Exhibit 10.75
SELECT MEDICAL CORPORATION
SELECT MEDICAL ESCROW, INC.
$175,000,000
7 1/2% Senior Subordinated Notes due 2013
PURCHASE AGREEMENT
July 29, 2003
X.X. XXXXXX SECURITIES INC.
XXXXXXX LYNCH, PIERCE, XXXXXX & Xxxxx
INCORPORATED
WACHOVIA CAPITAL MARKETS, LLC
XX XXXXX SECURITIES CORPORATION
CIBC WORLD MARKETS CORP.
FLEET SECURITIES, INC.
XXXXXXXXX & COMPANY, INC.
c/o X.X. XXXXXX SECURITIES INC.
000 Xxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Select Medical Escrow, Inc. ("Select Medical Escrow"), a
wholly owned subsidiary of Select Medical Corporation, a Delaware corporation
(the "Company"), proposes to issue and sell $175,000,000 aggregate principal
amount of its 7-1/2% Senior Subordinated Notes due 2013 (the "Securities"). The
Securities will be issued pursuant to an Indenture to be dated as of August 12,
2003 (the "Indenture") between Select Medical Escrow and U.S. Bank Trust
National Association, as trustee (the "Trustee"). On or prior to the Closing
Date (as defined herein) Select Medical Escrow will be designated an
Unrestricted Subsidiary under (and as such term is defined in) the Indenture,
dated as of June 11, 2001 (the "Existing Indenture"), among the Company, the
subsidiary guarantors party thereto and State Street Bank and Trust Company, as
trustee.
On the Closing Date, (i) Select Medical Escrow will issue the
Securities; (ii) Select Medical Escrow and the Company will enter into an Escrow
Agreement, dated as of the Closing Date (the "Escrow Agreement"), among the
Company, Select Medical
Escrow, the Trustee and U.S. Bank Trust National Association, as escrow agent
(the "Escrow Agent") in the form attached hereto as Annex A, and Select Medical
Escrow will enter into the Securities Account Control Agreement (the "Securities
Account Control Agreement"), among Select Medical Escrow, as pledgor, the
Trustee, as pledgee, assignee and secured party, and U.S. Bank Trust National
Association as escrow agent and securities intermediary; (iii) the Company will
make an equity contribution to Select Medical Escrow in an amount such that
Select Medical Escrow will have cash and cash equivalents in an amount
sufficient to redeem in cash the Securities at a redemption price equal to 101%
of the aggregate principal amount thereof plus accrued and unpaid interest
thereon to December 11, 2003 (the "Equity Contribution"); and (iv) pursuant to
the Escrow Agreement, Select Medical Escrow will deposit with the Escrow Agent
the proceeds of the issuance of the Securities and of the Equity Contribution
(collectively, the "Escrowed Funds") and will grant a perfected first priority
security interest in the Escrowed Funds to the Trustee for the benefit of the
Holders of the Securities (the "Security Interest"). On the date of the closing
of the Acquisition (defined below), Select Medical Escrow, the Company and each
of the subsidiaries of the Company listed on Schedule I hereto (each a "Company
Guarantor" and together, the "Company Guarantors") will enter into an Assumption
Agreement (the "Assumption Agreement"), in the form attached to the Escrow
Agreement.
The net proceeds of the issuance of the Securities will be
used in part to acquire (such acquisition, the "Acquisition") all of the
outstanding capital stock of Xxxxxxx Rehabilitation Corporation ("Xxxxxxx")
pursuant to a Stock Purchase Agreement, dated June 30, 2003 (the "Stock Purchase
Agreement") by and among the Company, Xxxxxxx and Xxxxx X. Xxxxxxx Foundation,
Inc. (the "Xxxxxxx Foundation").
In connection with the consummation of the Acquisition,
pursuant to the Assumption Agreement and a Supplemental Indenture, in the form
attached to the Escrow Agreement, by and among the Trustee, the Company, Select
Medical Escrow and the Company Guarantors (the "Select Medical Escrow
Supplemental Indenture"), the Company will assume the obligations of Select
Medical Escrow, and the Company Guarantors will guarantee the obligations of the
Company under the Notes, the Indenture, this Agreement, the Registration Rights
Agreement (as defined below) and the Escrow Agreement (the "Company
Assumption"). In connection with the consummation of the Acquisition, pursuant
to the Assumption Agreement and a Supplemental Indenture, in the form attached
to the Escrow Agreement, by and among the Trustee, the Company, Xxxxxxx and each
wholly-owned subsidiary of Xxxxxxx (collectively with Xxxxxxx, the "Xxxxxxx
Guarantors," and together with the Company Guarantors, the "Guarantors;" and
such Supplemental Indenture, the "Xxxxxxx Supplemental Indenture," and, together
with the Select Medical Escrow Supplemental Indenture, the "Supplemental
Indentures"), the Xxxxxxx Guarantors will guarantee the obligations of the
Company under the Notes, the
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Indenture, this Agreement, the Registration Rights Agreement and the Escrow
Agreement (the "Xxxxxxx Assumption," and together with the Company Assumption,
the "Assumptions"). Upon the satisfaction of certain conditions set forth in the
Escrow Agreement, including the contemporaneous closing of the Acquisition, the
release of the Security Interest (the "Security Interest Release") and the
consummation of the Assumptions, the Escrowed Funds will be released to Select
Medical Escrow or the Company. The date of the consummation of the Acquisition
and the execution of the Supplemental Indentures is referred to as the
"Acquisition Closing Date." Following the Acquisition and the Assumptions, the
Securities will be guaranteed on an unsecured senior subordinated basis by
guarantees (the "Guarantees", and each a "Guarantee") of the Guarantors.
Notwithstanding anything herein to the contrary and for the avoidance of doubt,
the Xxxxxxx Guarantors shall execute the Assumption Agreement, and the Xxxxxxx
Supplemental Indenture and the Select Medical Escrow Supplemental Indenture may
be pursuant to one supplemental indenture in the form attached to the Escrow
Agreement but are herein referred by separate terms.
The Company hereby confirms its agreement with X.X. Xxxxxx
Securities Inc. ("JPMorgan") and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated ("Xxxxxxx Xxxxx"), Wachovia Capital Markets, LLC, XX Xxxxx
Securities Corporation, CIBC World Markets Corp., Fleet Securities, Inc. and
Xxxxxxxxx & Company, Inc. (collectively, together with JPMorgan and Xxxxxxx
Xxxxx, the "Initial Purchasers") concerning the purchase of the Securities from
Select Medical Escrow by the several 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 and
Select Medical Escrow prepared a preliminary offering memorandum dated July 21,
2003 (the "Preliminary Offering Memorandum") and will prepare an offering
memorandum dated the date hereof (the "Offering Memorandum") setting forth
information concerning the Company, Select Medical Escrow, the Guarantors and
the Securities. Copies of the Preliminary Offering Memorandum have been, and
copies of the Offering Memorandum will be, delivered by the Company and Select
Medical Escrow 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 and Select Medical Escrow hereby
confirm that they have 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.
Holders of the Securities (including the Initial Purchasers
and their direct and indirect transferees) will, subject to the terms and
conditions thereof, be entitled to
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the benefits of an Exchange and Registration Rights Agreement, substantially in
the form attached hereto as Annex B (the "Registration Rights Agreement"),
pursuant to which the Company will agree to file with the Securities and
Exchange Commission (the "Commission"), following the Assumptions, a
registration statement under the Securities Act (the "Exchange Offer
Registration Statement") registering an issue of senior subordinated notes of
the Company (the "Exchange Securities") and guarantees of each of the Guarantors
which are identical in all material respects to the Securities (except that the
Exchange Securities will not contain terms with respect to transfer restrictions
or additional interest) and the Guarantors and under certain circumstances, a
shelf registration statement pursuant to Rule 415 under the Securities Act (the
"Shelf Registration Statement").
Prior to the Closing Date, the Company's Credit Agreement will
be amended (the "Credit Agreement Amendment").
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Company,
the Company Guarantors and Select Medical Escrow. The Company, the Company
Guarantors and Select Medical Escrow jointly and severally represent and warrant
to, and agree with, the several Initial Purchasers on and as of the date hereof
and the Closing Date (as defined in Section 3) that (provided, however, that in
the case of any representation or warranty regarding Xxxxxxx and each of its
subsidiaries only, any such representation or warranty shall be to the knowledge
of the Company):
(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 the Company, the Company Guarantors and
Select Medical Escrow make no representation or warranty 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, the Company Guarantors or Select Medical
Escrow by or on behalf of any Initial Purchaser specifically for use
therein as specified in section 16 hereof (the "Initial Purchasers'
Information").
(b) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its respective date, contains all of the
information that, if
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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, compliance
with the agreements set forth herein, compliance by the Initial
Purchasers with the offering and transfer procedures and restrictions
described in the Transaction Documents (as defined in Section 1(g)),
and the accuracy of the representations and warranties made in
accordance with the Transaction Documents by purchasers to whom the
Initial Purchasers initially resell the Securities, 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 Indenture Act") (it being
understood that no representation is made as to any resale subsequent
to the initial resale of the Securities).
(d) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Offering Memorandum; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would
not result in any material adverse changes in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Effect").
(e) (1) Each subsidiary and, in the case of Xxxxxxx and each
of its subsidiaries, each future subsidiary of the Company set forth on
Schedule III hereto (which lists (a) all Company Guarantors, (b) all
other subsidiaries of the Company that are either operating entities or
holding companies, (c) Select Medical Escrow and (d) Xxxxxxx and each
of its subsidiaries, each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
corporation or other entity in good standing under the laws of the
jurisdiction of its incorporation, has corporate or other power and
authority to own, lease and operate its properties and to conduct its
business as described in
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the Offering Memorandum and is duly qualified as a foreign corporation
or other entity to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would
not result in a Material Adverse Effect; except as set forth on
Schedule IV hereto, (a) all of the issued and outstanding capital stock
of each such Subsidiary that is a corporation has been duly authorized
and validly issued, is fully paid and non-assessable and is owned, or,
in the case of the Xxxxxxx Guarantors, will be owned after the
Acquisition Closing Date, by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity, and (b) all of the
ownership interests of each such Subsidiary that is not a corporation
have been duly authorized and are owned, or, in the case of the Xxxxxxx
Guarantors, will be owned after the Acquisition Closing Date, by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding shares of capital stock of any
Subsidiary was issued in violation of the preemptive or similar rights
of any securityholder of such Subsidiary. The only subsidiaries of the
Company and Xxxxxxx are the subsidiaries listed on Schedule I hereto
and the subsidiaries listed on Schedule V hereto (which lists all
subsidiaries of the Company and Xxxxxxx that are not guaranteeing the
Securities).
(2) Except to the extent disclosed in the Offering
Memorandum under the caption "Selected Consolidated Financial and Other
Data" and in the Company's consolidated financial statements included
in the Offering Memorandum, each of the specialty acute care hospitals,
outpatient rehabilitation clinics and occupational health centers
(collectively, the "Facilities") described in the Offering Memorandum
as owned by the Company or Xxxxxxx is owned or leased and operated, or
following the Acquisition will be owned or leased and operated, by a
Subsidiary of which the Company directly or indirectly owns, or
following the Acquisition will own, 100% of the outstanding ownership
interests. Except as disclosed in the Offering Memorandum, there are no
material encumbrances or restrictions on the ability of any Subsidiary
(i) to pay any dividends or make any distributions on such Subsidiary's
capital stock, (ii) to make any loans or advances to, or investments
in, the Company or any of its Subsidiaries, or (iii) to transfer any of
its property or assets to the Company or any of its Subsidiaries.
(f) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Offering Memorandum in the column
entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances by the Company, if
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any, pursuant to reservations, agreements or employee benefit plans
referred to in the Offering Memorandum or pursuant to the exercise of
convertible securities or options referred to in the Offering
Memorandum or repurchases of an immaterial number of shares of the
Company's capital stock held by former employees). Select Medical
Escrow is a wholly-owned subsidiary of the Company. Following
consummation of the Acquisition, Xxxxxxx will be a wholly-owned
subsidiary of the Company. The shares of issued and outstanding capital
stock of the Company, Select Medical Escrow and Xxxxxxx have been duly
authorized and validly issued and are fully paid and non-assessable;
none of the outstanding shares of capital stock of the Company, Select
Medical Escrow or Xxxxxxx were issued in violation of the preemptive or
other similar rights of any securityholder of the Company, Select
Medical Escrow or Xxxxxxx, respectively, that were not subsequently
waived. The shares of capital stock of the Company issued or to be
issued in connection with the exercise of any put right held by any
prior owner of a Facility that was subsequently acquired by the
Company, have been issued in compliance, in all material respects, with
all federal and state securities laws. Except as disclosed in the
Offering Memorandum, there are no outstanding options or warrants to
purchase, or any preemptive rights or other rights to subscribe for or
to purchase, any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of the Company's or
any of its subsidiaries', or Xxxxxxx'x or any other Xxxxxxx Guarantors'
capital stock or other ownership interests.
(g) (i) The Company, Select Medical Escrow and each of the
Company Guarantors has full right, power and authority to execute and
deliver this Agreement, the Indenture (including the Guarantee set
forth therein), the Registration Rights Agreement, and the Securities
and (ii) the Company has the full right, power and authority to execute
and deliver the Credit Agreement Amendment (the documents listed in
clauses (i) and (ii) above are collectively referred to as the
"Transaction Documents") and the Company, Select Medical Escrow and
each of the Company Guarantors has the full right, power and authority
to perform their respective 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 and the consummation of the transactions contemplated
thereby, including, without limitation the Equity Contribution, have
been duly and validly taken. Select Medical Escrow has full right,
power and authority to execute and deliver and to perform its
obligations under the Escrow Agreement, the Securities Account Control
Agreement, the Assumption Agreement and the Select Medical Escrow
Supplemental Indenture, and all corporate action required to be taken
for the due and proper authorization, execution and delivery of each of
the foregoing
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documents and agreements and the consummation of the transactions
contemplated thereby, including, without limitation, the granting and
perfection of the Security Interest, has been duly and validly taken.
