EXHIBIT 10.27
EXECUTION COPY
LIVING CENTERS OF AMERICA, INC.
(to be renamed Paragon Health Network, Inc.)
$275,000,000
9 1/2% Senior Subordinated Notes due 2007
$294,000,000
10 1/2% Senior Subordinated Discount Notes due 2007
PURCHASE AGREEMENT
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October 30, 1997
CHASE SECURITIES INC.
XXXXX XXXXXX INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
c/o Chase Securities Inc.
000 Xxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
LIVING CENTERS OF AMERICA, INC., a Delaware corporation (the
"Company"), proposes to issue and sell $275,000,000 aggregate principal amount
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of its 9 1/2% Senior Subordinated Notes due 2007 (the "Senior Subordinated
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Notes") and $294,000,000 aggregate principal amount of its 10 1/2% Senior
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Subordinated Discount Notes due 2007 (the "Senior Subordinated Discount Notes,"
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and together with the Senior Subordinated Notes, the "Securities"). The
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Securities will be issued pursuant to an Indenture to be dated as of November 1,
1997 (the "Indenture") among the Company and IBJ Xxxxxxxx Bank & Trust Company,
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as trustee (the "Trustee"). The Company hereby confirms its agreement with
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Chase Securities Inc. ("CSI"), Xxxxx Xxxxxx Inc. ("Xxxxx Xxxxxx") and Credit
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Suisse First Boston Corporation ("CSFB", and together with CSI and Xxxxx Xxxxxx,
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the "Initial Purchasers") concerning the purchase of the Securities from the
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Company by the Initial Purchasers.
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon an exemption therefrom. The Company has
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prepared a preliminary offering memorandum dated October 10, 1997 (the
"Preliminary Offering Memorandum") and will prepare an offering memorandum dated
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the date hereof (the "Offering Memorandum") setting forth information concerning
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the Company and the Securities. Copies of the Preliminary Offering Memorandum
have been, and copies of the Offering Memorandum will be, delivered by the
Company to the Initial Purchasers pursuant to the terms of this Agreement. Any
references herein to the Preliminary Offering Memorandum and the Offering
Memorandum shall be deemed to include all amendments and supplements thereto,
unless otherwise noted. The Company hereby confirms that it has authorized the
use of the Preliminary Offering Memorandum and the Offering Memorandum in
connection with the offering and resale of the Securities by the Initial
Purchasers in accordance with Section 2.
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Holders of the Securities (including the Initial Purchasers and their
direct and indirect transferees) will be entitled to the benefits of an Exchange
and Registration Rights Agreement, substantially in the form attached hereto as
Annex A (the "Registration Rights Agreement"), pursuant to which the Company
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will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
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"Exchange Offer Registration Statement") registering (a) an issue of senior
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subordinated notes of the Company (the "Senior Subordinated Exchange Notes")
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which are identical in all material respects to the Senior Subordinated Notes
(except as indicated below) and (b) an issue of senior subordinated discount
notes of the Company (the "Senior Subordinated Exchange Discount Notes", and
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together with the Senior Subordinated Exchange Notes, the "Exchange Securities")
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which are identical in all material respects to the Senior Subordinated Discount
Notes (except that the Exchange Securities will not contain terms with respect
to transfer restrictions or additional interest upon certain failures to comply
with the Registration Rights Agreement) and (ii) under certain circumstances, a
shelf registration statement pursuant to Rule 415 under the Securities Act (the
"Shelf Registration Statement").
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In connection with the offering and sale of the Securities, the
Company intends to borrow up to $890 million under the Senior Credit Facility.
The proceeds of the initial borrowing under the Senior Credit Facility, together
with the Apollo Investment and the proceeds from the offering of the Securities,
will be applied by the Company to finance the cash paid in the Recapitalization
Merger, the refinancing of a portion of the existing indebtedness of the Company
and GranCare, Inc. ("GranCare") and fees and expenses relating to the
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Transactions (as defined below). On the Closing Date, (i) pursuant to an
Agreement and Plan of Merger dated as of May 7, 1997, which was subsequently
amended and restated as of September 17, 1997 (the "Recapitalization Merger
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Agreement") among Living Centers of America, Inc. ("LCA"), Apollo Management,
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L.P. ("Apollo"), on behalf of one or more managed investment funds and Apollo
LCA Acquisition Corp. ("Apollo Sub"), a subsidiary of Apollo, Apollo Sub will be
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merged with and into LCA (the "Recapitalization Merger"), with LCA as the
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surviving corporation and (ii) pursuant to an Agreement and Plan of Merger dated
as of May 7, 1997, as amended and restated as of September 17, 1997 (the
"GranCare Merger Agreement") among LCA, GranCare, Apollo and LCA Acquisition
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Sub, Inc. ("LCA Sub"), GranCare will merge with LCA Sub (the "GranCare Merger"),
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with GranCare being the surviving corporation in the merger. The
Recapitalization Merger and the GranCare Merger are herein referred to as the
"Mergers" and, together with the other transactions in connection therewith, are
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collectively referred to herein as the "Transactions." Following completion of
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the Transactions, GranCare will become a wholly-owned subsidiary of LCA and LCA
will be renamed Paragon Health Network, Inc. ("Paragon").
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Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Offering Memorandum. As used in this Agreement,
unless the context otherwise requires: (i) the "Company" refers to LCA and its
subsidiaries, and the related business and operations thereof, prior to the
Mergers and to Paragon (formerly LCA) and its subsidiaries (including GranCare),
and the related business and operations thereof (including the GranCare
operations), after the Mergers and (ii) "GranCare" refers to GranCare, Inc., a
California corporation, and its subsidiaries for periods on or prior to February
12, 1997 and to GranCare, Inc., a Delaware corporation, and its subsidiaries for
periods subsequent to February 12, 1997.
1. Representations, Warranties and Agreements of the Company. The
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Company and GranCare represent and warrant to the several Initial Purchasers on
and as of the date hereof and the Closing Date (as defined in Section 3 and
after giving effect to the Mergers) that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date the
Offering Memorandum will not, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that no
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representation or warranty is
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made as to information contained in or omitted from the Preliminary
Offering Memorandum or the Offering Memorandum in reliance upon and in
conformity with written information relating to the Initial Purchasers
furnished to the Company by or on behalf of any Initial Purchaser
specifically for use therein (collectively, the "Initial Purchasers'
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Information").
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(b) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 2 and their compliance with the
agreements set forth therein, it is not necessary, in connection with the
issuance and sale of the Securities to the Initial Purchasers and the
offer, resale and delivery of the Securities by the Initial Purchasers in
the manner contemplated by this Agreement and the Offering Memorandum, to
register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
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Indenture Act").
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(d) The Company, GranCare and each of their respective subsidiaries
have been duly incorporated and are validly existing as corporations in
good standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good standing
as foreign corporations in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective
businesses requires such qualification, and have all power and authority
necessary to own or hold their respective properties and to conduct the
businesses in which they are engaged, except where the failure to so
qualify or have such power or authority would not, singularly or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), results of operations, business or prospects of the Company,
GranCare and their respective subsidiaries taken as a whole (a "Material
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Adverse Effect").
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(e) The Company will, on the Closing Date, have capitalization as set
forth in the Offering Memorandum under the heading "Capitalization"; and
all of the outstanding shares of capital stock of the Company have been
duly and validly authorized and issued and are fully paid and non-
assessable. All of the outstanding shares of capital stock of each
subsidiary of the Company and GranCare have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly or indirectly by the Company and GranCare, respectively, free and
clear of any lien, charge, encumbrance, security interest, restriction upon
voting or transfer or any other claim of any third party, except as
otherwise disclosed in the Offering Memorandum.
