the Subsidiaries are not parties to any pending action,
proceeding or investi-
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gation by any governmental authority for the assessment or collection of a
material amount of Taxes, nor does the Company or any Guarantor have knowledge
of any such threatened action, proceeding or investigation. No material claim
by any authority in a jurisdiction where the Company or any of the Subsidiaries
does not currently file a Tax Return to the effect that the Company or any of
the Subsidiaries is or may be subject to taxation by that jurisdiction is
pending. No Liens are presently imposed upon or asserted against any of the
Company's or any of the Subsidiaries' assets as a result of or in connection
with any failure, or alleged failure, to pay any material amount of Tax. As of
the Closing Date, the Company and the Subsidiaries will not have any agreement,
whether or not written, providing for the payment of Tax liabilities or
entitlement to refunds with any other party. The Company and the Subsidiaries
have withheld and paid all material amount of Taxes required to be withheld in
connection with any amounts paid or owing to any employee, creditor,
independent contractor or other third party with respect to the business of the
Company or the Subsidiaries. The unpaid Taxes of the Company and the
Subsidiaries do not exceed, in any material respect, the reserve for Tax
liability (as opposed to any reserve for deferred Taxes established to reflect
timing differences between book and tax income) set forth on the most recent
balance sheet of the Company, as adjusted for the passage of time through the
date hereof in accordance with the past custom and practice of the Company in
filing its Tax Returns. For purposes of this Agreement, the terms "Tax" and
"Taxes" shall mean all Federal, state, local or foreign income, payroll,
employee withholding, unemployment insurance, social security, sales, use,
service use, leasing use, excise, franchise, gross receipts, value added,
alternative or add-on minimum, estimated, occupation, real and personal
property, stamp, transfer, workers' compensation, severance, windfall profits,
environmental (including taxes under Section 59A of the Internal Revenue Code
of 1986, as amended), or other tax of the same or of a similar nature,
including any interest, penalty, or addition thereto, whether disputed or not.
The term "Tax Return" means any return, declaration, report, form, claim for
refund, or information return or statement relating to Taxes or income subject
to taxation, or any amendment thereto, and including any schedule or attachment
thereto.
(r) (i) Each of the Company and the Subsidiaries
has all material certificates, consents, exemptions, orders, permits, licenses,
authorizations, or other approvals or rights (each, an "Authorization") of and
from, and has made all material declarations and filings with, all Federal,
state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, necessary or required to own,
lease, license and use its properties and assets and to conduct its business in
the manner it does as described in the Offering Memorandum in the jurisdictions
wherein presently operated, and such other certifications, accreditations and
eligibility to participate in specified programs as and
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to the extent described in the Offering Memorandum, including, without
limitation, to the extent so described, eligibility to participate in Medicare,
Medicaid and Medi-Cal programs and accreditation by the Joint Commission on
Accreditation of Healthcare Organizations, (ii) each of the Company and the
Subsidiaries has all such Authorizations, certifications, accreditations and
determinations of eligibility and such are valid and in full force and effect,
except as could not have, singly or in the aggregate, a Material Adverse
Effect, (iii) the Company and the Subsidiaries are in compliance in all
material respects with the terms and conditions of all such Authorizations,
certifications, accreditations and determinations of eligibility and with the
rules and regulations of the regulatory authorities and governing bodies having
jurisdiction with respect thereto, except for such non-compliance as could not
have a Material Adverse Effect and (iv) neither the Company nor any Subsidiary
has received any notice of proceedings relating to the revocation or
modification of any such Authorization, certification, accreditation or
determination of eligibility (except in the ordinary course of business in
connection with the receipt of a routine survey that outlines immaterial areas
which require Company or Subsidiary action to maintain compliance or to
preclude such revocation or modification) and no such Authorization contains
any restrictions that are materially burdensome to any of them in a manner
different than applied to other companies engaged in similar businesses. The
Company and the Subsidiaries possess the patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (collectively,
"Intellectual Property") necessary to conduct its business as described in the
Offering Memorandum, and neither the Company nor any of the Subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to the foregoing. To the best knowledge of the Company
after due inquiry, the use of such Intellectual Property in connection with the
business and operations of the Company and the Subsidiaries does not infringe
on the rights of any person.
(s) The Company and each of the Subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability; (iii) access to assets is permitted
only in accordance with management's general or specific authorization; and
(iv) the recorded accountabil-
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ity for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(t) Neither the Company nor any of the Subsidiaries
is (i) an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended
(the "1940 Act") or (ii) a "holding company" or a "subsidiary company" of a
holding company, or an "affiliate" thereof within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(u) Each certificate signed by any officer of the
Company or any of the Guarantors and delivered to the Initial Purchaser or
counsel for the Initial Purchaser in connection herewith shall be deemed to be
a representation and warranty by the Company or such Guarantor to the Initial
Purchaser as to the matters covered thereby.
(v) None of the Company, any Subsidiary, nor any
director, officer, agent, employee or other person associated with or acting on
behalf of the Company or any of the Subsidiaries, has used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment; or is in violation of any Federal "fraud and abuse
legislation" or Federal "anti-kickback law."
(w) All facilities owned or operated as continuing
operations by the Company or the Subsidiaries (the "Company Facilities") (i)
are certified for participation or enrollment in the Medicare, Medicaid and
Medi-Cal programs, (ii) have a current and valid provider contract with the
Medicare, Medicaid and Medi-Cal programs, and (iii) are in substantial
compliance with the terms and conditions of participation of such programs and
have received all approvals or qualifications necessary for capital
reimbursement of the Company's assets except, in each case, where such failure
would not have a Material Adverse Effect. To the best knowledge of the Company
and the Guarantors, the amounts established as provisions for Medicare,
Medicaid and Medi-Cal adjustments and adjustments by any other third party
payors on the financial statements of the Company and the Subsidiaries are
sufficient in all material respects to pay any amounts for which the Company or
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20
any of the Subsidiaries may be liable. Neither the Company nor any of the
Guarantors has received notice from the regulatory authorities which enforce
the statutory or regulatory provisions in respect of the Medicare, Medicaid or
Medi-Cal programs of any pending or threatened investigations, surveys (other
than routine surveys) or decertification proceedings, and neither the Company
nor any of the Subsidiaries has any reason to believe that any such
investigations, surveys or proceedings are pending, threatened or imminent
which individually or in the aggregate could have a Material Adverse Effect.