The Company has full right, power and authority to execute and deliver
and to perform its obligations under the Escrow Agreement, the
Assumption Agreement, the Supplemental Indentures and the Stock
Purchase Agreement, and all corporate action required to be taken for
the due and proper authorization, execution and delivery of each of the
foregoing documents and agreements and the consummation of the
transactions contemplated thereby has been duly and validly taken. Each
of the Company Guarantors has full right, power and authority to
execute and deliver and to perform its obligations under the Assumption
Agreement and the Select Medical Escrow Supplemental Indenture, and all
corporate action required to be taken for the due and proper
authorization, execution and delivery of each of the foregoing
documents and agreements and the consummation of the transactions
contemplated thereby has been duly and validly taken. The Company's
Board of Directors (the "Board") has taken all action necessary to
permit the Company to cause each of the Xxxxxxx Guarantors, and there
is no fact or circumstance that would prevent each of the Xxxxxxx
Guarantors from having full right, power and authority, to execute and
deliver and to perform its obligations under the Xxxxxxx Supplemental
Indenture, and all corporate action required to be taken for the due
and proper authorization, execution and delivery of each of the
foregoing documents and agreements and the consummation of the
transactions contemplated thereby has been duly and validly taken by
the Company and each of its subsidiaries and upon consummation of the
Acquisition the Company will cause to be taken by each of the Xxxxxxx
Guarantors.
(h) This Agreement has been duly authorized, executed and
delivered by the Company, Select Medical Escrow and each of the Company
Guarantors.
(i) Each of the Registration Rights Agreement, the Assumption
Agreement and the Select Medical Escrow Supplemental Indenture has been
duly authorized by the Company, Select Medical Escrow and each of the
Company Guarantors and, when duly executed and delivered in accordance
with its terms by each of the parties thereto, will constitute a valid
and legally binding agreement of the Company, Select Medical Escrow and
each of the Company Guarantors enforceable against the Company, Select
Medical Escrow and each of the Company Guarantors 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) and an implied covenant
of good faith and fair
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dealing. The Stock Purchase Agreement has been duly authorized,
executed and delivered in accordance with its terms by the Company, and
constitutes a valid and legally 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) and an implied covenant of good faith and fair
dealing. The Escrow Agreement has been duly authorized by the Company
and Select Medical Escrow and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company and
Select Medical Escrow, enforceable against the Company and Select
Medical Escrow 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) and an implied covenant of good faith and fair dealing. The
Securities Account Control Agreement has been duly authorized by Select
Medical Escrow and, when duly executed and delivered in accordance with
its terms by each of the parties thereto, will constitute a valid and
legally binding agreement of Select Medical Escrow, enforceable against
Select Medical Escrow 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). The Xxxxxxx Supplemental Indenture has been duly
authorized by the Company and, in connection with the Acquisition, the
Company will upon the consummation of the Acquisition cause the Xxxxxxx
Supplemental Indenture to be duly authorized by each of the Xxxxxxx
Guarantors and, when duly executed and delivered in accordance with its
terms by each of the parties thereto, will constitute a valid and
legally binding agreement of the Company and each of the Xxxxxxx
Guarantors enforceable against the Company and each of the Xxxxxxx
Guarantors 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) and
an implied covenant of good faith and fair dealing.
(j) The Indenture has been, and in the case of the Company and
the Company Guarantors, will be, and in the case of the Xxxxxxx
Guarantors, upon the
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consummation of the Acquisition the Company will cause the Indenture to
be, duly authorized by Select Medical Escrow, the Company and each of
the Guarantors and, when duly executed and delivered in accordance with
its terms by each of the parties thereto (in the case of the Company
and the Guarantors, by means of the Supplemental Indentures), will
constitute a valid and legally binding agreement of Select Medical
Escrow, the Company and each of the Guarantors enforceable against
Select Medical Escrow, the Company and each of the Guarantors 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) and
an implied covenant of good faith and fair dealing. 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 have been, and, in the case of the Xxxxxxx
Guarantors, upon the consummation of the Acquisition the Company will
cause the Securities to be, duly authorized by Select Medical Escrow,
the Company and each of the Guarantors and, when duly executed,
authenticated, issued and delivered as provided in the Indenture and
paid for as provided herein, will be duly and validly issued and
outstanding and will constitute valid and legally binding obligations
of Select Medical Escrow and the Company, as issuers (in the case of
the Company, by means of the Company Assumption and the Select Medical
Escrow Supplemental Indenture) and each of the Guarantors, as
guarantors (in the case of the Company Guarantors, by means of the
Company Assumption and the Select Medical Escrow Supplemental
Indenture, and in the case of the Xxxxxxx Guarantors, by means of the
Xxxxxxx Assumption and the Xxxxxxx Supplemental Indenture), entitled to
the benefits of the Indenture and enforceable against Select Medical
Escrow and the Company, as issuers, and each of the Guarantors, as
guarantors, 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) and an implied covenant of good faith and fair dealing; the
Securities conform to all statements relating thereto contained in the
Offering Memorandum and such description conforms to the rights set
forth in the Transaction Documents, the Escrow Agreement, the
Assumption Agreement and the Supplemental Indentures.
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(l) The Guarantees have been duly authorized by each of the
Company Guarantors and the Company will cause the Guarantees to be duly
authorized by the Xxxxxxx Guarantors on the Acquisition Closing Date
and, when the Securities have been duly executed, authenticated, issued
and delivered as provided in the Indenture and paid for as provided
herein (assuming due authorization, execution and delivery of the
Indenture by the Trustee and due authentication of the Securities by
the Trustee), and in the case of the Company Guarantors, after the
execution of the Select Medical Escrow Supplemental Indenture, and in
the case of the Xxxxxxx Guarantors, after the execution of the Xxxxxxx
Supplemental Indenture, will constitute valid and legally binding
obligations of the Guarantors enforceable against the Guarantors in
accordance with their terms.
(m) The Exchange Securities have been duly authorized by
Select Medical Escrow and the Company and the related guarantees have
been duly authorized by each of the Company Guarantors and the Company
will cause the Exchange Securities to be duly authorized by the Xxxxxxx
Guarantors on the Acquisition Closing Date and, when duly executed,
authenticated, issued and delivered as provided in the Indenture and
the Registration Rights Agreement (assuming the Indenture is the valid
and legally binding obligation of the Trustee) will constitute a valid
and legally binding agreement of Select Medical Escrow and the Company,
as the case may be, as issuers and each of the Guarantors, as
guarantors, enforceable against Select Medical Escrow and the Company,
as the case may be, as issuers and each of the Guarantors, as
guarantors, 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) and an implied covenant of good faith and fair dealing.
(n) Each of the Transaction Documents not referred to in the
preceding clauses (h) through (l) has been duly authorized by the
Company and, when duly executed and delivered in accordance with their
terms by each of the parties thereto will constitute valid and legally
binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and to general equitable
principles (whether considered in a proceeding in equity or at law) and
an implied covenant of good faith and fair dealing.
(o) Each of the Transaction Documents, the Escrow Agreement,
the Assumption Agreement, the Supplemental Indentures and the Stock
Purchase
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Agreement (collectively, together with the Securities Account Control
Agreement, the "Related Documents") conforms in all material respects
to the description thereof contained in the Offering Memorandum.
(p) The execution, delivery and performance by Select Medical
Escrow, the Company and each of the Guarantors of each of the Related
Documents to which it is or will be a party, the issuance,
authentication, sale and delivery of the Securities and compliance by
Select Medical Escrow, the Company and each of the Guarantors with the
terms thereof and the consummation of the transactions contemplated by
the Related Documents 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, or Xxxxxxx or any of its subsidiaries, pursuant to any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries, or
Xxxxxxx or any of its subsidiaries, is a party or by which the Company
or any of its subsidiaries, or Xxxxxxx or any of its subsidiaries, is
bound or to which any of the property or assets of the Company or any
of its subsidiaries, or Xxxxxxx or any of its subsidiaries, is subject
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor
will such actions result in any violation of the provisions of the
charter or by-laws (or other comparable organizational documents) of
the Company or any of its subsidiaries, or Xxxxxxx 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
Xxxxxxx 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
Select Medical Escrow, the Company and each of the Guarantors of the
Related Documents to which each is a party, the issuance,
authentication, sale and delivery of the Securities and compliance by
Select Medical Escrow, the Company and each of the Guarantors with the
terms thereof and the consummation of the transactions contemplated by
the Related Documents, except for such consents, approvals,
authorizations, filings, registrations or qualifications which shall
have been obtained or made prior to the Closing Date and 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.
12
(q) PricewaterhouseCoopers LLP are independent certified
public accountants with respect to the Company and each of its
subsidiaries and Xxxxxxx and each of its subsidiaries, respectively,
within the applicable rules and regulations of the Commission. The
consolidated financial statements included in the Offering Memorandum,
together with the related notes, comply in all material respects with
the requirements applicable to a registration statement on Form S-4
under the Securities Act (except that certain supporting schedules and
exhibits are omitted), present fairly the financial position of the
Company and its consolidated subsidiaries and Xxxxxxx and its
consolidated subsidiaries, at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries and Xxxxxxx and its consolidated subsidiaries
for the periods specified; said financial statements have been prepared
in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved. The
selected consolidated financial data and the summary consolidated
financial information of the Company and Xxxxxxx included in the
Offering Memorandum present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited
financial statements included in the Offering Memorandum. The pro forma
financial statements and the related notes thereto and the other pro
forma information included in the Offering Memorandum present fairly
the information shown therein, have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
Notwithstanding the foregoing, the parties acknowledge that the column
entitled pro forma "LTM ended March 31, 2003" set forth on page 34 of
the Offering Memorandum does not comply with the rules of the
Commission requiring the Company to include pro forma financial
statements for and as of the latest quarterly period and the prior
fiscal year only, and the use of Adjusted EBITDA in the Offering
Memorandum may not comply with Item 10(e) of Regulation S-K.
(r) There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or
body, domestic or foreign, now pending (other than any sealed "qui tam"
actions of which the Company has no knowledge), or, to the knowledge of
the Company, threatened, against or affecting the Company or any of its
subsidiaries, or Xxxxxxx or any of its subsidiaries, which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the
properties or assets of the Company and its subsidiaries and Xxxxxxx
and its subsidiaries taken
13
as a whole; the aggregate of all pending legal or governmental
proceedings to which the Company or any of its subsidiaries, or Xxxxxxx
or any of its subsidiaries, is a party or of which any of their
respective properties or assets is the subject which are not described
in the Offering Memorandum, including ordinary routine litigation
incidental to the business, could not reasonably be expected to result
in a Material Adverse Effect.
(s) No action has been taken and no statute, rule, regulation
or order has been enacted, adopted or issued by any governmental agency
or body which prevents the issuance of the Securities or the
consummation of the Acquisition 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 or any of its subsidiaries, or
Xxxxxxx or any of its subsidiaries, which would prevent or suspend the
issuance or sale of the Securities or the consummation of the
Acquisition or the use of the Preliminary Offering Memorandum or the
Offering Memorandum in any jurisdiction; no action, suit or proceeding
is pending against or, to the best knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries, or Xxxxxxx
or any of its 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 the consummation of the Acquisition or in
any manner draw into question the validity or enforceability of any of
the Related Documents or any action taken or to be taken pursuant
thereto; and the Company and Select Medical Escrow have complied with
any and all requests by any securities authority in any jurisdiction
for additional information to be included in the Preliminary Offering
Memorandum and the Offering Memorandum.
(t) None of the Company or any of its subsidiaries, or Xxxxxxx
or any of its subsidiaries, is (i) in violation of its charter or
by-laws (or other comparable organizational documents), (ii) in
default, and no event has occurred which, with notice or lapse of time
or both, would constitute a default, in the due performance or
observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which it is a party or by which it is bound or to
which any of its property or assets is subject (except for such
defaults that would not result in a Material Adverse Effect) or (iii)
in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its
property or assets may be subject.
14
(u) The Company and its subsidiaries and Xxxxxxx and its
subsidiaries possess all required permits, licenses, provider numbers,
certificates, approvals (including without limitation, certificate of
need approvals), consents, orders, certifications (including, without
limitation, certification under the Medicare and Medicaid programs),
accreditations (including, without limitation, accreditation by the
Joint Commission on Accreditation of Healthcare Organizations) and
other authorizations (collectively, "Governmental Licenses") issued by,
and have made all required declarations and filings with, the
appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them
(including, without limitation, Government Licenses as are required (i)
under such federal and state healthcare laws as are applicable to the
Company and its subsidiaries or Xxxxxxx and its subsidiaries and (ii)
with respect to those facilities operated by the Company or any of its
subsidiaries or Xxxxxxx or any of its subsidiaries that participate in
the Medicare and/or Medicaid programs, to receive reimbursement
thereunder), except where the failure to possess such Governmental
Licenses or to make such declarations would not reasonably be expected
to result in a Material Adverse Effect; the Company and its
subsidiaries and Xxxxxxx and its subsidiaries are in compliance with
the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, singly or in the aggregate,
reasonably be expected to result in a Material Adverse Effect; all of
the Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or the failure
of such Governmental Licenses to be in full force and effect would not
reasonably be expected to result in a Material Adverse Effect; and none
of the Company or any of its subsidiaries or Xxxxxxx or any of its
subsidiaries, has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would reasonably be expected to result in a Material
Adverse Effect. All of the long-term acute care hospitals operated by
the Company or any of its subsidiaries, or Xxxxxxx or any of its
subsidiaries, and all of the Company's and its subsidiaries' and
Xxxxxxx'x and its subsidiaries' outpatient clinics that operate as
"rehabilitation agencies" are "providers of service" as defined in the
Social Security Act and the regulations promulgated thereunder and are
eligible to participate in the Medicare and (to the extent disclosed in
the Offering Memorandum) Medicaid programs.
(v) The accounts receivable of the Company and its
subsidiaries and Xxxxxxx and its subsidiaries have been adjusted to
reflect material changes in the reimbursement policies of third party
payors such as Medicare, Medicaid, private insurance companies, health
maintenance organizations, preferred provider organizations, managed
care systems and other third party payors (including,
15
without limitation, Blue Cross plans). The accounts receivable, after
giving effect to the allowance for doubtful accounts, relating to such
third party payors do not materially exceed amounts the Company and its
subsidiaries or Xxxxxxx and its subsidiaries are entitled to receive.
