Exhibit 26
SECURITIES PURCHASE AGREEMENT
dated as of June 16, 1999
among
HANGER ORTHOPEDIC GROUP, INC.
and
THE PURCHASERS NAMED HEREIN
TABLE OF CONTENTS
Article I DEFINED TERMS; RULES OF CONSTRUCTION.............................1
1.1 Defined Terms....................................................1
1.2 Rules of Construction............................................5
Article II PURCHASE AND SALE OF SHARES; CLOSING............................6
2.1 Certificate of Amendment.........................................6
2.2 Authorization of Issuance of Preferred Shares....................6
2.3 Sale of Securities...............................................6
2.4 Closing..........................................................6
2.5 Closing Deliveries...............................................7
2.6 Use of Proceeds..................................................7
Article III REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY...............7
3.1 Offering Memorandum..............................................7
3.2 Capitalization...................................................8
3.3 Organization, Power and Authority and Good Standing..............9
3.4 Authorization, Execution, Enforceability and Consents............9
3.5 Reports and Financial Information...............................11
3.6 Compliance with Laws............................................11
3.7 Absence of Changes..............................................12
3.8 Taxes...........................................................12
3.9 Title to Assets.................................................12
3.10 Proceedings.....................................................12
3.11 Contracts.......................................................13
3.12 Insurance.......................................................13
3.13 ERISA...........................................................13
3.14 Accounting......................................................14
3.15 Investment Company..............................................14
3.16 Solvency........................................................14
3.17 Private Sale....................................................14
3.18 Brokers.........................................................14
3.19 Regulatory Matters..............................................15
3.20 Y2K.............................................................15
3.21 Incorporation of NovaCare Purchase Agreement....................16
3.22 Certificates of Officers........................................16
Article IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS...............16
4.1 Authorization of the Documents..................................16
4.2 Investment Representations......................................16
Article V CONDITIONS TO CLOSING...........................................17
5.1 Conditions to Purchasers' Obligations...........................17
5.2 Conditions to the Company's Obligations.........................19
Article VI INDEMNIFICATION................................................19
6.1 Survival of Representations, Warranties, Agreements
and Covenants, Etc............................................19
6.2 Indemnification.................................................19
Article VII TRANSFER OF SECURITIES........................................21
7.1 Restriction on Transfer.........................................21
7.2 Restrictive Legends.............................................22
7.3 Notice of Transfer..............................................22
7.4 Transfer Pursuant to Rule 144...................................23
Article VIII ADDITIONAL AGREEMENTS OF THE COMPANY.........................23
8.1 Escrow of Proceeds of Senior Subordinated Notes.................23
8.2 Conduct Pending Closing.........................................23
8.3 Existing Warrants and Common Stock..............................24
8.4 Amendment of By-laws............................................25
Article IX MISCELLANEOUS..................................................25
9.1 Fees............................................................25
9.2 Further Assurances..............................................26
9.3 Remedies........................................................26
9.4 Successors and Assigns........................................26
9.5 Entire Agreement...............................................26
9.6 Notices.........................................................27
9.7 Amendments, Modifications and Waivers...........................28
9.8 Governing Law; Waiver of Jury Trial............................28
9.9 No Third Party Reliance.........................................28
9.10 Submission to Jurisdiction......................................29
9.11 Severability....................................................29
9.12 Independence of Agreements, Covenants, Representations
and Warranties................................................29
9.13 Counterparts; Facsimile Signatures..............................30
ii
SCHEDULES AND EXHIBITS
SCHEDULES
Schedule I - Purchasers, Purchase Price and Fees
Schedule 3.2(d) - Options and Warrants
Schedule 3.2(e) - Preemptive Rights and Rights of First Refusal
Schedule 3.2(f) - Liens
Schedule 3.2(g) - Redemption Rights
Schedule 3.2(h) - Registration Rights
Schedule 3.6 - Orders
Schedule 3.10 - Proceedings
Schedule 3.20 - Y2K
EXHIBITS
Exhibit A - Certificate of Designations for Redeemable Preferred Stock
Exhibit B - Form of Charter Amendment
Exhibit C - Investor Rights Agreement
Exhibit D - Regulation Y Letter
iii
SECURITIES PURCHASE AGREEMENT
dated as of June 16, 1999 among HANGER
ORTHOPEDIC GROUP, INC., a Delaware
corporation (the "Company"), and the
Purchasers listed on Schedule I
(collectively, the "Purchasers").
