EXHIBIT 4.5
EXECUTION VERSION
EXTENDICARE HEALTH SERVICES, INC.
$125,000,000
6 7/8% SENIOR SUBORDINATED NOTES DUE 2014
PURCHASE AGREEMENT
April 15, 2004
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
ABN AMRO Incorporated
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Extendicare Health Services, Inc., a Delaware corporation (the
"COMPANY"), proposes to issue and sell to the several Initial Purchasers named
in Schedule 1 hereto (the "INITIAL PURCHASERS") $125,000,000 aggregate principal
amount of its 6 7/8% Senior Subordinated Notes due 2014 (the "NOTES") guaranteed
(the "GUARANTEES") by the Company's domestic subsidiaries signatory hereto
(collectively, the "SUBSIDIARY GUARANTORS") pursuant to the terms of an
indenture (the "INDENTURE"), to be dated as of April 22, 2004, among the
Company, the Subsidiary Guarantors and U.S. Bank, N.A., as trustee (the
"TRUSTEE").
The Notes will be offered and sold to you pursuant to an exemption
from the registration requirements under the Securities Act of 1933, as amended
(the "SECURITIES ACT"). The Company has prepared a preliminary offering
memorandum, dated April 9, 2004 (as amended or supplemented, the "PRELIMINARY
OFFERING MEMORANDUM"), and will prepare a final offering memorandum (as amended
or supplemented, the "OFFERING MEMORANDUM"), to be dated April 15, 2004,
relating to the Company, the Notes and the Guarantees.
Upon original issuance thereof, and until such time as the same is
no longer required under the applicable requirements of the Securities Act, the
Notes (and all securities issued in exchange therefor or in substitution
therefor) shall bear substantially the following legend:
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED, IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS
NOTE BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
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INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN "OFFSHORE
TRANSACTION" PURSUANT TO RULE 904 OF REGULATION S UNDER THE SECURITIES
ACT, (2) AGREES THAT IT WILL NOT PRIOR TO (A) THE DATE WHICH IS TWO YEARS
(OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE
SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS NOTE) OR THE
LAST DAY ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WERE THE
OWNERS OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) AND (B) SUCH LATER
DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE "RESALE
RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (I) TO THE COMPANY, (II) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (III) FOR SO
LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
(IV) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE
THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES
ACT OR (V) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO
EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE AND THE
REGISTRAR SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (IV) OR (V) TO REQUIRE THAT AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE COMPANY, THE
TRUSTEE AND THE REGISTRAR IS COMPLETED AND DELIVERED BY THE TRANSFEROR.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT.
You have advised the Company that you will make offers and sales
(the "EXEMPT RESALES") of the Notes purchased hereunder on the terms set forth
in the Offering Memorandum solely to (i) persons whom you reasonably believe to
be "qualified institutional buyers" as defined in Rule 144A under the Securities
Act ("QIBs") and (ii) outside the United States to
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persons other than U.S. persons in offshore transactions meeting the
requirements of Regulation S under the Securities Act ("REGULATION S") (such
persons specified in clauses (i) and (ii) being referred to herein as the
"ELIGIBLE PURCHASERS"). As used herein, the terms "offshore transaction,"
"United States" and "U.S. person" have the respective meanings given to them in
Regulation S. You will offer the Notes to Eligible Purchasers initially at a
price equal to 97.5001% of the principal amount thereof. Thereafter, the
offering price may be changed at any time without notice.
In connection with the offering of the Notes, the Company and the
Subsidiary Guarantors will enter into an amended and restated credit facility in
the amount of up to $155.0 million pursuant to a second amended and restated
credit agreement among Extendicare Holdings, Inc., the Company, the Subsidiary
Guarantors, ▇▇▇▇▇▇ Commercial Paper Inc., as the administrative agent, and the
other lenders thereto (the "NEW CREDIT FACILITY") to amend and restate the
credit agreement, dated as of June 28, 2002, among Extendicare Holdings, Inc.,
the Company, the Subsidiary Guarantors, ▇▇▇▇▇▇ Commercial Paper Inc., as the
administrative agent, and the other lenders thereto (the "EXISTING CREDIT
FACILITY"). The net proceeds from the sale of the Notes will be used to
refinance all the Company's $200.0 million outstanding 9.35% Senior Subordinated
Notes Due 2007 and to pay related fees and expenses, as described in the "Use of
Proceeds" section of the Offering Memorandum. The entering into of the New
Credit Facility, the offering of the Notes and the use of the net proceeds from
the sale of the Notes as provided in the "Use of Proceeds" section of the
Offering Memorandum are collectively referred to herein as the "TRANSACTIONS."
Holders (including subsequent transferees) of the Notes will have
the registration rights set forth in the registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT") among the Company, the Subsidiary Guarantors
and the Initial Purchasers, to be dated as of the Closing Date (as defined
below), in the form of Exhibit A hereto, for so long as such Notes constitute
"TRANSFER RESTRICTED SECURITIES" (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, the Company and the
Subsidiary Guarantors will agree to file with the Securities and Exchange
Commission (the "COMMISSION") under the circumstances set forth therein, (i) a
registration statement under the Securities Act (the "EXCHANGE OFFER
REGISTRATION STATEMENT") relating to a separate series of the Company's 6 7/8%
Senior Subordinated Notes due 2014 (the "EXCHANGE NOTES") to be offered in
exchange for the Notes (such offer to exchange being referred to collectively as
the "REGISTERED EXCHANGE OFFER") and (ii) if required by the terms of the
Registration Rights Agreement, a shelf registration statement pursuant to Rule
415 under the Securities Act (the "SHELF REGISTRATION STATEMENT") relating to
the resale by certain holders of the Notes, and to use their reasonable best
efforts to cause such Registration Statements to be declared effective. This
Agreement, the Notes, the Exchange Notes, the Guarantees, the Exchange Note
Guarantees (as defined below), the Indenture and Registration Rights Agreement
are hereinafter referred to collectively as the "OPERATIVE DOCUMENTS." This is
to confirm the agreements concerning the purchase of the Notes from the Company
by the Initial Purchasers.
SECTION 1. Representations, Warranties and Agreements of the Company
and the Subsidiary Guarantors. The Company and the Subsidiary Guarantors,
jointly and severally, represent, warrant and agree that:
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(a) The Preliminary Offering Memorandum and the Offering Memorandum
have been or will be prepared by the Company and Subsidiary Guarantors for
use by the Initial Purchasers in connection with the Exempt Resales. No
order or decree preventing the use of the Preliminary Offering Memorandum
or the Offering Memorandum, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration
requirements of the Securities Act has been issued and no proceeding for
that purpose has commenced or is pending or, to the knowledge of the
Company and Subsidiary Guarantors, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum
as of their respective dates did not, and the Offering Memorandum as of
the Closing Date will not, contain an untrue statement of a material fact
or omit to state a material fact necessary, in order to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading, except that this representation and
warranty does not apply to statements in or omissions from the Preliminary
Offering Memorandum and the Offering Memorandum made in reliance upon and
in conformity with information relating to the Initial Purchasers
furnished to the Company in writing by or on behalf of the Initial
Purchasers expressly for use therein, as specifically identified in
Section 8(e) hereof.
(c) The Company and each of the Subsidiary Guarantors (i) have been
duly organized or formed, are validly existing and are in good standing
under the laws of their respective jurisdictions of organization, and (ii)
are duly qualified to do business and are in good standing in each
jurisdiction in which their respective ownership or lease of property or
the conduct of their respective businesses requires such qualification,
except where the failure to so qualify or to be in good standing would not
have a material adverse effect on the general affairs, management,
consolidated financial position, shareholders' equity, results of
operations, business or prospects of the Company and its subsidiaries
taken as a whole (a "MATERIAL ADVERSE EFFECT"). The Company and each of
the Subsidiary Guarantors have all power and authority necessary to own or
hold their respective properties and to conduct the businesses in which
they are engaged, and none of the subsidiaries of the Company, other than
Extendicare Homes, Inc., Northern Health Facilities, Inc., Extendicare
Health Network, Inc., Extendicare Health Facility Holdings, Inc. and
Extendicare Health Facilities, Inc., is a "significant subsidiary," as
such term is defined in Rule 405 under the Securities Act.
(d) The Subsidiary Guarantors constitute all of the active
subsidiaries of the Company and each of the Company's other subsidiaries
are individually and in the aggregate inactive and immaterial.
(e) The Company has an authorized capitalization as set forth in the
Offering Memorandum. All of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable; and all of the issued shares of capital stock and
limited partner or limited liability company interests of each of the
Subsidiary Guarantors have been duly and validly authorized and issued and
are fully paid and non-assessable (except, in the case of such Subsidiary
Guarantors that are Wisconsin corporations, for certain statutory
liabilities that may be imposed by
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Section 180.0622(2)(b) of the Wisconsin Business Corporation Law for
unpaid employee wages) and are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims,
other than liens, encumbrances, equities or claims under the Existing
Credit Facility and contemplated under the New Credit Facility or
otherwise described in the Offering Memorandum, and none of such shares of
capital stock, or limited partner or limited liability company interests
were issued in violation of preemptive or other similar rights arising by
operation of law, under the charter and bylaws of the Company or under any
agreement to which the Company or any Subsidiary Guarantor is a party or
otherwise.
(f) Each of the Company and the Subsidiary Guarantors has all
requisite power and authority to execute, deliver and perform its
respective obligations under this Agreement and each of the other
Operative Documents to which it is a party.
(g) This Agreement has been duly and validly authorized, executed
and delivered by the Company and the Subsidiary Guarantors.
(h) The Registration Rights Agreement has been duly and validly
authorized by the Company and each of the Subsidiary Guarantors, and when
duly executed by the proper officers of the Company and each of the
Subsidiary Guarantors (assuming due authorization, execution and delivery
by the Initial Purchasers) and delivered by the Company and each of the
Subsidiary Guarantors, will constitute a legal, valid and binding
agreement of the Company and each of the Subsidiary Guarantors,
enforceable against the Company and each of the Subsidiary Guarantors in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights and remedies generally, and
subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity), and except that rights to indemnification and contribution
thereunder may be limited by federal or state securities laws or public
policy relating thereto.
(i) The Indenture has been duly and validly authorized by the
Company and each of the Subsidiary Guarantors, and when duly executed by
the proper officers of the Company and each of the Subsidiary Guarantors
(assuming due authorization, execution and delivery by the Trustee) and
delivered by the Company and each of the Subsidiary Guarantors, will
constitute a legal, valid and binding agreement of the Company and each of
the Subsidiary Guarantors enforceable against the Company and each of the
Subsidiary Guarantors in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought
in a proceeding at law or in equity). No qualification of the Indenture
under the Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE
ACT"), is required in connection with the offer and sale of the Notes
contemplated hereby or in connection with the Exempt Resales. The
Indenture
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conforms to the requirements of the Trust Indenture Act and the rules and
regulations thereunder applicable to an indenture that is qualified
thereunder.