(x) Each Company Facility is licensed by the proper
state department of health to conduct its business in substantially the manner
conducted by such Company Facility. The Company Facilities are presently in
substantial compliance with all of the material terms, conditions and
provisions of such licenses. The facilities, equipment, staffing and
operations of the Company Facilities satisfy the applicable state licensing
requirements in all material respects.
(y) No funds were received on behalf of the Company
or any of the Subsidiaries to construct, improve or acquire any of its
facilities under the "Xxxx-Xxxxxx" Act as a result of which the Company or any
of the Subsidiaries are currently or will in the future be required to pay any
amounts for which there shall be any "recapture" as a result of the
consummation of the transactions contemplated by this Agreement.
(z) The Securities, the Registration Rights
Agreement, the Indenture, the Warrant Shares Registration Rights Agreement, the
Warrant Agreement and the Escrow Agreement, when executed, will conform in all
material respects to the descriptions thereof contained in the Offering
Memorandum.
(aa) Neither the Company nor any agent acting on
their behalf has taken or will take any action that is reasonably likely to
cause the issuance or sale of the Securities to violate Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System, in each case as in
effect on the Closing Date.
(ab) The Notes and the Guarantees to be issued and
sold hereunder have been duly and validly authorized by the Company and the
Guarantors, respectively, and the Notes and the Guarantees, when they are
authenticated by the Trustee and issued, sold and delivered in accordance with
this Agreement
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and the Indenture against payment therefor as provided by this Agreement, will
have been duly and validly executed, authenticated, issued and delivered and
will constitute valid and binding obligations of the Company and the
Guarantors, respectively, enforceable against the Company and the Guarantors,
respectively, in accordance with their terms and entitled to the benefits
provided by the Indenture, except to the extent that enforcement thereof may be
limited by (A) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (B) general principles of equity.
(cc) The Warrants have been duly authorized by the
Company and, when duly executed and delivered in accordance with the Warrant
Agreement and delivered to the Initial Purchaser against payment therefore as
provided by this Agreement, the Warrants will be entitled to the benefits of
the Warrant Agreement and will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms (assuming due
authorization, execution and delivery by any other party thereto), subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws affecting creditors' rights and remedies generally
and to general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity). The Warrant Shares have been duly
authorized for issuance by the Company, have been reserved for issuance upon
the exercise of the Warrants and, when issued upon exercise of the Warrants in
accordance with the terms thereof, will be validly issued, fully paid and
nonassessable. All Warrant Shares, upon issuance, will be free of preemptive
or similar rights.
(dd) Each of the Indenture, the Registration Rights
Agreement, the Warrant Shares Registration Rights Agreement, the Warrant
Agreement and the Escrow Agreement has been duly and validly authorized by the
Company and the Guarantors, as applicable, and, when executed and delivered by
the Company and the Guarantors, as applicable, will constitute a valid and
binding obligation of the Company and the Guarantors, as applicable,
enforceable against each of them, as applicable, in accordance with its terms,
except to the extent that enforcement thereof may be limited by (A) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally, (B) general principles of
equity and (C) with respect to rights to indemnification, public policy.
(ee) When the Securities are issued and delivered
pursuant to this Agreement, such Securities will not be of the same class
(within the
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meaning of Rule 144A) as securities of the Company or any of the Subsidiaries
which are listed on a national securities exchange registered under Section 6
of the Exchange Act or quoted in a U.S. automated inter-dealer quotation
system.
(ff) Neither the Company nor any of the Subsidiaries
nor any affiliate of any of them (as defined in Rule 501(b) under the Act) has,
directly or through any agent, sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of, any security (as defined in the Act)
which is or will be integrated with the sale of the Securities in a manner that
would require the registration of the Securities under the Act; provided,
however, that the Company and Guarantors make no representations or warranties
as to the activities of the Initial Purchaser.
(gg) Neither the Company nor any of the Subsidiaries
nor any person acting on their behalf has (i) engaged, in connection with the
offering of the Securities, in any form of general solicitation or general
advertising (as those terms are used within the meaning of Regulation D under
the Act) or (ii) solicited offers for, or offered or sold, such Securities by
means of any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act; provided,
however, that the Company and Guarantors make no representations or warranties
as to the activities of the Initial Purchaser.