The Company is in the business of developing, acquiring and operating
orthotic and prosthetic patient-care centers in the United States (the
"Business"). The Company desires to raise $60,000,000 in preferred equity
financing, and the Purchasers are willing to purchase certain shares of the
Company's preferred stock in connection therewith, all on the terms and subject
to the conditions set forth herein.
ACCORDINGLY, in consideration of the foregoing and the covenants,
agreements, representations and warranties contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties, the parties hereto hereby agree as follows:
ARTICLE I
DEFINED TERMS; RULES OF CONSTRUCTION
1.1 DEFINED TERMS.
-------------
Capitalized terms used and not otherwise defined in this Agreement have
the meanings given to them below or in the other locations of this Agreement
specified below (or, if not defined herein, have the meanings ascribed to them
in the Certificate of Designations):
"Agreement" shall have the meaning given to such term in Section 1.2.
"Amended Charter" means, at any time prior to the effectiveness of the
Charter Amendment, the Certificate of Incorporation of the Company as in effect
on the date hereof and, thereafter, as amended by the Charter Amendment.
"Applicable Securities" means the shares of Redeemable Preferred Stock,
the Warrants and the Reserved Common Shares.
"Board" means the Board of Directors of the Company.
"Business" has the meaning given to it in the Preamble to this
Agreement.
"Business Day" means any day other than a Saturday, Sunday or a day on
which all United States securities exchanges on which Securities issued by the
Company are listed, are authorized or required to be closed.
"Certificate of Designations" means the certificate of designations,
powers, preferences and relative, participating, optional or other special
rights and
qualifications, limitations or restrictions of the Redeemable Preferred Stock,
in substantially the form set forth in Exhibit A.
"Certificate of Incorporation" means the Certificate of Incorporation
of the Company as amended and restated and in effect from time to time prior to
the effectiveness of the Charter Amendment.
"Charter Amendment" means the amendment to the Company's Certificate of
Incorporation, in substantially the form attached as Exhibit B.
"Claim" means any claim, demand, assessment, judgment, order, decree,
action, cause of action, litigation, suit, investigation or other Proceeding.
"Closing" has the meaning given to it in Section 2.4.
"Closing Date" has the meaning given to it in Section 2.4.
"Closing Certificate" has the meaning given to it in Section 6.1.
"Code" means the Internal Revenue Code of 1986, as amended, or any
similar Federal law then in force, and the rules and regulations promulgated
thereunder, all as the same may from time to time be in effect.
"Commission" means the Securities and Exchange Commission or any
successor or replacement thereto.
"Company" has the meaning given to it in the caption to this Agreement.
"Company Indemnified Persons" has the meaning given to it in Section
6.2(b).
"Chase" shall mean Chase Equity Associates, L.P., a California limited
partnership.
"Credit Agreement" shall mean the Credit Agreement dated as of the date
hereof, among the Company, The Chase Manhattan Bank, as Administrative Agent,
Collateral Agent and Issuing Bank, Bankers Trust Company, as Syndication Agent,
Paribas (f/k/a Banque Paribas), as Documentation Agent, and the Lenders party
thereto.
"Documents" means this Agreement, the Certificate of Designations, the
Investor Rights Agreement and the Regulation Y Letters.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended, or any similar Federal law in force, and the rules and regulations
promulgated thereunder, all as the same may be amended.
"Equity Incentive Plans" has the meaning given to it in the Certificate
of Designations.
2
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar Federal Statute then in force, and the rules and regulations
promulgated thereunder, all as the same may from time to time be in effect.
"Final Memorandum" means the final offering memorandum dated June 9,
1999, to be used in connection with the sale of the Senior Subordinated Notes.