(j) The Notes have been duly and validly authorized by the Company
and when duly issued by the Company in accordance with the terms of the
Indenture and, assuming due authentication of the Notes by the Trustee,
when delivered to the Initial Purchasers against payment therefor in
accordance with the terms hereof, will have been validly issued and
delivered, and will constitute legal, valid and binding obligations of the
Company entitled to the benefits of the Indenture and enforceable against
the Company in accordance with their terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought
in a proceeding at law or in equity).
(k) The Guarantees have been duly and validly authorized by each of
the Subsidiary Guarantors and when duly endorsed on the Notes in
accordance with the terms of the Indenture and, assuming due
authentication of the Notes by the Trustee, upon delivery to the Initial
Purchasers against payment therefor in accordance with the terms hereof
will constitute legal, valid and binding obligations of each of the
Subsidiary Guarantors entitled to the benefits of the Indenture and
enforceable against each of the Subsidiary Guarantors in accordance with
their terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).
(l) The Exchange Notes have been duly and validly authorized by the
Company and if and when duly issued by the Company in accordance with the
terms of the Indenture and, assuming due authentication of the Exchange
Notes by the Trustee, if and when delivered in accordance with the
Registered Exchange Offer contemplated by the Registration Rights
Agreement, will constitute legal, valid and binding obligations of the
Company entitled to the benefits of the Indenture and enforceable against
the Company in accordance with their terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought
in a proceeding at law or in equity).
(m) The guarantees of the Exchange Notes (the "EXCHANGE NOTE
GUARANTEES") have been duly and validly authorized by each of the
Subsidiary Guarantors and if and when duly endorsed on the Exchange Notes
in accordance with the terms of the Indenture and, assuming due
authentication of the Exchange Notes by the Trustee, if and when the
Exchange Notes are delivered in accordance with the Registered
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Exchange Offer contemplated by the Registration Rights Agreement, will
constitute legal, valid and binding obligations of each of the Subsidiary
Guarantors entitled to the benefits of the Indenture and enforceable
against each of the Subsidiary Guarantors in accordance with their terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).
(n) The Company and the Subsidiary Guarantors have all requisite
corporate power and authority to enter into (A) the New Credit Facility
and (B) any and all other agreements and instruments ancillary to or
entered into in connection with the transaction contemplated by the New
Credit Facility (items (A) and (B) are referred to collectively as the
"CREDIT DOCUMENTS").
(o) Each of the New Credit Facility and the other Credit Documents
has been duly and validly authorized by the Company and the Subsidiary
Guarantors, to the extent they are a party thereto, and when duly executed
by the proper officers of the Company and each of the Subsidiary
Guarantors (assuming due authorization, execution and delivery by the
other parties thereto) and delivered by the Company and each of the
Subsidiary Guarantors, to the extent they are a party thereto, will
constitute a legal, valid and binding agreement of each of the Company and
the Subsidiary Guarantors, enforceable against the Company and each of the
Subsidiary Guarantors in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought
in a proceeding at law or in equity). As of December 31, 2003, after
giving effect to the closing of the sale of the Notes, the receipt by the
Company of the proceeds therefrom, the closing of the New Credit Facility,
anticipated borrowings of $30.0 million under the New Credit Facility, the
$45.3 million of letters of credit outstanding under the New Credit
Facility and the application of the proceeds from the Notes and the New
Credit Facility as described under the caption "Use of Proceeds" in the
Offering Memorandum, the Company would have had $79.7 million of
borrowings available to it under the New Credit Facility. All
representations and warranties made by the Company in the New Credit
Facility and the other Credit Documents will be true and correct in all
material respects as of the date thereof.
(p) The Indenture, the Notes, the Guarantees, the Registration
Rights Agreement and the Credit Documents conform in all material respects
to the descriptions thereof in the Offering Memorandum.
(q) The execution, delivery and performance of this Agreement, the
other Operative Documents, the New Credit Facility and the other Credit
Documents by the Company and the Subsidiary Guarantors and the
consummation of the Transactions will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
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constitute a default under, (i) any indenture, mortgage, deed of trust,
loan agreement or other agreement, license or instrument to which the
Company or any of the Subsidiary Guarantors is a party or by which the
Company or any of the Subsidiary Guarantors is bound or to which any of
the property or assets of the Company or any of the Subsidiary Guarantors
is subject, (ii) the provisions of the charter or bylaws of the Company or
the charter, bylaws or other organizational documents of any of the
Subsidiary Guarantors or (iii) any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company or any of the Subsidiary Guarantors or any of their
properties or assets, except, in the case of clauses (i) and (iii) for
such conflicts, breaches, violations or defaults that would not have a
Material Adverse Effect. Except as may be required in connection with (1)
the registration of the Notes, the Exchange Notes, the Guarantees and/or
the Exchange Note Guarantees under the Securities Act in accordance with
the Registration Rights Agreement, (2) qualification of the Indenture
under the Trust Indenture Act, (3) compliance with the securities or blue
sky laws of various jurisdictions and (4) filings required by the terms of
the Credit Documents, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or body
is required for the execution, delivery and performance of this Agreement,
any of the other Operative Documents, the New Credit Facility and the
other Credit Documents by the Company and the Subsidiary Guarantors and
the consummation of the Transactions.
(r) The financial statements (including the related notes and
supporting schedules) included in the Offering Memorandum comply as to
form in all material respects with the requirements of Regulation S-X
under the Securities Act and present fairly the financial condition and
results of operations and cash flows of the entities purported to be shown
thereby, at the dates and for the periods indicated, and have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved. The other
financial data, selected pro forma ratios, operating data and statistical
information and data, including EBITDA (as defined in the Offering
Memorandum), included in the Offering Memorandum is presented fairly and
has been prepared on a basis consistent with such financial statements and
the books and records of the Company.
(s) Except as set forth in the Offering Memorandum, there are no
legal or governmental proceedings pending to which the Company or any of
the Subsidiary Guarantors is a party or of which any property or assets of
the Company or any of the Subsidiary Guarantors is the subject which, if
determined adversely to the Company or any of the Subsidiary Guarantors,
would have a Material Adverse Effect, and to the Company's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or others.
(t) Except as set forth in the Offering Memorandum, there are no
contracts, agreements or understandings between the Company and/or the
Subsidiary Guarantors and any person granting such person the right to
require the Company or the Subsidiary Guarantors to file a registration
statement under the Securities Act with respect to any securities of the
Company or the Subsidiary Guarantors owned or to be owned by such person
or to require the Company or the Subsidiary Guarantors to include such
securities
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in the securities to be registered pursuant to the Exchange Offer
Registration Statement or the Shelf Registration Statement or in any
securities registered or to be registered pursuant to any other
registration statement filed by or required to be filed by the Company or
the Subsidiary Guarantors under the Securities Act.
(u) Except as disclosed in the Offering Memorandum, since the date
of the latest audited consolidated financial statements of the Company
included in the Offering Memorandum, none of the Company or the Subsidiary
Guarantors has incurred any liability or obligation, direct or contingent,
or entered into any transaction, in each case not in the ordinary course
of business, that is material to the Company or the Subsidiary Guarantors,
taken as a whole, and there has not occurred, to the knowledge of the
Company and the Subsidiary Guarantors, any development or event involving
a Material Adverse Effect and, except as disclosed in or contemplated by
the Offering Memorandum, there has been no (i) dividend or distribution of
any kind declared, paid or made by the Company or its affiliates on any
class of its respective capital stock, (ii) issuance of securities by the
Company or its affiliates (other than the Notes and the Guarantees offered
thereby or pursuant to an issuance by the Company or its affiliates of
options to purchase the capital stock of the Company or its affiliates) or
(iii) material increase in short-term or long-term debt of the Company or
the Subsidiary Guarantors.
(v) The Company is in full compliance with the reporting
requirements of Section 13 or 15(d) of the Exchange Act. All reports filed
by the Company with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act comply as to form with the Exchange Act and the rules and
regulations of the Commission thereunder and when filed did not include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading.
(w) The Company and each Subsidiary Guarantor (i) makes and keeps
accurate books and records and (ii) maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management's authorization,
(B) transactions are recorded as necessary to permit preparation of its
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for its assets, (C) access to
its assets is permitted only in accordance with management's authorization
and (D) the recorded accountability for its assets is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(x) KPMG LLP, who have certified certain financial statements of the
Company, whose report appears in the Offering Memorandum and who have
delivered the initial letter referred to in Section 7(j) hereof, are
independent public accountants under rule 101 of the AICPA's Code of
Professional Conduct and its interpretations and rulings.
(y) The statistical and market-related data included in the Offering
Memorandum are based on or derived from sources that the Company and the
subsidiaries believe to be reliable and accurate.
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(z) Except as disclosed in or specifically contemplated by the
Offering Memorandum, each of the Company and the Subsidiary Guarantors has
such permits, licenses, patents, franchises, certificates of need and
other approvals or authorizations of governmental or regulatory
authorities ("PERMITS") as are necessary under applicable law to own its
properties and to conduct its businesses in the manner described in the
Offering Memorandum, except where the failure to have any such Permit
would not, individually or in the aggregate, have a Material Adverse
Effect; each of the Company and the Subsidiary Guarantors has fulfilled
and performed all of its obligations with respect to the Permits, except
where the failure to so fulfill and/or perform such obligations would not
have a Material Adverse Effect; and, except as disclosed in or
specifically contemplated by the Offering Memorandum, no event has
occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other impairment of
the rights of the holder of any such Permit, except where any such
revocations, terminations or impairments would not, individually or in the
aggregate, have a Material Adverse Effect. Except as disclosed in or
specifically contemplated by the Offering Memorandum, none of the Permits
contains any restriction that is materially burdensome (other than such
burdens as are common or customary to such Permits) to any of the Company
or the Subsidiary Guarantors.
(aa) The Company and each of the Subsidiary Guarantors carry, or are
covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the value of
their respective properties and as is customary for companies engaged in
similar businesses in similar industries.
(bb) The Company and each of the Subsidiary Guarantors own or
possess adequate rights to use all patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service
▇▇▇▇ registrations, copyrights and licenses necessary for the conduct of
their respective businesses and have no reason to believe that the conduct
of their respective businesses will conflict with, and have not received
any notice of any claim of conflict with, any such rights of others, and
the Company and the Subsidiary Guarantors are not aware of any pending or
threatened claim to the contrary or any pending or threatened challenge by
any other person to the rights of the Company and the Subsidiary
Guarantors with respect to the foregoing which, if determined adversely to
any of the Company or the Subsidiary Guarantors, would have a Material
Adverse Effect.
(cc) There are no contracts or other documents which would be
required to be described in a prospectus included in or filed as an
exhibit to a registration statement on Form S-1 under the Securities Act
that have not been described in the Offering Memorandum or filed with the
Commission.
(dd) No relationship, direct or indirect, exists between or among
the Company and the Subsidiary Guarantors, on the one hand, and the
directors, officers, shareholders, customers or suppliers of the Company
or the Subsidiary Guarantors, on the other hand, which would be required
to be described in a prospectus included in a registration statement on
Form S-1 under the Securities Act that is not described in the Offering
Memorandum.
