$125,000,000 Principal Amount of 9 3/8% Senior Subordinated Notes due 2008
SUN HEALTHCARE GROUP, INC.
(Payment of Principal and Interest Guaranteed by
the Guarantors referred to within)
PURCHASE AGREEMENT
April 29, 1998
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
▇▇▇▇▇▇▇▇ & CO. INC.
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. 10167
Dear Sirs:
Sun Healthcare Group, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "COMPANY"), proposes, subject to the
terms and conditions stated herein, to issue and sell to Bear, ▇▇▇▇▇▇▇ & Co.
Inc. (the "REPRESENTATIVE"), ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities
Corporation, ▇.▇. ▇▇▇▇▇▇ Securities Inc., NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC
and ▇▇▇▇▇▇▇▇ & Co. Inc. (collectively with the Representative, the "INITIAL
PURCHASERS") an aggregate of up to $125,000,000 principal amount (the "FIRM
SECURITIES") and, at the election of the Initial Purchasers, an aggregate of up
to an additional $25,000,000 principal amount (the "OPTIONAL SECURITIES"), of
its 9 3/8% Senior Subordinated Notes due 2008. The Firm Securities and the
Optional Securities that the Initial Purchasers elect to purchase pursuant to
Section 2 hereof are referred to collectively as the "NOTES."
The Notes are to be issued pursuant to an indenture to be dated as of
May 4, 1998 (the "INDENTURE") between the Company, the Guarantors (as defined
below)
and U.S. Bank Trust National Association, as trustee (the "TRUSTEE"). The
Notes will be guaranteed (the "SUBSIDIARY GUARANTEES") by each of the
entities listed on Schedule I hereto (each, a "GUARANTOR" and, collectively,
the "GUARANTORS"). Additionally, the Notes will be entitled to certain
registration rights provided under a Note Registration Rights Agreement, to
be dated as of May 4, 1998, (the "REGISTRATION RIGHTS AGREEMENT") between the
Company and the Initial Purchasers.
Prior to or concurrently with the issuance and sale of the Notes, Sun
Financing I, a statutory business trust formed under the laws of the State of
Delaware and all of whose common securities are owned by the Company ("SUN
FINANCING I"), is proposing to issue and sell $300,000,000 of its 7% Convertible
Trust Issued Preferred Securities ("TIPS") (plus an aggregate of $45,000,000
additional TIPS subject to an over-allotment option) to the Initial Purchasers
pursuant to a purchase agreement, to be dated as of the date hereof (the "TIPS
PURCHASE AGREEMENT"), by and among Sun Financing I, the Company and the Initial
Purchasers. This Agreement, the Indenture, the Notes, the Subsidiary
Guarantees, the Registration Rights Agreement and all documents to which the
Company or Sun Financing I is a party related to the offering of the TIPS (the
"TIPS OFFERING"), including without limitation the TIPS Purchase Agreement, the
Declaration, the Indenture, the Registration Rights Agreement, the Guarantee,
the Debenture Purchase Agreement and the Common Securities Purchase Agreement
(as such terms are defined in the TIPS Purchase Agreement), are collectively
referred to herein as the "TRANSACTION DOCUMENTS."
The Company has prepared a preliminary offering memorandum dated April
14, 1998 (the "PRELIMINARY OFFERING MEMORANDUM") and a final offering memorandum
dated April 29, 1998 (the "OFFERING MEMORANDUM") with respect to the offering of
the Notes contemplated by this Agreement (the "OFFERING").
The Notes have not been registered under the Securities Act of 1933,
as amended (the "SECURITIES ACT"), and are being sold in reliance on exemptions
from or in transactions not subject to the registration requirements of the
Securities Act, including sales (i) made in the United States to "qualified
institutional buyers" as defined in, and in reliance on, Rule 144A under the
Securities Act ("RULE 144A") and (ii) made outside the United States in reliance
on Regulation S under the Securities Act ("REGULATION S").
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE GUARANTORS.
As of the date hereof, each of the Company and the Guarantors represents and
warrants to, and agrees with, each of the Initial Purchasers that:
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a. Each of the Preliminary Offering Memorandum and the Offering
Memorandum does not (and any amendment or supplement will not) contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein in light of
the circumstances under which they were made, not misleading, except that the
representations and warranties contained in this paragraph (a) shall not apply
to untrue statements made in or omissions from the Preliminary Offering
Memorandum (or any amendment or supplement thereto) that are corrected in the
Offering Memorandum (or any amendment or supplement thereto) or statements in or
omissions from the Preliminary Offering Memorandum (or any amendment or
supplement thereto) based on any information contained in or omitted from the
Preliminary Offering Memorandum or the Offering Memorandum or any amendment
thereof or supplement thereto in reliance upon and in conformity with
information furnished in writing to the Company by the Representatives expressly
for use therein.
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, whose reports are included in the
Offering Memorandum, are independent public accountants with respect to the
Company and Regency Health Services, Inc. ("REGENCY"), in each case as required
by the Securities Act and the rules and regulations promulgated thereunder (the
"SECURITIES ACT REGULATIONS").
c. Each of the historical financial statements of the Company
and Regency, including the notes thereto, and supporting schedules included in
the Offering Memorandum present fairly the consolidated financial position of
the Company and its subsidiaries and Regency and its subsidiaries, as the case
may be, as of the dates indicated and the consolidated results of operations
and changes in financial position of the Company and its subsidiaries and
Regency and its subsidiaries, as the case may be, for the periods specified,
except as otherwise stated in the Offering Memorandum, such historical financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis. The PRO FORMA financial statements
have been prepared on a basis consistent with the historical financial
statements, except for the PRO FORMA adjustments specified therein, and give
effect to assumptions made on a reasonable basis and present fairly the
historical and proposed transactions contemplated by the Offering Memorandum.
d. Each of the Company's and Regency's historical financial
statements, including the notes thereto, set forth in the Offering Memorandum
comply as to form in all material respects with the requirements applicable to
registration statements on Form S-3 under the Securities Act.
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e. The Company's PRO FORMA financial statements, including the
notes thereto, set forth in the Offering Memorandum comply as to form in all
material respects with the requirements of the Securities Act.
f. Subsequent to the respective dates as of which information
is given in the Offering Memorandum, except as set forth or contemplated in the
Offering Memorandum (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement), (i) there has been no material
adverse change nor any development that might reasonably be expected to involve
a prospective material adverse change, in the condition, financial or otherwise,
or the earnings, business, management or operations of the Company and its
subsidiaries taken as a whole, (ii) there has not been any material adverse
change or any development that might reasonably be expected to involve a
prospective material adverse change in the capital stock or in the long-term
debt of the Company or any of its subsidiaries and (iii) neither the Company nor
any of its subsidiaries has incurred any material liability or obligation,
direct or contingent, other than in the ordinary course of business.
g. Each of the Company and its subsidiaries (i) has been duly
organized and is validly existing as a corporation, partnership or limited
liability company, as the case may be, in good standing under the laws of its
jurisdiction of organization and (ii) is duly qualified and in good standing as
a foreign corporation, partnership or limited liability company, as the case may
be, in each jurisdiction in which the location of its properties (owned or
leased) or the nature of its business makes such qualification necessary, except
for those failures to be so qualified or in good standing that will not (a) have
a material adverse effect on the business, prospects, financial conditions or
results of operations of the Company and its subsidiaries taken as a whole, (b)
materially interfere with or materially adversely affect the issuance or
marketability of the Notes pursuant hereto or (c) in any manner draw into
question the validity of this Agreement or the other Transaction Documents (the
events referred to in clauses (a) through (c), a "MATERIAL ADVERSE EFFECT").
h. Neither the Company nor any of the Guarantors is in
violation of its respective charter, by-laws or other organizational documents,
as the case may be, or in default in the performance of any obligation, bond,
agreement, debenture, note, or any other evidence of indebtedness or any
indenture, mortgage, deed or trust or other contract, lease or other instrument
that is material to the Company and its subsidiaries, taken as a whole, to which
the Company or any of its subsidiaries is a party or by which the Company or any
of such subsidiaries is bound, or to which any of its
4
respective property is subject except for such violations or defaults that
would not, singly or in the aggregate, have a Material Adverse Effect.
i. Each of the Company and its subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other approvals
("PERMITS") of, and has made all filings with and notice to, all governmental or
regulatory authorities and self-regulatory organizations and all courts and
other tribunals, including, without limitation, under any applicable
Environmental Laws (as defined herein), as are necessary to own, lease, license
and operate its respective properties and to conduct its business, except where
the failure to have any such permit or to make any such filing or notice would
not, singly or in the aggregate, have a Material Adverse Effect. Each such
permit is valid and in full force and effect and each of the Company and its
subsidiaries is in compliance with all the terms and conditions thereof and with
the rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; no event has occurred (including the receipt
of any notice from any authority or governing body) which allows or, after
notice or elapse of time or both, would allow revocation, suspension or
termination of any such permit or results or, after notice or lapse of time or
both, would result in any other impairment of the rights of the holder of any
such permit; and such permits contain no restrictions that are unduly burdensome
to the Company or any of its subsidiaries except where such failure to be valid
and in full force and effect or to be in compliance, the occurrence of any such
event or the presence of any such restriction would not, singly or in the
aggregate, have a Material Adverse Effect.