"Fundamental Documents" means the documents by which any Person (other
than an individual) establishes its legal existence or which govern its internal
affairs. The Fundamental Documents of the Company are the Certificate of
Incorporation (prior to the effectiveness under Delaware Law of the Charter
Amendment), the Amended Charter (after the effectiveness under Delaware Law of
the Charter Amendment) and the By-laws of the Company.
"GAAP" means United States generally accepted accounting principles.
"Indemnified Persons" means any of the Company Indemnified Persons or
any of the Purchaser Indemnified Persons, as the context may require.
"Indemnifying Persons" means any of the Purchasers or the Company, as
the context may require.
"Insurance Policies" has the meaning given to it in Section 3.12.
"Intellectual Property Rights" means all industrial and intellectual
property rights, including, without limitation, patents, patent applications,
patent rights, trademarks, trademark applications, trade names, service marks,
service ▇▇▇▇ applications, copyrights, copyright applications, know-how, trade
secrets, proprietary processes and formulae, confidential information,
franchises, licenses, inventions, instructions, marketing materials, trade
dress, logos and designs and all documentation and media constituting,
describing or relating to the foregoing, including manuals, memoranda and
records.
"Investor Rights Agreement" means the Investor Rights Agreement among
the Company and the Purchasers, in substantially the form set forth in Exhibit
C.
"Knowledge" has the meaning given to it in Section 1.2.
"Liability" means any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due, regardless of when
asserted.
"Loss" means any loss (including diminution in value of Securities),
Liability, Claim, cost, damage, deficiency, Tax (including any Taxes imposed
with respect to any indemnity payments for any such Loss), penalty, fine or
expense, whether or not arising out of any Claims by or on behalf of any party
to this Agreement or any third party, including interest, penalties, reasonable
attorneys' fees and expenses and all amounts paid in investigation, defense or
settlement of any of the foregoing which any
3
such party may suffer, sustain or become subject to, as a result of, in
connection with, relating or incidental to or by virtue of any indemnifiable
event or condition.
"Material Adverse Effect" means, with respect to any Person, a material
adverse effect on the business, condition (financial and otherwise), operations,
results of operations, assets (including levels of working capital and
components thereof), Liabilities, and prospects of such Person.
"Material Agreements" has the meaning given to it in Section 3.10.
"NovaCare Purchase Agreement" means the Stock Purchase Agreement dated
as of April 2, 1999 by and among NovaCare, Inc., NC Resources, Inc., the Company
and HPO Acquisition Corp., as in effect on the date hereof (after giving effect
to Amendment No. 1 dated May 19, 1999).
"Paribas" means Paribas North America, Inc.
"Permits" has the meaning given to it in Section 3.6(b)
"Person" has the meaning given to it in the Certificate of
Designations.
"Preliminary Memorandum" means the preliminary offering memorandum
dated May 21, 1999 used in connection with the offering of the Senior
Subordinated Notes.
"Proceeding" means any legal, administrative or arbitration action,
suit, complaint, charge, hearing, inquiry, investigation or proceeding.
"Purchaser" has the meaning given to it in the caption to this
Agreement and any Person succeeding to the rights of a Purchaser pursuant to the
terms hereof.
"Purchaser Indemnified Person" has the meaning given to it in Section
6.2(a).
"Redeemable Preferred Stock" means the Corporation's 7% Redeemable
Preferred Stock, par value $.01 per share.
"Regulation Y Letter" means letters from the Company to Chase and
Paribas, in substantially the form attached as Exhibit D.
"Reserved Common Shares" means shares of Common Stock that will be
reserved from and after the Convertibility Effective Date for issuance upon the
conversion of the Redeemable Preferred Stock or the exercise of the Warrants, as
the case may be.
"Securities" has the meaning given to it in the Certificate of
Designations.
4
"Senior Subordinated Notes" means the Company's 11 1/4% Senior
Subordinated Notes due 2009 issued on the date hereof.
"Senior Subordinated Notes Purchase Agreement" means the Purchase
Agreement dated as of June 9, 1999, among the Company and the Initial Purchasers
signatory thereto.
"Subsidiary" has the meaning given to it in the Certificate of
Designations.