4. INDEMNIFICATION.
(a) The Company and each of the Guarantors agrees to
indemnify and hold harmless (i) the Initial Purchaser, (ii) each person, if
any, who controls (within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act) the Initial Purchaser (any of the persons referred to in this
clause (ii) being hereinafter referred to as a "controlling person") and (iii)
each officer, director, employee, agent and representative of the Initial
Purchaser (any person referred to in clause (i), (ii) or (iii) may hereinafter
be referred to as an "Indemnified Person") to the fullest extent lawful, from
and against any and all losses, claims, damages, liabilities, actions and
expenses (including without limitation and as incurred, reimbursement of all
reasonable costs of investigating, preparing, pursuing, or defending any claim
or action, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, including the reasonable fees and expenses of
counsel to any Indemnified Person in accordance with the provisions of this
Section 4) directly or indirectly caused by, related to,
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23
based upon or arising out of, or in connection with any untrue statement or
alleged untrue statement of a material fact contained in the Offering
Memorandum (including, in each case, any amendment or supplement thereto) or
any preliminary Offering Memorandum, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as any such loss,
liability, claim, damage or expense is caused solely by an untrue statement or
omission or alleged untrue statement or omission that is (x) made in reliance
upon and in conformity with any Initial Purchaser Information or (y) with
respect to the Initial Purchaser from whom the person asserting such loss,
liability, claim, damage or expense purchased Securities, made in the
Preliminary Offering Memorandum if a copy of the Offering Memorandum (as
amended or supplemented, if the Company shall have furnished the Initial
Purchaser with such amendments or supplements thereto on a timely basis and in
reasonable numbers) was not delivered by or on behalf of such Initial Purchaser
to the person asserting such loss, liability, claim, damage or expense, if
required by law to have been so delivered by the Initial Purchaser, at or prior
to the written confirmation of the sale of the Securities, and it shall be
finally determined by a court of competent jurisdiction, in a judgment not
subject to appeal or review, that the Offering Memorandum (as so amended or
supplemented) would have completely corrected such untrue statement or
omission. The Company shall notify you promptly of the institution, threat or
assertion of any claim, action, proceeding (including any governmental
investigation) or litigation in connection with the matters addressed by this
Agreement which involves the Company, any Guarantor or any Indemnified Person.
(b) In case any action or proceeding (including any
governmental investigation) shall be brought or asserted against any of the
Indemnified Persons with respect to which indemnity may be sought against the
Company or any Guarantor, such Indemnified Person shall promptly notify the
parties against whom indemnification is being sought (the "Indemnifying
Persons") in writing (provided that the failure to give such notice shall not
relieve any of the Indemnifying Persons of its obligations or liabilities
pursuant to this Agreement, except to the extent that the Indemnifying Person
has been materially prejudiced by such failure as determined by a court of
competent jurisdiction in a judgment no longer subject to appeal or review).
Upon receiving such notice, the Company shall be entitled to participate in any
such action or proceeding and to assume, at its sole expense, the defense
thereof, with counsel reasonably satisfactory to such Indemnified Person (who
shall not, except with the consent of the Indemnified Person, be counsel to any
Indemnifying Person) and, after written notice from the Company to
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such Indemnified Person of its election so to assume the defense thereof
promptly after receipt of the notice from the Indemnified Person of such action
or proceeding, the Company and the Guarantors shall not be liable to such
Indemnified Person hereunder for legal expenses of other counsel subsequently
incurred by such Indemnified Person in connection with the defense thereof,
other than reasonable costs of investigation, unless (i) the Company or a
Guarantor agrees in writing to pay such fees and expenses, (ii) the Company
shall have failed promptly to assume such defense or to employ counsel
reasonably satisfactory to such Indemnified Person, or (iii) the named parties
to any such action or proceeding (including any impleaded parties) include both
such Indemnified Person and an Indemnifying Person or an affiliate of an
Indemnifying Person, and such Indemnified Person shall have been advised by
counsel either (x) that there may be one or more legal defenses available to
such Indemnified Person that are different from or additional to those
available to such Indemnifying Person or such affiliate or (y) a conflict may
exist between such Indemnified Person and such Indemnifying Person or such
affiliate (in which case, if such Indemnified Person notifies the Company in
writing, the Company shall not have the right to assume the defense thereof),
it being understood, however, that the Indemnifying Persons shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any time
for all such Indemnified Persons. An Indemnifying Person shall not be liable
for any settlement of any such action or proceeding effected without the prior
written consent of such Indemnifying Person, but if settled with the prior
written consent of such Indemnifying Person, such Indemnifying Person agrees to
indemnify and hold harmless any Indemnified Person from and against any loss,
claim, damage, liability or expense by reason of any such settlement. The
Indemnifying Persons shall not, without your prior written consent, settle or
compromise or consent to the entry of judgment in or otherwise seek to
terminate any pending or threatened action, claim, litigation or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not any Indemnified Person is a party thereto), unless such
settlement, compromise, consent or termination includes an unconditional
release of each Indemnified Person from all liability arising out of such
action, claim, litigation or proceeding.
(c) The Initial Purchaser agrees to indemnify and
hold harmless the Company, the Guarantors, the officers, directors, agents,
representatives and employees of the Company and the Guarantors, and any person
con-
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trolling (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) the Company or any Guarantor, to the same extent as the foregoing
indemnity from the Company and the Guarantors to each of the Indemnified
Persons, but only with respect to claims and actions solely based on any
Initial Purchaser Information. In case any action or proceeding (including any
governmental investigation) shall be brought or asserted against the Company,
the Guarantors, or any such person in respect of which indemnity may be sought
against the Initial Purchaser pursuant to the foregoing sentence, the Initial
Purchaser shall have the rights and duties given to the Company and the
Guarantors (except that if the Company or any Guarantor shall have assumed the
defense thereof, the Initial Purchaser shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof but the
fees and expenses of such counsel shall be at the expense of such Initial
Purchaser), and the Company, the Guarantors and any such person shall have the
rights and duties given to the Indemnified Person by Section 4(b) above.
(d) If the indemnification provided for in this
Section 4 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or expenses referred to herein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party(ies), on the one hand, and the indemnified party(ies), on
the other hand, from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying
party(ies) and the indemnified party, as well as any other relevant equitable
considerations. The relative fault of the Company and the Guarantors, on the
one hand, and the Initial Purchaser, on the other, shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact related
to information supplied by the Company and the Guarantors, on the one hand, or
by the Initial Purchaser, on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The indemnity and contribution obligations of any party
set forth herein shall be in addition to any liability or obligation such party
may otherwise have to any other party.