j. The execution, delivery, and performance of this Agreement
and the other Transaction Documents by the Company and by Sun Financing I, as
applicable, and the consummation of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or result in a breach of any of
the terms and provisions of, or constitute a default (or an event which with
notice or lapse of time, or both, would constitute a default) under, any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to the Company and its subsidiaries, taken as a whole, to which the
Company or any of its subsidiaries is a party or their respective properties or
assets may be bound, except for such conflicts, breaches or defaults as would
not, singly or in the aggregate, have a Material Adverse Effect, (ii) violate or
conflict with any provision of the charter, by-laws, partnership agreement or
other organizational document of the Company, (iii) violate or conflict with
any of its subsidiaries or any applicable judgment, decree, order, statute, law,
rule or regulation of any court or any governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
respective properties except for such violations
5
or conflicts as would not, singly or in the aggregate, have a Material
Adverse Effect, (iv) require any consent, approval, authorization or other
order and, or other qualification with any court or governmental body or
agency having jurisdiction over the Company or any of its subsidiaries or any
of their respective properties, except (in the case of clauses (ii), (iii)
and (iv) above) for any such consents, approvals, authorizations or other
orders or qualifications as have been made or obtained in or will be made or
obtained in the case of the transactions contemplated by the Registration
Rights Agreements as may be required under state securities or Blue Sky laws
or the securities laws of any jurisdiction outside the United States in
connection with the purchase and distribution of the Notes and TIPS by the
Initial Purchasers and except for the filing of registration statements under
the Securities Act or Exchange Act applicable in connection with the
transactions contemplated by the Registration Rights Agreements, and
qualification of the Indentures, the Declaration and the Guarantee under the
Trust Indenture Act in connection with the Registration Rights Agreements,
(v) result in the imposition or creation of (or the obligation to create or
impose) any security interest, claim, lien encumbrances or adverse interest
of any nature (each, a "LIEN") under, any agreement or instrument to which
the Company or any of its subsidiaries is a party or by which it or any of
them is bound, or to which any properties of the Company or any of its
subsidiaries is or may be subject, or (vi) result in the termination or
revocation of any permit of the Company or any of its subsidiaries or result
in any other impairment of the rights of the holder of any such permit.
k. The Indenture has been duly authorized by the Company and
each of the Guarantors and, when validly executed and delivered by the Company
and each of the Guarantors and the Trustee, will have been validly executed and
delivered and (assuming the due authorization, execution and delivery thereof by
the Trustee) will constitute the valid and binding obligation of the Company and
each of the Guarantors, enforceable against the Company and each of the
Guarantors in accordance with its terms, except (x) as the enforceability
thereof may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or other
similar laws affecting creditors' rights generally, (y) enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
brought in a proceeding at law or in equity) and (z) the waiver as to stay,
extension or usury laws may not be enforceable. On the Closing Date and any
Option Closing Date (as defined herein), the Indenture will conform in all
material respects to the description thereof contained in the Offering
Memorandum and will conform in all material respects to the requirements of the
Trust Indenture Act of 1939, as amended (the "TIA"), and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
applicable to an indenture which is qualified thereunder.
6
l. The Notes have been duly authorized by the Company and, when
duly authorized, authenticated and delivered by the Trustee and issued, sold and
delivered in accordance with this Agreement and the Indenture, will have been
validly executed and delivered by the Company and will constitute the valid and
binding obligation of the Company, enforceable against the Company in accordance
with their terms, except (x) as the enforceability thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
creditors' rights generally, (y) enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is brought in a
proceeding at law or in equity) and (z) the waiver as to stay, extension or
usury laws may not be enforceable. On the Closing Date and any Option Closing
Date, the Notes will conform in all material respects to the description thereof
contained in the Offering Memorandum.
m. The Subsidiary Guarantees in respect of the Notes have been
duly authorized by each such Guarantor and, when the Notes have been issued,
authenticated, sold and delivered in accordance with this Agreement and the
Indenture with the Subsidiary Guarantee of each Guarantor endorsed thereon, the
Subsidiary Guarantees will have been validly executed and delivered and will
constitute the valid and binding obligation of each such Guarantor, enforceable
against each such Guarantor in accordance with their terms, except (x) as the
enforceability thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting creditors' rights generally, (y)
enforcement thereof is subject to general principles of equity (regardless of
whether enforcement is brought in a proceeding at law or in equity) and (z) the
waiver as to stay, extension or usury laws may not be enforceability. On the
Closing Date and any Option Closing Date, the Subsidiary Guarantees will conform
in all material respects to the description thereof contained in the Offering
Memorandum.
n. The Registration Rights Agreement has been duly authorized
by the Company. The Registration Rights Agreement, when executed and delivered
by the Company and the Initial Purchasers (assuming the Registration Rights
Agreement is duly authorized by the Initial Purchasers), will have been validly
executed and delivered by the Company and will constitute the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except (i) as the enforceability thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
creditors' rights generally, (ii) enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is brought in a
7
proceeding at law or in equity), (iii) the waiver as to stay, extension or
usury laws may not be enforceable and (iv) to the extent indemnification or
contribution provisions in the Registration Rights Agreement may be
unenforceable. On the Closing Date, the Registration Rights Agreement will
conform in all material respects to the description thereof contained in the
Offering Memorandum.
o. As of the date hereof, there is no litigation or
governmental proceeding to which the Company or any of its subsidiaries is a
party or to which any property of the Company or any of its subsidiaries is
subject or which is pending or, to the knowledge of the Company, contemplated
against the Company or any of its subsidiaries, except (in each case) as
disclosed in the Offering Memorandum or for any such proceeding which the
Company has reasonably concluded is not likely to result in a Material Adverse
Effect.
p. Except as would not have a Material Adverse Effect, (i) the
Company and its subsidiaries are not in violation of any Federal, state or local
laws and regulations relating to pollution or protection of human health or the
environment ("ENVIRONMENTAL LAWS"), which violation includes, but is not limited
to, noncompliance with or lack of any permits (as defined below) or other
governmental authorizations; and (ii) (A) the Company and its subsidiaries have
not received any communication, whether from a governmental authority or
otherwise, alleging any such violation or noncompliance, and there are no
circumstances, either past, present or that are reasonably foreseeable, that are
reasonably likely to lead to such violation in the future, (B) there is no
pending or, to the Company's knowledge, threatened claim, action, investigation
or notice by any person or entity alleging potential liability for
investigatory, cleanup, or governmental responses costs, or natural resources or
property damages, or personal injuries, attorney's fees or penalties relating to
any actual, alleged or, to the Company's knowledge, threatened pollution or
contamination, or any circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law (collectively, "ENVIRONMENTAL
CLAIMS"), and (C) there are no past or present actions, activities,
circumstances, conditions, events or incidents, that could reasonably be
expected to form the basis of any Environmental Claim against the Company and
its subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company and its subsidiaries have retained or assumed
either contractually or by operation of law. In the ordinary course of its
business, each of the Company and its subsidiaries, where required or
appropriate, has conducted environmental investigations of, and has reviewed
information regarding, its business properties and operations and those of other
properties within the vicinity of its business properties
8
and operations; on the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities are not likely to have a
Material Adverse Effect.
q. All of the outstanding equity interests of the Guarantors
have been duly authorized and validly issued and are fully paid and
nonassessable, were not issued and are not now in violation of or subject to any
preemptive rights and, to the extent owned by the Company or any of its direct
or indirect subsidiaries, are owned, directly or indirectly, by the Company free
and clear of any lien, claim, encumbrance, security interest, restriction on
transfer, shareholders' agreement, voting trust or other preferential
arrangement or defect of title whatsoever, except as described in the Offering
Memorandum or as are not material.
r. Except as otherwise set forth in the Offering Memorandum and
Article XV (Subordination) of the Indenture, the Notes, when issued, delivered
and sold in accordance with this Agreement, will rank PARI PASSU in right of
payment with the Company's 9 1/2% Senior Subordinated Notes due 2007.
s. (i) None of the Company, the Guarantors or any of their
affiliates (as defined in Rule 501(b) under the Securities Act) nor any person
acting on behalf of any such person (excluding the Initial Purchasers and their
respective affiliates, as to which no representation is made) has engaged in any
directed selling efforts (as such term is defined in Regulation S) in the United
States with respect to the Notes and (ii) each of the Company, the Guarantors or
their affiliates and each person acting on behalf of any of them (other than the
Initial Purchasers and their respective affiliates, as to which no
representation made) has complied with and will comply with the offering
restrictions requirement of Regulation S in connection with the offering of
Notes outside the United States.
t. None of the Company, the Guarantors, any of their affiliates
nor any person acting on behalf of any of them (excluding the Initial Purchasers
and their respective affiliates, as to which no representation is made) has
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) that is
or may be integrated with the sale of the Notes in a manner that would require
registration under the Securities Act.
u. The Notes are eligible for resale pursuant to Rule 144A and,
when issued, will not be of the same class as any securities listed on a
national
9
securities exchange registered under section 6 of the Exchange Act (as
hereinafter defined) or quoted in a U.S. automated inter-dealer quotation
system.
v. Subject to compliance by the Initial Purchasers with the
procedures set forth in Section 3 hereof, it is not necessary, in connection
with the offer, sale and delivery of the Notes to the Initial Purchasers in the
manner contemplated by this Agreement and the Offering Memorandum, to register
the Notes under the Securities Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended.