"Tax" means any Taxes and the term "Taxes" means, with respect to any
Person, (A) all income taxes (including any tax on or based upon net income, or
gross income, or income as specially defined, or earnings, or profits, or
selected items of income, earnings or profits) and all gross receipts, sales,
use, ad valorem, transfer, franchise, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property or windfall profits
taxes, alternative or add-on minimum taxes, customs duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any taxing
authority (domestic or foreign) on such Person and (B) any Liability for the
payment of any amount of the type described in the immediately preceding clause
(A) as a result of (i) being a "transferee" (within the meaning of Section 6901
of the Code or any other Applicable Law) of another Person, (ii) being a member
of an affiliated, combined or consolidated group or (iii) a contractual
arrangement or otherwise.
"Trustee" has the meaning given to it in the Indenture.
"Warrants" means the warrants to purchase shares of Common Stock that
may be issuable upon the redemption of the Redeemable Preferred Stock in
accordance with the Certificate of Designations.
1.2 RULES OF CONSTRUCTION.
----------------------
The term this "Agreement" means this agreement together with all
schedules and exhibits hereto, as the same may from time to time be amended,
modified, supplemented or restated in accordance with the terms hereof. In this
Agreement, the term "Knowledge" of any Person means (i) actual knowledge of such
Person (including the actual knowledge of the executive officers, key employees
and directors of such Person) and (ii) that knowledge which could have been
acquired by such Person after making such due inquiry and exercising such due
diligence as a prudent businessperson would have made or exercised in the
management of his or her business affairs, including due inquiry of those key
employees and professionals of such Person who could reasonably be expected to
have actual knowledge of the matters in question. The use in this Agreement of
the term "including" means "including, without limitation." The words "herein,"
"hereof," "hereunder" and other words of similar import refer to this Agreement
as a whole, including the schedules and exhibits, as the same may from time to
time be amended, modified, supplemented or restated, and not to any particular
section, subsection, paragraph, subparagraph or clause contained in this
Agreement. All
5
references to sections, schedules and exhibits mean the sections of this
Agreement and the schedules and exhibits attached to this Agreement, except
where otherwise stated. The title of and the section and paragraph headings in
this Agreement are for convenience of reference only and shall not govern or
affect the interpretation of any of the terms or provisions of this Agreement.
The use herein of the masculine, feminine or neuter forms shall also denote the
other forms, as in each case the context may require or permit. Where specific
language is used to clarify by example a general statement contained herein,
such specific language shall not be deemed to modify, limit or restrict in any
manner the construction of the general statement to which it relates. The
language used in this Agreement has been chosen by the parties to express their
mutual intent, and no rule of strict construction shall be applied against any
party. Unless expressly provided otherwise, the measure of a period of one month
or year for purposes of this Agreement shall be that date of the following month
or year corresponding to the starting date, provided that if no corresponding
date exists, the measure shall be that date of the following month or year
corresponding to the next day following the starting date. For example, one
month following February 18 is March 18, and one month following March 31 is
May 1.
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
2.1 CERTIFICATE OF AMENDMENT.
------------------------
Prior to the Closing, the Company shall file with the Secretary of
State of the State of Delaware the Certificate of Designations. The Certificate
of Designations designates 60,000 shares of Redeemable Preferred Stock and sets
forth the powers, preferences and relative, participating, optional or other
special rights and qualifications, limitations or restrictions thereof.
2.2 AUTHORIZATION OF ISSUANCE OF PREFERRED SHARES.
---------------------------------------------
The Company has authorized the issuance at the Closing of an aggregate
of 60,000 shares of Redeemable Preferred Stock.
2.3 SALE OF SECURITIES.
------------------
At the Closing, subject to the satisfaction or waiver of the conditions
set forth in Article V, the Company shall issue and sell to each Purchaser, and
each Purchaser shall severally purchase from the Company, that number of shares
of Redeemable Preferred Stock set forth opposite its name on Schedule I for the
aggregate purchase price set forth opposite its name.