(f) The Company has full right, power and authority to execute and
deliver this Agreement, the Indenture, the Registration Rights Agreement,
the Securities and the Merger Documents (as defined in Section 15)
(collectively, the "Transaction Documents") to which it is a party and to
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perform its obligations hereunder and thereunder; and all corporate action
required to be taken for the due and proper authorization, execution and
delivery of each of the Transaction Documents to which it is a party and
the consummation of the transactions contemplated thereby have been duly
and validly taken.
(g) GranCare has full right, power and authority to execute and
deliver this Agreement and the Merger Documents to which it is a party and
to perform its obligations hereunder and thereunder; all corporate action
required to be taken for the due and proper authorization, execution and
delivery of each of the Merger Documents to which it is a party and the
consummation of the transactions contemplated thereby have been duly and
validly taken; and
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this Agreement has been duly authorized, executed and delivered by GranCare
and constitutes a valid and binding agreement of GranCare.
(h) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the
Company.
(i) The Registration Rights Agreement has been duly authorized by the
Company and, when duly executed and delivered in accordance with its terms
by each of the parties thereto, will constitute a valid and binding
agreement of the Company enforceable against the Company in accordance with
its terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally and
by general equitable principles (whether considered in a proceeding in
equity or at law).
(j) The Indenture has been duly authorized by the Company and, when
duly executed and delivered in accordance with its terms by each of the
parties thereto, will constitute a valid and binding agreement of the
Company enforceable against the Company in accordance with its terms,
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law). On the Closing Date, the Indenture will conform in all material
respects to the requirements of the Trust Indenture Act and the rules and
regulations of the Commission applicable to an indenture which is qualified
thereunder.
(k) The Securities and the Exchange Securities have been duly
authorized by the Company and, when duly executed, authenticated, issued
and delivered as provided in the Indenture and paid for as provided herein,
will be duly and validly issued and outstanding and will constitute valid
and binding obligations of the Company entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally and
by general equitable principles (whether considered in a proceeding in
equity or at law).
(l) The Recapitalization Merger Agreement and the GranCare Merger
Agreement have been duly authorized, executed and delivered by the Company,
and each constitutes a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except to the
extent that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law).
(m) The GranCare Merger Agreement has been duly authorized, executed
and delivered by GranCare, and constitutes a valid and binding agreement of
GranCare enforceable against GranCare in accordance with its terms, except
to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law).
(n) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
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(o) The execution, delivery and performance by the Company of each of
the Transaction Documents to which it is a party, the issuance,
authentication, sale and delivery of the Securities and compliance by the
Company with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents to which it is a party will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company or any of its subsidiaries pursuant to, any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such actions result in any violation of
the provisions of the charter or by-laws of the Company or any of its
subsidiaries or any statute or any judgment, order, decree, rule or
regulation of any court or arbitrator or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties or assets; and no consent, approval, authorization or order of,
or filing or registration with, any such court or arbitrator or
governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, delivery and
performance by the Company of each of the Transaction Documents to which it
is a party, the issuance, authentication, sale and delivery of the
Securities and compliance by the Company with the terms thereof and the
consummation of the transactions contemplated by the Transaction Documents
to which it is a party, except for such consents, approvals,
authorizations, filings, registrations or qualifications (i) which shall
have been obtained or made prior to the Closing Date, (ii) as may be
required to be obtained or made under the Securities Act and applicable
state securities laws as provided in the Registration Rights Agreement and
(iii) which shall not adversely affect the ability of the Company to
consummate the transactions contemplated by the Transaction Documents.
(p) The execution, delivery and performance by GranCare of each of
the Merger Documents to which it is a party and the consummation of the
transactions contemplated by the Merger Documents to which it is a party
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of GranCare or any of its subsidiaries pursuant to, any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which GranCare or any of its subsidiaries is a
party or by which GranCare or any of its subsidiaries is bound or to which
any of the property or assets of GranCare or any of its subsidiaries is
subject, nor will such actions result in any violation of the provisions of
the charter or by-laws of GranCare or any of its subsidiaries or any
statute or any judgment, order, decree, rule or regulation of any court or
arbitrator or governmental agency or body having jurisdiction over GranCare
or any of its subsidiaries or any of their properties or assets; and no
consent, approval, authorization or order of, or filing or registration
with, any such court or arbitrator or governmental agency or body under any
such statute, judgment, order, decree, rule or regulation is required for
the execution, delivery and performance by GranCare of each of the Merger
Documents to which it is a party and the consummation of the transactions
contemplated therein, except for such consents, approvals, authorizations,
filings, registrations or qualifications (i) which shall have been obtained
or made prior to the Closing Date, (ii) as may be required to be obtained
or made under the Securities Act and applicable state securities laws and
(iii) which shall not adversely affect the ability of GranCare to
consummate the transactions contemplated by the Merger Documents.
(q) Ernst & Young LLP are independent certified public accountants
with respect to the Company, GranCare and their respective subsidiaries
within the meaning of Rule 101 of the Code of Professional Conduct of the
American Institute of Certified Public Accountants ("AICPA") and its
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interpretations and rulings thereunder. The historical financial
statements (including the related notes) contained in the Offering
Memorandum comply in all material
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respects with the requirements applicable to a registration statement on
Form S-1 under the Securities Act (except to the extent that certain
earnings per share data has been omitted from the "Selected Historical
Consolidated Financial and Other Data" section of the Offering Memorandum,
certain pro forma tax disclosure has been omitted from the "Unaudited Pro
Forma Condensed Consolidated Financial Statements" contained in the
Offering Memorandum and to the extent that the "Summary Unaudited Pro Forma
Financial and Other Data" and the "Unaudited Pro Forma Condensed
Consolidated Financial Statements" contain certain non-GAAP disclosure
without supporting footnotes); such financial statements have been prepared
in accordance with generally accepted accounting principles consistently
applied throughout the periods covered thereby and fairly present the
financial position of the entities purported to be covered thereby at the
respective dates indicated and the results of their operations and their
cash flows for the respective periods indicated; and the financial
information contained in the Offering Memorandum under the headings
"Summary--Summary Unaudited Pro Forma Financial and Other Data", "Summary--
Summary Historical Consolidated Financial and Other Data",
"Capitalization", "Unaudited Pro Forma Condensed Consolidated Financial
Statements", "Selected Historical Consolidated Financial and Other Data"
and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" is derived from the accounting records of the
Company, GranCare and their respective subsidiaries, as the case may be,
and such sections of the Offering Memorandum fairly present the information
purported to be shown thereby in all material respects. The pro forma
financial information contained in the Offering Memorandum has been
prepared on a basis consistent with the historical financial statements
contained in the Offering Memorandum (except for the pro forma adjustments
specified therein), includes all material adjustments to the historical
financial information required by Rule 11-02 of Regulation S-X under the
Securities Act and the Exchange Act to reflect the transactions described
in the Offering Memorandum, gives effect to assumptions made on a
reasonable basis and fairly presents the historical and proposed
transactions contemplated by the Offering Memorandum and the Transaction
Documents in all material respects. The other historical financial and
statistical information and data included in the Offering Memorandum are,
in all material respects, fairly presented.