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26
The Company, the Guarantors and the Initial Purchaser agree
that it would not be just and equitable if contribution pursuant to this
Section 4(d) were determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or judgments referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 4, the Initial Purchaser (and its related
Indemnified Persons) shall not be required to contribute, in the aggregate, any
amount in excess of the amount by which the total discount applicable to the
Securities purchased by the Initial Purchaser exceeds the amount of any damages
which the Initial Purchaser (and its related Indemnified Persons) have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
5. CONDITIONS OF INITIAL PURCHASER'S OBLIGATION. The
obligation of the Initial Purchaser to purchase the Securities under this
Agreement is subject to the satisfaction of each of the following conditions on
the Closing Date:
(a) All the representations and warranties of the
Company and the Guarantors contained in this Agreement shall be true and
correct when made and on the Closing Date with the same force and effect as if
made on and as of the Closing Date. The Company and the Guarantors shall have
performed or complied with all of their respective obligations and agreements
herein contained and required to be performed or complied with by each of them
at or prior to the Closing Date.
(b) (i) Since the date as of which information is
given in the Offering Memorandum, there shall not have been any Material
Adverse Change, (ii) since the date of the latest balance sheet included in the
Offering Memorandum there shall not have been any material adverse change, or
development involving a prospective material adverse change, in the debt of the
Company or the Subsidiaries and (iii) the Company and the Subsidiaries shall
have no liability or obligation, direct or contingent, that is material to the
Company and the Subsidiaries,
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27
individually or in the aggregate, and which is not disclosed in the Offering
Memorandum.
(c) On the Closing Date you shall have received
certificates of the Company and the Guarantors, dated the Closing Date, signed
by the Chief Executive Officer and the Chief Financial Officer of the Company
and the Guarantors, in their capacities as officers of the Company and the
Guarantors, confirming the matters set forth in paragraphs (a), (b) and (l) of
this Section 5.
(d) You shall have received on the Closing Date an
opinion (reasonably satisfactory to you and counsel for the Initial Purchaser),
dated the Closing Date, of Xxxxxxxx & Xxxxxxxx LLP, counsel for the Company,
(and, as applicable, local counsel for the Company and the Guarantors solely as
relates to matters of local law) to the effect that:
(i) the Company and each active Guarantor is
duly incorporated and validly existing corporation in good standing
under the laws of its jurisdiction of organization and the Company and
each Guarantor has the requisite corporate power and corporate
authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and is duly qualified
as a foreign corporation and in good standing in each jurisdiction
where the ownership, leasing or operation of property or the conduct
of the business requires such qualification, except where the failure
to be so qualified will not have a material adverse effect on the
financial condition of the Company and its Subsidiaries taken as a
whole;
(ii) the Company and each Guarantor, as
applicable, has full corporate power and authority to execute, deliver
and perform this Agreement, the Indenture, the Registration Rights
Agreement, the Warrant Shares Registration Rights Agreement, the
Warrant Agreement and the Escrow Agreement, and has full corporate
power and authority to authorize, issue and sell the Securities as
contemplated thereby; each of this Agreement, the Indenture, the
Registration Rights Agreement, the Warrant Shares Registration Rights
Agreement, the Warrant Agreement and the Escrow Agreement, has been
duly authorized, executed and delivered by the Company and each
Guarantor, as applicable, and each
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of the Indenture, the Registration Rights Agreement, the Warrant
Shares Registration Rights Agreement, the Warrant Agreement and the
Escrow Agreement, constitutes a legal, valid and binding obligation of
the Company and each Guarantor, as applicable, and is enforceable
against the Company and each Guarantor, as applicable, in accordance
with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws
affecting creditors' rights generally from time to time in effect and
to general principles of equity, including without limitation,
concepts of materiality, reasonableness, good faith and fair dealing,
regardless of whether in a proceeding at equity or at law);
(iii) each of the Securities, the Notes, the
Guarantees, the Warrants, the Common Stock, the Indenture, the
Registration Rights Agreement, the Warrant Shares Registration Rights
Agreement, the Warrant Agreement and the Escrow Agreement, conforms in
all material respects to the descriptions thereof contained in the
Offering Memorandum;
(iv) neither the Company nor any of the
Subsidiaries is (a) an "investment company" or a company "controlled"
by an investment company within the meaning of the Investment Company
Act of 1940, as amended, or (b) a "holding company" or a "subsidiary
company" of a holding company, or an "affiliate" thereof within the
meaning of the Public Utility Holding Company Act of 1935, as amended;
(v) assuming the accuracy of the
representations of the Initial Purchaser and of the Company and the
Guarantors contained herein, together with the other assumptions set
forth in paragraph (vii) below, no authorization, approval, consent or
order of, or filing with, any court or governmental body or agency is
required for the consummation by the Company and the Guarantors of the
transactions contemplated by this Agreement, except such as are
required to be obtained and made under the 1933 Act, or state
securities or Blue Sky laws or regulations, or with respect to the
Registration Rights Agreement and the Warrant Shares Registration
Rights Agreement, the Act and the regulations of the NASD;
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(vi) the execution and delivery of this
Agreement, the Indenture, the Registration Rights Agreement, the
Warrant Shares Registration Rights Agreement, the Warrant Agreement
and the Escrow Agreement, the issuance and sale of the Securities, the
issuance of the Warrant Shares, the payment of the Securities in
accordance with their terms and the consummation of the transactions
contemplated by this Agreement, the Registration Rights Agreement the
Warrant Shares Registration Rights Agreement, the Warrant Agreement
and the Escrow Agreement, will not conflict with or result in a breach
or violation of the charter or bylaws of the Company or any Guarantor
or the terms or provisions of, or constitute a default under, any
statute, rule or regulation or to the best of such counsel's knowledge
any material agreement or instrument to which the Company or any of
the Subsidiaries is a party or by which any of them is bound and which
has been identified to such counsel, or to which any of the assets or
properties of the Company or any of the Subsidiaries is subject, or to
the best of such counsel's knowledge any order of any court or
governmental agency, body or official having jurisdiction over the
Company or any of the Subsidiaries or any of their properties;
(vii) assuming (A) the accuracy of, and
compliance with, the representations, warranties and covenants of the
Company and the Guarantors in Section 2 and Section 3 of the Purchase
Agreement, (B) the accuracy of, and compliance with, the
representations, warranties and covenants of the Initial Purchaser in
Section 1 of the Purchase Agreement, (C) the accuracy of the
representations and warranties of each of the purchasers to whom the
Initial Purchaser initially resell the Securities as specified in
Section 1 of the Purchase Agreement, (D) the compliance by the Initial
Purchaser with the offering and transfer procedures and restrictions
described in the Offering Memorandum and (E) receipt by the purchasers