(w) Neither the Company nor, to the knowledge of the Company,
any officers, directors or stockholders, employees or other agents of
the Company or any of its subsidiaries or Xxxxxxx or any of its
subsidiaries or the hospitals operated by them, has engaged in any
activities which are prohibited under Federal Medicare and Medicaid
statutes including, but not limited to, 42 U.S.C. Sections 1320a-7
(Program Exclusion), Section 1320a-7a (Civil Monetary Penalties),
1320a-7b (the Anti-kickback Statute), Section 1395nn and 1396b (the
"Xxxxx" law, prohibiting certain self-referrals), or any other federal
healthcare law, including, but not limited to, the federal TRICARE
statute, 10 U.S.C. Section 1071 et seq., the Federal Civil False Claims
Act, 31 U.S.C. Sections 3729-32, Federal Criminal False Claims Act, 18
U.S.C. Section 287, False Statements Relating to Health Care Matters,
18 U.S.C. Section 1035, Health Care Fraud, 18 U.S.C. SEction 1347, or
the federal Food, Drug & Cosmetics Act, 21 U.S.C. SEction 360aaa, or
any regulations promulgated pursuant to such statutes, or related state
or local statutes or regulations or any rules of professional conduct,
including but not limited to the following: (i) knowingly and willfully
making or causing to be made a false statement or representation of a
material fact in any applications for any benefit or payment under the
Medicare or Medicaid program or from any third party (where applicable
federal or state law prohibits such payments to third parties); (ii)
knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining
rights to any benefit or payment under the Medicare or Medicaid program
or from any third party (where applicable federal or state law
prohibits such payments to third parties); (iii) failing to disclose
knowledge by a claimant of the occurrence of any event affecting the
initial or continued right to any benefit or payment under the Medicare
or Medicaid program or from any third party (where applicable federal
or state law prohibits such payments to third parties) on its own
behalf or on behalf of another, with intent to secure such benefit or
payment fraudulently; (iv) knowingly and willfully offering, paying,
soliciting or receiving any remuneration (including any kickback, bribe
or rebate), directly or indirectly, overtly or covertly, in cash or in
kind (a) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for
which payment may be made in
16
whole or in part by Medicare or Medicaid or any third party (where
applicable federal or state law prohibits such payments to third
parties), or (b) in return for purchasing, leasing or ordering or
arranging for or recommending the purchasing, leasing or ordering of
any good, facility, service, or item for which payment may be made in
whole or in part by Medicare or Medicaid or any third party (where
applicable federal or state law prohibits such payments to third
parties); (v) knowingly and willfully referring an individual to a
person with which they have ownership or certain other financial
arrangements (where applicable federal law prohibits such referrals);
and (vi) knowingly and willfully violating any enforcement initiative
instituted by any governmental agency (including, without limitation,
the Office of the Inspector General and the Department of Justice),
except for any such activities which are specifically described in the
Offering Memorandum or which would not, singly or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(x) None of the Company or any of its subsidiaries or Xxxxxxx
or any of its subsidiaries or any of the Facilities operated by any of
them has failed to file with applicable regulatory authorities any
statement, report, information or form required by any applicable law,
regulation or order, except where the failure to be so in compliance
could not, individually or in the aggregate, have a Material Adverse
Effect. Except as described in the Offering Memorandum, all such
filings or submissions were in compliance with applicable laws when
filed and no deficiencies have been asserted by any regulatory
commission, agency or authority with respect to any such filings or
submissions, except for any such failures to be in compliance or
deficiencies which would not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(y) The Company and its subsidiaries and Xxxxxxx and its
subsidiaries have timely filed all federal, state, local and foreign
tax returns that are required to be filed or have duly requested
extensions thereof and all such tax returns are true, correct and
complete, except to the extent that any failure to file or request an
extension, or any incorrectness would not reasonably be expected to
result in a Material Adverse Effect. The Company and its subsidiaries
and Xxxxxxx and its subsidiaries have timely paid all taxes shown as
due on such filed tax returns (including any related assessments, fines
or penalties), except to the extent that any such taxes are being
contested in good faith and by appropriate proceedings, or to the
extent that any failure to pay would not reasonably be expected to
result in a Material Adverse Effect; and adequate charges, accruals and
reserves have been provided for in the financial statements referred to
in Section 1(q) above in accordance with GAAP in respect of all
Federal, state, local and foreign taxes for all periods as to which the
tax liability of the Company and its subsidiaries and Xxxxxxx and its
subsidiaries has not been finally determined or remains open to
examination by applicable taxing authorities except (A) for taxes
incurred after the date of the financial statements referred to in
Section 1(q) or (B) where the failure to provide for such charges,
accruals and reserves would not reasonably be
17
expected to result in a Material Adverse Effect. None of the Company or
any of its subsidiaries, or Xxxxxxx or any of its subsidiaries, is a
"United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Internal Revenue Code of 1986, as amended (the
"Code").
(z) None of the Company or any of its subsidiaries, or Xxxxxxx
or any of its 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 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.
(aa) The Company and each of its subsidiaries and Xxxxxxx and
each if its subsidiaries maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with 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. The Company has complied in all material respects with
all applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002, including,
without limitation, any such provisions relating to extensions of
credit to directors or executive officers and the Company's internal
controls.
(bb) The Company and each of its subsidiaries and Xxxxxxx and
each of its subsidiaries and each of the Facilities owned, leased or
operated by them are insured by insurers of recognized financial
responsibility, or self-insured as disclosed in the Offering
Memorandum, against such losses and risks and in such amounts as are
prudent and customary in the healthcare industry; none of the Company
or any of its subsidiaries, or Xxxxxxx or any of its subsidiaries, or
any of the hospitals owned, leased or operated by them, has been
refused any material insurance coverage sought or applied for since
January 1, 2001; and the Company has no reason to believe that it or
any of the Facilities owned, leased or operated by it, any of its
subsidiaries, or Xxxxxxx or any of its subsidiaries, will not be able
to renew its existing insurance coverage as and when such coverage
expires or to obtain coverage consistent with such coverage in all
material respects from insurers with comparable financial strength and
claims paying ability ratings as may be necessary to continue its
operations except where the failure to renew or
18
maintain such coverage would not reasonably be expected to result in a
Material Adverse Effect. The officers and directors of the Company and
Select Medical Escrow are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as the
Company believes are prudent and customary for officers' and directors'
liability insurance of a public company and as the Company believes
would cover claims which would reasonably be expected to be made in
connection with the issuance of the Securities; and the Company has no
reason to believe that it will not be able to renew its existing
directors' and officers' liability insurance coverage as and when such
coverage expires or to obtain coverage consistent with such coverage in
all material respects from insurers with comparable financial strength
and claims paying ability ratings as may be necessary to cover its
officers and directors.
(cc) The Company and its subsidiaries and Xxxxxxx and its
subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them in all material respects,
and none of the Company or any of its subsidiaries, or Xxxxxxx or any
if its subsidiaries has received any notice or is otherwise aware of
any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances
which would render any Intellectual Property invalid or inadequate to
protect the interest of the Company or any of its subsidiaries, or
Xxxxxxx or any of its subsidiaries, therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate, would
result in a Material Adverse Effect.
(dd) The Company and its subsidiaries and Xxxxxxx and its
subsidiaries have good and marketable title to all real property owned
by them and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except such
as (a) are described in the Offering Memorandum or (b) do not, singly
or in the aggregate, in a manner that would reasonably be expected to
result in a Material Adverse Effect, affect the value of such property
or interfere with the use made or proposed to be made of such property
by the Company or any of its subsidiaries, or Xxxxxxx or any of its
subsidiaries; and all of the leases and subleases of the Company and
its subsidiaries, and Xxxxxxx and its subsidiaries, considered as one
enterprise, and under which the Company or any of its subsidiaries, or
Xxxxxxx or any of its subsidiaries, holds properties described
19
in the Offering Memorandum, are in full force and effect, and neither
the Company or any of its subsidiaries, nor Xxxxxxx or any of its
subsidiaries, has any notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any of its
subsidiaries, or Xxxxxxx or any of its subsidiaries, under any of the
leases or subleases mentioned above, or affecting or questioning the
rights of the Company or any of its subsidiaries, or Xxxxxxx or any of
its subsidiaries, to the continued possession of the leased or
subleased premises under any such lease or sublease, except where the
failure to be in full force and effect or such claim would not
reasonably be expected to have a Material Adverse Effect.
(ee) No labor dispute with the employees of the Company or any
of its subsidiaries, or Xxxxxxx or any of its subsidiaries, exists or,
to the knowledge of the Company, is imminent, and the Company is not
aware of any existing or imminent labor disturbance by the employees of
the Company's or any of its subsidiaries', or Xxxxxxx'x or any of its
subsidiaries', principal suppliers, manufacturers, customers or
contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
(ff) 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 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code")) or "accumulated funding
deficiency" (as defined in Section 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 or any of its subsidiaries, or Xxxxxxx or any of its
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 and each of its subsidiaries, and Xxxxxxx and each of its
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 or any of its
subsidiaries, or Xxxxxxx or any of its 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.
20
(gg) Except as described in the Offering Memorandum, (A) none
of the Company or any of its subsidiaries, or Xxxxxxx or any of its
subsidiaries, or any of the Facilities owned, leased or operated by
them, is in violation of any material federal, state, local or foreign
statute, law, rule, regulation, standard, guide, ordinance, code,
policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of
human health, the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances
(including, without limitation, asbestos, polychlorinated biphenyls,
urea formaldehyde insulation, petroleum or petroleum products)
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and its subsidiaries and Xxxxxxx and its
subsidiaries and each of the Facilities owned, leased or operated by
them have all material permits, authorizations and approvals required
under any applicable Environmental Laws and are each in compliance with
their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating to any Environmental Law against
the Company or any of its subsidiaries, or Xxxxxxx or any of its
subsidiaries, or any of the Facilities owned, leased or operated by
them, except as would not, singly or in the aggregate, result in a
Material Adverse Effect and (D) there are no events or circumstances
that might reasonably be expected to form the basis of an order for
clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries, or Xxxxxxx or any of its
subsidiaries, or any of the Facilities owned, leased or operated by
them, relating to Hazardous Materials or any Environmental Laws except
for such events or circumstances that would not, singly or in the
aggregate, result in a Material Adverse Effect.
(hh) None of the Company or any of its subsidiaries, or
Xxxxxxx or any of its subsidiaries, or to the best knowledge of the
Company, any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or any of its
subsidiaries, or Xxxxxxx or any of its subsidiaries, has used any
corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity, made any direct
or indirect unlawful payment to any foreign or domestic government
official or employee
21
from corporate funds, violated or is in violation of any provision of
the Foreign Corrupt Practices Act of 1977, or made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(ii) On and immediately after the Closing Date, Select Medical
Escrow, and on and immediately after the effectiveness of the
Assumptions, the Company and each of its subsidiaries and Xxxxxxx and
each of its subsidiaries (in each case, 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 the present fair market value (or
present fair saleable value) of the assets of Select Medical Escrow,
the Company, Xxxxxxx and each of their respective subsidiaries, as the
case may be, is not less than the total amount required to pay the
probable liabilities of Select Medical Escrow, the Company, Xxxxxxx and
each of their respective subsidiaries, as the case may be, on its total
existing debts and liabilities (including contingent liabilities) as
they become absolute and matured, Select Medical Escrow, the Company,
Xxxxxxx and each of their respective subsidiaries, as the case may be,
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, assuming the sale of the
Securities (and in the case of the Company, Xxxxxxx and each of their
respective subsidiaries, the Assumption) as contemplated by this
Agreement and the Offering Memorandum, Select Medical Escrow, the
Company, Xxxxxxx and each of their respective subsidiaries, as the case
may be, is not incurring debts or liabilities beyond its ability to pay
as such debts and liabilities mature and Select Medical Escrow, the
Company, Xxxxxxx and each of their respective subsidiaries, as the case
may be, 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.
(jj) None of the Company or any of its subsidiaries, or
Xxxxxxx or any of its subsidiaries, owns any "margin securities" as
that term is defined in Regulations G and U of the Board of Governors
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
22
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 T, U or X of the Federal Reserve Board.
(kk) Other than as provided for or contemplated by this
Agreement, none of the Company or any of its subsidiaries, or Xxxxxxx
or any of its subsidiaries, is a party to any contract, agreement or
understanding with any person that would give rise to a valid claim
against the Company or any of its subsidiaries or the Initial
Purchasers for a brokerage commission, finder's fee or like payment in
connection with the offering and sale of the Securities.
(ll) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(mm) None of Select Medical Escrow, the Company, or any of
their affiliates or any person acting on any of 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.
(nn) None of Select Medical Escrow, the Company or 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.
(oo) None of Select Medical Escrow, the Company or any of
their affiliates or any other person acting on any of 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.
(pp) None of the Company or any of its subsidiaries, or
Xxxxxxx or any of its subsidiaries or, to the best of the Company's
knowledge, any of their respective directors, officers or affiliates
has taken or will take, directly or indirectly, any action designed to,
or that could be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Securities in
violation of Regulation M under the Exchange Act.
23
(qq) 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 a reasonable basis or
has been disclosed other than in good faith.
(rr) Except as disclosed in the Offering Memorandum, there are
no outstanding loans, advances, or guarantees of indebtedness by the
Company or any of its subsidiaries, or Xxxxxxx or any of its
subsidiaries, to or for the benefit of any of the executive officers or
directors of the Company or any of its subsidiaries, or Xxxxxxx or any
of its subsidiaries, or any of the members of the families of any of
them that would be required to be so disclosed under the Securities
Act, the regulations thereunder or Form S-1 pursuant to the Securities
Act.