10
(ee) No labor disturbance by the employees of the Company or any of
the Subsidiary Guarantors exists or, to the knowledge of the Company, is
imminent which would have a Material Adverse Effect.
(ff) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any material liability; the
Company has not incurred and does not expect to incur any material
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "CODE"); and each "pension plan"
for which the Company would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act,
which would cause the loss of such qualification.
(gg) The Company and the Subsidiary Guarantors have filed all
federal, state and local income and franchise tax returns required to be
filed through the date hereof, other than those being contested in good
faith, and paid all taxes due thereon, other than those being contested in
good faith, and no tax deficiency has been determined adversely to the
Company or any of the Subsidiary Guarantors, nor does the Company have any
knowledge of any tax deficiency which, if determined adversely to the
Company or any of the Subsidiary Guarantors, would have a Material Adverse
Effect.
(hh) Neither the Company nor any of the Subsidiary Guarantors (i) is
in violation of its charter, bylaws or other organizational documents,
(ii) is in default, and no event has occurred which, with notice or lapse
of time or both, would constitute such a default, in the due performance
or observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any
of its properties or assets is subject, except for such defaults that
would not have a Material Adverse Effect, or (iii) is in violation of any
law, ordinance, governmental rule, regulation or court decree to which it
or its property or assets may be subject, except for such violations that
would not have a Material Adverse Effect.
(ii) Neither the Company nor any of the Subsidiary Guarantors, nor
any current director or officer, or to the Company's knowledge, any
current agent, employee or other person associated with or acting on
behalf of the Company or any of the Subsidiary Guarantors, has used any
corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government official
or employee from corporate funds; violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.
11
(jj) Neither the Company nor the Subsidiary Guarantors has stored,
disposed of, generated, manufactured, refined, transported, handled or
treated toxic wastes, medical wastes, solid wastes, hazardous wastes or
hazardous substances or other similar materials ("HAZARDOUS MATERIALS")
and, to the knowledge of the Company, there has been no storage, disposal,
generation, manufacture, refinement, transportation, handling or treatment
of Hazardous Materials by any other person at, upon or from any of the
properties now owned or leased by the Company or the Subsidiary Guarantors
in violation of any applicable law, ordinance, rule, regulation, order,
judgment, decree or permit which could reasonably be expected to have,
individually or in the aggregate with all such violations and remedial
actions, a Material Adverse Effect; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of any
kind onto such property or into the environment surrounding such property
of any toxic wastes, medical wastes, solid wastes, hazardous wastes or
hazardous substances due to or caused by the Company or any of the
Subsidiary Guarantors or with respect to which the Company or any of the
Subsidiary Guarantors have knowledge, which could reasonably be expected
to have, individually or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings and releases,
a Material Adverse Effect; and the terms "hazardous wastes," "toxic
wastes," "hazardous substances," "solid wastes" and "medical wastes" shall
have the meanings specified in any applicable local, state, federal and
foreign laws or regulations with respect to environmental protection.
(kk) The Company and each of the Subsidiary Guarantors have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case,
free and clear of all liens, encumbrances and defects except such as are
existing under the Existing Credit Facility and contemplated under the New
Credit Facility or otherwise described in the Offering Memorandum or such
as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such
property by the Company and the Subsidiary Guarantors; and all assets held
under lease by the Company and the Subsidiary Guarantors are held by them
under valid, subsisting and enforceable leases, with such exceptions as
are not material and do not interfere with the use made and proposed to be
made of such assets by the Company and the Subsidiary Guarantors.
(ll) Immediately after the consummation of the Transactions, the
fair value and present fair saleable value of the assets of the Company
and each of the Subsidiary Guarantors (each on a consolidated basis) will
exceed the sum of its stated liabilities and identified contingent
liabilities; none of the Company nor any of the Subsidiary Guarantors
(each on a consolidated basis) is, nor will any of the Company or any of
the Subsidiary Guarantors (each on a consolidated basis) be, after giving
effect to the execution, delivery and performance of this Agreement and
the other Operative Documents and the New Credit Facility and the other
Credit Documents and the consummation of the Transactions, (A) left with
unreasonably small capital with which to carry on its business as it is
proposed to be conducted, (B) unable to pay its debts (contingent or
otherwise) as they mature or (C) otherwise insolvent.
(mm) Neither the Company nor any Subsidiary Guarantor is, or, as of
the Closing Date after giving effect to the Transactions and the
application of the proceeds as
12
described in the Offering Memorandum under the section entitled "Use of
Proceeds," will be, an "investment company" within the meaning of such
term under the Investment Company Act of 1940, as amended (the "INVESTMENT
COMPANY ACT").
(nn) Except as set forth in the Offering Memorandum, neither the
Company nor any of the Subsidiary Guarantors nor, to the knowledge of the
Company, any other person who has a direct or indirect ownership or
control interest in the Company or any of the Subsidiary Guarantors or who
is an officer, director, agent or managing employee of the Company or any
Subsidiary Guarantor: (1) has engaged in any activities which are
prohibited, or are cause for criminal or civil penalties and/or mandatory
or permissive exclusion from Medicare or Medicaid, under Section 1320a-7,
1320a-7a, 1320a-7b, or 1395nn of Title 42 of the United States Code, the
federal TRICARE statute, the Federal False Claims Act 31
U.S.C.Section 3729-3733, or the regulations promulgated pursuant to such
statutes or regulations or related state or local statutes or by generally
recognized professional standards of care or conduct; (2) has had a civil
monetary penalty assessed against it under Section 1128A of the Social
Security Act ("SSA"); (3) is currently excluded from participation under
the Medicare program or a Federal Health Care Program (as that term is
defined in SSA Section 1128(B)(f)); or (4) has been convicted (as that
term is defined in 42 C.F.R. Section 1001.2) of any of the categories of
offenses described in SSA Section 1128(a) and (b)(1), (2) and (3).
(oo) Neither the Company nor any other affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act ("REGULATION D")) of the
Company has directly, or through any agent (provided that no
representation is made as to the Initial Purchasers or any person acting
on their behalf), (i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or could be integrated with the offering and sale
of the Notes and the Guarantees in a manner that would require the
registration of the Notes and the Guarantees under the Securities Act or
(ii) engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D, including, but not limited to,
advertisements, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising) in connection with the
offering of the Notes and the Guarantees. Neither the Company nor any
Subsidiary Guarantor has offered, sold or issued any securities, or
securities that are convertible into other securities, with terms that are
substantially similar to the Notes and the Guarantees during the six-month
period preceding the date of the Offering Memorandum, including any sales
pursuant to Section 4(2) of the Securities Act or Regulation D or
Regulation S under the Securities Act.
(pp) Each of the Preliminary Offering Memorandum and the Offering
Memorandum and each amendment or supplement thereto, as of its date,
contains the information specified in, and meets the requirements of, Rule
144A(d)(4) under the Act.
(qq) Neither the Company nor any Subsidiary Guarantor has
distributed and, prior to the later to occur of the Closing Date and
completion of the distribution of the Notes and the Guarantees, will not
distribute any offering material in connection with the
13
offering and sale of the Notes other than the Preliminary Offering
Memorandum and the Offering Memorandum.
(rr) When issued and delivered pursuant to this Agreement, the Notes
will not be of the same class (within the meaning of Rule 144A under the
Securities Act) as securities of the Company that are listed on a national
securities exchange registered under Section 6 of the Exchange Act or that
are quoted in a U.S. automated inter-dealer quotation system.
(ss) Assuming (i) that your representations and warranties in
Section 2 of this Agreement are true, (ii) compliance by you with the
covenants set forth herein and (iii) that each of the Eligible Purchasers
is a QIB or a person who acquires the Notes and the Guarantees outside the
United States in an "offshore transaction" and is not a "U.S. person"
(within the meaning of Rule 904 of Regulation S), it is not necessary in
connection with the purchase of the Notes and the Guarantees and the offer
and initial resale of the Notes and the Guarantees by you in the manner
contemplated by this Agreement and the Offering Memorandum, to register
the Notes and the Guarantees under the Securities Act or to qualify the
Indenture under the Trust Indenture Act.
(tt) None of the Company, any Subsidiary Guarantor or any of their
affiliates or any person acting on their behalf (provided that no
representation is made as to the Initial Purchasers or any person acting
on their behalf) has engaged or will engage in any directed selling
efforts within the meaning of Rule 902(c) of Regulation S with respect to
the Notes, and the Company, the Subsidiary Guarantors and their other
affiliates and all persons acting on their behalf (provided that no
representation is made as to the Initial Purchasers or any person acting
on their behalf) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the offering
of the Notes outside of the United States and, in connection therewith,
the Offering Memorandum will contain the disclosure required by Rule
902(g). The sales of the Notes pursuant to Regulation S are not part of a
plan or scheme to evade the registration provision of the Securities Act.
(uu) The Notes sold in reliance on Regulation S will be represented
upon issuance by a temporary global security that may not be exchanged for
definitive securities until the expiration of the 40-day restricted period
referred to in Rule 903(b)(2) of the Securities Act and only upon
certification of beneficial ownership of such Notes by non-U.S. persons or
U.S. persons who purchased such Notes in transactions that were exempt
from the registration requirements of the Securities Act.
(vv) In connection with the distribution of the Notes and the
Guarantees, neither the Company nor any of its subsidiaries has taken or
will take, directly or indirectly, any action designed to cause or result
in, or which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the Notes
and the Guarantees to facilitate the sale or resale of the Notes and the
Guarantees.
14
(ww) No "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Securities
Act (i) has imposed (or has informed the Company that it is considering
imposing) any condition (financial or otherwise) on the Company's
retaining any rating assigned as of the date hereof to the Company or any
of their respective securities or (ii) has indicated to the Company that
it is considering (A) the downgrading, suspension or withdrawal of, or any
review for a possible change that does not indicate the direction of the
possible change in, any rating so assigned or (B) any negative change in
the outlook for any rating of the Company.
(xx) The Company has not taken, and will not take, any action that
might cause this Agreement or the issuance or sale of the Notes and the
Guarantees 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.
(yy) The Company and each Subsidiary Guarantor understands that the
Initial Purchaser and, for purposes of the opinions to be delivered to the
Initial Purchaser pursuant to Section 7 hereof, counsel to the Company and
counsel to the Initial Purchasers will rely upon the accuracy and truth of
the foregoing representations and hereby consents to such reliance.
SECTION 2. Representations, Warranties and Agreements of the Initial
Purchasers. Each of the Initial Purchasers, severally and not jointly,
represents and warrants to, and agrees with, the Company and the Subsidiary
Guarantors, that:
(a) Such Initial Purchaser is a QIB with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Notes and the
Guarantees.