2.4 CLOSING.
-------
The closing (the "Closing") hereunder with respect to the issuance and
sale of the Preferred Shares being purchased by each Purchaser at the Closing
and the consummation of the related transactions contemplated hereby shall,
subject to the satisfaction or waiver of the applicable conditions set forth in
Section 5.1, take place at
6
the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at
10:00 a.m., local time, on the date of the closing of the transactions
contemplated by the NovaCare Purchase Agreement, or at such other time, date or
place as agreed to by the parties.
2.5 CLOSING DELIVERIES.
------------------
At the Closing, the Company shall deliver to each Purchaser purchasing
shares of Redeemable Preferred Stock a certificate, registered in such
Purchaser's name, representing the shares of Redeemable Preferred Stock
purchased by such Purchaser at the Closing, against receipt by the Company of a
wire transfer, of immediately available funds to an account or accounts
designated by the Company, of an aggregate amount equal to the purchase price
for the shares of Redeemable Preferred Stock being purchased by such Purchaser
at the Closing (such date, the "Closing Date").
2.6 USE OF PROCEEDS.
---------------
The proceeds received by the Company from the sale of all shares of
Redeemable Preferred Stock shall be used by the Company solely as set forth
under "Sources and Uses of Funds" in the Final Memorandum.
ARTICLE III
REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY
The Company represents and warrants to each Purchaser as follows:
3.1 OFFERING MEMORANDUM.
--------------------
(a) Neither the Preliminary Memorandum as of the date thereof nor the
Final Memorandum nor any amendment or supplement thereto as of the date thereof
and at all times subsequent thereto up to the Closing Date contained or contains
any untrue statement of a material fact or omitted or omits to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations and
warranties set forth in this Section 3.1 do not apply to statements or omissions
made in reliance upon and in conformity with information relating to either of
the Purchasers furnished to the Company in writing by the Purchasers expressly
for use in the Preliminary Memorandum, the Final Memorandum or any amendment or
supplement thereto.
(b) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources which the Company and the
Subsidiaries believe to be reliable and accurate.
7
3.2 CAPITALIZATION.
--------------
The authorized capital stock of the Company immediately after the
Closing shall consist of:
(a) 25,000,000 duly authorized shares of Common Stock, of which (i)
18,852,824 shares shall be duly and validly issued and outstanding, fully paid
and nonassessable, with no personal Liability attached to the ownership thereof,
(ii) 133,495 shares shall be held by the Company as treasury shares, (iii)
1,893,914 shares shall be duly and validly reserved for issuance pursuant to
outstanding options, (iv) 468,099 shares shall be duly and validly reserved for
issuance pursuant to options that may be granted after the date hereof to
employees of the Company pursuant to the Company's Equity Incentive Plans and
(v) 830,650 shares shall be duly and validly reserved for issuance pursuant to
outstanding warrants.
(b) 10,000,000 duly authorized shares of Preferred Stock, 60,000 of
which shall be duly and validly issued and outstanding, fully paid and
nonassessable, with no personal Liability attached to the ownership thereof, all
of which shall be held of record and beneficially by the Purchasers and in the
amounts set forth on Schedule I, free and clear of all Liens. All of the
outstanding shares of Preferred Stock shall be designated Redeemable Preferred
Stock.
(c) All Reserved Common Shares, if and when issued, will be duly and
validly issued and outstanding, fully paid and nonassessable, with no personal
Liability attached to the ownership thereof.
(d) Schedule 3.2(d) contains a list of all outstanding warrants,
options, agreements, convertible securities and other commitments pursuant to
which the Company is or may become obligated to issue, sell or otherwise
transfer any Securities of the Company, which list names all Persons entitled to
receive such Securities, indicates whether or not such Securities are entitled
to any anti-dilution or similar adjustments upon the issuance of additional
Securities of the Company or otherwise, sets forth the shares of capital stock
and other Securities required to be issued thereunder (calculated after giving
effect to all such anti-dilution and other similar adjustments resulting from
the issuance of the shares of Redeemable Preferred Stock and, if applicable, the
other Applicable Securities) and the exercise or conversion price thereof, as
applicable.