w. The Company is not, and upon consummation of the
transactions contemplated hereby will not be, subject to registration as an
"investment company" under the Investment Company Act of 1940, as amended.
x. Neither the Company nor any of its subsidiaries nor any
agent thereof acting on the behalf of them has taken, and none of them will
take, any action that might cause this Agreement or the issuance or sale of the
Notes to violate Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part
221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System.
y. The Company and each of 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.
z. To the extent described in the Offering Memorandum, the
facilities owned or operated as continuing operations by the Company or its
subsidiaries (the "COMPANY FACILITIES") (i) are certified for participation or
enrollment in the Medicare and Medicaid programs, except where failure to do so,
singly or in the aggregate, would not have a Material Adverse Effect, (ii) have
a current and valid provider contract with the Medicare and Medicaid programs,
except where failure to have such contract, singly or in the aggregate, would
not have a Material Adverse Effect, and (iii) are in substantial compliance with
the terms and conditions of participation of such programs and have received all
approvals or qualifications
10
necessary for capital reimbursement of the Company's assets except, in each
case, where the failure to be so certified, to have such contracts, to be in
such compliance or to have such approvals or qualifications, singly or in the
aggregate, would not have a Material Adverse Effect. Except as set forth in
the Offering Memorandum or as to which the Company has reasonably concluded
is not likely to have a Material Adverse Effect, neither the Company nor any
of its subsidiaries has received notice from the regulatory authorities which
enforce the statutory or regulatory provisions in respect of the Medicare or
Medicaid programs of any pending or threatened investigations, surveys (other
than routine surveys) or decertification proceedings.
aa. All material Tax returns required to be filed by the Company
and each of its subsidiaries have been filed and all such returns are true,
complete, and correct in all material respects. All material Taxes that are due
or claimed to be due from the Company and each of its subsidiaries have been
paid other than those (i) currently payable without penalty or interest or (ii)
being contested in good faith and by appropriate proceedings and for which
adequate reserves have been established in accordance with GAAP. For purposes
of this Agreement, the term "TAX" and "TAXES" shall mean all Federal, state,
local and foreign taxes, and other assessments of a similar nature (whether
imposed directly or through withholding), including any interest, additions to
tax, or penalties applicable thereto.
bb. All indebtedness of the Company and the Guarantors that will
be repaid with the proceeds of the issuance and sale of the Notes was incurred,
and the indebtedness represented by the Notes is being incurred, for appropriate
corporate purposes and in good faith and each of the Company and the Guarantors
was, at the time of the incurrence of such indebtedness that will be repaid with
the proceeds of the issuance and sale of the Notes, and will be on the Closing
Date (after giving effect to the application of the proceeds from the issuance
of the Notes) solvent, and had at the time of the incurrence of such
indebtedness that will be repaid with the proceeds of the issuance and sale of
the Notes and will have on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Notes) sufficient capital
for carrying on their respective business and were, at the time of the
incurrence of such indebtedness that will be repaid with the proceeds of the
issuance and sale of the Notes, and will be on the Closing Date (after giving
effect to the application of the proceeds from the issuance of the Notes) able
to pay their respective debts as they mature.
cc. To the best of the Company's knowledge, neither the Company
nor any of its subsidiaries, nor any director, officer, agent, employee or other
person associated with or acting on behalf of the Company or any of its
subsidiaries, has
11
used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity, made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds, violated or is in violation of any provision
of the Foreign Corrupt Practices Act of 1977, made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment or is in violation of
any Federal "fraud and abuse legislation" or Federal "anti-kickback law."
dd. The lenders have approved the issuance of the Notes and
Guarantees in accordance with the terms of that certain Credit Agreement, dated
as of October 8, 1997, by and among the Company and NationsBank of Texas, N.A.
and the other banks that are parties thereto.
ee. Each certificate provided on the Closing Date by any officer
of the Company and delivered to the Initial Purchasers or counsel for the
Initial Purchasers shall be deemed to be a representation and warranty of the
Company to the Initial Purchasers as to the matters covered thereby.
ff. The Company acknowledges that the Initial Purchasers and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Section 6 hereof, counsel to the Company and the Guarantors and counsel to
the Initial Purchasers, will rely upon the accuracy and truth of the foregoing
representations and hereby consent to such reliance.
2. PURCHASE, SALE AND DELIVERY OF THE NOTES. On the basis of the
representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to sell
to the Initial Purchasers, and the Initial Purchasers, severally and not
jointly, agree to purchase from the Company, the principal amount of the Notes
set forth opposite their respective names in Schedule II hereto at a purchase
price equal to 97.25% of such principal amount. Payment of the purchase price
for, and delivery of, the Notes will be made at the offices of Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ at
9:30 a.m. (New York City time) on May 4, 1998, unless postponed in accordance
with Section 9 hereof, or such other time and date as may be mutually agreed in
writing between you and the Company (the time and date of such payment and
delivery being herein called the "CLOSING DATE").
The Company also grants to the Initial Purchasers an option to
purchase, solely for the purpose of covering over-allotments in the sale of Firm
Securities, if any,
12
all or any portion of the Optional Securities at the purchase price set forth
above. The option granted hereby may be exercised as to all or any part of
the Optional Securities at any time (but only once) within 30 days after the
date of the Offering Memorandum. The Initial Purchasers shall not be under
any obligation to purchase any Optional Securities prior to the exercise of
such option. The option granted hereby may be exercised by the
Representative giving written notice to the Company setting forth the number
of Optional Securities to be purchased and the date and time for delivery of
and payment for such Optional Securities and stating that the Optional
Securities referred to therein are to be used for the purpose of covering
over-allotments in connection with the distribution and sale of the Firm
Securities. If such notice is given prior to the Closing Date, the date set
forth therein for such delivery and payment shall not be earlier than two
full business days thereafter or the Closing Date, whichever occurs later.
If such notice is given on or after the Closing Date, the date set forth
therein for such delivery and payment shall not be earlier than three full
business days thereafter. In either event, the date so set forth shall not
be more than 15 full business days after the date of such notice. The date
and time set forth in such notice is herein called the "OPTION CLOSING DATE."
Upon exercise of the option, the Company shall become obligated to sell to
the Initial Purchasers, and, subject to the terms and conditions herein set
forth, the Initial Purchasers shall become obligated to purchase, for the
account of each Initial Purchaser, from the Company, severally and not
jointly, the number of Optional Securities specified in such notice.
Optional Securities shall be purchased for the accounts of the Initial
Purchasers in proportion to the number of Firm Securities set forth opposite
such Initial Purchaser's name in Schedule II hereto, except that the
respective purchase obligations of each Initial Purchaser shall be adjusted
so that no Initial Purchaser shall be obligated to purchase fractional
Optional Securities.
At or prior to the Closing Date and any Option Closing Date hereunder,
the Company shall execute and deliver for authentication the Notes to be
purchased and sold on such date and shall deposit such Notes with The Depositary
Trust Company ("DTC") for the account or accounts of participants in DTC
(including Euroclear and CEDEL, as the case may be) purchasing beneficial
interests in one or more certificates in global or definitive form in such
denominations and registered in such names as the Initial Purchasers request
upon notice to the Company at least two business days prior to such date.
Against delivery of the Notes to DTC for the respective accounts of the Initial
Purchasers, the Initial Purchasers shall pay or cause to be paid to the Company
the purchase price for such Notes by wire transfer in same day funds, payable to
the order of the Company. Certificates evidencing the Notes shall be registered
in such name or names and in such authorized denominations as you may request in
writing at least two full business days prior to the Closing Date, or if not so
requested, in the name
13
of Cede & Co. as nominee for DTC. The Company will permit you to inspect
such certificates at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
at least one full business day prior to the Closing Date and any Option
Closing Date.
3. SUBSEQUENT OFFERS AND RESALES OF THE NOTES. The Initial
Purchasers and the Company hereby establish and agree to observe the following
procedures in connection with the offer and sale of the Notes:
a. Each Initial Purchaser has advised the Company that it will
offer the Notes for resale (the "EXEMPT RESALES") upon the terms and conditions
set forth in this Agreement and the Offering Memorandum. The Notes have not been
and will not be registered under the Securities Act. Each Initial Purchaser
agrees that it will not take, and acknowledges that the Company has not taken,
any action that would permit a public offering of the Notes in any jurisdiction
and further agrees that, with respect to the offer or sale of any Notes or the
delivery or distribution of any Offering Memorandum, it will comply with
applicable laws and regulations in such jurisdictions or to which it is
otherwise subject. Such Initial Purchaser further agrees that it is not
acquiring the Notes with a view to any distribution thereof or with any present
intention of offering or selling any of the Notes in a transaction that would
violate the Securities Act or the securities laws of any State of the United
States or any other applicable jurisdiction.
b. Each Initial Purchaser represents and warrants that (i) it
is a qualified institutional buyer within the meaning of Rule 144A with such
knowledge and experience in financial and business matters as are necessary in
order to evaluate the merits and risks of investing in the Notes or is not a
U.S. person and is acquiring the Notes outside the United States in compliance
with Rule 903 or 904 under the Securities Act and (ii) that neither it nor any
of its affiliates nor any person acting on behalf of any such person has engaged
in any general solicitation or general advertising, within the meaning of
Regulation D, under the Securities Act, in connection with the offer, sale or
resale of the Notes.