(b) Such Initial Purchaser (i) is not acquiring the Notes and the
Guarantees with a view to any distribution thereof or with any present
intention of offering or selling any of the Notes and the Guarantees in a
transaction that would violate the Securities Act or any state securities
laws or any other applicable jurisdiction; (ii) in connection with the
Exempt Resales, will solicit offers to buy the Notes and the Guarantees
only from, and will offer to sell the Notes and the Guarantees only to,
the Eligible Purchasers in accordance with this Agreement and on the terms
contemplated by the Offering Memorandum; and (iii) will not offer or sell
the Notes and the Guarantees, nor has it offered or sold the Notes and the
Guarantees by, or otherwise engaged in, any form of general solicitation
in connection with the offering of the Notes and the Guarantees.
(c) The Notes and the Guarantees have not been and will not be
registered under the Securities Act and may not be offered or sold within
the United States or to, or for the account or benefit of, U.S. persons
except in accordance with Regulation S under the Securities Act or
pursuant to an exemption from the registration requirements of the
Securities Act. Such Initial Purchaser represents that it has not offered,
sold or delivered the Notes and the Guarantees, and will not offer, sell
or deliver the Notes and the Guarantees (i) as part of their distribution
at any time or (ii) otherwise until 40 days after the later of the
commencement of the offering of the Notes and the Guarantees and the
15
Closing Date (such period, the "DISTRIBUTION COMPLIANCE PERIOD"), within
the United States or to, or for the account or benefit of U.S. persons,
except in accordance with Rule 144A under the Securities Act. Accordingly,
such Initial Purchaser represents and agrees that neither it, its
affiliates nor any persons acting on its behalf have engaged or will
engage in any directed selling efforts within the meaning of Rule 902(c)
of Regulation S with respect to the Notes and the Guarantees, and its
affiliates and all persons acting on its behalf have complied and will
comply with the offering restrictions requirements of Regulation S.
(d) Such Initial Purchaser agrees that, at or prior to confirmation
of a sale of Notes and Guarantees (other than a sale pursuant to Rule
144A), it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Notes and
Guarantees from them during the Distribution Compliance Period a
confirmation or notice substantially to the following effect:
"The Notes covered hereby have not been registered under the
Securities Act of 1933 (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 or the closing date, except in either
case in accordance with Regulation S (or Rule 144A if available)
under the Securities Act, and in connection with any subsequent sale
by you of the Notes covered hereby in reliance on Regulation S
during the period referred to above to any distributor, dealer or
person receiving a selling concession, fee or other remuneration,
you must deliver a notice substantially to the foregoing effect.
Terms used above have the meanings assigned to them in Regulation
S."
(e) All offers and sales of the Notes and the Guarantees by such
Initial Purchaser pursuant to Regulation S are and will be "offshore
transactions" within the meaning of Regulation S and are not and will not
be part of a plan or scheme to evade the registration provisions of the
Securities Act.
(f) Such Initial Purchaser (i) has not offered or sold, and prior to
the six months after the date of the issue of the Notes will not offer or
sell, any Notes to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for purposes of their
businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995, (ii) has
complied with and will comply with all applicable provisions of the
Financial Services and Markets ▇▇▇ ▇▇▇▇, or the FSMA, with respect to
anything done by it in relation to the Notes in, from or otherwise
involving the United Kingdom and (iii) has only communicated or caused to
be communicated and will only communicate and cause to be communicated any
invitation or inducement to engage in investment activity (within the
meaning of Section 21 of the FSMA) received by it in connection with the
issue or sale of any Notes in circumstances in which Section 21(1) of the
FSMA would not apply to the Company.
16
(g) Such Initial Purchaser understands that the Company and, for
purposes of the opinions to be delivered to you pursuant to Section 7
hereof, counsel to the Company and counsel to the Initial Purchasers will
rely upon the accuracy and truth of the foregoing representations and
hereby consents to such reliance.
The terms used in this Section 2 that have meanings assigned to them
in Regulation S are used herein as so defined.
SECTION 3. Purchase of the Notes and the Guarantees by the Initial
Purchasers. On the basis of the representations and warranties contained in, and
subject to the terms and conditions of, this Agreement, the Company agrees to
sell the Notes (and cause the Subsidiary Guarantors to issue the Guarantees) to
the several Initial Purchasers and each of the Initial Purchasers, severally and
not jointly, agrees to purchase the amount of Notes set opposite that Initial
Purchaser's name in Schedule 1 hereto. Each Initial Purchaser will purchase such
aggregate principal amount of Notes at an aggregate purchase price equal to
95.0001% of the principal amount thereof (the "PURCHASE PRICE").
The Company shall not be obligated to deliver any of the Notes to be
delivered on the Closing Date, except upon payment for all the Notes and the
Guarantees to be purchased on the Closing Date as provided herein.
SECTION 4. Delivery of and Payment for the Notes and the Guarantees.
(a) Delivery of and payment for the Notes and the Guarantees shall
be made at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 9:00 A.M., New York City time, on the fifth
full business day following the date of this Agreement or at such other
date or place as shall be determined by agreement between ▇▇▇▇▇▇ Brothers
and the Company. This date and time are sometimes referred to as the
"CLOSING DATE."
(b) On the Closing Date, one or more Notes in definitive form,
registered in the name of Cede & Co., as nominee of The Depository Trust
Company ("DTC"), having an aggregate principal amount corresponding to the
aggregate principal amount of the Notes (collectively, the "GLOBAL
NOTES"), shall be delivered by the Company to the Initial Purchasers
against payment by the Initial Purchasers of the purchase price thereof by
wire transfer of immediately available funds as the Company may direct by
written notice delivered to you no later than two business days prior to
the Closing Date. The Global Notes in definitive form shall be made
available to the Initial Purchasers for inspection not later than 2:00
p.m. on the business day prior to the Closing Date.
SECTION 5. Further Agreements of the Company. The Company agrees:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) of the issuance by the Commission or any state
securities commission of any stop order suspending the qualification or
exemption from qualification of the Notes and the Guarantees for offering
or sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose by the Commission or any state securities
commission or other regulatory authority, and (ii) the happening of any
event that makes
17
any statement of a material fact made in the Preliminary Offering
Memorandum or the Offering Memorandum untrue or which requires the making
of any additions to or changes in the Preliminary Offering Memorandum or
Offering Memorandum in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The
Company shall use all reasonable efforts to prevent the issuance of any
stop order or order suspending the qualification or exemption of the Notes
and the Guarantees under any state securities or blue sky laws and, if at
any time any state securities commission shall issue any stop order
suspending the qualification or exemption of the Notes and the Guarantees
under any state securities or blue sky laws, the Company shall use all
reasonable efforts to obtain the withdrawal or lifting of such order at
the earliest possible time.
(b) To furnish to you without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments or supplements thereto, as you may reasonably request. The
Company consents to the use of the Preliminary Offering Memorandum and the
Offering Memorandum, and any amendments and supplements thereto required
pursuant to this Agreement, by you in connection with the Exempt Resales
that are in compliance with this Agreement.
(c) Not to amend or supplement the Offering Memorandum prior to the
Closing Date or during the period referred to in (d) below unless you
shall previously have been advised of, and shall not have reasonably
objected to, such amendment or supplement within a reasonable time, but in
any event not longer than three days after being furnished a copy of such
amendment or supplement. The Company shall promptly prepare, upon any
reasonable request by you, any amendment or supplement to the Offering
Memorandum that may be necessary or advisable in connection with Exempt
Resales.
(d) If, in connection with any Exempt Resales or market making
transactions after the date of this Agreement and prior to the
consummation of the Registered Exchange Offer, any event shall occur that,
in the judgment of the Company or in your judgment or the judgment of
counsel to you, makes any statement of a material fact in the Offering
Memorandum untrue or that requires the making of any additions to or
changes in the Offering Memorandum in order to make the statements in the
Offering Memorandum, in the light of the circumstances at the time that
the Offering Memorandum is delivered to prospective Eligible Purchasers,
not misleading, or if it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, the Company will promptly notify
you of such event and prepare an appropriate amendment or supplement to
the Offering Memorandum so that, at the time that the Offering Memorandum
is delivered to prospective Eligible Purchasers, (i) the statements in the
Offering Memorandum as amended or supplemented, in the light of the
circumstances under which they were made, will not be misleading and (ii)
the Offering Memorandum will comply with applicable law.
(e) Promptly from time to time to take such action as you may
reasonably request to qualify the Notes and the Guarantees for offering
and sale under the state securities or blue sky laws of such jurisdictions
as you may request (provided, however,
18
that the Company shall not be obligated to qualify as a foreign
corporation in any jurisdiction in which it is not now so qualified or to
take any action that would subject it to general consent to service of
process in any jurisdiction in which it is not now so subject) and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Notes and the Guarantees.
(f) To use all reasonable best efforts to do and perform all things
required to be done and performed under this Agreement by it prior to or
after the Closing Date and to satisfy all conditions precedent on its part
to the delivery of the Notes and the Guarantees.
(g) Except as contemplated in the Registration Rights Agreement, not
to sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in the Securities Act) that would be
integrated with the sale of the Notes and the Guarantees in a manner that
would require the registration under the Securities Act of the sale to you
or the Eligible Purchasers of the Notes and the Guarantees.
(h) For so long as any Notes remain outstanding and 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, to make available upon request to any
registered holder or beneficial owner of Notes in connection with any sale
thereof and any prospective purchaser of Notes from such registered holder
or beneficial owner, the information required by Rule 144A(d)(4) under the
Securities Act.
(i) To use its reasonable best efforts to cause the Notes to be
eligible for trading in The PORTAL(R) Market ("PORTAL"), a subsidiary of
The Nasdaq Stock Market, Inc., and to permit the Notes to be eligible for
clearance and settlement through DTC.
(j) To apply the net proceeds from the sale of the Notes as set
forth in the Offering Memorandum under the section entitled "Use of
Proceeds."
(k) To take such steps as shall be necessary to ensure that neither
the Company nor any subsidiary of the Company shall become an "investment
company" within the meaning of such term under the Investment Company Act
and the rules and regulations of the Commission thereunder.
(l) Except for borrowings under the New Credit Facility and a
potential exchange by the Company of a note payable to Extendicare Inc.
for the 9.35% Senior Subordinated Notes Due 2007 currently held by
Extendicare Inc., for a period of 180 days from the date of the Offering
Memorandum, not to, directly or indirectly, sell, contract to sell, grant
any option to purchase, issue any instrument convertible into or
exchangeable for, or otherwise transfer or dispose of, any debt securities
of the Company or any Subsidiary Guarantor in a public or private offering
for cash having a maturity of more than one year from the date of issue of
such securities, except (i) for the Exchange
19
Notes and the Exchange Note Guarantees in connection with the Exchange
Offer or (ii) with the prior consent of the Initial Purchasers, which
consent shall not be unreasonably withheld.
(m) For a period of three years following the Closing Date, to
furnish to you copies of all materials furnished by the Company to holders
of Notes and all public reports and all reports and financial statements
furnished by the Company to the principal national securities exchange
upon which the Company's common stock or Notes may be listed pursuant to
requirements of or agreements with such exchange or to the Commission
pursuant to the Exchange Act or any rule or regulation of the Commission
thereunder.