(r) Except as otherwise stated in the Offering Memorandum, there are
no legal or governmental proceedings pending to which the Company, GranCare
or any of their respective subsidiaries is a party or of which any property
or assets of the Company, GranCare or any of their respective subsidiaries
is the subject which, singularly or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, could reasonably be
expected to have a Material Adverse Effect; and to the best knowledge of
the Company and GranCare, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(s) No action has been taken and no statute, rule, regulation or
order has been en acted, adopted or issued by any governmental agency or
body which prevents the issuance of the Securities or suspends the sale of
the Securities in any jurisdiction; no injunction, restraining order or
order of any nature by any federal or state court of competent jurisdiction
has been issued with respect to the Company, GranCare or any of their
respective subsidiaries which would prevent or suspend the issuance or sale
of the Securities or the use of the Offering Memorandum in any
jurisdiction; no action, suit or proceeding is pending against or, to the
knowledge of the Company and GranCare after reasonable due inquiry,
threatened against or affecting the Company, GranCare or any of their
respective subsidiaries before any court or arbitrator or any governmental
agency, body or official, domestic or foreign, which could reasonably be
expected to interfere with or adversely affect the issuance of the
Securities or in any manner draw into question the validity or
enforceability of any of the Transaction Documents or any action taken or
to be taken pursuant thereto; and the Company and GranCare have complied
with any and all requests by any securities authority in any jurisdiction
for additional
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information to be included in the Preliminary Offering Memorandum and the
Offering Memorandum.
(t) Neither the Company nor GranCare nor any of their respective
subsidiaries is (i) in violation of its charter or by-laws, (ii) in default
in any material respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in
any material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which it is a party or by which it is
bound or to which any of its property or assets is subject or (iii) in
violation in any material respect of any material law, ordinance,
governmental rule, regulation or court decree to which it or its property
or assets may be subject.
(u) The Company, GranCare and each of their respective subsidiaries
possess all material licenses, certificates, authorizations and permits
issued by, and have made all declarations and filings with, the appropriate
federal, state or foreign regulatory agencies or bodies which are necessary
or desirable for the ownership of their respective properties or the
conduct of their respective businesses as described in the Offering
Memorandum, except where the failure to possess or make the same would not,
singularly or in the aggregate, have a Material Adverse Effect, and neither
the Company nor GranCare nor any of their respective subsidiaries has
received notification of any revocation or modification of any such
license, certificate, authorization or permit or has any reason to believe
that any such license, certificate, authorization or permit will not be
renewed in the ordinary course.
(v) The Company, GranCare and their respective subsidiaries have
filed all federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and have paid all
taxes due thereon, except such returns, which individually or in the
aggregate, do not involve material amounts or where the failure to file
such returns by the Company, GranCare and their respective Significant
Subsidiaries (as defined in Regulation S-X under the Securities Act), as
the case may be, would not, individually or in the aggregate, materially
adversely affect the business, operations or prospects of such entity, and
no tax deficiency has been determined adversely to the Company, GranCare or
any of their respective subsidiaries, as the case may be, which has had
(nor does the Company, GranCare or any of their respective subsidiaries
have any knowledge of any tax deficiency which, if determined adversely to
the Company, GranCare or any of their respective subsidiaries, as the case
may be, could reasonably be expected to have) a Material Adverse Effect,
except to the extent that the validity thereof is being contested in good
faith pursuant to appropriate proceedings.
(w) Neither the Company nor GranCare nor any of their respective
subsidiaries is (i) an "investment company" or a company "controlled by" an
investment company within the meaning of the Investment Company Act of
1940, as amended (the "Investment Company Act"), and the rules and
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regulations of the Commission thereunder or (ii) a "holding company" or a
"subsidiary company" of a holding company or an "affiliate" thereof within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
(x) The Company, GranCare and each of their respective subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
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(y) The Company, GranCare and their respective subsidiaries maintain
insurance of the types and in the amounts generally deemed adequate for
their businesses and consistent with insurance coverage maintained by
similar companies and businesses, all of which insurance is in full force
and effect.
(z) The Company, GranCare and each of their respective subsidiaries
own or possess adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses and know-
how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) necessary
for the conduct of their respective businesses; and the Company, GranCare
and their respective subsidiaries have not received any notice of any claim
of conflict with, any such rights of others, except for such notices of
conflicts, which, if individually or in the aggregate determined adversely
to the Company, GranCare or their respective subsidiaries, as the case may
be, would not have a Material Adverse Effect.
(aa) The Company, GranCare and each of their respective subsidiaries
have good and marketable title to, or have valid rights to lease or
otherwise use, all items of real and personal property which are material
to the business of the Company, GranCare and their respective subsidiaries,
in each case free and clear of all liens, encumbrances, claims and defects
and imperfections of title except such as (i) do not materially interfere
with the use made and proposed to be made of such property by the Company,
GranCare and their respective subsidiaries or (ii) could not reasonably be
expected to have a Material Adverse Effect.
(bb) No strike or work stoppages by the employees of the Company,
GranCare or any of their respective subsidiaries exists or, to the
Company's or GranCare's knowledge after reasonable due inquiry, is
contemplated or threatened.
(cc) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
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4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
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302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan of the Company, GranCare or any of their
respective subsidiaries which could reasonably be expected to have a
Material Adverse Effect; each such employee benefit plan is in compliance
in all material respects with applicable law, including ERISA and the Code;
the Company, GranCare and each of their respective subsidiaries have not
incurred and do not expect to incur liability under Title IV of ERISA with
respect to the termination of, or withdrawal from, any pension plan for
which the Company, GranCare or any of their respective subsidiaries would
have any liability; and each such pension plan that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act,
which could reasonably be expected to cause the loss of such qualification.
(dd) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission or other release of any kind of
toxic or other wastes or other hazardous substances by, due to or caused by
the Company, GranCare or any of their respective subsidiaries upon any of
the property now or, to the knowledge of the Company or GranCare, as the
case may be, previously owned or leased by the Company, GranCare or any of
their respective subsidiaries, in violation of any statute or any
ordinance, rule, regulation, order, judgment, decree or permit or which
would, under any statute or any ordinance, rule (including rule of common
law), regulation, order, judgment, decree or permit, give rise to any
liability, except for any violation or liability which could not reasonably
be expected to have,
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singularly or in the aggregate with all such violations and liabilities, a
Material Adverse Effect; and there has been no disposal, discharge,
emission or other release of any kind onto such property or into the
environment surrounding such property of any toxic or other wastes or other
hazardous substances with respect to which the Company or GranCare has
knowledge, except for any such disposal, discharge, emission or other
release of any kind which could not reasonably be expected to have,
singularly or in the aggregate with all such discharges and other releases,
a Material Adverse Effect.
(ee) Neither the Company nor GranCare nor any of their respective
subsidiaries nor, to the Company's or GranCare's knowledge after reasonable
due inquiry, any employee or agent of the Company, GranCare or any of their
respective subsidiaries has intentionally made any payment of funds of the
Company, GranCare or any of their respective subsidiaries, as the case may
be, or used, received or retained any funds in violation of the Foreign
Corrupt Practices Act of 1977.
(ff) On and immediately after the Closing Date, the Company (after
giving effect to the issuance of the Securities and to the other
transactions related thereto as described in the Offering Memorandum) will
be Solvent. As used in this paragraph, the term "Solvent" means, with
respect to a particular date, that on such date (i) the present fair market
value (or present fair saleable value) of the assets of the Company is not
less than the total amount required to pay the probable liabilities of the
Company on its total existing debts and liabilities (including contingent
liabilities) as they become absolute and matured, (ii) the Company is able
to realize upon its assets and pay its debts and other liabilities,
contingent obligations and commitments as they mature and become due in the
normal course of business, (iii) assuming the sale of the Securities as
contemplated by this Agreement and the Offering Memorandum, the Company is
not incurring debts or liabilities beyond its ability to pay as such debts
and liabilities mature and (iv) the Company is not engaged in any business
or transaction, and is not about to engage in any business or transaction,
for which its property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in
which the Company is engaged. In computing the amount of such contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
(gg) Neither the Company nor GranCare nor any of their respective
subsidiaries owns any "margin securities" as that term is defined in
Regulations G and U of the Board of Gover nors of the Federal Reserve
System (the "Federal Reserve Board"), and none of the proceeds of the sale
---------------------
of the Securities will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or
carry any margin security or for any other purpose which might cause any of
the Securities to be considered a "purpose credit" within the meanings of
Regulation G, T, U or X of the Federal Reserve Board.