c. In connection with sales outside the United States, each
Initial Purchaser agrees that it has not and will not offer, sell or deliver
Notes (i) as part of its distribution thereof at any time or (ii) otherwise
until 40 days after completion of the distribution, as determined by the
Representative, to or for the account or benefit of U.S. persons (as defined in
Regulation S). Each Initial Purchaser confirms that neither it nor its
affiliates nor any person acting on behalf of any such person has engaged in any
"directed selling efforts" (as such term is defined in Regulation S) with
respect to
14
the Notes and that it and each such other person has complied with the
offering restrictions requirement of Regulation S with respect to the Notes.
d. Such Initial Purchasers agree that, at or prior to entering
into any contractual arrangement with any distributor (as that term is defined
for the purposes of Regulation S) with respect to the distribution of the Notes
without the written consent of the Company, the Initial Purchasers will cause
such distributor to agree in writing to comply with the provisions of Regulation
S to at least the same extent as required of the Initial Purchasers hereunder.
e. Each of the Initial Purchasers acknowledges and agrees that
it has not and will not offer, sell or deliver the Notes in the United States or
to or for the account of any U.S. Person other than (A)(i) distributors (as
defined in Regulation S) who, in purchasing the Notes will be deemed to have
represented and agreed that their purchase of the Notes pursuant to Regulation S
is not a part of a plan or a scheme to evade the registration provisions of the
Securities Act and (ii) institutional buyers that are reasonably believed to be
"qualified institutional buyers" (as defined in Rule 144A) who, in purchasing
the Notes will be deemed to have represented that (x) they are purchasing the
Notes for their own account or accounts with respect to which they exercise sole
investment discretion and that they or such accounts are "qualified
institutional buyers" (as defined in Rule 144A) and (y) they acknowledge that
the seller of such Notes may be relying on the exemption from the provisions of
Section 5 of the Securities Act provided by Rule 144A thereunder and such Notes
will not have been registered under the Securities Act, and (B) to eligible
purchasers who agree (1) that Notes purchased by them may be resold, pledged or
otherwise transferred within the time period referred to under Rule 144(k)
(taking into account the provisions of Rule 144(d) under the Securities Act, if
applicable) under the Securities Act, as in effect on the date of the transfer
of such Notes, only (a) to the Company, (b) to a "qualified institutional buyer"
in compliance with Rule 144A, (c) outside the United States in compliance with
Rule 903 or 904 under the Securities Act, (d) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act (if available) or,
(e) pursuant to a registration statement which has been declared effective under
the Securities Act, and (2) to deliver to each person to whom such Notes or an
interest therein is transferred a notice substantially to the effect of the
foregoing.
f. Each of the Initial Purchasers has advised the Company that,
prior to the confirmation of sale of any Notes, it will have sent to each
dealer, distributor or person receiving a selling concession fee or other
remuneration that
15
purchases any Notes from it during the restricted period a confirmation or
notice substantially to the following effect:
"The Notes have not been registered under the Securities Act of
1933, as amended (the Securities Act), and may not be offered and sold within
the United States or to, or for the account or benefit of U.S. persons (i) as
part of their distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the Offering and the Closing Date or Option Closing
Date, except in either case in accordance with Regulation S (or Rule 144A in
transactions that are exempt from the registration requirements of the
Securities Act) under the Securities Act, and in connection with any subsequent
sale by you of the Notes in reliance on Regulation S during the period referred
to above to any distributor, dealer or person receiving a selling concession,
fee or other remuneration, you must deliver a notice to substantially the
foregoing effect. Terms used above have the meanings assigned to them in
Regulation S."
g. Each Initial Purchaser represents, warrants and agrees that
(i) it has not offered or sold and prior to the expiration of six months from
the Closing Date or Option Closing Date will not offer or sell Notes to persons
in the United Kingdom, other than to persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of investments (whether as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which will not result in an offer to the public within the meaning
of the Public Offers of Securities Regulations 1995, (ii) it has complied and
will comply with all applicable provisions of the Public Offers of Securities
Regulations and the Financial Services Act of 1986 with respect to anything done
by it in relation to the Notes in, from, or otherwise involving the United
Kingdom and (iii) it has only issued or passed on and will only issue or pass
on, to any person in the United Kingdom any documents received by it in
connection with the issue of the Notes if the person is of a kind described in
Article 11(c) of the Financial Services Act of 1986 (Investment Advertisements)
(Exemptions) Order 1995 or is a person whom the documents may lawfully be issued
or passed on.
h. Each Initial Purchaser agrees that it will not offer, sell
or deliver any of the Notes in any jurisdiction outside the United States except
under circumstances that will result in compliance with the applicable laws
thereof, and that it will take at its own expense whatever action is required to
permit its purchase and resale of the Notes in such jurisdictions. Each Initial
Purchaser understands that no action has been taken to permit a public offering
in any jurisdiction outside the United States where action would be required for
such purpose.
16
i. The Notes offered and sold by the Initial Purchasers
pursuant hereto in reliance on Regulation S have been and will be offered and
sold only in offshore transactions.
j. The sale of the Notes offered and sold by the Initial
Purchaser pursuant hereto in reliance on Regulation S is not part of a plan or
scheme to evade the registration provisions of the Securities Act.
k. The Initial Purchasers acknowledge that the Company and its
subsidiaries and, for purposes of the opinions to be delivered to each Initial
Purchaser pursuant to Section 6 hereof, counsel to the Company and the
Guarantors and counsel to the Initial Purchasers will rely upon the accuracy and
truth of the foregoing representations by the Initial Purchasers and the Initial
Purchasers hereby consent to such reliance.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with
the Initial Purchasers that:
a. If, after the date hereof during such period as in the
opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP ("COUNSEL FOR THE INITIAL
PURCHASERS") an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers, any event shall occur
as a result of which, in the opinion of Counsel for the Initial Purchasers, it
becomes necessary to amend or supplement the Offering Memorandum in order to
make the statements therein, in the light of the circumstances when such
Offering Memorandum is delivered to an eligible purchaser, not misleading, or
if, in the reasonable judgment of Counsel for the Initial Purchasers, it is
necessary to amend or supplement the Offering Memorandum to comply with any
applicable law, forthwith to prepare an appropriate amendment or supplement to
such Offering Memorandum so that the statements therein, as so amended or
supplemented, will not, in the light of the circumstances when it is so
delivered, be misleading, or so that such Offering Memorandum, as so amended or
supplemented, will comply with applicable law, and to furnish to the Initial
Purchasers and such other persons as the Initial Purchasers may designate such
number of copies thereof as the Initial Purchasers may reasonably request.
b. The Company will promptly deliver to each of the Initial
Purchasers such number of copies of the Offering Memorandum and all amendments
of and supplements thereto as the Initial Purchasers may reasonably request
within 90 days following the date of the Offering Memorandum.
17
c. The Company will endeavor in good faith, in cooperation with
the Initial Purchasers to qualify the Notes for offering and sale under the
securities and legal investment laws relating to the offering or sale of the
Notes of such jurisdictions as you may reasonably request and to maintain such
qualification in effect for so long as required for the distribution thereof;
except that in no event shall the Company be obligated in connection therewith
to qualify as a foreign corporation or to execute a general consent to service
of process or to take any other action that would subject it to service of
process or taxation other than as to matters relating to sales of Notes in any
jurisdiction in which it is not now so subject.
d. The Company will apply the proceeds from the sale of the
Notes as set forth under "Use of Proceeds" in the Offering Memorandum.
e. The Company will cooperate to cause the Notes to be
designated Private Offerings, Resales and Trading through Automated Linkage
("PORTAL") market securities in accordance with the rules and regulations of the
National Association of Securities Dealers, Inc., relating to trading on the
PORTAL market.
f. So long as any of the Notes are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act and during any
period in which the Company is not subject to Section 13 or 15(d) of the
Exchange Act, the Company will provide to any holder of the Notes or to any
prospective purchaser of the Notes designated by any holder, upon request of
such holder or prospective purchaser, information required to be provided by
Rule 144A(d)(4) of the Securities Act.
g. None of the Company, its subsidiaries or, to the Company's
knowledge, affiliates or any person acting on their behalf (other than the
Initial Purchasers and their respective affiliates, as to which no
representation is made) will solicit any offer to buy or offer or sell the Notes
by means of any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act.
h. None of the Company, its subsidiaries or, to the Company's
knowledge, affiliates or any person acting on their behalf (other than the
Initial Purchasers and their respective affiliates, as to which no
representation is made) will offer, sell or solicit offers to buy or otherwise
negotiate in respect of any security
18
(as defined in the Securities Act) which will be integrated with the sale of
the Notes in a manner that would require the registration of the Notes under
the Securities Act.
i. During the period from the Closing Date until two years
after the Closing Date, the Company and its subsidiaries will not, and, to the
Company's knowledge, will not permit any of their "affiliates" (as defined in
Rule 144 under the Securities Act) to, resell any of the Notes that have been
reacquired by them, except for Notes acquired by the Company and its
subsidiaries or any of their affiliates and resold in a transaction registered
under the Securities Act.
j. None of the Company, its subsidiaries or, to the Company's
knowledge, affiliates or any person acting on their behalf (other than the
Initial Purchasers and their respective affiliates, as to which no
representation is made) will engage in any directed selling efforts (as that
term is defined in Regulation S) with respect to the Notes sold pursuant to
Regulation S, and the Company and their affiliates and each person acting on
their behalf (other than the Initial Purchasers and their respective affiliates,
as to which no representation is made) will comply with the offering
restrictions of Regulation S with respect to those Notes sold pursuant thereto.
k. The Company will cooperate with the Initial Purchasers in
arranging for the Notes to be accepted for clearance and settlement through
Euroclear, CEDEL and The Depository Trust Company.
l. Each of the Notes will bear the legend contained in "Notices
to Investors" in the Offering Memorandum for the time period and upon the other
terms stated therein, except as otherwise specified in such section of the
Offering Memorandum.
m. The Company will use its reasonable best efforts to do and
perform all things required or necessary to be done and performed under this
Agreement by it prior to the Closing Date and to satisfy all conditions
precedent to the delivery of the Notes.
5. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is terminated,
the Company hereby agrees to pay all costs and expenses incident to the
performance of the obligations of the Company hereunder, including those in
connection with (i) preparing, printing, duplicating, filing and distributing
the Offering Memorandum and any amendments or supplements thereto (including,
without limitation, fees and expenses
19
of the Company's accountants and counsel), the underwriting documents
(including this Agreement and the other Transaction Documents and all other
documents related to the offering of the Notes and/or the TIPS (including
those supplied to the Initial Purchasers in quantities provided for herein),
(ii) the issuance, transfer and delivery of the Notes to the Initial
Purchasers, including any transfer or other taxes payable thereon, (iii) the
qualification of the Notes under state or foreign legal investment,
securities or Blue Sky laws, including the costs of printing and mailing a
preliminary and final "Blue Sky Survey" and the reasonable fees of Counsel
for the Initial Purchasers and such counsel's reasonable disbursements in
relation thereto, (iv) the cost of printing the Notes, (v) all expenses and
listing fees in connection with the application for quotation of the Notes in
the PORTAL market, (vi) the cost and charges of any transfer agent,
registrar, trustee or fiscal paying agent, (vii) the costs and charges of
DTC, Euroclear and CEDEL and (viii) all other costs and expenses incident to
the performance of the obligations of the Company hereunder for which
provision is not otherwise made in this Section 5.
6. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations
of the Initial Purchasers to purchase and pay for the Notes, as provided herein,
shall be subject to the accuracy of the representations and warranties of the
Company herein contained, as of the date hereof and as of the Closing Date (for
purposes of this Section 6, "Closing Date" shall refer to the Closing Date and
any Option Closing Date), to the absence from any certificates, opinions,
written statements or letters furnished to you or to Counsel for the Initial
Purchasers pursuant to this Section 6 of any misstatement or omission, to the
performance by the Company of its obligations hereunder, and to the following
additional conditions:
a. On the Closing Date, you shall have received:
▇. ▇▇ opinion, dated the Closing Date, of ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, special counsel for the Company, substantially to the effect that:
i) the Company is a corporation duly incorporated and
validly existing in good standing under the laws of the State of
Delaware with corporate power and authority under such laws to
own, lease and operate its properties and conduct its business as
described in the Offering Memorandum;
ii) the Notes have been duly authorized by the Company and,
assuming that the Notes have been duly executed by the Company
and authenticated by the Trustee in accordance
20
with the provisions of the Indenture and in the manner
described in the certificate delivered to you on the Closing
Date (which facts have not been determined by an inspection of
the Notes), the Notes have been duly issued and delivered by
the Company and constitute valid and binding obligations of
the Company, entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms
except as (x) as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting creditors' rights
generally, (y) enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity) and (z) the
waiver as to stay, extension or usury laws may not be
enforceable;
iii) the Indenture has been duly authorized, executed and
delivered by the Company and, assuming the due authorization,
execution and delivery thereof by the Trustee, constitutes a
valid and binding obligation of the Company and each of the
Guarantors, enforceable against the Company and each Guarantor in
accordance with its terms, except as (x) the enforcement thereof
may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting creditors'
rights generally, (y) enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity) and (z) the
waiver as to stay, extension or usury laws may not be
enforceable;
iv) this Agreement has been duly authorized, executed and
delivered by the Company;
v) the Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and, assuming
due authorization, execution and delivery by the Initial
Purchasers, constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, except as (w) the enforcement thereof may be limited
21
by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting creditors' rights
generally, (x) enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity), (y) the
waiver as to stay, extension or usury laws may not be
enforceable and (z) to the extent indemnification or
contribution provisions in the Registration Rights Agreement
may not be enforceable;
vi) the Indenture, the Notes and the Subsidiary Guarantees
conform in all material respects to the statements in the
Offering Memorandum relating thereto under the caption
"Description of Notes;"
vii) the Company is not in violation of its certificate of
incorporation or by-laws;
viii) the execution, delivery and performance of this
Agreement and other Transaction Documents and compliance by the
Company with all the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby
will not require any consent, approval, authorization or other
order of, or qualification with, any court or governmental body
or agency (except such as may be required under the securities or
Blue Sky laws of the various states and except for the filing of
registration statements under the Securities Act or Exchange Act
applicable in connection with the transactions contemplated by
the Registration Rights Agreements, and qualification of the
Indentures, the Declaration and the Guarantee under the Trust
Indenture Act, in connection with the Registration Rights
Agreements);
ix) the Company is not and, after giving effect to the
offering and sale of the Notes and the application of the net
proceeds thereof as described in the Offering Memorandum, will
not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended;
22
x) the Indenture complies as to form in all material
respects with the requirements of the TIA, and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder; and
xi) no registration under the Securities Act of the Notes
or qualification of the Indenture under the TIA is required for
the sale of the Notes to the Initial Purchasers as contemplated
by this Agreement or for the Exempt Resales assuming (i) the
accuracy of, and compliance with, the Initial Purchaser's
representations and agreements contained in Section 3 of this
Agreement and (ii) the accuracy of the representations and
agreements of the Company and the Guarantors set forth in
Sections 1(s) to (v) and 4(f) to 4(j) of this Agreement and (iii)
that the offer, sale and delivery of the Notes have been made as
contemplated by this Agreement and the Offering Memorandum.
Such counsel (i) may state that such opinions are limited to matters
governed by the Federal laws of the United States of America, the laws of the
State of New York and the General Corporation Law of the State of Delaware, (ii)
may rely upon the opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ delivered pursuant to Section 6B
hereof (including any assumptions or qualifications thereto) as to matters of
the laws of the states of organization of each of the Guarantors addressed
therein with regard to the authorization, execution and delivery of documents by
such Guarantors, (iii) may rely upon the opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ as to matters involving the laws of the State of Connecticut and (iv) may
rely upon the opinion of a New Mexico law firm reasonably acceptable to the
Initial Purchasers as to matters involving the laws of the State of New Mexico.
In addition, such counsel shall state that (a) it has acted as special
counsel to the Company in connection with the preparation of the Preliminary
Offering Memorandum and Offering Memorandum and (b) it has generally reviewed
and discussed such statements contained in the Offering Memorandum with certain
officers and employees of the Company and the Company's auditors, and with your
counsel and yourselves. Such counsel shall further state that in the course of
this review and discussion, no facts have come to its attention that cause it to
believe that the Offering Memorandum (except for the financial statements and
other financial and statistical data included therein or omitted therefrom as to
all of which it has not been requested to comment) as of its date (as amended or
supplemented, if applicable) or on the Closing
23
Date, contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact necessary in order to make the
statements therein, in light of the circumstances in which they were made,
not misleading. Without limiting the foregoing, such counsel may further
state that (i) it has not verified and is not passing upon and does not
assume responsibility for the accuracy, completeness or fairness of the
statements in the Offering Memorandum other than those mentioned in
subparagraph (vi), (ii) the Company has retained ▇▇▇▇▇▇ & Austin to advise
it with respect to the government investigation by the Office of the
Inspector General described in the section of the Offering Memorandum
entitled "Risk Factors--Investigations; Uncertain Impact on Future Operating
Results" (hereinafter, "OIG MATTERS") and (iii) the Company has retained
▇▇▇▇▇▇, Cullina, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ to advise it with respect to the
government investigation in Connecticut described in the section of the
Offering Memorandum entitled "Risk Factors--Investigations; Uncertain Impact
on Future Operating Results" (hereinafter, "CONNECTICUT MATTERS").