SECTION 6. Expenses. The Company agrees that, whether or not the
transactions contemplated by this Agreement are consummated or this Agreement
becomes effective or is terminated, to pay all costs, expenses, fees and taxes
incident to and in connection with: (i) the preparation, printing, filing and
distribution of the Preliminary Offering Memorandum and the Offering Memorandum
(including, without limitation, financial statements) and all amendments and
supplements thereto (but not, however, legal fees and expenses of your counsel
incurred in connection therewith), (ii) the preparation, printing (including,
without limitation, word processing and duplication costs) and delivery of this
Agreement, the Indenture, the Registration Rights Agreement, all blue sky
memoranda and all other agreements, memoranda, correspondence and other
documents printed and delivered in connection herewith and with the Exempt
Resales (but not, however, legal fees and expenses of your counsel incurred in
connection with any of the foregoing other than fees of such counsel plus
reasonable disbursements incurred in connection with the preparation, printing
and delivery of such blue sky memoranda), (iii) the issuance and delivery by the
Company and the Subsidiary Guarantors of the Notes and the Guarantees, (iv) the
qualification of the Notes for offer and sale under the securities or blue sky
laws of the several states (including, without limitation, the reasonable fees
and disbursements of your counsel relating to such registration or
qualification), (v) furnishing such copies of the Preliminary Offering
Memorandum and the Offering Memorandum, and all amendments and supplements
thereto, as may be reasonably requested for use in connection with the Exempt
Resales, (vi) the preparation of certificates for the Notes (including, without
limitation, printing and engraving thereof), (vii) the fees, disbursements and
expenses of the Company's counsel and accountants, (viii) all expenses and
listing fees in connection with the application for quotation of the Notes in
PORTAL, (ix) the costs and expenses of the Company relating to investor
presentations on any road show undertaken in connection with the offering of the
Notes, including without limitation, expenses associated with the production of
road show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered in
connection with the road show; (x) all fees and expenses of the Company
(including fees and expenses of its counsel) and the Initial Purchasers (but not
including fees and expenses of their counsel) in connection with approval of the
Notes by DTC for "book-entry" transfer and (xi) the performance by the Company
and the Subsidiary Guarantors of its other obligations under this Agreement.
20
SECTION 7. Conditions of Initial Purchasers' Obligations. The
respective obligations of the Initial Purchasers hereunder are subject to the
accuracy, when made and on the Closing Date, of the representations and
warranties of the Company contained herein, to the performance by the Company of
its obligations hereunder, and to each of the following additional terms and
conditions.
(a) The Offering Memorandum shall have been printed and copies
distributed to you not later than 9:00 A.M., New York City time, on April
20, 2004, or at such later date and time as you may approve in writing,
and no stop order suspending the qualification or exemption from
qualification of the Notes in any jurisdiction shall have been issued and
no proceeding for that purpose shall have been commenced or shall be
pending or threatened.
(b) No Initial Purchaser shall have discovered and disclosed to the
Company on or prior to such Closing Date that the Offering Memorandum or
any amendment or supplement thereto contains an untrue statement of a fact
which, in the opinion of Weil, Gotshal & ▇▇▇▇▇▇ LLP, counsel for the
Initial Purchasers, is material or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated therein
or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the other
Operative Documents, the Credit Documents and the Offering Memorandum, and
all other legal matters relating to this Agreement and the Transactions
shall be reasonably satisfactory in all material respects to counsel for
the Initial Purchasers, and the Company shall have furnished to such
counsel all documents and information that they may reasonably request to
enable them to pass upon such matters.
(d) ▇▇▇▇▇ & Lardner shall have furnished to the Initial Purchasers
its written opinion, as counsel to the Company and the Subsidiary
Guarantors, addressed to the Initial Purchasers and dated as of the
Closing Date, in form and substance reasonably satisfactory to the Initial
Purchasers and its counsel, substantially in the form attached hereto as
Exhibit B.
(e) ▇▇▇▇ ▇▇▇▇▇▇, Esq., General Counsel of the Company, shall have
furnished to the Initial Purchasers his written opinion, as counsel to the
Company and the Subsidiary Guarantors, addressed to the Initial Purchasers
and dated as of the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers and its counsel, substantially in
the form attached hereto as Exhibit C.
(f) The Initial Purchasers shall have received from Weil, Gotshal &
▇▇▇▇▇▇ LLP, counsel for the Initial Purchasers, such opinion or opinions,
dated as of the Closing Date, with respect to the issuance and sale of the
Notes and the Guarantees, the Offering Memorandum and other related
matters as the Initial Purchasers may reasonably require, and the Company
shall have furnished to such counsel such documents as they reasonably
request for the purpose of enabling them to pass upon such matters.
21
(g) Each of the Company, the Subsidiary Guarantors and the Trustee
shall have entered into the Indenture and the Initial Purchasers shall
have received counterparts, conformed as executed, thereof.
(h) Each of the Company, the Subsidiary Guarantors and the Initial
Purchasers shall have entered into the Registration Rights Agreement and
the Initial Purchasers shall have received counterparts, conformed as
executed, thereof.
(i) The Notes shall have been approved for trading in PORTAL and
shall be eligible for clearance and settlement through The Depository
Trust Company.
(j) At the time of execution of this Agreement, the Initial
Purchasers shall have received from KPMG LLP, a letter, in form and
substance satisfactory to the Initial Purchasers, addressed to the Initial
Purchasers and dated the date hereof (i) confirming that they are
independent public accountants under rule 101 of the AICPA's Code of
Professional Conduct and its interpretations and rulings, (ii) stating, as
of the date hereof (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Offering Memorandum, as of a date not more
than five days prior to the date hereof), the conclusions and findings of
such firm with respect to the financial information and other matters
ordinarily covered by accountants' "comfort letters" to initial
purchasers.
(k) With respect to the letter of KPMG LLP, referred to in the
preceding paragraph and delivered to the Initial Purchasers concurrently
with the execution of this Agreement (the "INITIAL LETTER"), the Initial
Purchasers shall have received a letter (the "BRING-DOWN LETTER") of such
accountants, addressed to the Initial Purchasers and dated as of the
Closing Date (i) confirming that they are independent public accountants
under rule 101 of the AICPA's Code of Professional Conduct and its
interpretations and rulings, (ii) stating, as of the date of the
bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Offering Memorandum, as of a date not more
than five days prior to the date of the bring-down letter), the
conclusions and findings of such firm with respect to the financial
information and other matters covered by the initial letter and (iii)
confirming in all material respects the conclusions and findings set forth
in the initial letter.
(l) The Initial Purchasers shall have received an executed copy of
the Credit Documents, with all schedules, exhibits and amendments thereto.
(m) The Initial Purchasers shall have received (i) a certificate
from the Company, dated the Closing Date, signed by its Chairman of the
Board or Chief Executive Officer and its Chief Financial Officer or
Treasurer and (ii) a certificate from each Subsidiary Guarantor, dated as
of the Closing Date, signed by its President, other executive officer or
authorized signatory stating, as applicable, that:
(A) The representations and warranties of the Company
and the Subsidiary Guarantors, as applicable, are true and
correct as if made on
22
and as of the Closing Date (other than to the extent any such
representation or warranty is made expressly to a certain
date), and the Company and the Subsidiary Guarantors, as
applicable, have performed all covenants and agreements and
satisfied all conditions on their part to be performed or
satisfied hereunder, to the extent a party hereto, at or prior
to the Closing Date;
(B) At the Closing Date, since the date hereof, except
as described in the Offering Memorandum, no event or events
have occurred, nor has any information become known that,
individually or in the aggregate, would have a Material
Adverse Effect;
(C) They have carefully examined the Preliminary
Offering Memorandum and the Offering Memorandum and, in their
opinion, the Preliminary Offering Memorandum and Offering
Memorandum, as of their respective dates, did not, and the
Offering Memorandum, as of the Closing Date, does not include
any untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
since the date of the Offering Memorandum, no event has
occurred which should have been set forth in a supplement or
amendment to Offering Memorandum; and
(D) The issuance and sale of the Notes and Guarantees by
the Company and the Subsidiary Guarantors hereunder has not
been enjoined (temporarily or permanently) by any court or
governmental body or agency.
(n) (i) Neither the Company nor any of the Subsidiary Guarantors
shall have sustained since the date of the latest audited financial
statements included in the Offering Memorandum (exclusive of any amendment
or supplement thereto after the date hereof) any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in
the Offering Memorandum or (ii) since such date there shall not have been
any change in the capital stock or long-term debt of the Company or any of
the Subsidiary Guarantors or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of the
Company and the Subsidiary Guarantors taken as a whole, otherwise than as
set forth or contemplated in the Offering Memorandum, the effect of which,
in any such case described in clause (i) or (ii), is, in the judgment of
▇▇▇▇▇▇ Brothers, so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or the delivery of the Notes and
the Guarantees being delivered on such Closing Date on the terms and in
the manner contemplated in the Offering Memorandum.
(o) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Company's
debt securities by
23
any "nationally recognized statistical rating organization," as that term
is defined by the Commission for purposes of Rule 436(g)(2) of the
Securities Act and (ii) no such organization shall have publicly announced
or privately informed the Company that it has under surveillance or
review, with possible negative implications, its rating of any of the
Company's debt securities.
(p) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the Toronto Stock Exchange or
the Nasdaq National Market shall have been suspended or the settlement of
such trading generally shall have been materially disrupted or minimum
prices shall have been established on any such exchange or such market by
the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a general banking
moratorium shall have been declared by Federal or state authorities, (iii)
the United States shall have become engaged in hostilities, there shall
have been an escalation in hostilities involving the United States or
there shall have been a declaration of a national emergency or war by the
United States or (iv) there shall have occurred such a material adverse
change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the United
States shall be such) or there shall have occurred any other calamity or
crisis, including without limitation as a result of terrorist activities
after the date hereof, as to make it, in the judgment of ▇▇▇▇▇▇ Brothers,
impracticable or inadvisable to proceed with the offering or delivery of
the Notes and the Guarantees being delivered on such Closing Date on the
terms and in the manner contemplated in the Offering Memorandum.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
SECTION 8. Indemnification and Contribution.