(hh) Neither the Company nor GranCare nor any of their respective
subsidiaries is a party to any contract, agreement or understanding with
any person that would give rise to a valid claim against the Company,
GranCare or the Initial Purchasers for a brokerage commission, finder's fee
or like payment in connection with the offering and sale of the Securities.
(ii) The Securities (i) will not, when issued, be of the same class
as securities listed on a national securities exchange registered under
Section 6 of the Exchange Act or quoted in an automated inter-dealer
quotation system; provided, that securities that are convertible or
exchangeable into securities so listed or quoted at the time of issuance
and that had an effective conversion premium of less than 10%, shall be
treated as securities of the class into which they
10
are convertible or exchangeable; and that warrants that may be exercised
for securities so listed or quoted at the time of issuance, or that had an
effective exercise premium of less than 10%, shall be treated as securities
of the class to be issued upon exercise; and provided further that the
Commission may from time to time, taking into account then-existing market
practices, designate additional securities and classes of securities that
will not be deemed of the same class as securities listed on a national
securities exchange or quoted in a U.S. automated inter-dealer quotation
system, and (ii) are not securities of an open-end investment company, unit
investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the Investment Company Act.
(jj) Assuming the accuracy of the representations and warranties of
the Initial Purchasers set forth in Section 2 hereof, none of the Company,
GranCare, any of their respective affiliates or any person acting on its or
their behalf has engaged or will engage in any directed selling efforts (as
such term is defined in Regulation S under the Securities Act ("Regulation
----------
S")), and all such persons have complied and will comply with the offering
-
restrictions requirement of Regulation S to the extent applicable.
(kk) Assuming the accuracy of the representations and warranties of
the Initial Purchasers set forth in Section 2 hereof, neither the Company
nor GranCare nor any of their affiliates has, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as such term is defined in the
Securities Act) which is or will be integrated with the sale of the
Securities in a manner that would require registration of the Securities
under the Securities Act.
(ll) Assuming the accuracy of the representations and warranties of
the Initial Purchasers set forth in Section 2 hereof, none of the Company,
GranCare, or any of their respective affiliates or any other person acting
on its or their behalf has engaged, in connection with the offering of the
Securities, in any form of general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act.
(mm) Assuming the accuracy of the representations and warranties of
the Initial Purchasers set forth in Section 2 hereof, the Company has not
taken and will not take, directly or indirectly, any action prohibited by
Regulation M under the Exchange Act in connection with the offering of the
Securities.
(nn) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in the
Preliminary Offering Memorandum or the Offering Memorandum has been made or
reaffirmed without, in light of the circumstances under which such
statements were made, a reasonable basis or has been disclosed other than
in good faith.
(oo) None of the Company, GranCare or any of their respective
subsidiaries does business with the government of Cuba or with any person
or affiliate located in Cuba within the meaning of Florida Statutes Section
517.075.
(pp) Since the date as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (i) there has been no
material adverse change or any development involving a prospective material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs, management or business prospects of the Company
or GranCare, whether or not arising in the ordinary course of business,
(ii) the Company and GranCare have not incurred any material liability or
obligation, direct or contingent, other than in the ordinary course of
business, (iii) the Company and GranCare have not entered into any material
transaction other than in the ordinary course of business and (iv)
11
there has not been any change in the capital stock or long-term debt of the
Company or GranCare, or any dividend or distribution of any kind declared,
paid or made by the Company or GranCare on any class of its capital stock.
2. Purchase and Resale of the Securities. (a) On the basis of the
-------------------------------------
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Company, the principal amount of Securities set forth opposite the name of such
Initial Purchaser on Schedule 1 hereto at a purchase price equal to, in the case
of the Senior Subordinated Notes, 96.804% of the principal amount thereof and,
in the case of the Senior Subordinated Discount Notes, 57.919% of the principal
amount thereof. The Company shall not be obligated to deliver any of the
Securities except upon payment for all of the Securities to be purchased as
provided herein.
(b) The Initial Purchasers have advised the Company that they propose
to offer the Securities for resale upon the terms and subject to the conditions
set forth herein and in the Offering Memorandum. Each Initial Purchaser,
severally and not jointly, represents, warrants and agrees that (i) it is
purchasing the Securities pursuant to a private sale exempt from registration
under the Securities Act, (ii) it has not solicited offers for, or offered or
sold, and will not solicit offers for, or offer or sell, the Securities by means
of any form of general solicitation or general advertising within the meaning of
Rule 502(c) of Regulation D under the Securities Act ("Regulation D") or in any
------------
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (iii) it has solicited and will solicit offers for the
Securities only from, and has offered or sold and will offer, sell or deliver
the Securities, as part of their initial offering, only (A) within the United
States to persons whom it reasonably believes to be qualified institutional
buyers ("Qualified Institutional Buyers"), as defined in Rule 144A under the
------------------------------
Securities Act ("Rule 144A"), or if any such person is buying for one or more
---------
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to it that each such account is a
Qualified Institutional Buyer to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A and in each case, in
transactions in accordance with Rule 144A and (B) outside the United States to
persons other than U.S. persons in reliance on Regulation S under the Securities
Act ("Regulation S").
------------
(c) In connection with the offer and sale of Securities in reliance
on Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) the Securities have not been registered under the Securities Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except pursuant to an exemption from,
or in transactions not subject to, the registration requirements of the
Securities Act.
(ii) such Initial Purchaser has offered and sold the Securities, and
will offer and sell the Securities, (A) as part of their distribution at
any time and (B) otherwise until 40 days after the later of the
commencement of the offering of the Securities and the Closing Date, only
in accordance with Regulation S or Rule 144A or any other available
exemption from registration under the Securities Act.
(iii) none of such Initial Purchaser or any of its affiliates or any
other person acting on its or their behalf has engaged or will engage in
any directed selling efforts with respect to the Securities, and all such
persons have complied and will comply with the offering restrictions
requirement of Regulation S.
(iv) at or prior to the confirmation of sale of any Securities sold
in reliance on Regulation S, it will have sent to each distributor, dealer
or other person receiving a selling concession, fee
12
or other remuneration that purchases Securities from it during the
restricted period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and may not
be offered or sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of their distribution at any
time or (ii) otherwise until 40 days after the later of the
commencement of the offering of the Securities and the date of
original issuance of the Securities, except in accordance with
Regulation S or Rule 144A or any other available exemption from
registration under the Securities Act. Terms used above have the
meanings given to them by Regulation S."
(v) it has not and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the Securities,
except with its affiliates or with the prior written consent of the
Company.
Terms used in this Section 2(c) have the meanings given to them by Regulation S.
(d) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that (i) it has not offered or sold and prior to the date
six months after the Closing Date will not offer or sell any Securities to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 and the Public Offers
of Securities Regulations 1995 with respect to anything done by it in relation
to the Securities in, from or otherwise involving the United Kingdom; and (iii)
it has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued or passed
on.
(e) Each Initial Purchaser, severally and not jointly, agrees that,
prior to or simultaneously with the confirmation of sale by such Initial
Purchaser to any purchaser of any of the Securities purchased by such Initial
Purchaser from the Company pursuant hereto, such Initial Purchaser shall furnish
to that purchaser a copy of the Offering Memorandum (and any amendment or
supplement thereto that the Company shall have furnished to such Initial
Purchaser prior to the date of such confirmation of sale). In addition to the
foregoing, each Initial Purchaser acknowledges and agrees that the Company and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Sections 5(d) and (e), counsel for the Company and for the Initial
Purchasers, respectively, may rely upon the accuracy of the representations and
warranties of the Initial Purchasers and their compliance with their agreements
contained in this Section 2, and each Initial Purchaser hereby consents to such
reliance.