to whom the Initial Purchaser initially resells the Securities of a
copy of the Offering Memorandum prior to such sale, it is not
necessary in connection with the offer, sale and delivery of the
Securities or in connection with the initial resale of such Securities
in the manner contemplated by the Purchase Agreement and the Offering
Memorandum to register the Securities under the Act, it
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being understood that no opinion is expressed as to any subsequent
resale of any Securities;
(viii) to such counsel's knowledge, there
are no governmental or legal proceedings pending or threatened to
which the Company or any Guarantor is a party or to which any of their
respective property is subject which, if determined adversely, would
reasonably be expected to have a Material Adverse Effect or adversely
affect the performance by either the Company or any Guarantor of its
obligations pursuant to this Agreement;
(ix) the Securities have been duly
authorized and, when executed and authenticated in accordance with the
provisions of the Indenture (as applicable) and delivered to and paid
for by the Initial Purchaser pursuant to the Purchase Agreement, will
constitute legal, valid and binding obligations of the Company and the
Guarantors, as applicable, entitled to the benefits of the Indenture
and the Warrant Agreement, as applicable, and enforceable against the
Company and the Guarantors, as applicable, in accordance with their
terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, regardless
of whether in a proceeding in equity or at law and that rights to
indemnification may be unenforceable by public policy); and to such
counsel's knowledge, except as otherwise set forth in the Offering
Memorandum, the issuance of such Warrants is not subject to any
preemptive or similar purchase rights in favor of any other person;
and
(x) the Warrant Shares have been duly
authorized and reserved for issuance upon exercise of the Warrants,
and, when issued upon exercise of the Warrants in accordance with the
terms of the Warrant Agreement, will be validly issued, fully paid and
nonassessable and to such counsel's knowledge, except as otherwise set
forth in the Offering Memorandum, the issuance of such Warrant Shares
is not subject to any preemptive or similar purchase rights in favor
of any other person.
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In giving their opinion required by subsection (d) of this
Section 5, such counsel (i) may state that such opinions are limited to matters
governed by the Federal laws of the United States of America, the laws of the
State of California, the laws of the State of New York, and the general
corporation laws of the State of Delaware, and (ii) shall state that (a) such
counsel has acted as counsel to the Company on a regular basis and has acted as
counsel to the Company in connection with the preparation of the Offering
Memorandum and (b) such counsel has participated in conferences with officers
and other representatives of the Company and the Subsidiaries, representatives
of the independent public accountants for the Company and the Subsidiaries,
your representatives and your counsel in connection with the preparation of the
Offering Memorandum and has considered the matters required to be stated
therein and the statements contained therein; and such counsel shall advise you
that, on the basis of the foregoing, although such counsel has not
independently verified the accuracy, completeness or fairness of such
statements (except as indicated above in paragraph (iii)) no facts came to such
counsel's attention that caused such counsel to believe that the Offering
Memorandum as of the date thereof and as of the Closing Date, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. Without limiting the foregoing, such counsel may further state
that it assumes no responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial statements, notes and
schedules and other financial and statistical data included in the Offering
Memorandum.
(e) You shall have received an opinion dated the
Closing Date, from Xxxxx Xxxxxxx, Esq., general counsel of the Company, in form
and substance reasonably satisfactory to you (which may state that such opinion
is limited to matters governed by the Federal laws of the United States of
America, the laws of the State of New York and the general corporation laws of
the State of Delaware), to the effect that:
(i) the execution and delivery of this
Agreement, the Indenture, the Registration Rights Agreement, the
Warrant Shares Registration Rights Agreement, the Warrant Agreement,
the Escrow Agreement, and the issuance and sale of the Securities, the
issuance of the Warrant Shares, the performance by the Company and the
Guarantors of their obligations pursuant thereto, as applicable, and
the consummation of the transactions contemplated
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thereby will not conflict with or result in a breach or violation of
any of the respective charters or bylaws of the Company or any of the
Guarantors or the terms or provisions of, or constitute a default by
the Company or any Subsidiary under any statute, rule or regulation or
to the best of such counsel's knowledge any material agreement or
instrument to which the Company or any of the Subsidiaries is a party
or by which any of them is bound, or to which any of the assets or
properties of the Company or any of the Subsidiaries is subject, or to
the best of such counsel's knowledge any order of any court or
governmental agency, body or official having jurisdiction over the
Company or any of the Subsidiaries or any of their properties;
(ii) to the best of such counsel's
knowledge, there is no current, pending or threatened action, suit or
proceeding before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary or to which
any of their respective property is subject, which is of a material
nature and which is not adequately disclosed in the Offering
Memorandum;
(iii) each of the Company and the
Subsidiaries has such Authorizations from all regulatory or
governmental officials, bodies and tribunals as are necessary to own,
lease and operate its respective properties and to conduct its
business in the manner described in the Offering Memorandum and such
certifications, accreditations and eligibility to participate in
specified programs as and to the extent described in the Offering
Memorandum, including, without limitation, eligibility to participate
in Medicare, Medicaid and Medi-Cal programs;
(iv) all of the issued and outstanding
shares of capital stock of, or other ownership interests in, each
Subsidiary are owned directly or through Subsidiaries, by the Company,
are fully paid and nonassessable, and to the best of such counsel's
knowledge are owned free and clear of any Lien, in each case except as
disclosed in the Offering Memorandum;
(v) the descriptions in the Offering
Memorandum of statutes, legal and governmental proceedings, contracts
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33
and other documents and regulatory matters including, without
limitation, the matters described in the Offering Memorandum, under
the caption "Business-Government Regulation" insofar as such
statements constitute summaries of legal matters, documents or
proceedings referred to therein are accurate in all material respects
and fairly present the information required to be shown;
(vi) to the best of such counsel's
knowledge, neither the Company nor any of the Subsidiaries has
violated any Environmental Laws, nor any Federal or state law relating
to discrimination in the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor any provisions
of ERISA or the rules and regulations promulgated thereunder, which in
each case might result in any Material Adverse Change in the business,
prospects, financial condition or results of operation of the Company
and the Subsidiaries, taken as a whole; and
(vii) to the best of such counsel's
knowledge, except as disclosed in the Offering Memorandum, there are
no outstanding subscriptions, rights, warrants, options, calls,
convertible securities, commitments of sale or Liens related to or
entitling any person to purchase or otherwise to acquire any shares of
the capital stock of, or other ownership interest in, the Company or
any Subsidiary.