(ss) The statistical and market-related data included in the
Offering Memorandum is derived from sources which Select Medical Escrow
and the Company reasonably and in good faith believe to be accurate,
reasonable and reliable in all material respects and the statistical
and market-related data included in the Offering Memorandum agrees with
the sources from which it was derived in all material respects. Without
limitation to the foregoing, the following were derived from
accounting, financial and/or other appropriate records of the Company
(the "Company Records"): (i) the pro forma amounts relating to the
ranking of indebtedness and certain amounts of indebtedness outstanding
(including Senior Indebtedness, Senior Subordinated Indebtedness,
Guarantor Senior Indebtedness, Existing Subsidiary Guarantees and other
indebtedness of Subsidiary Guarantors) disclosed in the Offering
Memorandum under the headings "Offering memorandum summary -- The
offering - Ranking", "Risk factors - Despite our level of indebtedness,
we and our subsidiaries will be able to incur more debt. This could
further exacerbate the risks described above", "Risk factors - Risks
relating to the offering - Your right to receive payments on the notes
will be junior to our existing senior indebtedness and the existing
senior indebtedness of the subsidiary guarantors and possibly all of
our and their future indebtedness. Further, claims of creditors of our
non-guarantor subsidiaries will generally have priority with respect to
the assets of those subsidiaries over your claims", "Description of
notes - Ranking and subordination", "Description of notes - Subsidiary
guarantees", (ii) the amount of availability the Company would have had
under its senior credit facility as of March 31, 2003 after giving
effect to the offering, as disclosed under the headings "Offering
memorandum summary -- The offering - Ranking", "Risk factors - Risks
relating to our business - Our indebtedness may limit cash flow
available to invest in the ongoing needs of our
24
business to generate future cash flow, which could prevent us from
fulfilling our obligations under the notes", and "Risk factors - Risks
relating to our business - Despite our level of indebtedness, we and
our subsidiaries will be able to incur more debt. This could further
exacerbate the risks described above", "Description of notes - "Ranking
and subordination", (iii) the percent, for each of the three months
ended March 31, 2003 and 2002, of specialty hospital revenues from
services provided to Medicare patients that was paid by Medicare under
a cost-based reimbursement methodology, as disclosed in the Offering
Memorandum under the heading "Management's discussion and analysis of
financial condition and results of operations - Critical accounting
matters - Sources of revenues", and (iv) the percent of funding our
Canadian outpatient rehabilitation clinics receive through workers'
compensation benefits, as disclosed in the Offering Memorandum under
the heading "Our business - Government regulations - Canadian
reimbursement". The Company Records accurately present the
above-referenced information as disclosed in the Offering Memorandum at
the dates indicated and for the periods specified.
(tt) Since the respective dates as of which information is
given in the Offering Memorandum, except as otherwise stated therein,
(A) 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 and its subsidiaries
and Xxxxxxx and its subsidiaries considered as one enterprise, whether
or not arising in the ordinary course of business, (B) none of the
Company or any of its subsidiaries, or Xxxxxxx or any of its
subsidiaries, has incurred any liability or obligation, direct or
contingent, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries and
Xxxxxxx and its subsidiaries considered as one enterprise, (C) there
have been no transactions entered into by the Company or any of its
subsidiaries, or Xxxxxxx or any of its subsidiaries, other than those
in the ordinary course of business, which are material with respect to
the Company and its subsidiaries and Xxxxxxx and its subsidiaries
considered as one enterprise, and (D) there has not been any change in
the capital stock (other than pursuant to issuances of common stock in
connection with the exercise of options or put rights) or long-term
debt of the Company or Xxxxxxx or any dividend or distribution of any
kind declared, paid or made by the Company 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, Select Medical
Escrow agrees to issue
25
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
Select Medical Escrow, the principal amount of Securities set forth opposite the
name of such Initial Purchaser on Schedule II hereto at a purchase price equal
to 97.60% of the principal amount thereof. Select Medical Escrow 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 Select Medical Escrow and 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 an accredited investor within the meaning of Regulation D under the
Securities Act and 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
26
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 (as such term is defined in
Regulation S) 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 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"; and
(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
27
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 and Markets Act
2000 ("FSMA") of the United Kingdom 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 communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or inducement to engage
in investment activity (within the meaning of Section 21 of the FSMA) received
by it in connection with the issue or sale of any of the Securities in
circumstances in which Section 21(l) of the FSMA does not apply to the Company.
(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
Select Medical Escrow pursuant hereto, such Initial Purchaser shall furnish to
that purchaser a copy of the Offering Memorandum (and any amendment or
supplement thereto that Select Medical Escrow or 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 Select Medical Escrow and the Company and, for purposes of the
opinions to be delivered to the Initial Purchasers pursuant to Section 5(d) and
(e), counsel for Select Medical Escrow and 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) Select Medical Escrow and the Company acknowledge and agree 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
Debevoise & Xxxxxxxx, New York, New York, or at such other place as shall be
agreed upon by the Initial Purchasers and the Company, at 10:00 A.M., New York
City time, on August 12, 2003, or at such other time or date, not later than
seven full business days 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").
28
(b) On the Closing Date, payment of the purchase price for the Securities shall
be made to Select Medical Escrow by wire or book-entry transfer of same-day
funds to such account or accounts as Select Medical Escrow 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 JPMorgan on behalf of the Initial Purchasers shall have
requested in writing not less than two full business days prior to the Closing
Date. Select Medical Escrow agrees to make one or more global certificates
evidencing the Securities available for inspection by JPMorgan on behalf of the
Initial Purchasers in New York, New York no later than 1 P.M. on the day prior
to the Closing Date.
(c) On the Closing Date, Select Medical Escrow shall deposit the Escrowed funds
in an escrow account in accordance with the Escrow Agreement.
4. Further Agreements of Select Medical Escrow, the Company
and the Company Guarantors. Each of Select Medical Escrow, the Company and the
Company Guarantors 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 Preliminary Offering Memorandum or 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 Preliminary Offering Memorandum or 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 Preliminary Offering Memorandum and the Offering Memorandum (and
any amendments or supplements thereto) as may be reasonably requested;
29
(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 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 so long as the Securities are outstanding, 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 as the Initial Purchasers may designate and to continue
such qualifications in effect for so long as required
30
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, and Xxxxxxx and its
subsidiaries shall not be obligated to qualify as foreign corporations
in any jurisdiction in which they are not so qualified or to file a
general consent to service of process in any jurisdiction;
(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) until (a) November 27, 2003 if the Acquisition and the
Assumptions have not been consummated prior to such date, (b) the date
90 days from the date of the Offering Memorandum if the Acquisition
and the Assumptions have been consummated prior to such date, or (c)
the date on which the Acquisition and the Assumptions are consummated
if such date occurs after the date set forth in clause (b) and before
the date set forth in clause (a) above, (X) not to seek to finance the
Acquisition other than with the - proceeds of the issuance of the
Securities (other than (i) to the extent cash or borrowing under the
senior credit facility is used to
31
finance a portion of the Acquisition as disclosed in the Offering
Memorandum and (ii) if the closing of the issuance of the Securities
does not occur within 10 business days of the date of this Agreement),
and (Y) 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, or Xxxxxxx or any of its subsidiaries
(other than the Securities), in each case without the prior written
consent of JPMorgan and Xxxxxxx Xxxxx, it being understood that the
foregoing shall not prohibit the Company or any of its subsidiaries,
or Xxxxxxx or any of its subsidiaries, from issuing seller notes to
the seller in connection with any acquisition (other than the
Acquisition) by the Company or any of its subsidiaries, or Xxxxxxx or
any of its subsidiaries, as permitted under the Indenture or making
borrowings under the Credit Agreement, other than to finance the
Acquisition (except as disclosed in the Offering Memorandum);
(l) during the period from the Closing Date until three years
after the Closing Date or, if earlier, the completion of the Exchange
Offer, 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 or,
if earlier, until such time as the Securities are not "restricted
securities" (as defined in Rule 144 under the Securities Act), be or
become, or be or become owned by, 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, and not to 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
JPMorgan and Xxxxxxx Xxxxx 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
32
creating actual, or apparent, active trading in or of raising the
price of the Securities;
(o) in connection with the offering of the Securities, to
make its officers, employees, independent accountants and legal
counsel reasonably available upon request by the Initial Purchasers;
(p) to furnish to each of the Initial Purchasers on the date
hereof a copy of the independent accountants' reports included in the
Offering Memorandum signed by the accountants rendering such reports;
(q) 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 best efforts to satisfy
all conditions precedent on its part to the delivery of the
Securities;
(r) to not take any action prior to the execution and
delivery of the Indenture which, if taken after such execution and
delivery, would have violated any of the covenants contained in the
Indenture;
(s) to not take any action prior to the Closing Date which
would require the Offering Memorandum to be amended or supplemented
pursuant to Section 4(d);
(t) prior to the later of the Closing Date and the date on
which all of the Securities have been resold by the Initial
Purchasers, not to issue any press release or other communication
directly or indirectly or hold any press conference with respect to
the Company or Xxxxxxx or their respective conditions, 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 the prior written
consent of the Initial Purchasers, which consent shall not be
unreasonably withheld or delayed, unless in the judgment of the
Company and its counsel, and after notification to the Initial
Purchasers, such press release or communication is required by law;
(u) to apply the net proceeds from the sale of the Securities
in all material respects as set forth in the Offering Memorandum under
the heading "Use of Proceeds"; and
33
(v) Immediately upon consummation of the Acquisition, to
cause the Company, the Company Guarantors and the Xxxxxxx Guarantors
to duly authorize, execute and deliver the respective Supplemental
Indentures.
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 Select Medical Escrow, the Company and the
Company Guarantors contained herein, to the accuracy of the statements of
Select Medical Escrow, the Company, the Company Guarantors and their respective
officers made in any certificates delivered pursuant hereto, to the performance
by Select Medical Escrow, the Company and each of the Company Guarantors of
their 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 jurisdiction shall have been issued and no
proceedings 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 opinion of counsel for the
Initial Purchasers, is material or omits to state any fact which, in
the opinion of such counsel, 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 legal matters
incident to the authorization, form and validity of each of the
Related Documents and the Offering Memorandum, and all other legal
matters relating to the Related Documents and the transactions
contemplated thereby, shall be satisfactory in all material respects
to the Initial Purchasers, and Select Medical Escrow, the Company and
the Company Guarantors shall have furnished to the Initial Purchasers
all documents and information that they or their counsel may
reasonably request to enable them to pass upon such matters.
(d) Dechert LLP shall have furnished to the Initial
Purchasers their written opinion, as counsel to Select Medical Escrow,
the Company and the Company Guarantors, addressed to the Initial
Purchasers and dated the Closing Date, in
34
form and substance reasonably satisfactory to the Initial Purchasers,
substantially to the effect set forth in Annex C hereto.
(e) Xxxxxxx X. Xxxxxx shall have furnished to the Initial
Purchasers his written opinion, as general counsel to Select Medical
Escrow and the Company, 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 D
hereto.
(f) Xxxx Xxxxx LLP shall have furnished to the Initial
Purchasers their written opinion, as special regulatory counsel to the
Company and the Company Guarantors, 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 E hereto.
(g) Xxxx's shall have furnished to the Initial Purchasers
their written opinion, as special Canadian counsel to the Company and
the Company Guarantors, 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 F
hereto.
(h) The Initial Purchasers shall have received from Debevoise
& 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 shall have
furnished to such counsel such documents and information as they
request for the purpose of enabling them to pass upon such matters.
(i) The Company shall have furnished to the Initial
Purchasers two letters (one in respect of the Company and the other in
respect of Xxxxxxx) (the "Initial Letters") of PricewaterhouseCoopers
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 G and Annex H hereto.
(j) The Company shall have furnished to the Initial
Purchasers two letters (the "Bring-Down Letters") of
PricewaterhouseCoopers LLP, addressed to the Initial Purchasers and
dated the Closing Date (A) confirming that they are independent public
accountants with respect to the Company and Xxxxxxx, respectively,
within the applicable rules and regulations adopted by the Commission,
(B) stating, as of the date of the Bring-Down Letters (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
35
of a date not more than three business days prior to the date of the
Bring-Down Letters), that the conclusions and findings of such
accountants with respect to the financial information and other
matters covered by the Initial Letters are accurate and (C) confirming
in all material respects the conclusions and findings set forth in the
Initial Letters.
(k) The Company shall have furnished to the Initial
Purchasers a certificate, dated the Closing Date, of its chief
executive officer, its chief operating officer and its chief financial
officer stating that as of the Closing Date, the representations and
warranties of Select Medical Escrow, the Company and the Company
Guarantors in this Agreement are true and correct in all material
respects (including without limitation Section 1(a)), Select Medical
Escrow, the Company and the Company Guarantors have complied with all
agreements and satisfied all conditions on their part to be performed
or satisfied hereunder on or prior to the Closing Date, 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 or any of
its subsidiaries, or, to the knowledge of the Company, Xxxxxxx or any
of its subsidiaries, 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, or, to the knowledge of the Company,
Xxxxxxx and its subsidiaries taken as a whole, except as set forth in
the Offering Memorandum.
(l) The Initial Purchasers shall have received a certificate
of Xxxxxxx X. Xxxxxx, Senior Vice President and General Counsel of
Select Medical Escrow and the Company, dated the Closing Date, in form
and substance reasonably satisfactory to the Initial Purchasers,
substantially to the effect set forth in Annex I hereto. The Initial
Purchasers shall have received a certificate of the Chief Financial
Officer and the Controller of the Company concerning certain
information contained in the Offering Memorandum, dated the Closing
Date, in form and substance reasonably satisfactory to the Initial
Purchasers, substantially to the effect set forth in Annex J hereto.
(m) The Initial Purchasers shall have received a counterpart
of (i) the Registration Rights Agreement which shall have been
executed and delivered by a duly authorized officer of Select Medical
Escrow, the Company and each of the Company Guarantors; (ii) the
Escrow Agreement which shall have been executed and delivered by a
duly authorized officer of Select Medical Escrow; and (iii) the Stock
Purchase Agreement which shall have been executed and delivered by a
duly authorized officer of the Company, Xxxxxxx and the Xxxxxxx
Foundation.
36
(n) The Indenture shall have been duly executed and delivered
by Select Medical Escrow and the Trustee, and the Securities shall
have been duly executed and delivered by Select Medical Escrow and
duly authenticated by the Trustee.
(o) The Securities shall have been approved by the NASD for
trading in the PORTAL Market.
(p) If any event shall have occurred that requires Select
Medical Escrow, the Company or the Company Guarantors under Section
4(d) to prepare an amendment or supplement to the Offering Memorandum,
then 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.
(q) 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 judgment of the
Initial Purchasers would materially impair the ability of the Initial
Purchasers to purchase, hold or effect resales of the Securities as
contemplated hereby.
(r) 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
(other than pursuant to issuances of common stock in connection with
the exercise of options or put rights) 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 Select Medical Escrow, the
Company and its subsidiaries and Xxxxxxx and its subsidiaries taken as
a whole, 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 (exclusive of any
amendment or supplement thereto).
(s) 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.
37
(t) 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 other debt securities
or preferred stock by a "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, or has changed its
outlook with respect to (other than an announcement with positive
implications of a possible upgrading), its rating of the Securities or
any of the Company's other debt securities or preferred stock.