(f) The Company acknowledges and agrees that the Initial Purchasers
may sell Securities to any affiliate of an Initial Purchaser and that any such
affiliate may sell Securities purchased by it to an Initial Purchaser.
3. Delivery of and Payment for the Securities. (a) Delivery of and
------------------------------------------
payment for the Securities shall be made at the offices of Xxxxxxx Xxxxxxx &
Xxxxxxxx, New York, New York, or at such other place as shall be agreed upon by
the Initial Purchasers and the Company, at 9:30 A.M., New York City time, on
November 4, 1997, or at such other time or date, not later than seven full
business days
13
thereafter, as shall be agreed upon by the Initial Purchasers and the Company
(such date and time of payment and delivery being referred to herein as the
"Closing Date").
------------
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of same-
day funds to such account or accounts as the Company shall specify prior to the
Closing Date or by such other means as the parties hereto shall agree prior to
the Closing Date against delivery to the Initial Purchasers of the certificates
evidencing the Securities. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligations of the Initial Purchasers hereunder. Upon delivery, the
Securities shall be in global form, registered in such names and in such
denominations as CSI on behalf of the Initial Purchasers shall have requested in
writing not less than two full business days prior to the Closing Date. The
Company agrees to make one or more global certificates evidencing the Securities
available for inspection by CSI on behalf of the Initial Purchasers in New York,
New York at least 24 hours prior to the Closing Date.
4. Further Agreements of the Company and GranCare. The Company and
----------------------------------------------
GranCare agree with each of the Initial Purchasers:
(a) to advise the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes
any statement of a material fact made in the Offering Memorandum untrue or
which requires the making of any additions to or changes in the Offering
Memorandum (as amended or supplemented from time to time) in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; to advise the Initial Purchasers promptly of any
order preventing or suspending the use of the Offering Memorandum, of any
suspension of the qualification of the Securities for offering or sale in
any jurisdiction and of the initiation or threatening of any proceeding for
any such purpose; and to use its best efforts to prevent the issuance of
any such order preventing or suspending the use of the Offering Memorandum
or suspending any such qualification and, if any such suspension is issued,
to obtain the lifting thereof at the earliest possible time;
(b) to furnish promptly to each of the Initial Purchasers and counsel
for the Initial Purchasers, without charge, as many copies of the Offering
Memorandum (and any amend ments or supplements thereto) as may be
reasonably requested;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers and
counsel for the Initial Purchasers and not to effect any such amendment or
supplement to which the Initial Purchasers shall reasonably object by
notice to the Company after a reasonable period to review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel for
the Initial Purchasers or counsel for the Company, to amend or supplement
the Offering Memorandum in order that the Offering Memorandum will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, to promptly prepare such
amendment or supplement as may be necessary to correct such untrue
statement or omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act,
to furnish to holders of the Securities and prospective purchasers of the
Securities designated by such holders, upon request of such
14
holders or such prospective purchasers, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act, unless the
Company is then subject to and in compliance with Section 13 or 15(d) of
the Exchange Act (the foregoing agreement being for the benefit of the
holders from time to time of the Securities and prospective purchasers of
the Securities designated by such holders);
(f) for a three-year period ending on the third anniversary of the
Closing Date, to furnish to the Initial Purchasers copies of any annual
reports, quarterly reports and current reports filed by the Company with
the Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as
may be designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to the Trustee or to the
holders of the Securities pursuant to the Indenture or the Exchange Act or
any rule or regulation of the Commission thereunder;
(g) to promptly take from time to time such actions as the Initial
Purchasers may reasonably request to qualify the Securities for offering
and sale under the securities or Blue Sky laws of such jurisdictions in the
United States as the Initial Purchasers may reasonably designate and to
continue such qualifications in effect for so long as required for the
resale of the Securities; and to arrange for the determination of the
eligibility for investment of the Securities under the laws of such
jurisdictions as the Initial Purchasers may reasonably request; provided
--------
that the Company and its subsidiaries will not be required to qualify
generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service
of process or to taxation in any such jurisdiction where it is not then so
subject;
(h) to assist the Initial Purchasers in arranging for the Securities
to be designated Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market securities in accordance with the rules and
------
regulations adopted by the National Association of Securities Dealers, Inc.
("NASD") relating to trading in the PORTAL Market and for the Securities to
----
be eligible for clearance and settlement through The Depository Trust
Company ("DTC");
---
(i) not to, and to cause its affiliates not to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as such term is defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require
registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may
be, not to, and to cause its affiliates not to, and not to authorize or
knowingly permit any person acting on their behalf to, solicit any offer to
buy or offer to sell the Securities by means of any form of general
solicitation or general advertising within the meaning of Regulation D or
in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act; and not to offer, sell, contract to sell or
otherwise dispose of, directly or indirectly, any securities under
circumstances where such offer, sale, contract or disposition would cause
the exemption afforded by Section 4(2) of the Securities Act to cease to be
applicable to the offering and sale of the Securities as contemplated by
this Agreement and the Offering Memorandum;
(k) from the date hereof and until the earlier of (i) 180 days after
the date of the Offering Memorandum or (ii) the consummation of the
Exchange Offer, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement for,
or announce any offer, sale, contract for sale of or other disposition of
any debt securities issued or guaranteed by the Company or any of its
subsidiaries (other than the Securities) without the prior written consent
of the Initial Purchasers;
15
(l) during the period from the Closing Date until two years after the
Closing Date, without the prior written consent of the Initial Purchasers,
not to, and not permit any of its affiliates (as defined in Rule 144 under
the Securities Act) to, resell any of the Securities that have been
reacquired by them, except for Securities purchased by the Company or any
of its affiliates and resold in a transaction registered under the
Securities Act;
(m) not to, for so long as the Securities are outstanding, be or
become, or be or become owned by, an open-end investment company, unit
investment trust or face-amount cer tificate company that is or is required
to be registered under Section 8 of the Investment Com-pany Act, and to not
be or become, or be or become owned by, a closed-end investment company
required to be registered, but not registered thereunder;
(n) in connection with the offering of the Securities, until CSI on
behalf of the Initial Purchasers shall have notified the Company of the
completion of the resale of the Securities, not to, and to cause its
affiliated purchasers (as defined in Regulation M under the Exchange Act)
not to, either alone or with one or more other persons, bid for or
purchase, for any account in which it or any of its affiliated purchasers
has a beneficial interest, any Securities, or attempt to induce any person
to purchase any Securities; and not to, and to cause its affiliated
purchasers not to, make bids or purchase for the purpose of creating
actual, or apparent, active trading in or of raising the price of the
Securities;
(o) to furnish to each of the Initial Purchasers on the date hereof a
copy of the independent accountants' report included in the Offering
Memorandum signed by the accountants rendering such report;
(p) to do and perform all things required to be done and performed by
it under this Agreement that are within its control prior to or after the
Closing Date, and to use its reasonable best efforts to satisfy all
conditions precedent on its part to the delivery of the Securities;
(q) prior to the Closing Date, not to issue any press release or
other communication directly or indirectly or hold any press conference
with respect to the Company or GranCare, its condition, financial or
otherwise, or earnings, business affairs or business prospects (except for
routine oral marketing communications in the ordinary course of business
and consistent with the past practices of the Company and of which the
Initial Purchasers are notified), without prior consultation with the
Initial Purchasers, unless in the judgment of the Company or GranCare and
their respective counsel, and after notification to the Initial Purchasers,
such press release or communication is required by law; and
(r) to apply the net proceeds from the sale of the Securities as set
forth in the Offering Memorandum under the heading "Use of Proceeds".