(e) Except as set forth on Schedule 3.2(e) there are no preemptive
rights, rights of first refusal or other similar rights to purchase or otherwise
acquire shares of capital stock or other Securities of the Company pursuant to
any Applicable Law, any Fundamental Document of the Company or any agreement to
which the Company is a party or may be bound.
(f) Except as set forth on Schedule 3.2(f) or as contemplated by the
Documents and the Fundamental Documents of the Company, there is no Lien (such
as a right of first refusal, right of first offer, proxy, voting trust or voting
agreement) with
8
respect to the sale or voting of any Securities of the Company (whether
outstanding or issuable upon the conversion, exchange or exercise of outstanding
Securities).
(g) Except as set forth on Schedule 3.2(g), other than as required by
the Certificate of Designations, there are no obligations to redeem, repurchase
or otherwise acquire shares of capital stock or other Securities of the Company
pursuant to any Applicable Law, any Fundamental Document of the Company or any
agreement to which the Company is a party or may be bound.
(h) Except as contemplated by the Investor Rights Agreement or as set
forth on Schedule 3.2(h), no Person has any right to cause the Company to effect
the registration under the Securities Act of any shares of Common Stock or any
other Securities of the Company.
(i) Except as set forth on Schedule 2 to the Senior Subordinated Notes
Purchase Agreement, the Company does not have any Subsidiaries. Except for the
Subsidiaries or as disclosed in the Final Memorandum, the Company does not own,
directly or indirectly, any shares of capital stock or any other equity or
long-term debt Securities or have any equity interest in any Person.
(j) All Securities issued by the Company have been either issued in
transactions in accordance with or exempt from registration under the Securities
Act and the rules and regulations promulgated thereunder and all applicable
state securities or "blue sky" laws, and the Company has not violated the
Securities Act or any applicable state securities or "blue sky" laws in
connection with the issuance of any such Securities. There are no restrictions
upon the voting rights associated with, or the transfer of, any of the capital
stock of the Company, except as provided by (i) United States or state
securities laws or (ii) the terms and provisions of the Documents.
3.3 ORGANIZATION, POWER AND AUTHORITY AND GOOD STANDING.
----------------------------------------------------
(a) Each of the Company and the Subsidiaries is duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
organization and has all requisite corporate (or partnership or limited
liability company) power and authority to own its properties and conduct its
business as now conducted and as described in the Final Memorandum.
(b) Each of the Company and the Subsidiaries is duly qualified to do
business as a foreign entity in good standing in all other jurisdictions where
the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified would
not, individually or in the aggregate, have a Material Adverse Effect.
3.4 AUTHORIZATION, EXECUTION, ENFORCEABILITY AND CONSENTS.
------------------------------------------------------
(a) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under this Agreement and
each other Document. This Agreement and each other Document has been duly and
validly
9
authorized by the Company. This Agreement has been duly executed and delivered
by the Company and this Agreement constitutes and, when executed and delivered
by the Company (assuming the due authorization, execution and delivery by the
other parties thereto), each other Document to which it is a party, will
constitute, a valid and legally binding agreement of the Company, enforceable
against the Company in accordance with its terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought.
(b) The authorization, reservation, issuance, sale and delivery, as
applicable, of the shares of Redeemable Preferred Stock and, subject to the
effectiveness of the Charter Amendment, the other Applicable Securities, have
been duly and validly authorized by all requisite action on the part of the
Company. The shares of Redeemable Preferred Stock and the other Applicable
Securities (if issued), will be duly and validly issued and outstanding, fully
paid and nonassessable, with no personal Liability attaching to the ownership
thereof and not subject to any preemptive rights, rights of first refusal or
other similar rights of the stockholders of the Company.
(c) No consent, approval, authorization, Permit or Order of any
Governmental Authority or third party is required for the issuance and sale by
the Company of the Applicable Securities to the Purchasers or the consummation
by the Company of the other transactions contemplated hereby or by any other
Document, except in the case of the Reserved Shares, for the approval of the
shareholders of the Company. None of the Company or the Subsidiaries is (i) in
violation of its Fundamental Documents, (ii) in breach or violation of any
Applicable Law, or (iii) in breach of 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 Permit
or Material Agreement to which the Company or any of its Subsidiaries is a party
or to which any of their respective properties or assets is subject.