In giving the opinion required by subsection (e) of this
Section 5, such counsel shall state that (a) such counsel has acted as counsel
to the Company on a regular basis and has acted as counsel to the Company in
connection with the preparation of the Offering Memorandum and (b) such counsel
has participated in conferences with officers and other representatives of the
Company and its Subsidiaries, representatives of the independent public
accountants for the Company and the Subsidiaries, your representatives and your
counsel in connection with the preparation of the Offering Memorandum and has
considered the matters required to be stated therein and the statements
contained therein; and such counsel shall advise you that, on the basis of the
foregoing, although such counsel has not independently verified the accuracy,
completeness or fairness of such statements (except as indicated above) no
facts came to such counsel's attention that caused such counsel to believe that
the Offering Memorandum as of the date thereof and as of the Closing Date,
contained an untrue statement of a material fact or omitted
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34
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. Without limiting the foregoing, such
counsel may further state that it assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial and statistical data
included in the Offering Memorandum.
(f) You shall have received on the Closing Date
an opinion (reasonably satisfactory to you and counsel for the Initial
Purchasers), dated the Closing Date, of Burns, Doane, Xxxxxxx & Xxxxxx, L.L.P.,
and certain other intellectual property counsel for the Company, collectively
to the effect that:
(i) the information in the Offering
Memorandum under "Risk Factors--Reliance on Patents and Proprietary
Rights," and "Business--Patents, Licenses and Trademarks" to the
extent that it constitutes matters of law, summaries of legal matters,
documents or proceedings, or legal conclusions, has been reviewed by
such counsel and, to the best of such counsel's knowledge, does not
contain any untrue statement of a material fact or omit to state any
material fact with respect to patents, trademarks or proprietary
rights required to be stated therein or necessary to make the
statements therein not misleading and is correct in all material
respects and fairly and completely and correctly presents the
information called for with respect thereto;
(ii) to the best of such counsel's
knowledge, there are no pending or threatened legal or governmental
proceedings, nor allegations on the part of any person, involving
intellectual property, including, but not limited to, claims for
misappropriation of proprietary information, infringement, ownership
dispute, validity or enforceability challenges, disputes under
licenses or other intellectual property-related agreements, unfair
competition, or unauthorized use or disclosure of confidential
information, and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated;
(iii) the Company is listed in the records
of the United States Patent and Trademark Office ("PTO") as the sole
assignee of record of each of the patents listed on a schedule to such
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35
counsel's opinion as Schedule I thereto (the "Patents"), each of the
patent applications listed on a schedule to such counsel's opinion as
Schedule II thereto (the "Patent Applications"), each of the
trademarks listed on a schedule to such counsel's opinion as Schedule
III thereto (the "Trademarks"), and each of the trademark applications
listed on a schedule to such counsel's opinion as Schedule IV thereto
(the "Trademark Applications"), and in the records of the United
States Copyright Office as the sole assignee of record of each of the
copyright listed on a schedule to such counsel's opinion as Schedule V
thereto (the "Copyrights", collectively the "Intellectual Property").