B. An opinion, dated the Closing Date, from ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, in-house counsel for the Company, substantially to the effect that:
i) each of the Guarantors has been duly organized and is
validly existing in good standing as a corporation, limited
liability company or partnership under the laws of its
jurisdiction of organization, with power and authority under such
laws to own lease and operate its properties and to conduct its
business as described in the Offering Memorandum;
ii) each of the Company and the Guarantors is duly
qualified and is in good standing as a foreign corporation or
limited liability company authorized to do business in each
jurisdiction in which the nature of its business or its ownership
or leasing of property requires such qualification, except where
the failure to be so qualified would not have been a Material
Adverse Effect;
iii) each of the Indenture and this Agreement has been duly
authorized, executed and delivered by each of the Guarantors;
iv) to the best of such counsel's knowledge, after due
inquiry, all of the outstanding equity interests of each of the
24
Guarantors have been duly authorized and validly issued and are
fully paid and non-assessable, and to the extent such equity
interests are owned by the Company, are owned free and clear of
any Lien, except for Liens permitted under debt instruments
(including the Indenture) described in the Offering Memorandum or
Liens which are not material;
v) the statements in the Offering Memorandum relating to
Connecticut Matters and OIG Matters under the caption "Risk
Factors-Investigations; Uncertain Impact on Future Operating
Results" insofar as such statements constitute a summary of the
legal matters or proceedings referred to therein, fairly present
the information called for with respect to such legal matters and
proceedings;
vi) none of the Guarantors is in violation of its
respective charter, by-laws or other organizational documents, as
the case may be, except for such violations as would not, singly
or in the aggregate, have a Material Adverse Effect and, to the
best of such counsel's knowledge after due inquiry, neither the
Company nor any of its subsidiaries is in default in the
performance of any obligation, agreement, covenant or condition
contained in any indenture, loan agreement, mortgage, lease or
other agreement or instrument that is material to the Company and
its subsidiaries, taken as a whole, to which the Company or any
of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective property is bound except for
such conflicts, breaches or defaults as would not singly or in
the aggregate, have a Material Adverse Effect; and
vii) the execution, delivery and performance of this
Agreement and other Transaction Documents and compliance by the
Company and the Guarantors with all the provisions hereof and
thereof and the consummation of the transactions contemplated
hereby and thereby will not conflict with or constitute a breach
of any of the terms or provisions of, or a default under any
indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company and its subsidiaries,
taken as a whole, to which the Company or any of the Guarantors
is a party or by which the Company or any of
25
the Guarantors or their respective property is bound except
for such conflicts or breaches or defaults as would not,
singly or in the aggregate, have a Material Adverse Effect,
or, to the best of such counsel's knowledge, after due
inquiry, violate or conflict with any applicable law or any
rule, regulation, judgment, order or decree of any court or
any governmental body or agency having jurisdiction over the
Company, any of the Guarantors or their respective property.
Such counsel (i) may state that such opinions are limited to matters
governed by the Federal laws of the United States of America, the laws of the
State of California, and the General Corporation Law of the State of Delaware,
(ii) may state that such counsel is generally familiar with the General
Corporation Law of the State of Delaware, (iii) may make an assumption that
matters involving the laws of the states of organization of each Guarantor, with
regard to due authorization, execution and delivery are the same as the law of
the State of California, (iv) may rely upon the opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ as to matters involving the laws of the State of Connecticut
and (v) may rely upon the opinion of a New Mexico law firm, or an attorney
admitted to the practice of law in the State of New Mexico, reasonably
acceptable to the Initial Purchasers as to matters involving the laws of the
State of New Mexico. In addition, such counsel may state that certain matters
relating to the regulation of the health care industry have been passed upon by
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, United States regulatory counsel for the Company and
that such matters have, accordingly, been excluded from the opinion.
C. An opinion, dated the Closing Date, from Sidley &
Austin, special health care counsel for the Company, which states that Sidley &
▇▇▇▇▇▇ has acted as special counsel to the Company in connection with OIG
Matters; and such counsel shall advise you that, on the basis of the foregoing,
no facts have come to its attention which caused it to believe that the
statements in the Offering Memorandum under the caption "Risk Factors --
Investigations; Uncertain Impact on Future Operating Results," as of the date of
the Offering Memorandum (as amended or supplemented, if applicable) and as of
the Closing Date, contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Without limiting the foregoing, Sidley &
Austin may further state that it assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness of the financial
statements, notes
26
and schedules and other financial or statistical data included in the Offering
Memorandum.
Such counsel may state that such opinion is limited to matters
governed by the Federal laws of the United States of America.
D. An opinion, dated the Closing Date, from ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, special Connecticut counsel for the Company and
Sunrise Healthcare Corporation with respect to the Connecticut Matters and
special Connecticut counsel for Sundance Rehabilitation Corporation with respect
to due authorization, substantially to the effect that each of the Indenture,
the Registration Rights Agreement and this Agreement has been duly authorized by
Sundance Rehabilitation Corporation. In addition, Murtha, Cullina, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ shall state that it has acted as special Connecticut counsel to the
Company in connection with Connecticut Matters; and such counsel shall advise
you that, on the basis of the foregoing, no facts have come to its attention
which caused it to believe that the statements in the Offering Memorandum under
the caption "Risk Factors -- Investigations; Uncertain Impact on Future
Operating Results" as of the date of the Offering Memorandum (as amended or
supplemented, if applicable) and as of the Closing Date, contained or contains
an untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Without limiting the foregoing, Murtha, Cullina, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ may further
state that it assumes no responsibility for, and has not independently verified,
the accuracy, completeness or fairness of the financial statements, notes and
schedules and other financial or statistical data included in the Offering
Memorandum.
Such counsel may state that such opinions are limited to matters
governed by the Federal laws of the United States of America and the laws of the
State of Connecticut.
E. An opinion, dated the Closing Date, from ▇▇▇▇▇▇▇,
Carton & ▇▇▇▇▇▇▇, special regulatory counsel for the Company and the Guarantors,
substantially to the effect that the statements in the Offering Memorandum under
the captions "Risk Factors--Risks Related to Prospective Payment System,"
"Risk Factors--Potential Reduction of Reimbursement Rates from Third Party
Payors and Impact on Future Operating Results," "Risk Factors--Investigations;
Uncertain Impact on Future Operating Results," "Risk Factors--Potential Adverse
Impact From Extensive Regulation," "Business--United States Revenue Sources,"
and "Business--Government
27
Regulation," insofar as such statements constitute a summary of certain
aspects of Title XVIII and XIX of the Social Security Act and the regulations
thereunder, fairly present the information called for with respect to such
statements.
Such counsel may state that such opinions are limited to matters
governed by Title XVIII and XIX of the Social Security Act, 42 U.S.C. Section
1395, et seq. and do not extend to any other Federal or state laws governing the
licensors of the Company or Company-related facilities, suppliers or therapists.
F. An opinion, dated the Closing Date, from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, special United Kingdom counsel for the Company and the Guarantors,
substantially to the effect that the statements in the Offering Memorandum under
the caption "Business--United Kingdom Revenue Sources," insofar as such
statements constitute a summary of the legal matters, documents or proceedings
referred to therein, fairly present the information called for with respect to
such legal matters, documents and proceedings.
Such counsel may state that such opinions are limited to matters
governed by the laws of the United Kingdom.
G. An opinion, dated the Closing Date, from New Mexico
counsel for Sunrise Healthcare Corporation and SunScript Pharmacy Corporation
reasonably acceptable to the Initial Purchasers, substantially to the effect
that each of the Indenture and this Agreement has been duly authorized by each
of Sunrise Healthcare Corporation and SunScript Pharmacy Corporation.
Such counsel may state that such opinions are limited to the matters
governed by the laws of the State of New Mexico.
b. The Initial Purchasers shall have received from Counsel for
the Initial Purchasers, a favorable opinion, dated as of the Closing Date with
respect to the issuance and sale of the Notes, the Offering Memorandum and such
other related matters as you may reasonably require, and the Company shall have
furnished to Counsel for the Initial Purchasers, such documents as they request
for the purpose of enabling them to pass upon such matters.
c. At the Closing Date you shall have received a certificate of
the Chief Financial Officer and the Secretary or Assistant Secretary of the
Company, dated the Closing Date in substantially the form of Exhibit A attached
hereto.
28
d. At the time this Agreement is executed and at the Closing
Date, you shall have received a "comfort" letter, from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
independent public accountants for the Company and Regency, dated, respectively,
as of the date of this Agreement and as of the Closing Date addressed to the
Initial Purchasers in form and substance satisfactory to the Initial Purchasers.
e. Prior to the Closing Date the Company shall have furnished
to the Initial Purchasers such further information, certificates and documents
as the Initial Purchasers may reasonably request.
f. At the Closing Date, the Notes shall have been approved for
quotation in the PORTAL market.
g. The Company shall have executed the Registration Rights
Agreement and the Initial Purchasers shall have received an original copy
thereof, duly executed by the Company.
h. The Company shall not have failed at or prior to the Closing
Date to perform or comply in all material respects with any of the agreements
herein contained and required to be performed or complied with by the Company at
or prior to the Closing Date.
i. If any of the conditions specified in this Section 6 shall
not have been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Counsel for the Initial Purchasers pursuant to this Section 6 shall not be in
all material respects reasonably satisfactory in form and substance to the
Representative and to Counsel for the Initial Purchasers, all obligations of the
Initial Purchasers hereunder may be canceled by you at, or at any time prior to,
the Closing Date and such termination shall be without liability of any party to
any other party except as provided in Section 11(c). Notice of such
cancellation shall be given to the Company in writing, or by telephone, telex or
telegraph, confirmed in writing.