5. Conditions of Initial Purchasers' Obligations. The respective
---------------------------------------------
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company and GranCare contained herein, to
the accuracy of the statements of the Company, GranCare and their respective
officers made in any certificates delivered pursuant hereto, to the performance
by the Company and GranCare of their respective obligations hereunder, and to
each of the following additional terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial Purchasers
may agree; and no stop order suspending the sale of the Securities in any
jurisdic
16
tion shall have been issued and no proceeding for that purpose shall have
been commenced or shall be pending or threatened.
(b) None of the Initial Purchasers shall have discovered and
disclosed to the Company on or prior to the Closing Date that the Offering
Memorandum or any amendment or supplement thereto contains an untrue
statement of a fact which, in the written advice of counsel for the Initial
Purchasers, is material or omits to state any fact which, in the written
advice of such counsel (a copy of which shall be supplied to GranCare and
the Company), is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) All corporate proceedings and other matters required for due
authorization and validity of each of the Transaction Documents and the
transactions contemplated thereby and the Offering Memorandum shall be
satisfactory in all material respects to the Initial Purchasers, and the
Company and GranCare shall have furnished to the Initial Purchasers copies
of such documents and information that they or their counsel may reasonably
request to enable them to pass upon such matters.
(d) Xxxxxx, Xxxxxxxxx, Xxxxxx & Xxxxxx LLP shall have furnished to
the Initial Purchasers their written opinion, as counsel to the Company
following the Mergers and GranCare, addressed to the Initial Purchasers and
dated the Closing Date, in form and substance reasonably satisfactory to
the Initial Purchasers, substantially to the effect set forth in Annex B
hereto.
(e) The Initial Purchasers shall have received from Xxxxxxx Xxxxxxx &
Xxxxxxxx, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Initial
Purchasers may reasonably require, and the Company and GranCare shall have
furnished to such counsel such documents and information as they request
for the purpose of enabling them to pass upon such matters.
(f) The Company and GranCare shall have furnished to the Initial
Purchasers a letter (the "Initial Letter") of Ernst & Young LLP, addressed
--------------
to the Initial Purchasers and dated the date hereof, in form and substance
satisfactory to the Initial Purchasers, substantially to the effect set
forth in Annex C hereto.
(g) The Company and GranCare shall have furnished to the Initial
Purchasers a letter (the "Bring-Down Letter") of Ernst & Young LLP,
-----------------
addressed to the Initial Purchasers and dated the Closing Date (i)
confirming that they are independent public accountants with respect to the
Company and its subsidiaries and GranCare and its subsidiaries,
respectively, within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings thereunder, (ii)
stating, as of the date of the Bring-Down Letter (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Offering Memorandum,
as of a date not more than three business days prior to the date of the
Bring-Down Letter), that the conclusions and findings of such accountants
with respect to the financial information and other matters covered by the
Initial Letter are accurate and (iii) confirming in all material respects
the conclusions and findings set forth in the Initial Letter.
(h) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its Executive Vice President and
Chief Financial Officer and Vice President and Associate General Counsel,
solely in their capacity as officers and not in their individual capacity,
stating that (A) such officers have examined the Offering Memorandum, (B)
in their opinion, the Offering Memorandum, as of its date, did not include
any untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary in
17
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and since the date of the
Offering Memorandum, no event has occurred which should have been set forth
in a supplement or amendment to the Offering Memorandum so that the
Offering Memorandum (as so amended or supplemented) would not include any
untrue statement of a material fact and would not omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading and (C) to his knowledge after reasonable due inquiry,
as of the Closing Date, the representations and warranties of the Company
in this Agreement are true and correct, the Company has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder on or prior to the Closing Date in all material
respects, and subsequent to the date of the most recent financial
statements contained in the Offering Memorandum, there has been no material
adverse change in the financial position or results of operation of the
Company and its subsidiaries taken as a whole, or any change, or any
development including a prospective change, in or affecting the condition
(financial or otherwise), results of operations, business or prospects of
the Company and its subsidiaries taken as a whole, except as set forth in
the Offering Memorandum. Such officers may also state that (i) they were
the Executive Vice President and Chief Financial Officer of LCA (prior to
the Mergers) and the Vice President, Assistant General Counsel and
Assistant Secretary of GranCare (prior to the Mergers), (ii) they
participated in the preparation of the Offering Memorandum, and (iii) they
are generally familiar with the operations and business of the respective
corporations of which they were officers, have made such inquiries as they
deemed appropriate in connection with making this certificate and have
conferred amongst themselves in its preparation.
(i) GranCare shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its general counsel and its chief
financial officer, solely in their capacity as officers and not in their
individual capacity, stating that (A) such officers have examined the
Offering Memorandum, (B) in their opinion, the GranCare Information
contained in the Offering Memorandum, as of its date, did not include any
untrue statement of a material fact and did not omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and since the date of the Offering Memorandum, no
event has occurred in respect of GranCare which should have been set forth
in a supplement or amendment to the Offering Memorandum so that the
Offering Memorandum (as so amended or supplemented) would not include any
untrue statement of a material fact and would not omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading and (C) to their knowledge after reasonable due
inquiry, as of the Closing Date, the representations and warranties of
GranCare in this Agreement are true and correct, GranCare has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder on or prior to the Closing Date in all material
respects, and subsequent to the date of the most recent financial
statements contained in the Offering Memorandum, there has been no material
adverse change in the financial position or results of operations of
GranCare and its subsidiaries taken as a whole, or any change, or any
development including a prospective change, in or affecting the condition
(financial or otherwise), results of operations, business or prospects of
GranCare and its subsidiaries taken as a whole, except as set forth in the
Offering Memorandum.
(j) The Initial Purchasers shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of the Company.
18
(k) The Indenture shall have been duly executed and delivered by the
Company and the Trustee, and the Securities shall have been duly executed
and delivered by the Company and duly authenticated by the Trustee.
(l) The Securities shall have been approved by the NASD for trading
in the PORTAL Market.
(m) If any event shall have occurred that requires the Company under
Section 4(d) to prepare an amendment or supplement to the Offering
Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchasers shall have been given a reasonable opportunity to
comment thereon, and copies thereof shall have been delivered to the
Initial Purchasers reasonably in advance of the Closing Date.
(n) There shall not have occurred any invalidation of Rule 144A under
the Securities Act by any court or any withdrawal or proposed withdrawal of
any rule or regulation under the Securities Act or the Exchange Act by the
Commission or any amendment or proposed amendment thereof by the Commission
which, in the case of a proposed withdrawal, in the written advice of
counsel to the Initial Purchasers, a copy of which will be delivered to
GranCare and the Company, is reasonably likely to occur and would
materially impair the ability of the Initial Purchasers to purchase, hold
or effect resales of the Securities as contemplated hereby.
(o) Except as otherwise disclosed in the Offering Memorandum
(exclusive of any amendment or supplement thereto), subsequent to the
execution and delivery of this Agreement or, if earlier, the dates as of
which information is given in the Offering Memorandum (exclusive of any
amendment or supplement thereto), there shall not have been any change in
the capital stock or long-term debt or any change, or any development
involving a prospective change, in or affecting the condition (financial or
otherwise), results of operations, business or prospects of the Company and
its subsidiaries taken as a whole (including GranCare prior to the
consummation of the Mergers), the effect of which, in any such case
described above, is, in the judgment of the Initial Purchasers, so material
and adverse as to make it impracticable or inadvisable to proceed with the
sale or delivery of the Securities on the terms and in the manner
contemplated by this Agreement and the Offering Memorandum, which change or
development shall be specified in writing by the Initial Purchasers to the
Company and GranCare (exclusive of any amendment or supplement thereto).