To the best of such counsel's knowledge, there are no claims of any
persons relating to the scope or ownership of the Intellectual
Property, there are no liens which have been recorded against any of
the Intellectual Property, there are no material defects of form in
the preparation or filing of the Patent or Trademark Applications, the
Patent and Trademark Applications are being diligently prosecuted, and
none of the Patent and Trademark Applications has been finally
rejected with no rights to further prosecute or has been abandoned;
(iv) the Company is listed in the records of
the appropriate foreign patent offices as the sole assignee of record
of each of the foreign patents listed on a schedule to such counsel's
opinion as Schedule VI thereto (herein called the "Foreign Patents")
and each of the foreign applications listed on a schedule to such
counsel's opinion as Schedule VII thereto (herein called the "Foreign
Applications"). To the best of such counsel's knowledge, there are no
claims of any persons relating to the scope or ownership of the
Foreign Patents or the Foreign Applications, there are no liens which
have been recorded against any of the Foreign Patents or the Foreign
Applications, there are no material defects of form in the preparation
or filing of the Foreign Applications, the Foreign Applications are
being diligently prosecuted, and none of the Foreign Applications has
been finally rejected with no rights to further prosecute or has been
abandoned;
(v) nothing has come to the attention of
such counsel that leads such counsel to believe that the Applications
and the Foreign Applications will not eventuate in issued patents, or
that
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36
any patents issued in respect of any such Applications or Foreign
Applications will not be valid or will not afford the Company
reasonable patent protection relative to the subject matter thereof;
(vi) the license agreements on a schedule to
such counsel's opinion as Schedule VIII thereto are duly executed,
validly binding and enforceable in accordance with their terms and, to
the best of such counsel's knowledge, the Company is not in material
breach or default of any such licenses;
(vii) to the best of such counsel's
knowledge, all pertinent prior art references known to the Company or
its counsel during the prosecution of the Patents and the Applications
were disclosed to the PTO and other relevant patent offices and, to
the best of such counsel's knowledge, all information submitted to the
PTO in connection with the prosecution of the applications was
accurate, neither such counsel nor the Company made any
misrepresentation to, or concealed any material fact from, the PTO
during such prosecution. The allowance of the associated patent
claims each of the Patents is entitled to a statutory presumption of
validity under 35 U.S.C. 282 and to the best of our knowledge there is
no legal basis to rebut the statutory presumption of validity of the
Patents;
(viii) to the best of such counsel's
knowledge, the Company takes security measures adequate to assert
trade secret protection in its non-patented technology;
(ix) the forms of agreement executed by the
Company's employees, consultants and other advisors respecting trade
secrets, confidentiality, or intellectual property rights are valid,
binding and enforceable in accordance with their express terms; and
(x) nothing has come to the attention of
such counsel that leads such counsel to believe that, with respect to
licenses, patents, trade secrets, copyrights or other proprietary
information or know-how owned or used by the Company, the Offering
Memorandum contains an untrue statement of a material
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37
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading.
The opinions of Xxxxxxxx & Xxxxxxxx LLP, Xxxxx Xxxxxxx, Esq.
and Burns, Doane, Xxxxxxx & Xxxxxx, L.L.P. described in paragraphs (d), (e) and
(f) above shall be rendered to you at the request of the Company and shall so
state therein.
(g) You shall have received from Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, counsel for the Initial Purchaser, an opinion dated
the Closing Date as to such matters as the Initial Purchaser may reasonably
require.
(h) You shall have received letters on and as of the
date hereof as well as on and as of the Closing Date (in the latter case
constituting an affirmation of the statements set forth in the former), in
customary form and substance satisfactory to you, from Ernst & Young LLP,
Coopers & Xxxxxxx and certain other independent public accountants, with
respect to the financial statements and certain financial and statistical
information contained in the Offering Memorandum as you shall require.
(i) The Securities, the Indenture, the Registration
Rights Agreement, the Warrant Shares Registration Rights Agreement, the Warrant
Agreement and the Escrow Agreement shall have been executed and delivered by
the Company and the Guarantors, as applicable.
(j) Prior to the Closing Date, the Company shall
have furnished to you such further information, certificates and documents as
you may reasonably request.
(k) The Initial Purchaser shall have been notified
by the Nasdaq Stock Market, Inc. that it had designated the Securities as
PORTAL eligible.
(l) No stop order suspending the sale of the
Securities in any jurisdiction has been issued and no proceeding for that
purpose has been commenced or is pending or threatened and every request for
additional information on the part of any state securities commission has been
complied with; no action shall have been taken and no statute, rule, regulation
or order shall have
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been enacted, adopted or issued by any governmental agency, body or official
which would, as of the Closing Date, prevent the issuance of the Securities;
and no injunction, restraining order or order of any nature by any court of
competent jurisdiction shall have been issued as of the Closing Date which
would prevent the issuance of the Securities. Subsequent to the execution and
delivery of this Agreement and prior to the Closing Date, there shall not have
been any downgrading, nor shall any notice have been given 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 the rating accorded any of
the Company's securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2) of the
Act.
(m) The Company shall have entered into the New
Credit Facility (as defined in the Offering Memorandum) on the terms and
conditions, and providing for the availability of borrowings, as described in
the Offering Memorandum.
(n) The Company and the Guarantors shall not have
failed at or prior to the Closing Date to perform or comply with any of the
agreements herein contained and required to be performed or complied with by
them at or prior to the Closing Date.
(o) Each of the Warrant Shares Registration Rights
Agreement, the Warrant Agreement and the Escrow Agreement shall be in form and
substance satisfactory to the Initial Purchaser and counsel for the Initial
Purchaser.
The opinions and certificates mentioned in this Agreement
shall be deemed to be in compliance with the provisions hereof only if they are
in all material respects satisfactory to the Initial Purchaser and to Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the Initial Purchaser.
If any of the conditions specified in this Section 5 shall not
have been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
counsel for the Initial Purchaser pursuant to this Section 5 shall not be in
all material respects reasonably satisfactory in form and substance to you and
such counsel, all your obligations hereunder may be cancelled by you at, or at
any time prior to, the Closing Date. Notice of such cancellation shall be
given to the Company in writing, or by telephone, telex or telegraph, confirmed
in writing.
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6. EFFECTIVE DATE OF AGREEMENT, DEFAULT AND TERMINATION.
This Agreement shall become effective upon the execution and delivery of this
Agreement by the parties hereto.