(u) 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, the
American Stock Exchange, the Nasdaq National Market or the
over-the-counter market shall have been suspended or limited, or
minimum prices shall 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 (including
without limitation, the New York Stock 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) any calamity or
crisis, outbreak or escalation of hostilities or a declaration by the
United States of a national emergency or war or (iv) a material
adverse change in general economic, political or financial conditions
(or the effect of international conditions on the financial markets in
the United States shall be such) 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).
(v) The Credit Agreement Amendment has been executed and
delivered by all of the parties thereto.
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 Debevoise & Xxxxxxxx.
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
38
received by the Company prior to delivery of and payment for the Securities if,
(i) prior to that time, any of the events described in Section 5(u) shall have
occurred and be continuing or (ii) as of the Closing Date, any of the terms and
conditions set forth in Section 5 shall not have been satisfied in all
respects.
7.Defaulting Initial Purchasers.
(a) If, on the Closing Date, any Initial Purchaser defaults on its obligation
to purchase the Securities that it has agreed to purchase hereunder, the
non-defaulting Initial Purchasers may in their discretion arrange for the
purchase of such Securities by other persons satisfactory to Select Medical
Escrow and the Company on the terms contained in this Agreement. If, within 36
hours after any such default by any Initial Purchaser, the non-defaulting
Initial Purchasers do not arrange for the purchase of such Securities, then
Select Medical Escrow and the Company shall be entitled to a further period of
36 hours within which to procure other persons satisfactory to the
non-defaulting Initial Purchasers to purchase such Securities on such terms. If
other persons become obligated or agree to purchase the Securities of a
defaulting Initial Purchaser, either the non-defaulting Initial Purchasers or
Select Medical Escrow and the Company may postpone the Closing Date for up to
five full Business Days in order to effect any changes that in the opinion of
counsel for Select Medical Escrow and the Company or counsel for the Initial
Purchasers may be necessary in the Offering Memorandum or in any other document
or arrangement, and Select Medical Escrow and the Company agree to promptly
prepare any amendment or supplement to the Offering Memorandum that effects any
such changes. As used in this Agreement, the term "Initial Purchaser" includes,
for all purposes of this Agreement unless the context otherwise requires, any
person not listed in Schedule II hereto that, pursuant to this Section 7,
purchases Securities that a defaulting Initial Purchaser agreed but failed to
purchase.
(b) If, after giving effect to any arrangements, if any, for the purchase of
the Securities of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and Select Medical Escrow and the Company as
provided in paragraph (a) above, the aggregate principal amount of such
Securities that remains unpurchased does not exceed one-tenth of the aggregate
principal amount of all the Securities, then Select Medical Escrow and the
Company shall have the right to require each non-defaulting Initial Purchaser
to purchase the principal amount of Securities that such Initial Purchaser
agreed to purchase hereunder plus such Initial Purchaser's pro rata share
(based on the principal amount of Securities that such Initial Purchaser agreed
to purchase hereunder in relation to the principal amount of Securities that
all non-defaulting Initial Purchasers agreed to purchase hereunder) of the
Securities of such defaulting Initial Purchaser or Initial Purchasers for which
such arrangement have not been made.
39
(c) If, after giving effect to arrangements, if any, for the purchase of the
Securities of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and Select Medical Escrow and the Company as
provided in paragraph (a) above, the aggregate principal amount of such
Securities that remains unpurchased exceeds one-tenth of the aggregate
principal amount of all the Securities, or if Select Medical Escrow and the
Company shall not exercise the right described in paragraph (b) above, then
this Agreement shall terminate without liability on the part of the
non-defaulting Initial Purchasers, Select Medical Escrow, the Company or the
Company Guarantors, except that Select Medical Escrow, the Company and each of
the Company Guarantors will continue to be liable for the payment of expenses
as set forth in Sections 8 and 12 hereof and except that the provisions of
Sections 9 or 10 hereof shall not terminate and shall remain in effect.
(d) Nothing contained herein shall relieve a defaulting Initial Purchaser of
any liability it may have to Select Medical Escrow, the Company, the Company
Guarantors or any non-defaulting Initial Purchaser for damages caused by its
default.
8. Reimbursement of Initial Purchasers' Expenses. If (a) this
Agreement shall have been terminated pursuant to Section 6 or 7, (b) Select
Medical Escrow shall fail to tender the Securities for delivery to the Initial
Purchasers for any reason permitted under this Agreement or (c) the Initial
Purchasers shall decline to purchase the Securities for any reason permitted
under this Agreement, Select Medical Escrow, the Company and the Company
Guarantors 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, none of Select Medical Escrow, the Company
or the Company Guarantors shall be obligated to reimburse any defaulting
Initial Purchaser on account of such expenses.
9. Indemnification.
(a) Select Medical Escrow, the Company and each of the Company Guarantors shall
jointly and severally 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,
40
under the Securities Act, the Exchange Act, any other federal or state
statutory law or regulation, at common law or otherwise, 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 Select
Medical Escrow, the Company or any Company Guarantor 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 Select Medical Escrow, the Company and the Company Guarantors 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; 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, in either case, such failure to deliver the
Offering Memorandum was a result of non-compliance by Select Medical Escrow or
the Company with Section 4(b).
(b) Each Initial Purchaser, severally and not jointly, shall indemnify and hold
harmless Select Medical Escrow, the Company, each of the Company Guarantors and
their respective 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 Select Medical Escrow or the Company 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, insofar as such loss, claim, damage, liability or action
arises
41
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, and shall reimburse Select
Medical Escrow or the Company, as the case may be, for any legal or other
expenses reasonably incurred by Select Medical Escrow or 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 (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified 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, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the
42
right to direct the defense of such action on behalf of the indemnified party)
or (4) 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 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 Select Medical Escrow, the Company, the
Company Guarantors and the Initial Purchasers in this Section 9 and in Section
10 are in addition to any other liability that Select Medical Escrow, the
Company, the Company Guarantors 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 Select Medical Escrow, the Company and
the Company Guarantors on the one hand and the Initial Purchasers on the other
from the offering of the Securities or (ii) if the allocation provided by clause
(i) 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 Select Medical Escrow, the Company and the
Company Guarantors on the one hand and
43
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 Select Medical Escrow, the Company and the Company
Guarantors 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 Select Medical Escrow,
the Company and the Company Guarantors, 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. 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 information supplied by Select
Medical Escrow, the Company and the Company Guarantors 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 omissions. Select Medical Escrow, the Company,
the Company Guarantors 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 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute 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, Select
Medical Escrow, the Company, the Company Guarantors and their respective
successors. This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except as
44
provided in Sections 9 and 10 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of Select Medical
Escrow, the Company, the Company Guarantors 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. Select Medical Escrow, the Company and each of
the Company Guarantors 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 Related 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 Select
Medical Escrow's and the Company's counsel and 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 Select Medical
Escrow, the Company, each of the Company Guarantors and the Initial Purchasers
contained in this Agreement or made by or on behalf of Select Medical Escrow,
the Company, each of the Company Guarantors or the Initial Purchasers pursuant
to this Agreement or any certificate delivered pursuant hereto shall survive the
delivery of and payment for the Securities and shall remain in full force and
effect, regardless of any termination 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.
45
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 X.X. Xxxxxx Securities Inc., 000
Xxxx Xxxxxx, 0xx xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X.
Xxxxx (telecopier no.: (000) 000-0000) with a copy to Debevoise &
Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, attention of Xxxxxx X.
Xxxxxxx, facsimile (000) 000-0000; or
(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: Xxxxxxx X. Xxxxxx, Senior Vice
President, Secretary and General Counsel (telecopier no.: (717)
975-9981) with a copy to Dechert LLP, 0000 Xxxx Xxxxxxxx Xxxxx, 0000
Xxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, attention of Xxxxxxxxxxx
X. Xxxxxx, Facsimile (000) 000-0000;
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, requests, notices or
agreements shall take effect at the time of receipt thereof. Select Medical
Escrow and 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 JPMorgan.
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 and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
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: the statements
concerning the Initial Purchasers contained in the (i) the second sentence of
the fifth paragraph on the front cover page, and (ii) the third paragraph, the
fourth, fifth and sixth sentences of the eighth paragraph, the tenth paragraph
and the eleventh 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
46
more than one counterpart, the executed agreement 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.
47
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 between the Company, Select Medical
Escrow, the Company Guarantors and the several Initial Purchasers in accordance
with its terms.
Very truly yours,
SELECT MEDICAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
SELECT MEDICAL ESCROW, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
SELECTMARK, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Treasurer
SELECT HOSPITAL INVESTORS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Vice President & Treasurer
SLMC FINANCE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Treasurer
48
EACH OF THE COMPANY
GUARANTORS LISTED ON SCHEDULE
I HERETO OTHER THAN
SELECTMARK, INC., SELECT
HOSPITAL INVESTORS, INC. AND
SLMC FINANCE CORPORATION
By /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
Accepted:
X.X. XXXXXX SECURITIES INC.
for itself and on behalf of
the several Initial Purchasers
listed in Schedule II hereto
By /s/ Xxxxx Xxxxx
-----------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
0 Xxxxx Xxxxxxxxx Xxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
49
SCHEDULE I
GUARANTORS
COMPANY GUARANTORS
Affiliated Physical Therapists, Ltd.
Allegany Hearing and Speech, Inc.
American Transitional Hospitals, Inc.
Athens Sports Medicine Clinic, Inc.
Ather Sports Injury Clinic, Inc.
Atlantic Health Group, Inc.
Atlantic Rehabilitation Services, Inc.
Avalon Rehabilitation & Healthcare, LLC
Buendel Physical Therapy, Inc.
C.E.R. - West, Inc.
C.O.A.S.T. Institute Physical Therapy, Inc.
CCISUB, Inc.
CMC Center Corporation
Cenla Physical Therapy & Rehabilitation Agency, Inc.
Center for Evaluation & Rehabilitation, Inc.
Center for Physical Therapy & Sports Rehabilitation, Inc.
CenterTherapy, Inc.
Champion Physical Therapy, Inc.
Connecticut NovaCare Ventures, Inc.
Xxxxxx Physical Therapy Associates, Inc.
Xxxxxxx Physical Therapy Clinic, Inc.
Xxxxxxx Xxxxx & Associates, Ltd.
Elk County Physical Therapy, Inc.
Fine, Xxxxxx & Wah, Inc.
Xxxxxxx Xxxxxxx, Xx. & Xxxxxxx Xxxx Physical Therapists, Inc.
SCHEDULE I
Gallery Physical Therapy Center, Inc.
Georgia NovaCare Ventures, Inc.
Georgia Physical Therapy of West Georgia, Inc.
Georgia Physical Therapy, Inc.
GP Therapy, L.L.C.
Greater Sacramento Physical Therapy Associates, Inc.
Grove City Physical Therapy and Sports Medicine, Inc.
Gulf Breeze Physical Therapy, Inc.
Gulf Coast Hand Specialists
Hand Therapy Associates, Inc.
Hand Therapy and Rehabilitation Associates, Inc.
Hangtown Physical Therapy, Inc.
Xxxxxx Physical Therapy, Inc.
Xxxxxx Physical Therapy Associates, Inc.
Human Performance and Fitness, Inc.
Indianapolis Physical Therapy and Sports Medicine, Inc.
Intensiva Healthcare Corporation
Intensiva Hospital of Greater St. Louis, Inc.
Xxxxxx Sports Science Institute, Inc.
Xxxxxx Sportsmedicine Institute, Inc.
Kentucky Rehabilitation Services, Inc.
Xxxx X. Xxxxxxx, Inc.
Metro Rehabilitation Services, Inc.
Michigan Therapy Centre, Inc.
MidAtlantic Health Group, Inc.
Monmouth Rehabilitation, Inc.
New England Health Group, Inc
New Mexico Physical Therapists, Inc.
Northside Physical Therapy, Inc.
I-2
SCHEDULE I
NovaCare Health Group, LLC
NovaCare Occupational Health Services, Inc.
NovaCare Outpatient Rehabilitation East, Inc.
NovaCare Outpatient Rehabilitation, Inc.
NovaCare Outpatient Rehabilitation of California, Inc.
NovaCare Outpatient Rehabilitation West, Inc.
NovaCare Rehabilitation, Inc.
NW Rehabilitation Associates, L.P.
P.T. Services Company
P.T. Services, Inc.
P.T. Services Rehabilitation, Inc.
Xxxxx Xxxxxxx R.P.T. Physical Therapy Clinic, Orthopedic Rehabilitation & Sports
Medicine, Ltd.
Physical Rehabilitation Partners, Inc.
Physical Therapy Enterprises, Inc.
Physical Therapy Institute, Inc.
Physical Therapy Services of the Jersey Cape, Inc.
Physio - Associates, Inc.
Pro Active Therapy, Inc.
Pro Active Therapy of Ahoskie, Inc.
Pro Active Therapy of Xxxxxxx, Inc.
Pro Active Therapy of Greenville, Inc.
Pro Active Therapy of North Carolina, Inc.
Pro Active Therapy of Rocky Mount, Inc.
Pro Active Therapy of South Carolina, Inc.
Pro Active Therapy of Virginia, Inc.
Professional Therapeutic Services, Inc.
Quad City Management, Inc.
RCI (Colorado), Inc.
RCI (Exertec), Inc.
I-3
SCHEDULE I
RCI (Michigan), Inc.
RCI (S.P.O.R.T.), Inc.
RCI (WRS), Inc.
Rebound Oklahoma, Inc.
Redwood Pacific Therapies, Inc.
Rehab Advantage, Inc.
Rehab Managed Care of Arizona, Inc.
Rehab Provider Network - California, Inc.
Rehab Provider Network - East I, Inc.
Rehab Provider Network - East II, Inc.
Rehab Provider Network - Georgia, Inc.
Rehab Provider Network - Indiana, Inc.
Rehab Provider Network - Michigan, Inc.
Rehab Provider Network - New Jersey, Inc.
Rehab Provider Network - Ohio, Inc.
Rehab Provider Network - Oklahoma, Inc.
Rehab Provider Network - Pennsylvania, Inc.
Rehab Provider Network - Washington, D.C., Inc.
Rehab Provider Network of Colorado, Inc.
Rehab Provider Network of Florida, Inc.
Rehab Provider Network of Nevada, Inc.
Rehab Provider Network of New Mexico, Inc.
Rehab Provider Network of North Carolina, Inc.
Rehab Provider Network of Texas, Inc.
Rehab Provider Network of Wisconsin, Inc.