7. INDEMNIFICATION.
a. The Company and the Guarantors agree to indemnify and hold
harmless each of the Initial Purchasers and each person, if any, who controls
any of the Initial Purchasers within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange
29
Act"), against any and all losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys' fees and any
and all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation, subject to
the last sentence of Section 7(c)), joint or several, to which they or any of
them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Offering Memorandum, or the Preliminary Offering Memorandum or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; PROVIDED,
HOWEVER, that the Company and the Guarantors will not be liable in any such
case to the extent but only to the extent that any such loss, liability,
claim, damage or expense arises out of or is based upon any such untrue
statements or omissions from the Preliminary Offering Memorandum that are
corrected in the Offering Memorandum or any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance
upon and in conformity with written information furnished to the Company or
the Guarantors by or on behalf of any Initial Purchaser through the
Representative expressly for use therein. This indemnity agreement will be in
addition to any liability which the Company and the Guarantors may otherwise
have including under this Agreement.
b. Each Initial Purchaser, severally, and not jointly, agrees
to indemnify and hold harmless the Company and the Guarantors, each of the
directors of the Company or the Guarantors, each of the officers of the Company
or the Guarantors, and each other person, if any, who controls the Company or
any of the Guarantors within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, against any losses, liabilities, claims,
damages and expenses whatsoever as incurred (including but not limited to
attorneys' fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation, subject to the last sentence of Section 7(c)), jointly or severally,
to which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Offering Memorandum, or the Preliminary Offering Memorandum or any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission
30
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, in each case to the extent,
but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance
upon and in conformity with written information furnished to the Company or
any of the Guarantors by or on behalf of any Initial Purchaser through the
Representative expressly for use therein; PROVIDED, HOWEVER, that in no case
shall any Initial Purchaser be liable or responsible for any amount in excess
of the underwriting discount applicable to the Notes purchased by such
Initial Purchaser hereunder. This indemnity will be in addition to any
liability which any Initial Purchaser may otherwise have including under this
Agreement. The Company and the Guarantors acknowledge that the statements
set forth in the first sentence of the last paragraph of the cover page, the
information on page vi regarding stabilization, in the third paragraph, the
third sentence of the fourth paragraph, the fifth paragraph and the sixth
paragraph under the caption "Plan of Distribution" in the Offering Memorandum
constitute the only information furnished in writing by or on behalf of any
Initial Purchaser through the Representative expressly for use in the
Offering Memorandum or in any amendment thereof or supplement thereto, as the
case may be.
c. Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 unless the indemnifying party
is materially prejudiced by the failure to notify). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the Company or, if the Company is not a
party, by one of the indemnifying parties in connection with the defense of such
action, (ii) the indemnifying parties shall not have employed counsel to have
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties
31
shall have reasonably concluded that there may be defenses available to it or
them which are different from or additional to those available to one or all
of the indemnifying parties (in which case the indemnifying parties shall not
have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and expenses
of one counsel (in addition to any local counsel) for all indemnified parties
shall be borne by the indemnifying parties. Anything in this subsection to
the contrary notwithstanding, an indemnifying party shall not be liable for
any settlement of any claim or action effected without its written consent;
PROVIDED, HOWEVER, that such consent was not unreasonably withheld.
8. CONTRIBUTION. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 7 hereof is
for any reason finally held by a court of competent jurisdiction to be
unavailable from any indemnifying party or is insufficient to hold harmless a
party indemnified thereunder, the Company, the Guarantors and the Initial
Purchasers shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement (subject to the last sentence
of this Section 8) of, any action, suit or proceeding or any claims asserted,
but after deducting in the case of losses, claims, damages, liabilities and
expenses suffered by the Company, the Guarantors or other Initial Purchasers, as
applicable, any contribution received by the Company or the Guarantors from
persons, other than the Initial Purchaser(s), who may also be liable for
contribution, including persons who control the Company within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, officers
and directors of the Company) as incurred to which the Company and one or more
of the Initial Purchasers may be subject, in such proportions as is appropriate
to reflect the relative benefits received by the Company and the Guarantors, on
the one hand, and the Initial Purchasers on the other hand from the offering of
the Notes or, if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to above but also the relative fault of the Company and the Guarantors and the
Initial Purchasers in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, the Guarantors and the Initial Purchasers shall be deemed to be in the
same proportion as (x) the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and (y) the underwriting discounts and commissions received by the Initial
Purchasers respectively. The relative fault of the Company and the Guarantors
and of the Initial Purchasers shall be determined by reference to, among
32
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Guarantors or the Initial
Purchasers and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Company, the Guarantors and the Initial Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation (even if the Initial Purchasers were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 8, (i) in no case shall any
Initial Purchaser be liable or responsible for any amount in excess of the
underwriting discount applicable to the Notes purchased by such Initial
Purchaser hereunder, (ii) 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 and (iii) no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at
which the Note purchased by it and sold in the Offering were offered to
subsequent purchasers exceeds the amount of any damages that such Initial
Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. For purposes of
this Section 8, each person, if any, who controls an Initial Purchaser within
the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act shall have the same rights to contribution as such Initial
Purchaser, and each person, if any, who controls the Company or the
Guarantors within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act, each officer and each director of the Company or
the Guarantors shall have the same rights to contribution as the Company and
the Guarantors, subject in each case to clauses (i) and (ii) of this Section
8. Any party entitled to contribution will, promptly after receipt of notice
of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party
or parties, notify each party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation
it or they may have under this Section 8 or otherwise unless the contributing
party is materially prejudiced by the failure to notify. No party shall be
liable for contribution with respect to any action or claim settled without
its consent; PROVIDED, HOWEVER, that such consent was not unreasonably
withheld.
9. DEFAULT BY AN INITIAL PURCHASER. If one or more of the Initial
Purchasers shall fail at the Closing Date or any Option Closing Date to purchase
the Notes which it is obligated to purchase under this Agreement (the "DEFAULTED
NOTES"),
33
the non-defaulting Initial Purchaser(s) shall have the right, within 24 hours
thereafter, to make arrangements for it or any other Initial Purchaser(s) to
purchase all, but not less than all, of the Defaulted Notes in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the
non-defaulting Initial Purchaser(s) shall not have completed such
arrangements within such 24-hour period, then this Agreement shall terminate
without liability on the part of the non-defaulting Initial Purchaser(s).
Notwithstanding anything to the contrary above, if the aggregate principal
amount of the Defaulted Notes is not more than one-tenth of the aggregate
principal amount of the Notes to be purchased on such date by all Initial
Purchasers, each non-defaulting Initial Purchaser shall be obligated
severally, in the proportion which the principal amount of the Notes set
forth opposite its name in Schedule I bears to the aggregate principal amount
of the Notes which all the non-defaulting Initial Purchasers, as the case may
be, have agreed to purchase, or in such other proportion as you may specify,
to purchase the Defaulted Notes; PROVIDED that in no event shall the
aggregate principal amount of the Notes which any Initial Purchaser has
agreed to purchase pursuant to Section 2 hereof be increased pursuant to this
Section 9 by an amount in excess of one-ninth of such principal amount of the
Notes without the written consent of such Initial Purchaser.
No action taken pursuant to this Section 9 shall relieve any
defaulting Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the non-defaulting Initial Purchaser or
the Company shall have the right to postpone the Closing Date for a period not
exceeding seven days in order to effect any required changes in the Offering
Memorandum or in any other documents or arrangements.
10. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All representations
and warranties, covenants and agreements of the Initial Purchasers, the Company
and the Guarantors contained in this Agreement, including the agreements
contained in Section 5, the indemnity agreements contained in Section 7 and the
contribution agreements contained in Section 8, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any Initial Purchasers or any agent, representative or controlling person
thereof or by or on behalf of the Company, any Guarantor, any of the officers
and directors or any controlling person thereof, of the Company or any Guarantor
and shall survive delivery of and payment for the Notes to and by the Initial
Purchasers. The representations contained in Section 1 and the agreements
contained in Sections 5, 7, 8 and 11(c) hereof shall survive the termination of
this Agreement, including termination pursuant to Section 9 or 11 hereof.
34
11. TERMINATION.
a. The Initial Purchasers shall have the right to terminate
this Agreement at any time prior to the Closing Date, if (A) any domestic or
international event or act or occurrence has materially disrupted, or in the
Initial Purchasers' opinion will in the immediate future materially disrupt the
market for the Company's securities or the United States or international
securities markets generally; or (B) if trading on the New York Stock Exchange,
the American Stock Exchange, the Chicago Board and Options Exchange, the Chicago
Mercantile Exchange, the Chicago Board of Trade or The Nasdaq National Market
shall have been suspended, or materially limited; or (C) if a banking moratorium
has been declared by any United States Federal or New York State authority or if
any new restriction materially adversely affecting the distribution of the Notes
shall have become effective; or (D) if any downgrading in the rating of the
Company's debt securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Securities Act);
or (E)(i) if the United States becomes engaged in hostilities or there is an
escalation of hostilities involving the United States or there is a declaration
of a national emergency or war by the United States or (ii) if there shall have
been such change in political, financial or economic conditions and if the
effect of any such event in the Representative's judgment makes it impracticable
or inadvisable to proceed with the offering, sale and delivery of the Notes, as
the case may be, on the terms contemplated by the Offering Memorandum.
b. Any notice of termination pursuant to this Section 11 shall
be by telephone, telex, or telegraph, confirmed in writing by letter.
c. If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than (i) pursuant to Section 9 or 11(a)(A), (B), (C) or
(E) hereof, (ii) as a result of the material breach of this Agreement by the
Initial Purchasers or (iii) as a result of the failure of Counsel for the
Initial Purchasers to deliver an opinion as provided in Section 6(b) where all
other law firms required to deliver opinions pursuant to Section 6(a) have
provided written confirmation of their willingness to deliver such opinions as
required thereunder), the Company will, subject to demand by you, reimburse the
Initial Purchasers for all out-of-pocket expenses (including the fees and
expenses of their counsel), reasonably incurred by the Initial Purchasers in
connection herewith.