(p) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance or
sale of the Securities; and no injunction, restraining order or order of
any other nature by any federal or state court of competent jurisdiction
shall have been issued as of the Closing Date which would prevent the
issuance or sale of the Securities.
(q) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Securities or
any of the Company's or GranCare's other debt securities or preferred stock
by any "nationally recognized statistical rating organization", as such
term is defined by the Commission for purposes of Rule 436(g)(2) of the
rules and regulations of the Commission under the Securities Act and (ii)
no such organization shall have publicly announced that it has under
surveillance or review (other than an announcement with positive
implications of a possible upgrading), its rating of the Securities or any
of the Company's or GranCare's other debt securities or preferred stock.
(r) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the over-the-counter market
shall have been suspended or limited, or minimum prices shall
19
have been established on any such exchange or market by the Commission, by
any such exchange or by any other regulatory body or governmental authority
having jurisdiction, or trading in any securities of the Company on any
exchange or in the over-the-counter market shall have been suspended or
(ii) any moratorium on commercial banking activities shall have been
declared by federal or New York state authorities or (iii) an outbreak or
escalation of hostilities or a declaration by the United States of a
national emergency or war shall have occurred or (iv) a material adverse
change in general economic, political or financial conditions (or in the
effect of international conditions on the financial markets in the United
States) shall have occurred, the effect of which, in the case of this
clause (iv), is, in the judgment of the Initial Purchasers, so material and
adverse as to make it impracticable or inadvisable to proceed with the sale
or the delivery of the Securities on the terms and in the manner
contemplated by this Agreement and in the Offering Memorandum (exclusive of
any amendment or supplement thereto).
(s) The Initial Purchasers shall have received (i) copies of each of
the Merger Documents, and the documentation evidencing the Senior Credit
Facility (the "Bank Documents"), in each case certified by the secretary of
--------------
the Company as being true, complete and correct and (ii) evidence,
reasonably satisfactory to them, that (A) each of the Transactions shall
have been or is being consummated in accordance with the terms of the
Merger Documents (and without waiver or amendment of any material condition
contained therein) and (B) the initial funding shall have occurred or is
occurring under the Bank Documents and the Company shall have received at
least $690 million in gross cash proceeds therefrom. The Bank Documents and
the Merger Documents shall be in form and substance reasonably satisfactory
to the Initial Purchasers; provided, however, the condition set forth in
clause (ii)(A) of this paragraph relating to the consummation of the
Transactions may not be waived by the Initial Purchasers.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
6. Termination. The obligations of the Initial Purchasers hereunder
-----------
may be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Company prior to delivery of and payment for
the Securities if, prior to that time, any of the events described in Section
5(n), (o), (p), (q) or (r) shall have occurred and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing Date, any
-----------------------------
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchasers may make arrangements for the
purchase of the Securities which such defaulting Initial Purchaser agreed but
failed to purchase by other persons satisfactory to the Company and the non-
defaulting Initial Purchasers, but if no such arrangements are made within 48
hours after such default, this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers or the Company, except that
the Company will continue to be liable for the payment of expenses to the extent
set forth in Sections 8 and 12 and except that the provisions of Sections 9 and
10 shall not terminate and shall remain in effect. As used in this Agreement,
the term "Initial Purchasers" includes, for all purposes of this Agreement
unless the context otherwise requires, any party not listed in Schedule 1 hereto
that, pursuant to this Section 7, purchases Securities which a defaulting
Initial Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company or any non-defaulting
Initial Purchaser for damages caused by its default. If other persons are
obligated or agree to purchase the Securities of a defaulting Initial Purchaser,
either the non-defaulting Initial Purchasers or the Company may postpone the
Closing Date for up to seven full
20
business days in order to effect any changes that in the opinion of counsel for
the Company or counsel for the Initial Purchasers may be necessary in the
Offering Memorandum or in any other document or arrangement, and the Company
agrees to promptly prepare any amendment or supplement to the Offering
Memorandum that effects any such changes.
8. Reimbursement of Initial Purchasers' Expenses. If (a) this
---------------------------------------------
Agreement shall have been terminated pursuant to Section 6 or 7, (b) the Company
shall fail to tender the Securities for delivery to the Initial Purchasers for
any reason or (c) the Initial Purchasers shall decline to purchase the
Securities for any reason permitted under this Agreement, the Company shall
reimburse the Initial Purchasers for such out-of-pocket expenses (including
reasonable fees and disbursements of counsel) as shall have been reasonably
incurred by the Initial Purchasers in connection with this Agreement and the
proposed purchase and resale of the Securities. If this Agreement is terminated
pursuant to Section 7 by reason of the default of one or more of the Initial
Purchasers, the Company shall not be obligated to reimburse any defaulting
Initial Purchaser on account of such expenses.
9. Indemnification. (a) The Company shall indemnify and hold
---------------
harmless each Initial Purchaser, its affiliates, their respective officers,
directors, employees, representatives and agents, and each person, if any, who
controls any Initial Purchaser within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 9(a) and
Section 10 as an Initial Purchaser), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating to
purchases and sales of the Securities), to which that Initial Purchaser may
become subject, whether commenced or threatened, under the Securities Act, the
Exchange Act, any other federal or state statutory law or regulation, at common
law or otherwise, solely insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering
Memorandum or the Offering Memorandum or in any amendment or supplement thereto
or in any information provided by the Company pursuant to Section 4(e) or (ii)
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and shall
reimburse each Initial Purchaser promptly upon demand for any legal or other
expenses reasonably incurred by that Initial Purchaser in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
-------- -------
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, an untrue statement
or alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with any Initial Purchasers'
Information furnished by such Initial Purchaser; and provided, further, that
-------- -------
with respect to any such untrue statement in or omission from the Preliminary
Offering Memorandum, the indemnity agreement contained in this Section 9(a)
shall not inure to the benefit of any such Initial Purchaser to the extent that
the sale to the person asserting any such loss, claim, damage, liability or
action was an initial resale by such Initial Purchaser and any such loss, claim,
damage, liability or action of or with respect to such Initial Purchaser results
from the fact that both (A) to the extent required by applicable law, a copy of
the Offering Memorandum was not sent or given to such person at or prior to the
written confirmation of the sale of such Securities to such person and (B) the
untrue statement in or omission from the Preliminary Offering Memorandum was
corrected in the Offering Memorandum unless such failure to deliver the Offering
Memorandum was a result of non-compliance by the Company with Section 4(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, its affiliates, their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 9(b) and
Section 10 as the Company), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company may become subject, whether commenced or threatened, under the
Securities Act,
21
the Exchange Act, any other federal or state statutory law or regulation, at
common law or otherwise, solely insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering
Memorandum or the Offering Memorandum or in any amendment or supplement thereto
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with any Initial Purchasers' Information furnished by
such Initial Purchaser, and shall reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending or preparing to defend against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 9(a) or 9(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
--------
however, that the failure to notify the indemnifying party shall not relieve it
-------
from any liability which it may have under this Section 9 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and, provided, further, that the failure to
-------- -------
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 9. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
-------- -------
indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (i)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (ii) the indemnified party has reasonably
concluded (based upon written advice of counsel to the indemnified party, a copy
of which shall be provided to the indemnifying party) that there may be legal
defenses available to it or other indemnified parties that are different from or
in addition to those available to the indemnifying party, (iii) a conflict or
potential conflict exists (based upon written advice of counsel to the
indemnified party, a copy of which shall be provided to the indemnifying party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (iv) the indemnifying party has not in
fact employed counsel reasonably satisfactory to the indemnified party to assume