Rehab/Work Hardening Management Associates, Ltd.
RehabClinics, Inc.
RehabClinics (GALAXY), Inc.
RehabClinics (PTA), Inc.
I-4
SCHEDULE I
RehabClinics (SPT), Inc.
RehabClinics Abilene, Inc.
RehabClinics Dallas, Inc.
RehabClinics Pennsylvania, Inc.
S.T.A.R.T., Inc.
Select Air II, Inc.
Select Employment Services, Inc.
Select Hospital Investors, Inc.
Select Management Services, LLC
SelectMark, Inc.
Select Medical of Kentucky, Inc.
Select Medical of Maryland, Inc.
Select Medical of New Jersey, Inc.
Select Medical of New York, Inc.
Select Medical of Ohio, Inc.
Select Medical of Pennsylvania, Inc.
Select Medical Rehabilitation Clinics, Inc.
Select Provider Networks, Inc.
Select Rehabilitation Management Services, Inc.
Select Software Ventures, LLC
Select Specialty Hospital - Akron, Inc.
Select Specialty Hospital - Albuquerque
Select Specialty Hospital - Xxx Arbor, Inc.
Select Specialty Hospital - Arizona, Inc.
Select Specialty Hospital - Battle Creek, Inc.
Select Specialty Hospital - Beech Grove, Inc.
Select Specialty Hospital - Bloomington, Inc.
Select Specialty Hospital - Boston, Inc.
Select Specialty Hospital - Central Detroit, Inc.
I-5
SCHEDULE I
Select Specialty Hospital - Charleston, Inc.
Select Specialty Hospital - Cincinnati, Inc.
Select Specialty Hospital - Columbus, Inc.
Select Specialty Hospital - Columbus/Grant, Inc.
Select Specialty Hospital - Columbus/University, Inc.
Select Specialty Hospital - Conroe, Inc.
Select Specialty Hospital - Dallas, Inc.
Select Specialty Hospital - Denver, Inc.
Select Specialty Hospital - Durham, Inc.
Select Specialty Hospital - Erie, Inc.
Select Specialty Hospital - Escambia, Inc.
Select Specialty Hospital - Evansville, Inc.
Select Specialty Hospital - Flint, Inc.
Select Specialty Hospital - Fort Xxxxx, Inc.
Select Specialty Hospital - Fort Xxxxx, Inc.
Select Specialty Hospital - Gadsden, Inc.
Select Specialty Hospital - Greensburg, Inc.
Select Specialty Hospital - Honolulu, Inc.
Select Specialty Hospital - Houston, Inc.
Select Specialty Hospital - Huntsville, Inc.
Select Specialty Hospital - Indianapolis, Inc.
Select Specialty Hospital - Xxxxxxx, Inc.
Select Specialty Hospital - Johnstown, Inc.
Select Specialty Hospital - Kansas City, Inc.
Select Specialty Hospital - Knoxville, Inc.
Select Specialty Hospital - Lansing, Inc.
Select Specialty Hospital - Xxx, Inc.
Select Specialty Hospital - Xxxx, Inc.
Select Specialty Hospital - Lexington, Inc.
I-6
SCHEDULE I
Select Specialty Hospital - Little Rock, Inc.
Select Specialty Hospital - Louisville, Inc.
Select Specialty Hospital - Macomb County, Inc.
Select Specialty Hospital - Macon, Inc.
Select Specialty Hospital - Xxxxxx, Inc.
Select Specialty Hospital - Memphis, Inc.
Select Specialty Hospital - Milwaukee, Inc.
Select Specialty Hospital - Morgantown, Inc.
Select Specialty Hospital - Nashville, Inc.
Select Specialty Hospital - New Orleans, Inc.
Select Specialty Hospital - North Knoxville, Inc.
Select Specialty Hospital - Northwest Detroit, Inc.
Select Specialty Hospital - Northwest Indiana, Inc.
Select Specialty Hospital - Oklahoma City, Inc.
Select Specialty Hospital - Oklahoma City/East Campus, Inc.
Select Specialty Hospital - Omaha, Inc.
Select Specialty Hospital - Orange, Inc.
Select Specialty Hospital - Palm Beach, Inc.
Select Specialty Hospital - Philadelphia/AEMC, Inc.
Select Specialty Hospital - Phoenix, Inc.
Select Specialty Hospital - Pittsburgh, Inc.
Select Specialty Hospital - Pontiac, Inc.
Select Specialty Hospital - Reno, Inc.
Select Specialty Hospital - Saginow, Inc.
Select Specialty Hospital - San Antonio, Inc.
Select Specialty Hospital - Sarasota, Inc.
Select Specialty Hospital - Sioux Falls, Inc.
Select Specialty Hospital - South Dallas, Inc.
Select Specialty Hospital - Topeka, Inc.
I-7
SCHEDULE I
Select Specialty Hospital - TriCities, Inc.
Select Specialty Hospital - Tulsa, Inc.
Select Specialty Hospital - Western Michigan, Inc.
Select Specialty Hospital - Western Missouri, Inc.
Select Specialty Hospital - Wichita, Inc.
Select Specialty Hospital - Wilmington, Inc.
Select Specialty Hospital - Wyandotte, Inc.
Select Specialty Hospital - Youngstown, Inc.
Select Specialty Hospital - Zanesville, Inc.
Select Specialty Hospitals, Inc.
Select Synergos, Inc.
Select Transport, Inc.
Select Unit Management, Inc.
SLMC Finance Corporation
South Jersey Physical Therapy Associates, Inc.
South Jersey Rehabilitation and Sports Medicine Center, Inc.
South Philadelphia Occupational Health, Inc.
Southpointe Fitness Center, Inc.
Southwest Emergency Associates, Inc.
Southwest Physical Therapy, Inc.
Southwest Therapists, Inc.
Sports & Orthopedic Rehabilitation Services, Inc.
Sports Therapy and Arthritis Rehabilitation, Inc.
Star Physical Therapy, Inc.
Xxxxxxxxxx-Xxxxx, Inc.
The Center for Physical Therapy and Rehabilitation, Inc.
The Orthopedic Sports and Industrial Rehabilitation Network, Inc.
TJ Partnership I
Xxxxxxxx, Inc.
I-8
SCHEDULE I
Valley Group Physical Therapists, Inc.
Vanguard Rehabilitation, Inc.
Victoria Healthcare, Inc.
Wayzata Physical Therapy Center, Inc.
West Penn Rehabilitation Services, Inc.
West Side Physical Therapy, Inc.
West Suburban Health Partners, Inc.
Yuma Rehabilitation Center, Inc.
XXXXXXX GUARANTORS
Xxxxxxx Rehabilitation Corporation
Wholly-Owned Subsidiaries of Xxxxxxx Rehabilitation Corporation
Argosy Health, LLC
Atra Services, Inc.
Community Rehab Centers of Massachusetts, Inc.
Core Rehab Management, LLC
CRF Rehabilitation Associates, Inc.
Edgewater Rehabilitation Associates, Inc.
Horizon Health & Rehabilitation, Inc.
Xxxxxxx Assisted Living Corporation
Xxxxxxx Care Center at Cedar Grove, Inc.
Xxxxxxx Care Center at Great Falls, Inc. (dissolution pending)
Xxxxxxx Care Center at St. Cloud, Inc. (dissolution pending)
Xxxxxxx Institute for Rehabilitation, Inc.
Xxxxxxx Occupational Medicine Centers, Inc.
Xxxxxxx Physical Therapy & Rehabilitation, Inc.
Xxxxxxx Rehab Centers, Inc.
Xxxxxxx Rehab of Connecticut, Inc.
I-9
SCHEDULE I
Xxxxxxx Rehabilitation of Florida, Inc.
Xxxxxxx Rehabilitation of Maryland, Inc.
Xxxxxxx Rehabilitation Services, Inc.
Pennsylvania Rehab, Inc.
Physical Therapy Associates, P.C.
Wilpage, Inc.
Wholly-Owned Joint Venture Investment Interests of Xxxxxxx Rehabilitation
Corporation
Xxxxxxx Physical Therapy & Associates, Inc.
I-10
SCHEDULE II
Principal
Amount
Initial Purchasers of Securities
------------------ -------------
X.X. Xxxxxx Securities Inc. $ 70,000,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated 61,250,000
Wachovia Capital Markets, LLC 26,250,000
XX Xxxxx Securities Corporation 7,000,000
CIBC World Markets Corp. 3,500,000
Fleet Securities, Inc. 3,500,000
Xxxxxxxxx & Company, Inc. 3,500,000
Total $ 175,000,000
SCHEDULE III
COMPANY GUARANTORS,
SELECT MEDICAL ESCROW,
OPERATING AND HOLDING
COMPANY SUBSIDIARIES,
XXXXXXX AND ITS SUBSIDIARIES
COMPANY SUBSIDIARIES
1263568 Ontario Limited*
9086-3200 Quebec, Inc.*
Affiliated Physical Therapists, Ltd.
Allegany Hearing and Speech, Inc.
American Transitional Hospitals, Inc.
Athens Sports Medicine Clinic, Inc.
Ather Sports Injury Clinic, Inc.
Atlantic Health Group, Inc.
Atlantic Rehabilitation Services, Inc.
Avalon Rehabilitation & Healthcare, LLC
Buendel Physical Therapy, Inc.
C.E.R. - West, Inc.
C.O.A.S.T. Institute Physical Therapy, Inc.
Canadian Back Institute Limited*
Caritas Rehab Services, LLC*
CBI Barrie Limited Partnership*
CBI Burnaby Limited Partnership*
CBI Cambridge Limited Partnership*
CBI Edmonton Limited Partnership*
CBI Gatineau Limited Partnership*
CBI Kitchener Limited Partnership*
CBI London East Limited Partnership*
CBI London Limited Partnership*
III-1
SCHEDULE III
CBI Mississauga Limited Partnership*
CBI Montreal Limited Partnership*
CBI Niagara Limited Partnership*
CBI Ottawa Limited Partnership*
CBI Ottawa West Limited Partnership*
CBI Port Coquitlam Limited Partnership*
CBI Regina Limited Partnership*
CBI Richmond Limited Partnership*
CBI Sarnia Limited Partnership*
CBI St. Xxxxx Xxxx Limited Partnership*
CBI Surrey Limited Partnership*
CBI Windsor Limited Partnership*
CBI Physical Therapy Inc.*
CBI Professional Services, Inc.*
CCISUB, Inc.
CMC Center Corporation
Cenla Physical Therapy & Rehabilitation Agency, Inc.
Center for Evaluation & Rehabilitation, Inc.
Center for Physical Therapy & Sports Rehabilitation, Inc.
CenterTherapy, Inc.
Champion Physical Therapy, Inc.
Clinique De Physiotherapic Du Mediaclub, Inc.*
Connecticut NovaCare Ventures, Inc.
Xxxxxx Physical Therapy Associates, Inc.
Xxxxxxx Physical Therapy Clinic, Inc.
Xxxxxxx Xxxxx & Associates, Ltd.
Dynamic Rehabilitation, Inc.*
Eastern Rehabilitation, Inc.*
Elk County Physical Therapy, Inc.
III-2
SCHEDULE III
Fine, Xxxxxx & Wah, Inc.
Xxxxxxx Xxxxxxx, Xx. & Xxxxxxx Xxxx Physical Therapists, Inc.
Gallery Physical Therapy Center, Inc.
Georgia NovaCare Ventures, Inc.
Georgia Physical Therapy of West Georgia, Inc.
Georgia Physical Therapy, Inc.
GP Therapy, L.L.C.
Greater Sacramento Physical Therapy Associates, Inc.
Grove City Physical Therapy and Sports Medicine, Inc.
Gulf Breeze Physical Therapy, Inc.
Gulf Coast Hand Specialists
Hand Therapy Associates, Inc.
Hand Therapy and Rehabilitation Associates, Inc.
Hangtown Physical Therapy, Inc.
Xxxxxx Physical Therapy, Inc.
Xxxxxx Physical Therapy Associates, Inc.
Human Performance and Fitness, Inc.
Indianapolis Physical Therapy and Sports Medicine, Inc.
Intensiva Healthcare Corporation
Intensiva Hospital of Greater St. Louis, Inc.
Jeffersontown Physical Therapy, L.L.C.*
Xxxxxx Sports Science Institute, Inc.
Xxxxxx Sportsmedicine Institute, Inc.
Kentucky Orthopedic Rehabilitation, LLC*
Kentucky Rehabilitation Services, Inc.
Xxxx X. Xxxxxxx, Inc.
Medical Information Management Systems, LLC*
Metro Therapy, Inc.*
Metro Rehabilitation Services, Inc.
III-2
SCHEDULE III
Michigan Therapy Centre, Inc.
MidAtlantic Health Group, Inc.
Millennium Rehab Services, L.L.C.*
Monmouth Rehabilitation, Inc.
New England Health Group, Inc
New Mexico Physical Therapists, Inc.
Northside Physical Therapy, Inc.
NovaCare Health Group, LLC
NovaCare Occupational Health Services, Inc.
NovaCare Outpatient Rehabilitation East, Inc.
NovaCare Outpatient Rehabilitation, Inc.
NovaCare Outpatient Rehabilitation of California, Inc.
NovaCare Outpatient Rehabilitation West, Inc.
NovaCare Rehabilitation, Inc.
NW Rehabilitation Associates, L.P.
P.T. Services Company
P.T. Services, Inc.
P.T. Services Rehabilitation, Inc.
PCR Physiotherapist Corporation*
Xxxxx Xxxxxxx R.P.T. Physical Therapy Clinic, Orthopedic Rehabilitation & Sports
Medicine, Ltd.
Physical Rehabilitation Partners, Inc.
Physical Therapy Enterprises, Inc.
Physical Therapy Institute, Inc.
Physical Therapy Services of the Jersey Cape, Inc.
Physio - Associates, Inc.
Pro Active Therapy, Inc.
Pro Active Therapy of Ahoskie, Inc.
Pro Active Therapy of Xxxxxxx, Inc.
Pro Active Therapy of Greenville, Inc.
III-2
SCHEDULE III
Pro Active Therapy of North Carolina, Inc.
Pro Active Therapy of Rocky Mount, Inc.
Pro Active Therapy of South Carolina, Inc.
Pro Active Therapy of Virginia, Inc.
Professional Therapeutic Services, Inc.
Quad City Management, Inc.
RCI (Colorado), Inc.