This Agreement may be terminated at any time on or prior to
the Closing Date by the Initial Purchaser by notice to the Company if any of
the following has occurred: (i) subsequent to the date of this Agreement, any
Material Adverse Change or development involving a prospective Material Adverse
Change, whether or not arising in the ordinary course of business, which, in
the judgment of the Initial Purchaser impairs the investment quality of the
Securities, (ii) any outbreak or escalation of hostilities or other national or
international calamity or crisis or material adverse change in the financial
markets of the United States or elsewhere, or any other substantial national or
international calamity or emergency if the effect of such outbreak, escalation,
calamity, crisis or emergency would, in the Initial Purchaser judgment, make it
impracticable or inadvisable to market the Securities or to enforce contracts
for the sale of the Securities, (iii) any suspension or limitation of trading
generally in securities on the New York or American Stock Exchanges, the Nasdaq
Stock Market, or the over-the-counter markets or any setting of minimum prices
for trading on such exchanges or markets, (iv) any declaration of a general
banking moratorium by either Federal or New York authorities, (v) the taking of
any action by any Federal, state or local government or agency in respect of
its monetary or fiscal affairs that in the Initial Purchaser's judgment has a
material adverse effect on the financial markets in the United States, and
would, in the Initial Purchaser's judgment, make it impracticable or
inadvisable to market the Securities to enforce contracts for the sale of the
Securities, (vi) any securities of the Company or any of the Subsidiaries shall
have been downgraded or placed on any "watch list" for possible downgrading or
reviewed for a possible change that does not indicate the direction of the
possible change by any "nationally recognized statistical rating organization,"
as such term is defined for purposes of Rule 436(g)(2) of the Act, (vii) the
delisting of the common stock of the Company from the American Stock Exchange,
or (viii) the enactment, publication, decree or other promulgation of any
Federal or state statute, regulation, or rule or order of any court or other
governmental authority which in the judgment of the Initial Purchaser could
have a Material Adverse Effect.
If this Agreement shall be terminated by the Initial Purchaser
pursuant to clause (i), (vi) or (vii) of the second paragraph of this Section 6
or because of the failure or refusal on the part of the Company or the
Guarantors to comply with the terms or to fulfill any of the conditions of this
Agreement, the
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Company agrees to reimburse you for all reasonable out-of-pocket expenses
(including the reasonable fees and disbursements of counsel) incurred by you.
Notwithstanding any termination of this Agreement, the Company and the
Guarantors shall be liable for all expenses which they have agreed to pay
pursuant to Section 2 hereof. If this Agreement is terminated pursuant to this
Section 6, such termination shall be without any other liability of the Initial
Purchaser to the Company and the Guarantors.
7. NOTICES. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company, to it at Xxxx
Xxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, Attention: Chief
Financial Officer and, in each case, with a copy to Xxxxxxxx & Xxxxxxxx LLP,
00000 XxxXxxxxx Xxxxxxxxx, Xxxxx 0000, xxx Xxxxxx, Xxxxxxxxxx 00000, Attention:
Xxxxxx X. Xxxxxxx, Esq., (b) if to any Initial Purchaser, to Bear, Xxxxxxx &
Co. Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Syndicate
Department, and, in each case, with a copy to Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxxxx X. Xxxxxxx, or in any case to such other address as the
person to be notified may have requested in writing.
8. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS
APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK
STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY SUIT,
ACTION OR PROCEEDING RELATED TO THIS AGREEMENT OR ANY OF THE MATTERS
CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL
JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH
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SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
9. SEVERABILITY. Any determination that any provision of
this Agreement may be, or is, unenforceable shall not affect the enforceability
of the remainder of this Agreement.
10. SUCCESSORS. Except as otherwise provided, this Agreement
has been and is made solely for the benefit of and shall be binding upon the
Company, the Guarantors, the Initial Purchaser, any Indemnified Person referred
to herein and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement. The terms "successors and assigns" shall
not include a purchaser of any of the Securities from the Initial Purchaser
merely because of such purchase.
11. CERTAIN DEFINITIONS. For purposes of this Agreement,
"business day" means any day other than Saturday, Sunday or a Federal holiday.
12. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and, if executed in one or more counterpart, the executed
counterparts shall each be deemed to be an original, not all such counterparts
shall together constitute one and the same instrument.
13. HEADINGS. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to effect
the meaning or interpretation of, this Agreement.
14. SURVIVAL. The indemnities and contribution provisions
and the other agreements, representations and warranties of the Company and the
Guarantors, their respective officers and directors, and of the Initial
Purchaser set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and
payment for the Securities, regardless of (i) any investigation, or statement
as to the results thereof, made by or on behalf of the Initial Purchaser or by
or on behalf of the Company, the officers or directors of the Company, any
controlling person of the Company, or the Guarantors, (ii) acceptance of the
Securities and payment for them hereunder and (iii) termination of this
Agreement.
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This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument. Please confirm that the
foregoing correctly sets forth the agreement among the Company, the Guarantors
and you.
Very truly yours,
UROHEALTH SYSTEMS, INC.
By: /s/ XXXXX X. XXXXXXX
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
ALLSTATE MEDICAL PRODUCTS, INC.
By: /s/ XXXXX X. XXXXXXX
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
DACOMED CORPORATION
By: /s/ XXXXX X. XXXXXXX
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
GATES PLASTICS
By: /s/ XXXXX X. XXXXXXX
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
43
XXXXX MEDICAL SYSTEMS, LTD.
By: /s/ XXXXX X. XXXXXXX
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
UROHEALTH OF KENTUCKY, INC.
By: /s/ XXXXX X. XXXXXXX
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
MICROSURGE, INC.
By: /s/ XXXXX X. XXXXXXX
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
UROHEALTH, INC. (CALIFORNIA)
By: /s/ XXXXX X. XXXXXXX
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
44
DACOMED INTERNATIONAL, INC.
By: /s/ XXXXX X. XXXXXXX
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
N.T. REUDT CORPORATION
By: /s/ XXXXX X. XXXXXXX
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
INTERMED ASSOCIATES, INC.
By: /s/ XXXXX X. XXXXXXX
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
LAPAROMED CORPORATION
By: /s/ XXXXX X. XXXXXXX
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
ADVANCED UROCARE, INC.
By: /s/ XXXXX X. XXXXXXX
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
45
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
BEAR, XXXXXXX & CO. INC.
By: /s/ XXXXXX X. XXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Managing Director