the defense of such action within a reasonable time after receiving notice of
the commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm of attorneys (in addition to any
local counsel) at any one time for all such indemnified party or parties. Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 9(a) and 9(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified
22
party (which consent shall not be unreasonably withheld), effect any settlement
of any pending or threatened proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
The obligations of the Company and the Initial Purchasers in this
Section 9 and in Section 10 are in addition to any other liability that the
Company or the Initial Purchasers, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
10. Contribution. If the indemnification provided for in Section 9
------------
is unavailable or insufficient to hold harmless an indemnified party under
Section 9(a) or 9(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and the
Initial Purchasers on the other from the offering of the Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Initial Purchasers on the other with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Initial Purchasers on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Securities purchased under this Agreement (before deducting expenses)
received by or on behalf of the Company, on the one hand, and the total
discounts and commissions received by the Initial Purchasers with respect to the
Securities purchased under this Agreement, on the other, bear to the total gross
proceeds from the sale of the Securities under this Agreement, in each case as
set forth in the table on the cover page of the Offering Memorandum. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to the Company or information
supplied by the Company on the one hand or to any Initial Purchasers'
Information on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Initial Purchasers agree that
it would not be just and equitable if contributions pursuant to this Section 10
were to be determined by pro rata allocation (even if the Initial Purchasers
were treated as one entity for such purpose) or by any other method of
allocation that does not take into account the equitable considerations referred
to herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Section 10 shall be deemed to include, for purposes of this
Section 10, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending or preparing to defend any
such action or claim. Notwithstanding the provisions of this Section 10, no
Initial Purchaser shall be required to contribute any amount in excess of the
amount by which the total discounts and commissions received by such Initial
Purchaser with respect to the Securities purchased by it under this Agreement
exceeds the amount of any damages which such Initial Purchaser has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 12(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
as provided in this Section 10 are several in proportion to their respective
purchase obligations and not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement shall
----------------------------------------
inure to the benefit of and be binding upon the Initial Purchasers, the Company
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except as
23
provided in Sections 9 and 10 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Company and
the Initial Purchasers and in Section 4(e) with respect to holders and
prospective purchasers of the Securities. Nothing in this Agreement is intended
or shall be construed to give any person, other than the persons referred to in
this Section 11, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
12. Expenses. The Company agrees with the Initial Purchasers to pay
--------
(a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in that connection; (b) the
costs incident to the preparation, printing and distribution of the Preliminary
Offering Memorandum, the Offering Memorandum and any amendments or supplements
thereto; (c) the costs of reproducing and distributing each of the Transaction
Documents; (d) the costs incident to the preparation, printing and delivery of
the certificates evidencing the Securities, including stamp duties and transfer
taxes, if any, payable upon issuance of the Securities; (e) the fees and
expenses of the Company's counsel (including, without limitation, the fees and
expenses of counsel to the Company prior to completion of the Mergers),
GranCare's counsel and their respective independent accountants; (f) the fees
and expenses of qualifying the Securities under the securities laws of the
several jurisdictions as provided in Section 4(g) and of preparing, printing and
distributing Blue Sky Memoranda (including related fees and expenses of counsel
for the Initial Purchasers); (g) any fees charged by rating agencies for rating
the Securities; (h) the fees and expenses of the Trustee and any paying agent
(including related fees and expenses of any counsel to such parties); (i) all
expenses and application fees incurred in connection with the application for
the inclusion of the Securities on the PORTAL Market and the approval of the
Securities for book-entry transfer by DTC; and (j) all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement which are not otherwise specifically provided for in this Section 12;
provided, however, that except as provided in this Section 12 and Section 8, the
-------- -------
Initial Purchasers shall pay their own costs and expenses.
13. Survival. The respective indemnities, rights of contribution,
--------
representations, warranties and agreements of the Company and the Initial
Purchasers contained in this Agreement or made by or on behalf of the Company
or the Initial Purchasers pursuant to this Agreement or any certificate
delivered pursuant hereto shall survive the delivery of and payment for the
Securities and shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement or any investigation made by or on
behalf of any of them or any of their respective affiliates, officers,
directors, employees, representatives, agents or controlling persons, until such
time as the applicable statute of limitations has expired.
14. Notices, etc.. All statements, requests, notices and agreements
-------------
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by mail
or telecopy transmission to Chase Securities Inc., 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxx (telecopier no.: (212) 270-
0994);
(b) if to the Company, shall be delivered or sent by mail or telecopy
transmission to the address of the Company set forth in the Offering
Memorandum, Attention: General Counsel (telecopier no.: (000) 000-0000);
or
(c) if to GranCare, shall be delivered or sent by mail or telecopy
transmission to GranCare, Inc., Xxx Xxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx
Xxxxxxx 00000, Attention: General Counsel (telecopier no.: (770) 698-
8199).
provided that any notice to an Initial Purchaser pursuant to Section 9(c) shall
--------
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements,
24
requests, notices or agreements shall take effect at the time of receipt
thereof. The Company shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Initial Purchasers
by CSI.
15. Definition of Terms. For purposes of this Agreement, (a) the
-------------------
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act, (c) except where otherwise expressly provided, the
term "affiliate" has the meaning set forth in Rule 405 under the Securities Act
and (d) the term "Merger Documents" means the collective reference to the
Recapitalization Merger Agreement, the GranCare Merger Agreement and each of the
other related agreements to which either LCA or GranCare is a party to be
executed and delivered on or prior to the Closing Date pursuant thereto or in
connection therewith.
16. Initial Purchasers' Information. The parties hereto acknowledge
-------------------------------
and agree that, for all purposes of this Agreement, the Initial Purchasers'
Information consists solely of the following information in the Preliminary
Offering Memorandum and the Offering Memorandum: (i) the last paragraph on the
front cover page concerning the terms of the offering by the Initial Purchasers;
(ii) the first paragraph on page (i); and (iii) the information contained in the
first sentence of the third paragraph, the second sentence of the fourth
paragraph, the fifth paragraph, the seventh paragraph, the second sentence of
the ninth paragraph, the twelfth paragraph and the thirteenth paragraph under
the heading "Plan of Distribution".
17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. Counterparts. This Agreement may be executed in one or more
------------
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
19. Amendments. No amendment or waiver of any provision of this
----------
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
20. Headings. The headings herein are inserted for convenience of
--------
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the parties hereto in
accordance with its terms.
Very truly yours,
LIVING CENTERS OF AMERICA, INC.
By /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Financial Officer
GRANCARE, INC.
(solely as to its representations, warranties and
agreements contained in Sections 1 and 4 that
pertain to GranCare)
By /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
Accepted:
CHASE SECURITIES INC.
By /s/ Xxxxx Xxxx
----------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
0 Xxxxx Xxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
XXXXX XXXXXX INC.
By /s/ Xxxx X. Xxxxxx
---------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
CREDIT SUISSE FIRST BOSTON CORPORATION
By /s/ X.X. Xxxxxxxx
--------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
Xxxxxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Investment Banking Department/Transactions Advisory Group
SCHEDULE 1
SENIOR SUBORDINATED NOTES
Principal Amount of Senior
Initial Purchasers Subordinated Notes to be Purchased
------------------ ----------------------------------
Chase Securities Inc. $ 176,000,000
Xxxxx Xxxxxx Inc. $ 74,250,000
Credit Suisse First Boston Corporation $ 24,750,000
------------------------
Total $ 275,000,000
==========================
SENIOR SUBORDINATED DISCOUNT NOTES
Principal Amount of Senior
Initial Purchasers Subordinated Discount Notes to Be Purchased
------------------ -------------------------------------------
Chase Securities Inc. $ 188,160,000
Xxxxx Xxxxxx Inc. $ 79,380,000
Credit Suisse First Boston Corporation $ 26,460,000
------------------------
Total $ 294,000,000
==========================