(d) The execution, delivery and performance by the Company of this
Agreement and each other Document, and the consummation of the transactions
contemplated hereby and thereby, including the authorization, reservation,
issuance, sale and delivery, as the case may be, of the shares of Redeemable
Preferred Stock and, subject to the effectiveness of the Charter Amendment, the
other Applicable Securities, will not (a) violate any Applicable Law or (b)
conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute (with due notice or lapse of time, or both) a
default or give rise to any right of termination, cancellation or acceleration,
or result in the creation of any Lien upon any of the properties or assets of
the Company or any of its Subsidiaries, under, any provision of the Fundamental
Documents of the Company or any of its Subsidiaries or any Material Agreement or
Permit to which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries or their assets or properties are or may
be bound.
10
3.5 REPORTS AND FINANCIAL INFORMATION.
----------------------------------
(a) The audited consolidated financial statements of the Company and
the Subsidiaries included in the Final Memorandum present fairly in all material
respects the financial position, results of operations and cash flows of the
Company and the Subsidiaries at the dates and for the periods to which they
relate and have been prepared in accordance with GAAP applied on a consistent
basis, except as otherwise stated therein. The summary and selected financial
and statistical data in the Final Memorandum present fairly in all material
respects the information shown therein and have been prepared and compiled on a
basis consistent with the audited financial statements included therein, except
as otherwise stated therein. PricewaterhouseCoopers LLP (the "Independent
Accountants") is an independent public accounting firm within the meaning of
Rule 2-01 of Regulation S-X.
(b) The pro forma financial statements (including the notes thereto)
and the other pro forma financial information included in the Final Memorandum
(i) comply as to form in all material respects with the applicable requirements
of Regulation S-X promulgated under the Exchange Act, (ii) have been prepared in
accordance with the Commission's rules and guidelines with respect to pro forma
financial statements, and (iii) have been properly computed on the bases
described therein; the assumptions used in the preparation of the pro forma
financial data and other pro forma financial information included in the Final
Memorandum are reasonable and the adjustments used therein are appropriate to
give effect to the transactions or circumstances referred to therein.
3.6 COMPLIANCE WITH LAWS.
---------------------
(a) Schedule 3.6 sets forth a list of all Orders to which the Company
or any of its Subsidiaries or any of their respective assets or properties is
bound.
(b) The Company and each of the Subsidiaries holds all material
licenses, certificates and permits from Governmental Authorities ("Permits")
which are necessary to the conduct of their businesses.
(c) To the Knowledge of the Company, there is no proposed change in any
Applicable Law which would require the Company or any of the Subsidiaries to
obtain any material Permits in order to conduct the business of the Company and
the Subsidiaries as each is presently conducted and as presently proposed to be
conducted which the Company or such Subsidiary does not currently possess.
(d) To the Company's knowledge, there is no Applicable Law which would
prohibit or restrict the Company or any of the Subsidiaries from, or otherwise
materially adversely affect the Company or any of the Subsidiaries in,
conducting each of their businesses in any jurisdiction in which each is now
conducting business or which it proposes to conduct business.
(e) Neither the Company nor any of the Subsidiaries has infringed any
Intellectual Property Rights of any Person. To the Knowledge of the Company, no
11
Person has infringed any owned or licensed Intellectual Property Rights of the
Company or any of its Subsidiaries.
3.7 ABSENCE OF CHANGES.
-------------------
Since the date of the most recent financial statements appearing in the
Final Memorandum, except as described therein, (i) none of the Company or the
Subsidiaries has incurred any Liabilities or obligations, direct or contingent,
or entered into or agreed to enter into any transactions or contracts (written
or oral) not in the ordinary course of business, (ii) none of the Company or the
Subsidiaries has purchased any of its outstanding capital stock, nor declared,
paid or otherwise made any dividend or distribution of any kind on its capital
stock (other than with respect to any of such Subsidiaries, the purchase of, or
dividend or distribution on, capital stock owned by the Company) and (iii) there
has not been any material change in the capital stock or long-term indebtedness
of the Company or its Subsidiaries.