RCI (Exertec), Inc.
RCI (Michigan), Inc.
RCI (S.P.O.R.T.), Inc.
RCI (WRS), Inc.
Rebound Oklahoma, Inc.
Redwood Pacific Therapies, Inc.
Rehab Advantage, Inc.
Rehab Advantage Therapy Services, LLC*
Rehab Health, Inc.*
Rehab Managed Care of Arizona, Inc.
Rehab Provider Network - California, Inc.
Rehab Provider Network - East I, Inc.
Rehab Provider Network - East II, Inc.
Rehab Provider Network - Georgia, Inc.
Rehab Provider Network - Indiana, Inc.
Rehab Provider Network - Michigan, Inc.
Rehab Provider Network - New Jersey, Inc.
Rehab Provider Network - Ohio, Inc.
Rehab Provider Network - Oklahoma, Inc.
Rehab Provider Network - Pennsylvania, Inc.
Rehab Provider Network - Washington, D.C., Inc.
Rehab Provider Network of Colorado, Inc.
III-2
SCHEDULE III
Rehab Provider Network of Florida, Inc.
Rehab Provider Network of Nevada, Inc.
Rehab Provider Network of New Mexico, Inc.
Rehab Provider Network of North Carolina, Inc.
Rehab Provider Network of Texas, Inc.
Rehab Provider Network of Wisconsin, Inc.
Rehab/Work Hardening Management Associates, Ltd.
RehabClinics, Inc.
RehabClinics (GALAXY), Inc.
RehabClinics (PTA), Inc.
RehabClinics (SPT), Inc.
RehabClinics Abilene, Inc.
RehabClinics Dallas, Inc.
RehabClinics Pennsylvania, Inc.
S.T.A.R. Rehab, Inc.*
S.T.A.R.T., Inc.
Select Air II, Inc.
Select Employment Services, Inc.
Select Hospital Investors, Inc.
Select Management Services, LLC
SelectMark, Inc.
Select Medical Escrow, Inc.*
Select Medical of Kentucky, Inc.
Select Medical of Maryland, Inc.
Select Medical of New Jersey, Inc.
Select Medical of New York, Inc.
Select Medical of Ohio, Inc.
Select Medical of Pennsylvania, Inc.
Select Medical Rehabilitation Clinics, Inc.
III-2
SCHEDULE III
Select Provider Networks, Inc.
Select Rehabilitation Management Services, Inc.
Select Software Ventures, LLC
Select Specialty Hospital - Akron, Inc.
Select Specialty Hospital - Albuquerque
Select Specialty Hospital - Xxx Arbor, Inc.
Select Specialty Hospital - Arizona, Inc.
Select Specialty Hospital - Battle Creek, Inc.
Select Specialty Hospital - Beech Grove, Inc.
Select Specialty Hospital - Bloomington, Inc.
Select Specialty Hospital - Boston, Inc.
Select Specialty Hospital - Central Detroit, Inc.
Select Specialty Hospital - Central Pennsylvania, L.P.*
Select Specialty Hospital - Charleston, Inc.
Select Specialty Hospital - Cincinnati, Inc.
Select Specialty Hospital - Columbus, Inc.
Select Specialty Hospital - Columbus/Grant, Inc.
Select Specialty Hospital - Columbus/University, Inc.
Select Specialty Hospital - Conroe, Inc.
Select Specialty Hospital - Dallas, Inc.
Select Specialty Hospital - Denver, Inc.
Select Specialty Hospital - Durham, Inc.
Select Specialty Hospital - Erie, Inc.
Select Specialty Hospital - Escambia, Inc.
Select Specialty Hospital - Evansville, Inc.
Select Specialty Hospital - Flint, Inc.
Select Specialty Hospital - Fort Xxxxx, Inc.
Select Specialty Hospital - Fort Xxxxx, Inc.
Select Specialty Hospital - Gadsden, Inc.
III-2
SCHEDULE III
Select Specialty Hospital - Greensburg, Inc.
Select Specialty Hospital - Honolulu, Inc.
Select Specialty Hospital - Houston, Inc.
Select Specialty Hospital - Houston, L.P.*
Select Specialty Hospital - Huntsville, Inc.
Select Specialty Hospital - Indianapolis, Inc.
Select Specialty Hospital - Xxxxxxx, Inc.
Select Specialty Hospital - Johnstown, Inc.
Select Specialty Hospital - Kansas City, Inc.
Select Specialty Hospital - Knoxville, Inc.
Select Specialty Hospital - Lansing, Inc.
Select Specialty Hospital - Xxx, Inc.
Select Specialty Hospital - Xxxx, Inc.
Select Specialty Hospital - Lexington, Inc.
Select Specialty Hospital - Little Rock, Inc.
Select Specialty Hospital - Louisville, Inc.
Select Specialty Hospital - Macomb County, Inc.
Select Specialty Hospital - Macon, Inc.
Select Specialty Hospital - Xxxxxx, Inc.
Select Specialty Hospital - Memphis, Inc.
Select Specialty Hospital - Milwaukee, Inc.
Select Specialty Hospital - Mississippi Gulf Coast, Inc.*
Select Specialty Hospital - Morgantown, Inc.
Select Specialty Hospital - Nashville, Inc.
Select Specialty Hospital - New Orleans, Inc.
Select Specialty Hospital - North Knoxville, Inc.
Select Specialty Hospital - Northwest Detroit, Inc.
Select Specialty Hospital - Northwest Indiana, Inc.
Select Specialty Hospital - Oklahoma City, Inc.
III-2
SCHEDULE III
Select Specialty Hospital - Oklahoma City/East Campus, Inc.
Select Specialty Hospital - Omaha, Inc.
Select Specialty Hospital - Orange, Inc.
Select Specialty Hospital - Palm Beach, Inc.
Select Specialty Hospital - Philadelphia/AEMC, Inc.
Select Specialty Hospital - Phoenix, Inc.
Select Specialty Hospital - Pittsburgh, Inc.
Select Specialty Hospital - Pontiac, Inc.
Select Specialty Hospital - Reno, Inc.
Select Specialty Hospital - Saginow, Inc.
Select Specialty Hospital - San Antonio, Inc.
Select Specialty Hospital - Sarasota, Inc.
Select Specialty Hospital - Sioux Falls, Inc.
Select Specialty Hospital - South Dallas, Inc.
Select Specialty Hospital - Topeka, Inc.
Select Specialty Hospital - TriCities, Inc.
Select Specialty Hospital - Tulsa, Inc.
Select Specialty Hospital - Western Michigan, Inc.
Select Specialty Hospital - Western Missouri, Inc.
Select Specialty Hospital - Wichita, Inc.
Select Specialty Hospital - Wilmington, Inc.
Select Specialty Hospital - Wyandotte, Inc.
Select Specialty Hospital - Youngstown, Inc.
Select Specialty Hospital - Zanesville, Inc.
Select Specialty Hospitals, Inc.
Select Synergos, Inc.
Select Transport, Inc.
Select Unit Management, Inc.
SLMC Finance Corporation
III-2
SCHEDULE III
South Jersey Physical Therapy Associates, Inc.
South Jersey Rehabilitation and Sports Medicine Center, Inc.
South Philadelphia Occupational Health, Inc.
Southpointe Fitness Center, Inc.
Southwest Emergency Associates, Inc.
Southwest Physical Therapy, Inc.
Southwest Therapists, Inc.
Sports & Orthopedic Rehabilitation Services, Inc.
Sports Therapy and Arthritis Rehabilitation, Inc.
Star Physical Therapy, Inc.
Xxxxxxxxxx-Xxxxx, Inc.
The Center for Physical Therapy and Rehabilitation, Inc.
The Orthopedic Sports and Industrial Rehabilitation Network, Inc.
TJ Corporation I, LLC*
TJ Partnership I
Xxxxxxxx, Inc.
Valley Group Physical Therapists, Inc.
Vanguard Rehabilitation, Inc.
Victoria Healthcare, Inc.
Wayzata Physical Therapy Center, Inc.
West Penn Rehabilitation Services, Inc.
West Side Physical Therapy, Inc.
West Suburban Health Partners, Inc.
Yuma Rehabilitation Center, Inc.
XXXXXXX AND ITS SUBSIDIARIES
Xxxxxxx Rehabilitation Corporation
Wholly-Owned Subsidiaries of Xxxxxxx Rehabilitation Corporation
Argosy Health, LLC
III-2
SCHEDULE III
Atra Services, Inc.
Community Rehab Centers of Massachusetts, Inc.
Core Rehab Management, LLC
CRF Rehabilitation Associates, Inc.
Edgewater Rehabilitation Associates, Inc.
Horizon Health & Rehabilitation, Inc.
Xxxxxxx Assisted Living Corporation
Xxxxxxx Care Center at Cedar Grove, Inc.
Xxxxxxx Care Center at Great Falls, Inc. (dissolution pending)
Xxxxxxx Care Center at St. Cloud, Inc. (dissolution pending)
Xxxxxxx Institute for Rehabilitation, Inc.
Xxxxxxx Occupational Medicine Centers, Inc.
Xxxxxxx Physical Therapy & Rehabilitation, Inc.
Xxxxxxx Rehab Centers, Inc.
Xxxxxxx Rehab of Connecticut, Inc.
Xxxxxxx Rehabilitation of Florida, Inc.
Xxxxxxx Rehabilitation of Maryland, Inc.
Xxxxxxx Rehabilitation Services, Inc.
Pennsylvania Rehab, Inc.
Physical Therapy Associates, P.C.
Wilpage, Inc.
Joint Venture Investment Interests of Xxxxxxx Rehabilitation Corporation
Center for Health and Fitness at Palisades, LLC*
Xxxxxxx Adventist Rehabilitation Hospital, LLC*
Xxxxxxx Adventist Rehabilitation Services, LLC*
Xxxxxxx Assisted Living Centers, LLC*
Xxxxxxx Assisted Living Residence I, LLC*
Xxxxxxx Assisted Living Residence III, LLC*
III-2
SCHEDULE III
Xxxxxxx Physical Therapy & Associates, Inc.
*Non-Guarantor Subsidiary
III-2
SCHEDULE IV
CERTAIN INFORMATION
REGARDING STOCK AND
OWNERSHIP INTERESTS
COMPANY SUBSIDIARIES
1263568 Ontario Limited**
9086-3200 Quebec, Inc.**
Affiliated Physical Therapists, Ltd.
Allegany Hearing and Speech, Inc.
American Transitional Hospitals, Inc.
Athens Sports Medicine Clinic, Inc.
Ather Sports Injury Clinic, Inc.
Atlantic Health Group, Inc.
Atlantic Rehabilitation Services, Inc.
Avalon Rehabilitation & Healthcare, LLC
Buendel Physical Therapy, Inc.
C.E.R. - West, Inc.
C.O.A.S.T. Institute Physical Therapy, Inc.
Canadian Back Institute Limited*
Caritas Rehab Services, LLC+
CBI Barrie Limited Partnership**
CBI Burnaby Limited Partnership**
CBI Cambridge Limited Partnership**
CBI Edmonton Limited Partnership**
CBI Gatineau Limited Partnership**
CBI Kitchener Limited Partnership**
CBI London East Limited Partnership**
CBI London Limited Partnership**
CBI Mississauga Limited Partnership**
SCHEDULE IV
CBI Montreal Limited Partnership**
CBI Niagara Limited Partnership**
CBI Ottawa Limited Partnership**
CBI Ottawa West Limited Partnership**
CBI Port Coquitlam Limited Partnership**
CBI Physical Therapy Inc.**
CBI Professional Services, Inc.**
CBI Regina Limited Partnership**
CBI Richmond Limited Partnership**
CBI Sarnia Limited Partnership**
CBI St. Xxxxx Xxxx Limited Partnership**
CBI Sudbury Limited Partnership**
CBI Surrey Limited Partnership**
CBI Windsor Limited Partnership**
CCISUB, Inc.
CMC Center Corporation
Cenla Physical Therapy & Rehabilitation Agency, Inc.
Center for Evaluation & Rehabilitation, Inc.
Center for Physical Therapy & Sports Rehabilitation, Inc.
CenterTherapy, Inc.
Champion Physical Therapy, Inc.
Clinique De Physiotherapic Du Mediaclub, Inc.**
Connecticut NovaCare Ventures, Inc.
Xxxxxx Physical Therapy Associates, Inc.
Xxxxxxx Physical Therapy Clinic, Inc.
Xxxxxxx Xxxxx & Associates, Ltd.
Dynamic Rehabilitation, Inc.**
Eastern Rehabilitation, Inc.**
Elk County Physical Therapy, Inc.
IV-2
SCHEDULE IV
Fine, Xxxxxx & Wah, Inc.
Xxxxxxx Xxxxxxx, Xx. & Xxxxxxx Xxxx Physical Therapists, Inc.
Gallery Physical Therapy Center, Inc.
Georgia NovaCare Ventures, Inc.
Georgia Physical Therapy of West Georgia, Inc.
Georgia Physical Therapy, Inc.
GP Therapy, L.L.C.
Greater Sacramento Physical Therapy Associates, Inc.
Grove City Physical Therapy and Sports Medicine, Inc.
Gulf Breeze Physical Therapy, Inc.
Gulf Coast Hand Specialists
Hand Therapy Associates, Inc.
Hand Therapy and Rehabilitation Associates, Inc.
Hangtown Physical Therapy, Inc.
Xxxxxx Physical Therapy, Inc.
Xxxxxx Physical Therapy Associates, Inc.
Human Performance and Fitness, Inc.
Indianapolis Physical Therapy and Sports Medicine, Inc.
Intensiva Healthcare Corporation
Intensiva Hospital of Greater St. Louis, Inc.
Jeffersontown Physical Therapy, L.L.C.*
Xxxxxx Sports Science Institute, Inc.
Xxxxxx Sportsmedicine Institute, Inc.
Kentucky Orthopedic Rehabilitation, LLC+
Kentucky Rehabilitation Services, Inc.
Xxxx X. Xxxxxxx, Inc.
Medical Information Management Systems, LLC+
Metro Therapy, Inc.+
Metro Rehabilitation Services, Inc.
IV-3
SCHEDULE IV
Michigan Therapy Centre, Inc.
MidAtlantic Health Group, Inc.
Millennium Rehab Services, L.L.C.+
Monmouth Rehabilitation, Inc.
New England Health Group, Inc
New Mexico Physical Therapists, Inc.