(a) The Company and the Subsidiary Guarantors shall jointly and
severally indemnify and hold harmless each Initial Purchaser, its
directors, officers and employees and each person, if any, who controls
any Initial Purchaser within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of the Notes
and the Guarantees), to which that Initial Purchaser, director, officer,
employee or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary
Offering Memorandum, the Offering Memorandum or in any amendment or
supplement thereto or (B) in any blue sky application or other document
prepared or executed by the Company or the Subsidiary Guarantors (or based
upon any written information furnished by the Company or the Subsidiary
Guarantors) specifically for the purpose of qualifying any or all of the
Notes under the securities laws of any state or other jurisdiction (any
such application, document or information being hereinafter called a "BLUE
SKY APPLICATION")
24
or (C) in any materials or information provided to investors by, or with
the approval of, the Company in connection with the marketing of the
offering of the Notes ("MARKETING MATERIALS"), including any roadshow or
investor presentations made to investors by the Company (whether in person
or electronically), (ii) the omission or alleged omission to state in any
Preliminary Offering Memorandum, the Offering Memorandum or in any
amendment or supplement thereto, or in any Blue Sky Application or
Marketing Materials, any material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any act
or failure to act or any alleged act or failure to act by any Initial
Purchaser in connection with, or relating in any manner to, the Notes and
the Guarantees or the offering contemplated hereby, and which is included
as part of or referred to in any loss, claim, damage, liability or action
arising out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company and the Subsidiary Guarantors shall not be
liable under this clause (iii) to the extent that it is determined in a
final judgment by a court of competent jurisdiction that such loss, claim,
damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Initial
Purchaser through its gross negligence or willful misconduct), and shall
reimburse each Initial Purchaser and each such director, officer, employee
or controlling person promptly upon demand for any legal or other expenses
reasonably incurred by that Initial Purchaser, director, officer, employee
or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however that the Company
and the Subsidiary Guarantors will not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out
of or is based upon any such untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon and in conformity
with written information furnished to the Company through ▇▇▇▇▇▇ Brothers
by or on behalf of such Initial Purchaser expressly for inclusion therein.
The foregoing indemnity agreement is in addition to any liability which
the Company and the Subsidiary Guarantors may otherwise have to any
Initial Purchaser or to any director, officer, employee or controlling
person of that Initial Purchaser.
(b) Each Initial Purchaser shall, severally and not jointly,
indemnify and hold harmless the Company, the Subsidiary Guarantors, their
officers, each of their directors, and each person, if any, who controls
the Company within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company, the Subsidiary Guarantors or any
such director, officer or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Offering Memorandum, the Offering Memorandum or in any
amendment or supplement thereto, or in any Blue Sky Application or (ii)
the omission or alleged omission to state in any Preliminary Offering
Memorandum, the Offering Memorandum or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact required to be
stated therein or necessary to make the statements therein not misleading,
but in each case only to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon
and in conformity with written information concerning such Initial
Purchaser furnished to the Company
25
through ▇▇▇▇▇▇ Brothers by or on behalf of that Initial Purchaser
specifically for inclusion therein, and shall reimburse the Company, the
Subsidiary Guarantors and any such director, officer or controlling person
promptly upon demand for any legal or other expenses reasonably incurred
by the Company or any such director, officer or controlling person in
connection with investigating or defending or preparing to defend against
any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any
liability which any Initial Purchaser may otherwise have to the Company,
the Subsidiary Guarantors or any such director, officer, employee or
controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this
Section 8 except to the extent it has been materially prejudiced by such
failure and, provided further, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 8. If any such claim
or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party
of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that ▇▇▇▇▇▇ Brothers
shall have the right to employ one counsel (and one local counsel) to
represent jointly ▇▇▇▇▇▇ Brothers and those other Initial Purchasers and
their respective directors, officers, employees and controlling persons
who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Initial Purchasers against the
Company under this Section 8 if, in the reasonable judgment of ▇▇▇▇▇▇
Brothers, it is advisable for ▇▇▇▇▇▇ Brothers and those Initial
Purchasers, directors, officers, employees and controlling persons to be
jointly represented by separate counsel, and in that event the fees and
expenses of such separate counsel shall be paid by the Company. No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding in respect
of which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding and does not include any
findings of fact or admissions of fault or culpability as to the
indemnified party or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with the consent of the
indemnifying party or if there be a final judgment of the plaintiff in any
26
such action, the indemnifying party agrees to indemnify and hold harmless
any indemnified party from and against any loss or liability by reason of
such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the Company on the one hand
and the Initial Purchasers on the other from the offering of the Notes and
the Guarantees or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company, on the one hand, and the Initial
Purchasers, on the other, with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the
Initial Purchasers, on the other, with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the
offering of the Notes and the Guarantees purchased under this Agreement
(before deducting expenses) received by the Company, on the one hand, and
the total discounts and commissions received by the Initial Purchasers
with respect to the Notes and the Guarantees purchased under this
Agreement, on the other hand, bear to the total gross proceeds from the
offering of the Notes and the Guarantees under this Agreement. The
relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Initial Purchasers, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Subsidiary Guarantors
and the Initial Purchasers agree that it would not be just and equitable
if contributions pursuant to this Section 8 were to be determined by pro
rata allocation (even if the Initial Purchasers were treated as one entity
for such purpose) or by any other method of allocation which does not take
into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in
this Section 8 shall be deemed to include, for purposes of this Section
8(d), any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending or preparing to defend
any such action or claim. Notwithstanding the provisions of this Section
8(d), no Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the total price at which the Notes purchased
by it was resold to Eligible Purchasers exceeds the amount of any damages
which such Initial Purchaser has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers'
27
obligations to contribute as provided in this Section 8(d) are several in
proportion to their respective Purchase obligations and not joint.
(e) The Initial Purchasers severally confirm and the Company and the
Subsidiary Guarantors acknowledge that the last sentence on the cover page
of the Offering Memorandum, and the first sentence of the fifth, sixth,
seventh and ninth paragraphs, the second sentence of the seventh
paragraph, the sixth and seventh sentences of the tenth paragraph and the
eleventh paragraph under the section entitled "Plan of Distribution" in
the Offering Memorandum constitute the only information concerning the
Initial Purchasers furnished in writing to the Company by or on behalf of
the Initial Purchasers specifically for inclusion in the Offering
Memorandum.
SECTION 9. Defaulting Initial Purchasers.
If, on the Closing Date, any Initial Purchaser defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Initial Purchasers shall be obligated to purchase the Notes that
the defaulting Initial Purchaser agreed but failed to purchase on such Closing
Date in the respective proportions which the amount of the Notes set forth
opposite the name of each remaining non-defaulting Initial Purchaser in Schedule
1 hereto bears to the total amount of Notes set forth opposite the names of all
the remaining non-defaulting Initial Purchasers in Schedule 1 hereto; provided,
however, that the remaining non-defaulting Initial Purchasers shall not be
obligated to purchase any of the Notes on such Closing Date if the total amount
of the Notes which the defaulting Initial Purchaser or Initial Purchasers agreed
but failed to purchase on such date exceeds 10% of the total amount of Notes to
be purchased on such Closing Date, and any remaining non-defaulting Initial
Purchaser shall not be obligated to purchase more than 110% of the amount of
Notes which it agreed to purchase on such Closing Date pursuant to the terms of
Section 2. If the foregoing maximums are exceeded, the remaining non-defaulting
Initial Purchasers, or those other Initial Purchasers satisfactory to ▇▇▇▇▇▇
Brothers who so agree, shall have the right, but shall not be obligated, to
purchase, in such proportion as may be agreed upon among them, all of the Notes
to be purchased on such Closing Date. If the remaining Initial Purchasers or
other Initial Purchasers satisfactory to ▇▇▇▇▇▇ Brothers do not elect to
purchase the Notes which the defaulting Initial Purchaser or Initial Purchasers
agreed but failed to purchase on such Closing Date, this Agreement shall
terminate without liability on the part of any non-defaulting Initial Purchaser
or the Company, except that the Company will continue to be liable for the
payment of expenses to the extent set forth in Sections 6 and 11. As used in
this Agreement, the term "INITIAL PURCHASER" includes, for all purposes of this
Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 9, purchases the Notes which a
defaulting Initial Purchaser agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company and the Subsidiary
Guarantors for damages caused by its default. If other Initial Purchasers are
obligated or agree to purchase the Notes of a defaulting or withdrawing Initial
Purchaser, either the ▇▇▇▇▇▇ Brothers or the Company may postpone the Closing
Date for up to seven full business days in order to effect any changes that in
the opinion of counsel for the Company or counsel for the Initial Purchasers may
be necessary in the Offering Memorandum or in any other document or arrangement.
28
SECTION 10. Termination. The obligations of the Initial Purchasers
hereunder may be terminated by ▇▇▇▇▇▇ Brothers by notice given to and received
by the Company prior to delivery of and payment for the Notes if, prior to that
time, any of the events described in Sections 7(n), 7(o) and 7(p) shall have
occurred or if the Initial Purchasers shall decline to purchase the Notes for
any reason permitted under this Agreement.
SECTION 11. Reimbursement of Initial Purchasers' Expenses. If the
Company and the Subsidiary Guarantors shall fail to deliver the Notes and the
Guarantees to the Initial Purchasers by reason of any failure, refusal or
inability on the part of the Company and the Subsidiary Guarantors to perform
any agreement on its part to be performed, or because any other condition of the
Initial Purchasers' obligations hereunder required to be fulfilled by the
Company and the Subsidiary Guarantors is not fulfilled, the Company and the
Subsidiary Guarantors will reimburse the Initial Purchasers for all reasonable
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
incurred by the Initial Purchasers in connection with this Agreement and the
proposed purchase of the Notes and the Guarantees, and upon demand the Company
and the Subsidiary Guarantors shall pay the full amount thereof to ▇▇▇▇▇▇
Brothers.
SECTION 12. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by
mail, telex or facsimile transmission to the care of ▇▇▇▇▇▇ Brothers Inc.,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, 19th Floor, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (Fax: (646)
▇▇▇-▇▇▇▇), with a copy to Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇▇▇, Esq. (Fax: ▇▇▇-▇▇▇-▇▇▇▇)
and, in the case of any notice pursuant to Section 8(d), to the Director
of Litigation, Office of the General Counsel, ▇▇▇▇▇▇ Brothers Inc., ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (Fax: (▇▇▇) ▇▇▇-▇▇▇▇);
(b) if to the Company and the Subsidiary Guarantors, shall be
delivered or sent by mail, telex or facsimile transmission to the Company,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇, Attention:
▇▇▇▇▇▇ ▇. Rhinelander, (Fax: (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to ▇▇▇▇▇ &
Lardner LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq. (Fax: (▇▇▇) ▇▇▇-▇▇▇▇);
provided, however, that any notice to an Initial Purchaser pursuant to Section
8(d) shall be delivered or sent by mail, telex or facsimile transmission to such
Initial Purchaser at its address set forth in its acceptance telex to ▇▇▇▇▇▇
Brothers, which address will be supplied to any other party hereto by ▇▇▇▇▇▇
Brothers upon request. Any such statements, requests, notices or agreements
shall take effect at the time of receipt thereof. The Company shall be entitled
to act and rely upon any request, consent, notice or agreement given or made on
behalf of the Initial Purchasers by ▇▇▇▇▇▇ Brothers.