12. NOTICE. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any Initial
35
Purchaser, shall be mailed, delivered, or telexed or telegraphed and confirmed
in writing, to it c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate Department, with a copy to Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.; if sent to the Company, shall be
mailed, delivered, or telegraphed and confirmed in writing to the Company, ▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Esq., Senior Vice President, General Counsel and Secretary, with a copy to
Shearman & Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
13. PARTIES. This Agreement shall insure solely to the benefit of,
and shall be binding upon, the Initial Purchasers, the Company and the
Guarantors and the controlling persons, directors, officers, employees and
agents referred to in Section 7 and 8, and their respective successors and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained. The term "successors and assigns"
shall not include a purchaser, in its capacity as such, of Notes from any of the
Initial Purchasers.
14. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of New York.
36
If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
SUN HEALTHCARE GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
GUARANTORS, as listed on Schedule I to this
Purchase Agreement
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Authorized Signatory
Accepted as of the date first above written
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇
SECURITIES LLC
▇▇▇▇▇▇▇▇ & CO. INC.
BY: BEAR, ▇▇▇▇▇▇▇, & CO. INC.
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Senior Managing Director
SCHEDULE I
GUARANTORS
Accelerated Care Plus, LLC
Americare Homecare, Inc.
Americare of West Virginia, Inc.
Bay Colony Health Service, Inc.
▇▇▇▇▇▇▇ Health Care Corp.
Bergen Eldercare, Inc.
▇▇▇▇▇▇▇▇ Enterprises, Inc.
Brittany Rehabilitation Center, Inc.
Cal-Med, Inc.
Care Enterprises, Inc.
Care Enterprises West
Care Home Health Services
▇▇▇▇▇▇▇▇▇▇ Rehabilitation Center
Circleville Health Care Corp.
Clipper Home of North ▇▇▇▇▇▇, Inc.
Clipper Home of Portsmouth, Inc.
Clipper Home of Rochester, Inc.
Clipper Home of Wolfeboro, Inc.
Coalinga Rehabilitation Center
Community Re-Entry Services of Cortland, Inc.
Covina Rehabilitation Center
▇▇▇▇▇▇ Health Care Corp.
Evergreen Rehabilitation Center
Executive Pharmacy Services, Inc.
Fairfield Rehabilitation Center
First Class Pharmacy, Inc.
▇▇▇▇▇▇▇▇▇ Rehabilitation Center
Glendora Rehabilitation Center
Glenville Health Care, Inc.
Golan Healthcare Group, Inc.
▇▇▇▇▇▇▇ Nursing Home, Inc.
Grand Terrace Rehabilitation Center
G-WZ of Stamford, Inc.
Hallmark Health Services, Inc.
Harbor View Rehabilitation Center
▇▇▇▇▇▇▇▇▇ Rehabilitation Center
HC, Inc.
Heritage Rehabilitation Center
Heritage-Torrance Rehabilitation Center
HTA of New Jersey, Inc.
Huntington Beach Convalescent Hospital
▇▇▇▇▇▇▇ Rehabilitation Center, Inc.
▇▇▇▇▇-Mar Rehabilitation Center
Living Services, Inc.
LTC Staffinders, Inc.
Manatee Springs Nursing Center, Inc.
▇▇▇▇▇▇ Health Care Corp.
Masthead Corporation
▇▇▇▇▇▇▇▇▇▇▇ Rehabilitation Center
Mediplex Atlanta Rehabilitation Institute, Inc.
Mediplex Management, Inc.
Mediplex Management of Palm Beach County, Inc.
Mediplex Management of Texas, Inc.
Mediplex of Concord, Inc.
Mediplex of Connecticut, Inc.
Mediplex of Kentucky, Inc.
Mediplex of Maryland, Inc.
Mediplex of Massachusetts, Inc.
Mediplex of New Hampshire, Inc.
Mediplex of New Jersey, Inc.
Mediplex of New York, Inc.
Mediplex of Ohio, Inc.
Mediplex of Tennessee, Inc.
Mediplex of Virginia, Inc.
Mediplex Rehabilitation of Massachusetts, Inc.
New Bedford Nursing Center, Inc.
New Lexington Health Care Corp.
Newport Beach Rehabilitation Center
Nursing Home, Inc.
Oakview Treatment Centers of Kansas, Inc.
Oasis Mental Health Treatment Center, Inc.
Orange Rehabilitation Hospital, Inc.
Pacific Beach Physical Therapy, Inc.
Paradise Rehabilitation Center, Inc.
Paso ▇▇▇▇▇▇ Rehabilitation Center
Peachwood Physical Therapy, Inc.
Pharmacy Factors of California, Inc.
Pharmacy Factors of Florida, Inc.
Pharmacy Factors of Texas, Inc.
P.M.N.F. Management, Inc.
▇▇▇▇▇▇ Health Care Corp.
Quality Care Holding Corporation
Quality Nursing Care of Massachusetts, Inc.
Regency Health Services, Inc.
Regency High School, Inc.
Regency - North Carolina, Inc.
Regency Outpatient Services, Inc.
Regency Rehab Hospitals, Inc.
Regency Rehab Properties, Inc.
Regency Rehabilitation Management & Consulting Services, Inc.
Regency - Tennessee, Inc.
RHS Management Corporation
Rosewood Rehabilitation Center, Inc.
Salem Health Care Corp.
San Bernardino Rehabilitation Hospital, Inc.
Savannas Hospital Limited Partnership
Shandin Hills Rehabilitation Center
SHG International Holdings, Inc.
Special Medical Services, Inc.
▇▇▇▇▇▇▇▇ Land, Inc.
Stockton Rehabilitation Center, Inc.
SunAlliance Healthcare Services, Inc.
SunBridge, Inc.
Sun Care Corp.
SunCare Respiratory Services, Inc.
SunChoice Medical Supply, Inc.
SunDance Rehabilitation Corporation
SunFactors, Inc.
Sun Healthcare (Europe) LLC
Sun Healthcare, Inc.
Sun Lane Purchase Corporation
Sunmark of New Mexico, Inc.
SunPlus Home Health Services, Inc.
SunQuest Consulting, Inc.
Sunrise Healthcare Corporation
Sunrise Healthcare of Colorado, Inc.
Sunrise Healthcare of Florida, Inc.
Sunrise Rehab of Colorado, Inc.
SunScript Pharmacy Corporation
SunSolution, Inc.
Sunspectrum Outpatient Rehabilitation-Concord, Inc.
The Mediplex Group, Inc.
Vista ▇▇▇▇▇ Rehabilitation Center, Inc.
West Jersey/Mediplex Rehabilitation L.P.
Willowview Rehabilitation Center
Worcester Nursing Center, Inc.
SCHEDULE II
NAME OF INITIAL PURCHASER NOTES TO BE PURCHASED
------------------------- ---------------------
Bear, ▇▇▇▇▇▇▇ & Co. Inc. ....................... 62,500,000
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation ...................... 18,750,000
▇.▇. ▇▇▇▇▇▇ Securities Inc. .................... 18,750,000
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC .......... 18,750,000
▇▇▇▇▇▇▇▇ & Co. Inc. ............................ 6,250,000
------------
Total .......................................... $125,000,000
EXHIBIT A
SUN HEALTHCARE GROUP, INC.
OFFICERS' CERTIFICATE
Each of the undersigned ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer of
Sun Healthcare Group, Inc., a Delaware corporation (the "Company") and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, Senior Vice President, General Counsel and Secretary of the Company,
pursuant to Section 6(c) of the Purchase Agreement, dated April 28, 1998, by and
among the Company, the Guarantors named therein (the "Guarantors"), and Bear,
▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, ▇.▇.
▇▇▇▇▇▇ Securities Inc., NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC and ▇▇▇▇▇▇▇▇ & Co.
Inc., as initial purchasers (the "Purchase Agreement"), hereby certify on behalf
of the Company that:
(i) The representations and warranties of the Company and the
Guarantors contained in Section 1 of the Purchase Agreement are accurate
with the same force and effect as if made on and as of the date hereof.
(ii) As of the date hereof, the obligations of the Company and the
Guarantors to be performed thereunder on or prior to the date hereof have
been duly performed.
(iii) Subsequent to the respective dates as of which information
is given in the Offering Memorandum, (A) the Company and its subsidiaries
have not sustained any loss or interference with their respective
businesses or properties from (1) fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or (2) from any labor
dispute or any legal or governmental proceeding, and (B) there has not been
any change, or any development reasonably likely to involve a prospective
change, in the business, properties, operations, condition (financial or
otherwise), or results of operations of the Company and its subsidiaries
taken as a whole, in the case of either (A) or (B), the effect of which in
such person's reasonable judgment is material and adverse and except in the
case of either (A) or (B) as disclosed in the Offering Memorandum.
Capitalized terms used herein without definition shall have the meanings
given such terms in the Purchase Agreement.
A-1
▇▇▇▇▇▇▇, ▇▇▇▇, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇ and ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ are entitled to rely upon this
Officers' Certificate in connection with the opinions given by such firms
pursuant to Section 6 of the Purchase Agreement.
A-2