Northside Physical Therapy, Inc.
NovaCare Health Group, LLC
NovaCare Occupational Health Services, Inc.
NovaCare Outpatient Rehabilitation East, Inc.
NovaCare Outpatient Rehabilitation, Inc.
NovaCare Outpatient Rehabilitation of California, Inc.
NovaCare Outpatient Rehabilitation West, Inc.
NovaCare Rehabilitation, Inc.
NW Rehabilitation Associates, L.P.
P.T. Services Company
P.T. Services, Inc.
P.T. Services Rehabilitation, Inc.
PCR Physiotherapist Corporation**
Xxxxx Xxxxxxx R.P.T. Physical Therapy Clinic, Orthopedic Rehabilitation & Sports
Medicine, Ltd.
Physical Rehabilitation Partners, Inc.
Physical Therapy Enterprises, Inc.
Physical Therapy Institute, Inc.
Physical Therapy Services of the Jersey Cape, Inc.
Physio - Associates, Inc.
Pro Active Therapy, Inc.
Pro Active Therapy of Ahoskie, Inc.
Pro Active Therapy of Xxxxxxx, Inc.
Pro Active Therapy of Greenville, Inc.
IV-4
SCHEDULE IV
Pro Active Therapy of North Carolina, Inc.
Pro Active Therapy of Rocky Mount, Inc.
Pro Active Therapy of South Carolina, Inc.
Pro Active Therapy of Virginia, Inc.
Professional Therapeutic Services, Inc.
Quad City Management, Inc.
RCI (Colorado), Inc.
RCI (Exertec), Inc.
RCI (Michigan), Inc.
RCI (S.P.O.R.T.), Inc.
RCI (WRS), Inc.
Rebound Oklahoma, Inc.
Redwood Pacific Therapies, Inc.
Rehab Advantage, Inc.
Rehab Advantage Therapy Services, LLC+
Rehab Health, Inc.**
Rehab Managed Care of Arizona, Inc.
Rehab Provider Network - California, Inc.
Rehab Provider Network - East I, Inc.
Rehab Provider Network - East II, Inc.
Rehab Provider Network - Georgia, Inc.
Rehab Provider Network - Indiana, Inc.
Rehab Provider Network - Michigan, Inc.
Rehab Provider Network - New Jersey, Inc.
Rehab Provider Network - Ohio, Inc.
Rehab Provider Network - Oklahoma, Inc.
Rehab Provider Network - Pennsylvania, Inc.
Rehab Provider Network - Washington, D.C., Inc.
Rehab Provider Network of Colorado, Inc.
IV-5
SCHEDULE IV
Rehab Provider Network of Florida, Inc.
Rehab Provider Network of Nevada, Inc.
Rehab Provider Network of New Mexico, Inc.
Rehab Provider Network of North Carolina, Inc.
Rehab Provider Network of Texas, Inc.
Rehab Provider Network of Wisconsin, Inc.
Rehab/Work Hardening Management Associates, Ltd.
RehabClinics, Inc.
RehabClinics (GALAXY), Inc.
RehabClinics (PTA), Inc.
RehabClinics (SPT), Inc.
RehabClinics Abilene, Inc.
RehabClinics Dallas, Inc.
RehabClinics Pennsylvania, Inc.
S.T.A.R. Rehab, Inc.+
S.T.A.R.T., Inc.
Select Air II, Inc.
Select Employment Services, Inc.
Select Hospital Investors, Inc.
Select Management Services, LLC
SelectMark, Inc.
Select Medical of Kentucky, Inc.
Select Medical of Maryland, Inc.
Select Medical of New Jersey, Inc.
Select Medical of New York, Inc.
Select Medical of Ohio, Inc.
Select Medical of Pennsylvania, Inc.
Select Medical Rehabilitation Clinics, Inc.
Select Provider Networks, Inc.
IV-6
SCHEDULE IV
Select Rehabilitation Management Services, Inc.
Select Software Ventures, LLC
Select Specialty Hospital - Akron, Inc.
Select Specialty Hospital - Albuquerque
Select Specialty Hospital - Xxx Arbor, Inc.
Select Specialty Hospital - Arizona, Inc.
Select Specialty Hospital - Battle Creek, Inc.
Select Specialty Hospital - Beech Grove, Inc.
Select Specialty Hospital - Bloomington, Inc.
Select Specialty Hospital - Boston, Inc.
Select Specialty Hospital - Central Detroit, Inc.
Select Specialty Hospital - Central Pennsylvania, L.P.+
Select Specialty Hospital - Charleston, Inc.
Select Specialty Hospital - Cincinnati, Inc.
Select Specialty Hospital - Columbus, Inc.
Select Specialty Hospital - Columbus/Grant, Inc.
Select Specialty Hospital - Columbus/University, Inc.
Select Specialty Hospital - Conroe, Inc.
Select Specialty Hospital - Dallas, Inc.
Select Specialty Hospital - Denver, Inc.
Select Specialty Hospital - Durham, Inc.
Select Specialty Hospital - Erie, Inc.
Select Specialty Hospital - Escambia, Inc.
Select Specialty Hospital - Evansville, Inc.
Select Specialty Hospital - Flint, Inc.
Select Specialty Hospital - Fort Xxxxx, Inc.
Select Specialty Hospital - Fort Xxxxx, Inc.
Select Specialty Hospital - Gadsden, Inc.
Select Specialty Hospital - Greensburg, Inc.
IV-7
SCHEDULE IV
Select Specialty Hospital - Honolulu, Inc.
Select Specialty Hospital - Houston, Inc.
Select Specialty Hospital - Houston, L.P.+
Select Specialty Hospital - Huntsville, Inc.
Select Specialty Hospital - Indianapolis, Inc.
Select Specialty Hospital - Xxxxxxx, Inc.
Select Specialty Hospital - Johnstown, Inc.
Select Specialty Hospital - Kansas City, Inc.
Select Specialty Hospital - Knoxville, Inc.
Select Specialty Hospital - Lansing, Inc.
Select Specialty Hospital - Xxx, Inc.
Select Specialty Hospital - Xxxx, Inc.
Select Specialty Hospital - Lexington, Inc.
Select Specialty Hospital - Little Rock, Inc.
Select Specialty Hospital - Louisville, Inc.
Select Specialty Hospital - Macomb County, Inc.
Select Specialty Hospital - Macon, Inc.
Select Specialty Hospital - Xxxxxx, Inc.
Select Specialty Hospital - Memphis, Inc.
Select Specialty Hospital - Milwaukee, Inc.
Select Specialty Hospital - Mississippi Gulf Coast, Inc.+
Select Specialty Hospital - Morgantown, Inc.
Select Specialty Hospital - Nashville, Inc.
Select Specialty Hospital - New Orleans, Inc.
Select Specialty Hospital - North Knoxville, Inc.
Select Specialty Hospital - Northwest Detroit, Inc.
Select Specialty Hospital - Northwest Indiana, Inc.
Select Specialty Hospital - Oklahoma City, Inc.
Select Specialty Hospital - Oklahoma City/East Campus, Inc.
IV-8
SCHEDULE IV
Select Specialty Hospital - Omaha, Inc.
Select Specialty Hospital - Orange, Inc.
Select Specialty Hospital - Palm Beach, Inc.
Select Specialty Hospital - Philadelphia/AEMC, Inc.
Select Specialty Hospital - Phoenix, Inc.
Select Specialty Hospital - Pittsburgh, Inc.
Select Specialty Hospital - Pontiac, Inc.
Select Specialty Hospital - Reno, Inc.
Select Specialty Hospital - Saginow, Inc.
Select Specialty Hospital - San Antonio, Inc.
Select Specialty Hospital - Sarasota, Inc.
Select Specialty Hospital - Sioux Falls, Inc.
Select Specialty Hospital - South Dallas, Inc.
Select Specialty Hospital - Topeka, Inc.
Select Specialty Hospital - TriCities, Inc.
Select Specialty Hospital - Tulsa, Inc.
Select Specialty Hospital - Western Michigan, Inc.
Select Specialty Hospital - Western Missouri, Inc.
Select Specialty Hospital - Wichita, Inc.
Select Specialty Hospital - Wilmington, Inc.
Select Specialty Hospital - Wyandotte, Inc.
Select Specialty Hospital - Youngstown, Inc.
Select Specialty Hospital - Zanesville, Inc.
Select Specialty Hospitals, Inc.
Select Synergos, Inc.
Select Transport, Inc.
Select Unit Management, Inc.
SLMC Finance Corporation
South Jersey Physical Therapy Associates, Inc.
IV-9
SCHEDULE IV
South Jersey Rehabilitation and Sports Medicine Center, Inc.
South Philadelphia Occupational Health, Inc.
Southpointe Fitness Center, Inc.
Southwest Emergency Associates, Inc.
Southwest Physical Therapy, Inc.
Southwest Therapists, Inc.
Sports & Orthopedic Rehabilitation Services, Inc.
Sports Therapy and Arthritis Rehabilitation, Inc.
Star Physical Therapy, Inc.
Xxxxxxxxxx-Xxxxx, Inc.
The Center for Physical Therapy and Rehabilitation, Inc.
The Orthopedic Sports and Industrial Rehabilitation Network, Inc.
TJ Corporation I, LLC+
TJ Partnership I
Xxxxxxxx, Inc.
Valley Group Physical Therapists, Inc.
Vanguard Rehabilitation, Inc.
Victoria Healthcare, Inc.
Wayzata Physical Therapy Center, Inc.
West Penn Rehabilitation Services, Inc.
West Side Physical Therapy, Inc.
West Suburban Health Partners, Inc.
Yuma Rehabilitation Center, Inc.
XXXXXXX AND ITS SUBSIDIARIES
Xxxxxxx Rehabilitation Corporation
Wholly-Owned Subsidiaries of Xxxxxxx Rehabilitation Corporation
Argosy Health, LLC
Atra Services, Inc.
IV-10
SCHEDULE IV
Community Rehab Centers of Massachusetts, Inc.
Core Rehab Management, LLC
CRF Rehabilitation Associates, Inc.
Edgewater Rehabilitation Associates, Inc.
Horizon Health & Rehabilitation, Inc.
Xxxxxxx Assisted Living Corporation
Xxxxxxx Care Center at Cedar Grove, Inc.
Xxxxxxx Care Center at Great Falls, Inc. (dissolution pending)
Xxxxxxx Care Center at St. Cloud, Inc. (dissolution pending)
Xxxxxxx Institute for Rehabilitation, Inc.
Xxxxxxx Occupational Medicine Centers, Inc.
Xxxxxxx Physical Therapy & Rehabilitation, Inc.
Xxxxxxx Rehab Centers, Inc.
Xxxxxxx Rehab of Connecticut, Inc.
Xxxxxxx Rehabilitation of Florida, Inc.
Xxxxxxx Rehabilitation of Maryland, Inc.
Xxxxxxx Rehabilitation Services, Inc.
Pennsylvania Rehab, Inc.
Physical Therapy Associates, P.C.
Wilpage, Inc.
Joint Venture Investment Interests of Xxxxxxx Rehabilitation Corporation
Center for Health and Fitness at Palisades, LLC+
Xxxxxxx Adventist Rehabilitation Hospital, LLC+
Xxxxxxx Adventist Rehabilitation Services, LLC+
Xxxxxxx Assisted Living Centers, LLC+
Xxxxxxx Assisted Living Residence I, LLC+
Xxxxxxx Assisted Living Residence III, LLC+
Xxxxxxx Physical Therapy & Associates, Inc.
IV-11
SCHEDULE IV
All of the above-listed entities have pledged their capital stock or other
ownership interest pursuant to the Company's Amended and Restated Credit
Agreement, unless denoted with an *. The entities denoted with a + are not
wholly-owned by the Company or Xxxxxxx, as the case may be. Entities denoted
with ** have pledged their capital stock or ownership interest pursuant to the
Company's Amended and Restated Credit Agreement to the extent permitted by
Canadian law.
IV-12
SCHEDULE V
NON-GUARANTOR SUBSIDIARIES
COMPANY SUBSIDIARIES
1263568 Ontario Limited
9086-3200 Quebec, Inc.
Canadian Back Institute Limited
Caritas Rehab Services, LLC
CBI Barrie Limited Partnership
CBI Burnaby Limited Partnership
CBI Cambridge Limited Partnership
CBI Edmonton Limited Partnership
CBI Gatineau Limited Partnership
CBI Kitchener Limited Partnership
CBI Lethbridge Limited Partnership
CBI London East Limited Partnership
CBI London Limited Partnership
CBI Mississauga Limited Partnership
CBI Montreal Limited Partnership
CBI Niagara Limited Partnership
CBI Ottawa Limited Partnership
CBI Ottawa West Limited Partnership
CBI Port Coquitlam Limited Partnership
CBI Physical Therapy Inc.
CBI Professional Services, Inc.
CBI Regina Limited Partnership
CBI Richmond Limited Partnership
CBI Sarnia Limited Partnership
CBI St. Xxxxx Xxxx Limited Partnership
SCHEDULE V
CBI Sudbury Limited Partnership
CBI Surrey Limited Partnership
CBI Windsor Limited Partnership
Clinique De Physiotherapic Du Mediaclub, Inc.
Dynamic Rehabilitation, Inc.
Eastern Rehabilitation, Inc.
Jeffersontown Physical Therapy, L.L.C.
Kentucky Orthopedic Rehabilitation, LLC
Medical Information Management Systems, LLC
Metro Therapy, Inc.
Millennium Rehab Services, L.L.C.
PCR Physiotherapist Corporation
Rehab Advantage Therapy Services, LLC
Rehab Health, Inc.
S.T.A.R. Rehab, Inc.
Select Medical Escrow, Inc.
Select Specialty Hospital - Central Pennsylvania, L.P.
Select Specialty Hospital - Houston, L.P.
Select Specialty Hospital - Mississippi Gulf Coast, Inc.
TJ Corporation I, LLC
XXXXXXX SUBSIDIARIES
Non-Wholly Owned Joint Venture Investment Interests of Xxxxxxx Rehabilitation
Corporation
Center for Health and Fitness at Palisades, LLC
Xxxxxxx Adventist Rehabilitation Hospital, LLC
Xxxxxxx Adventist Rehabilitation Services, LLC
Xxxxxxx Assisted Living Centers, LLC
Xxxxxxx Assisted Living Residence I, LLC
Xxxxxxx Assisted Living Residence III, LLC
V-2