SECTION 13. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchasers, the
Company, the Subsidiary Guarantors and their respective personal representatives
and successors. This Agreement and the terms and provisions hereof are for the
sole benefit of only those persons,
29
except that (a) the representations, warranties, indemnities and agreements of
the Company and the Subsidiary Guarantors contained in this Agreement shall also
be deemed to be for the benefit of the directors, officers, employees of the
Initial Purchasers and each person or persons, if any, who control any Initial
Purchasers within the meaning of Section 15 of the Securities Act and (b) the
indemnity agreement of the Initial Purchasers contained in Section 8(b) of this
Agreement shall be deemed to be for the benefit of directors, officers and any
person controlling the Company and the Subsidiary Guarantors within the meaning
of Section 15 of the Securities Act. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 13, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
SECTION 14. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the Subsidiary Guarantors and the
Initial Purchasers contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Notes and the Guarantees and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any of them or
any person controlling any of them.
SECTION 15. Definition of the Term "Business Day." For purposes of
this Agreement, "BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday
or Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
SECTION 16. Jurisdiction. Each of the parties hereto irrevocably
consents to the jurisdiction of the courts of the State of New York and the
courts of the United States of America located in the Borough of Manhattan, City
and State of New York, over any suit, action or proceeding with respect to this
Agreement or the transactions contemplated hereby. Each of the parties hereto
waives any objection that it may have to the venue of any suit, action or
proceeding with respect to this Agreement or the transactions contemplated
hereby in the courts of the State of New York or the courts of the United States
of America, in each case, located in the Borough of Manhattan, City and State of
New York or that such suit, action or proceeding brought in the courts of the
State of New York or United States of America, in each case, located in the
Borough of Manhattan, City and State of New York was brought in an inconvenient
court and agrees not to plead or claim the same.
SECTION 17. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
regard to the principles of choice of law thereof.
SECTION 18. Counterparts. This Agreement may be executed in multiple
counterparts and, if executed in counterparts, the executed counterparts shall
each be deemed to be an original but all such counterparts shall together
constitute one and the same instrument.
SECTION 19. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
30
If the foregoing correctly sets forth the agreement among the
Company, the Subsidiary Guarantors and the Initial Purchasers, please indicate
your acceptance in the space provided for that purpose below.
Very truly yours,
EXTENDICARE HEALTH SERVICES, INC.
By:_____________________________________
Name:
Title:
EXTENDICARE HEALTH FACILITY HOLDINGS, INC.
EXTENDICARE HEALTH FACILITIES, INC.
NORTHERN HEALTH FACILITIES, INC.
EXTENDICARE HOMES, INC.
EXTENDICARE HEALTH NETWORK, INC.
THE PROGRESSIVE STEP CORPORATION
EXTENDICARE OF INDIANA, INC.
EXTENDICARE GREAT TRAIL, INC.
FIR LANE TERRACE CONVALESCENT CENTER, INC.
ADULT SERVICES UNLIMITED, INC.
ARBORS EAST, INC.
ARBORS AT TOLEDO, INC.
HEALTH POCONOS, INC.
▇▇▇▇▇▇▇▇ PROPERTIES, INC.
By:________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Chief Financial
Officer and Treasurer
SIGNATURE PAGE TO PURCHASE AGREEMENT
INDIANA HEALTH AND REHABILITATION CENTERS
PARTNERSHIP
BY: EXTENDICARE HOMES, INC., AS GENERAL
PARTNER
By:________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Chief Financial
Officer and Treasurer
BY: EXTENDICARE OF INDIANA, INC., AS
GENERAL PARTNER
By:________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Chief Financial
Officer and Treasurer
CONCORDIA MANOR, LLC
FIRST COAST HEALTH AND REHABILITATION
CENTER, LLC
▇▇▇▇▇▇▇ HEIGHTS REHABILITATION CENTER, LLC
TREASURE ISLE CARE CENTER, LLC
BY: EXTENDICARE HOMES, INC., AS SOLE MEMBER
By:________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Chief Financial
Officer and Treasurer
SIGNATURE PAGE TO PURCHASE AGREEMENT
▇▇▇▇▇▇▇ STREET, WV, LLC
NEW CASTLE CARE, LLC
BY: FIR LANE TERRACE CONVALESCENT CENTER,
INC., AS SOLE MEMBER
By:________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Chief Financial
Officer and Treasurer
ALPINE HEALTH AND REHABILITATION CENTER,
LLC
COLONIAL CARE, LLC
GREENBRIAR CARE, LLC
GREENBROOK CARE, LLC
HERITAGE CARE, LLC
LADY LAKE CARE, LLC
NEW HORIZON CARE, LLC
NORTH REHABILITATION CARE, LLC
PALM COURT CARE, LLC
▇▇▇▇▇▇ MANOR, LLC
ROCKLEDGE CARE, LLC
SOUTH HERITAGE HEALTH AND REHABILITATION
CENTER, LLC
THE OAKS RESIDENTIAL AND REHABILITATION
CENTER, LLC
WINTER HAVEN HEALTH AND REHABILITATION
CENTER, LLC
BY: EXTENDICARE HEALTH FACILITIES, INC.,
AS SOLE MEMBER
By:________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Chief Financial Officer and
Treasurer
SIGNATURE PAGE TO PURCHASE AGREEMENT
ARBORS AT TAMPA, LLC
ARBORS AT BAYONET POINT, LLC
ARBORS AT FAIRLAWN CARE, LLC
ARBORS AT FAIRLAWN REALTY OH, LLC
ARBORS AT SYLVANIA CARE, LLC
ARBORS AT SYLVANIA REALTY OH, LLC
ARBORS WEST CARE, LLC
ARBORS WEST REALTY OH, LLC
COLUMBUS REHABILITATION REALTY OH, LLC
JACKSONVILLE CARE, LLC
SAFETY HARBOR CARE, LLC
KISSIMMEE CARE, LLC
ORANGE PARK CARE, LLC
OREGON CARE, LLC
PORT CHARLOTTE CARE, LLC
SARASOTA CARE, LLC
SEMINOLE CARE, LLC
WINTER HAVEN CARE, LLC
BLANCHESTER CARE, LLC
CANTON CARE, LLC
COLUMBUS REHABILITATION CARE, LLC
DAYTON CARE, LLC
DELAWARE CARE, LLC
GALLIPOLIS CARE, LLC
▇▇▇▇▇▇▇▇ CARE, LLC
LONDON CARE, LLC
MARIETTA CARE, LLC
ROCKMILL CARE, LLC
ROCKSPRINGS CARE, LLC
WATERVILLE CARE, LLC
WOODSFIELD CARE, LLC
BY: NORTHERN HEALTH FACILITIES, INC.,
AS SOLE MEMBER
By:________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Chief Financial
Officer and Treasurer
SIGNATURE PAGE TO PURCHASE AGREEMENT
GREAT TRAIL CARE, LLC
BY: EXTENDICARE GREAT TRAIL, INC., AS
SOLE MEMBER
By:________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President - Development
FISCAL SERVICES GROUP, LLC
PARTNERS HEALTH GROUP, LLC
STAR PURCHASING SERVICES, LLC
BY: EXTENDICARE HEALTH NETWORK, INC.,
AS SOLE MEMBER
By:________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President - Development
MILFORD CARE, LLC
PRAIRIE VILLAGE CARE, LLC
▇▇▇▇▇ ▇▇▇▇▇ CARE, LLC
SWISS VILLA CARE, LLC
VILLA PINES CARE, LLC
BY: ▇▇▇▇▇▇▇▇ PROPERTIES, INC., AS
SOLE MEMBER
By:________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President - Development
SIGNATURE PAGE TO PURCHASE AGREEMENT
PARTNERS HEALTH GROUP - FLORIDA, LLC
PARTNERS HEALTH GROUP - LOUISIANA, LLC
PARTNERS HEALTH GROUP - TEXAS, LLC
BY: PARTNERS HEALTH GROUP, LLC
BY: EXTENDICARE HEALTH NETWORK, INC., AS
SOLE MEMBER
By:________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President - Development
SIGNATURE PAGE TO PURCHASE AGREEMENT
Accepted:
▇▇▇▇▇▇ BROTHERS INC.
By:__________________________________
Authorized Representative
For itself and as representative
of the several Initial Purchasers named
in Schedule 1 hereto
SIGNATURE PAGE TO PURCHASE AGREEMENT
SCHEDULE 1
Principal Amount
Initial Purchasers of Notes
-------------------------------------------------- ----------------
▇▇▇▇▇▇ Brothers Inc. .......................... $114,062,500
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. ........................... 6,875,000
ABN AMRO Incorporated ......................... 4,062,500
------------
Total............................................. $125,000,000
============
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
EXHIBIT B
FORM OF ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP OPINION
1. The Company and each of the Subsidiary Guarantors (i) are validly existing
and in good standing under the laws of their respective jurisdictions of
organization and (ii) are duly qualified to do business and are in good
standing in each jurisdiction in which their respective ownership or lease
of property or the conduct of their respective businesses requires such
qualification, except where the failure to so qualify or to be in good
standing would not have a material adverse effect on the general affairs,
management, consolidated financial position, shareholders' equity, results
of operations or business of the Company and its subsidiaries taken as a
whole (a "MATERIAL ADVERSE EFFECT"); and the Company and each of the
Subsidiary Guarantors have all requisite power and authority to own, lease
and operate its properties and carry on its business as such business is
described in the Offering Memorandum.
2. The Company and each of the Subsidiary Guarantors has all requisite
corporate power and authority to execute and deliver each of the Operative
Documents to which it is a party and to perform its respective obligations
thereunder. The execution, delivery and performance of each of the
Operative Documents by the Company and each of the Subsidiary Guarantors
have been duly authorized by all necessary corporate action on the part of
the Company and each of the Subsidiary Guarantors.
3. The Agreement has been duly and validly authorized, executed and delivered
by the Company and each of the Subsidiary Guarantors.
4. The Indenture has been duly and validly authorized, executed and delivered
by the Company and each of the Subsidiary Guarantors and, assuming due
authorization, execution and delivery thereof by the Trustee, constitutes
a legal, valid and binding obligation of the Company and each of the
Subsidiary Guarantors enforceable against the Company and each of the
Subsidiary Guarantors in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought
in a proceeding at law or in equity).
5. The Registration Rights Agreement has been duly and validly authorized,
executed and delivered by the Company and each of the Subsidiary
Guarantors and, assuming due authorization, execution and delivery thereof
by the Initial Purchasers, constitutes a legal, valid and binding
obligation of the Company and each of the Subsidiary Guarantors
enforceable against the Company and each of the Subsidiary Guarantors in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights and remedies generally, and
subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of
whether enforcement is sought in a proceeding at law or in equity), and
except that rights to indemnification and contribution thereunder may be
limited by federal or state securities laws or public policy relating
thereto.
6. The Company and the Subsidiary Guarantors, to the extent they are parties
thereto, have all requisite power and authority to enter into the New
Credit Facility and the other Credit Documents. The New Credit Facility
and the other Credit Documents have been duly and validly authorized,
executed and delivered by the Company and/or each of the Subsidiary
Guarantors, to the extent they are parties thereto, and, assuming due
authorization, execution and delivery thereof by the other parties
thereto, constitute legal, valid and binding obligations of the Company
and/or each of the Subsidiary Guarantors, to the extent they are parties
thereto, enforceable against the Company and/or each of the Subsidiary
Guarantors, to the extent they are parties thereto, in accordance with
their terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).
7. The Notes are in the form contemplated by the Indenture. The Notes have
been duly authorized, executed and issued by the Company and, assuming due
authentication thereof by the Trustee and upon payment and delivery in
accordance with the terms of the Agreement, will constitute legal, valid
and binding obligations of the Company, entitled to the benefits of the
Indenture, and enforceable against the Company in accordance with their
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).
8. The issuance of the Exchange Notes has been duly and validly authorized by
the Company, and when executed, issued, authenticated and delivered in
exchange for the Notes in accordance with the terms of the Registration
Rights Agreement, the Exchange Offer and the Indenture, will constitute
legal, valid and binding obligations of the Company, entitled to the
benefits of the Indenture, and enforceable against the Company in
accordance with their terms and entitled to the benefits of the Indenture,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).
9. The Guarantees have been duly authorized, executed and issued by the
respective Subsidiary Guarantors and, assuming due authentication of the
Notes by the Trustee, upon payment and delivery in accordance with the
terms of this Agreement will constitute legal, valid and binding
obligations of the Subsidiary Guarantors enforceable in accordance with
their terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
10. The Exchange Note Guarantees have been duly and validly authorized by the
Subsidiary Guarantors, and when executed, issued and delivered in exchange
for the Guarantees in accordance with the terms of the Registration Rights
Agreement, the Exchange Offer and the Indenture, will constitute legal,
valid and binding obligations of each of the Subsidiary Guarantors
enforceable against each of the Subsidiary Guarantors in accordance with
their terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).
11. The Indenture, the Notes, the Guarantees, the Registration Rights
Agreement, the New Credit Facility and the other Credit Documents conform
in all material respects to the descriptions thereof contained in the
Offering Memorandum.
12. None of the Company or the Subsidiary Guarantors (i) is in violation of
its certificate of incorporation or bylaws (or similar organizational
document), (ii) to such counsel's knowledge, in breach or violation of any
applicable statute, judgment, decree, order, rule or regulation, except
for any such breach or violation which would not, individually or in the
aggregate, have a Material Adverse Effect, or (iii) in breach or default
under (nor has any event occurred which, with notice or passage of time or
both, would constitute a default under) or in violation of any of the
terms or provisions of any of the agreements set forth on Schedule A(1)
hereto, except for any such breach, default, violation or event which
would not, individually or in the aggregate, have a Material Adverse
Effect.
13. The execution, delivery and performance by the Company and each of the
Subsidiary Guarantors of the Operative Documents, the New Credit Facility
and the other Credit Documents to which it is a party, compliance by the
Company and each of the Subsidiary Guarantors with the provisions thereof,
the consummation of the Transactions and the issuance and sale of the
Notes and the Guarantees as provided pursuant to the Agreement, will not
conflict with, constitute a default under or violate (a) any of the terms,
conditions or provisions of the certificate of incorporation or bylaws (or
similar organizational document) of the Company and each of the Subsidiary
Guarantors, (b) any of the terms, conditions or provisions of any of the
agreements set forth on Schedule A hereto, (c) any Delaware corporate or
federal law or regulation (other than federal securities laws, as to which
we express no opinion in this paragraph and state securities or blue sky
laws, as to which we express no opinion), or (d) any judgment, writ,
injunction, decree, order or ruling of any court or governmental authority
binding on the Company or any of the Subsidiary Guarantors
----------------
(1) Schedule A will include all agreements filed by EHSI as Exhibit 4 or 10 with
their 12/31/03 Form 10-K including the existing indenture, but excluding the
Existing Credit Facility).
which is known to us, except, in the case of this clause (d) for such
conflicts, defaults or violations that would not have a Material Adverse
Effect.
14. No consent, approval, waiver, license or authorization or other action by
or filing with any governmental authority is required in connection with
the execution and delivery by the Company and each of the Subsidiary
Guarantors of the Operative Documents, the New Credit Facility and the
other Credit Documents to which it is a party or the consummation by the
Company and each of the Subsidiary Guarantors of the Transactions, or the
issuance and sale by the Company of the Notes and the Guarantees as
provided in the Agreement, except for (a) federal securities laws (as to
which we express no opinion in this paragraph) and state securities or
blue sky laws (as to which we express no opinion), (b) those already
obtained and which are in full force and effect and (c) those required by
the terms of the New Credit Facility.
15. Assuming (i) the representations of the Initial Purchasers contained in
the Agreement are true, correct and complete, (ii) compliance by the
Initial Purchasers with their covenants set forth in the Agreement and
(iii) that each of the Eligible Purchasers is a QIB or a person who
acquires the Notes and the Guarantees outside the United States in an
"offshore transaction" and is not a "U.S. person" (within the meaning of
Rule 904 of Regulation S), it is not necessary in connection with the
offer, sale and delivery of the Notes to the Initial Purchasers pursuant
to the Agreement or the offer and resales of the Notes by the Initial
Purchasers, in the manner contemplated by the Agreement and described in
the Offering Memorandum, to register the Notes under the Securities Act or
to qualify the Indenture under the Trust Indenture Act.
16. Neither the consummation of the Transactions nor the sale, issuance,
execution or delivery of the Notes will violate Regulation T, U or X of
the Board of Governors of the Federal Reserve System.
17. The statements made in the Offering Memorandum under the heading "Certain
U.S. Federal Income Tax Considerations" insofar as such statements purport
to constitute statements of law or legal conclusions are accurate in all
material respects.
18. The statements made in the Offering Memorandum under the captions
"Description of Other Indebtedness," "Description of the Notes," "Business
-- Legal Proceedings," "Certain Relationships and Related Party
Transactions," "Notice to Investors" and "Plan of Distribution," in each
case insofar as such statements constitute summaries of legal matters,
documents or proceedings referred to therein, fairly present the
information called for which respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein in all
material respects.
19. The Company and each of the Subsidiary Guarantors is not and, after giving
effect to the issuance and sale of the Notes in accordance with the terms
of the Agreement and the application of the net proceeds therefrom, will
not be, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
20. Each of the Preliminary Offering Memorandum and the Offering Memorandum,
as of its date (except for the financial statements, including the notes
thereto, pro forma financial statements and other financial and
statistical data included or incorporated by reference therein, as to
which we express no opinion), contains the information specified in, and
meets the requirements of, Rule 144A(d)(4) under the Securities Act.
21. When the Notes and the Guarantees are issued and delivered pursuant to the
Agreement, no securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Notes or the Guarantees of the
Company or the Subsidiary Guarantors will be listed on any national
securities exchange or registered under Section 6 of the Securities
Exchange Act of 1934, as amended, or quoted on an automated inter-dealer
quotation system.
We have participated in conferences with the officers and other
representatives of the Company and the Subsidiary Guarantors, representatives of
the independent public accountants for the Company and the Subsidiary
Guarantors, the Initial Purchasers and counsel for the Initial Purchasers in
connection with the preparation of the Offering Memorandum and although we have
not independently verified and are not passing upon and assume no responsibility
for the accuracy, completeness or fairness of the statements contained in the
Offering Memorandum (except to the extent specified in paragraphs 17 and 18
above), no facts have come to our attention which lead us to believe that the
Offering Memorandum, at the time the Offering Memorandum was issued or at the
Closing Date, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading (it being understood that we express no view with
respect to the financial statements and related notes, the financial
projections, the other financial, statistical and accounting data included in or
appended as exhibits to the Offering Memorandum).
EXHIBIT C
FORM OF GENERAL COUNSEL OPINION
1. The Company has an authorized capitalization as set forth in the Offering
Memorandum. All of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and
non-assessable and all of the issued shares of capital stock, limited
partner or limited liability company interests of each of the Subsidiary
Guarantors have been duly and validly authorized and issued and are fully
paid, non-assessable (except, in the case of such subsidiaries that are
Wisconsin corporations, for certain statutory liabilities that may be
imposed by Section 180.0622(2)(b) of the Wisconsin Business Corporation
Law for unpaid employee wages) and are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims,
other than liens encumbrances, equities or claims under the Existing
Credit Facility and contemplated under the New Credit Facility or
otherwise described in the Offering Memorandum.
2. The Company and the Subsidiary Guarantors have obtained all Permits
necessary to conduct the businesses now or proposed to be conducted by
them as described in the Offering Memorandum, the lack of which would,
individually or in the aggregate, have a Material Adverse Effect; and each
of the Company and the Subsidiary Guarantors has fulfilled and performed
all of its obligations with respect to such Permits, except where the
failure to so fulfill and/or perform would not have a Material Adverse
Effect; and no event has occurred which allows, or after notice or lapse
of time would allow, revocation or termination thereof or results in any
other material impairment of the rights of the holder of any such Permit,
except where any such revocations, terminations or impairments would not,
singly or in the aggregate, have a Material Adverse Effect.
3. To the best of such counsel's knowledge, the Company and the Subsidiary
Guarantors own or possess adequate licenses or other rights to use all
patents, trademarks, service marks, trade names, copyrights and know-how
necessary to conduct the businesses now or proposed to be operated by them
as described in the Offering Memorandum, and none of the Company or the
Subsidiary Guarantors has received any notice of infringement of or
conflict with asserted rights of others with respect to any patents,
trademarks, service marks, trade names, copyrights or know-how which, if
such assertion of infringement or conflict were sustained, would have a
Material Adverse Effect.
4. To such counsel's knowledge, there are no holders of securities of the
Company or any of the Subsidiary Guarantors who, by reason of the
execution by the Company and each of the Subsidiary Guarantors of the
Agreement or the consummation by the Company and each of the Subsidiary
Guarantors of the transactions contemplated thereby, have the right,
pursuant to any material document, agreement or other instrument to which
either the Company or any of the Subsidiary Guarantors is a party, to
request or demand that the Company or any of the Subsidiary Guarantors
register under the Securities Act securities held by them.
5. To such counsel's knowledge, there are no legal or governmental
proceedings pending or overtly threatened to which the Company or any of
the Subsidiary Guarantors is a party or of
which any property or assets of the Company or any of the Subsidiary
Guarantors is the subject which, if determined adversely to the Company or
any of the Subsidiary Guarantors, would have a Material Adverse Effect.
6. The statements made in the Offering Memorandum under the caption "Business
-- Government Regulation" insofar as such statements constitute summaries
of legal matters, documents or proceedings referred to therein, fairly
present the information called for which respect to such legal matters,
documents and proceedings and fairly summarize the matters referred to
therein in all material respects.
7. To such counsel's knowledge, there are no legal or governmental
proceedings involving or affecting the Company or the Subsidiary
Guarantors or any of their respective properties or assets which would be
required to be described in a prospectus pursuant to the Act that are not
described in the Offering Memorandum, nor are there any material contracts
or other documents which would be required to be described in a prospectus
pursuant to the Act that are not described in the Offering Memorandum