3.8 TAXES.
------
Each of the Company and the Subsidiaries has filed all necessary
federal, state and foreign income and franchise Tax returns, and has paid all
Taxes required to be paid by it prior to or as of the Closing; and other than
tax deficiencies which the Company or any Subsidiary is contesting in good faith
and for which the Company or such Subsidiary has provided adequate reserves,
there is no material Tax deficiency that has been proposed, asserted or assessed
against the Company or any of the Subsidiaries.
3.9 TITLE TO ASSETS.
----------------
(a) Each of the Company and the Subsidiaries has good and marketable
title to all real property and good title to all personal property described in
the Final Memorandum as being owned by it and good and marketable title to a
leasehold estate in the real and personal property described in the Final
Memorandum as being leased by it free and clear of all Liens or restrictions,
except as described in the Final Memorandum.
(b) All leases, contracts and agreements to which the Company or any of
the Subsidiaries is a party or by which any of them is bound are valid and
enforceable against the Company or such Subsidiary, and are valid and
enforceable against the other party or parties thereto and are in full force and
effect.
(c) The Company and the Subsidiaries own or possess adequate licenses
or other rights to use all Intellectual Property Rights necessary to conduct the
businesses now or proposed to be operated by them as described in the Final
Memorandum.
3.10 PROCEEDINGS.
------------
Except as set forth on Schedule 3.10, there is not pending or, to the
Knowledge of the Company, threatened any Proceeding to which the Company or any
of the Subsidiaries is a party, or to which the property or assets of the
Company or any of the Subsidiaries are subject, before or brought by any
Governmental Authority.
12
3.11 CONTRACTS.
----------
(a) Neither the Company nor any of its Subsidiaries is a party to (a)
notes, bonds, mortgages, indentures, or material Permits or (b) other material
written or oral contracts, agreements, instruments and other understandings, (i)
involving annual amounts in excess of $10 million, (ii) that are material to the
Company or any of its Subsidiaries, (iii) that are material to the financial
condition or results of the operations of the Company and its Subsidiaries or
(iv) that would have been required to be described in a prospectus pursuant to
the Securities Act (collectively, the "Material Agreements"), except for those
Material Agreements that are described in the Final Memorandum.
(b) Each Material Agreement constitutes a valid and binding obligation
of the Company and/or Subsidiary party thereto and to the Knowledge of the
Company is enforceable against such other party in accordance with its terms.
Each of the Company and the Subsidiaries have in all material respects performed
all of the obligations required to be performed by each of them to date pursuant
to the Material Agreements, and there exists no default, or any event which upon
the giving of notice or the passage of time, or both, would give rise to a claim
of a default in the performance by the Company and the Subsidiaries or, to the
Knowledge of the Company, any other party to any of the Material Agreements,
except where such default or event, individually or in the aggregate, has not
had nor could it reasonably be expected to have a Material Adverse Effect.
3.12 INSURANCE.
----------
Each of the Company and the Subsidiaries carries insurance in such
amounts and covering such risks as is adequate for the conduct of its business
and the value of its properties. The Company has not received any notice that
(i) any of such policies has been or will be canceled or terminated or will not
be renewed on substantially the same terms as are now in effect or (ii) the
premium on any of such policies will be materially increased on the renewal
thereof.
3.13 ERISA.
------
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 liability; the Company has not incurred and does not expect to
incur 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.
13
3.14 ACCOUNTING.
-----------
The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
3.15 INVESTMENT COMPANY.
-------------------
Neither the Company nor any Subsidiary is an "investment company"
within the meaning of such term under the Investment Company Act of 1940 and the
rules and regulations of the Commission thereunder.
3.16 SOLVENCY.
---------
Immediately after the consummation of the transactions contemplated by
this Agreement, the fair value and present fair saleable value of the assets of
each of the Company and the Subsidiaries (each on a consolidated basis) will
exceed the sum of its stated liabilities and identified contingent liabilities;
none of the Company or the Subsidiaries (each on a consolidated basis) is, nor
will any of the Company or the Subsidiaries (each on a consolidated basis) be,
after giving effect to the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, (i)
left with unreasonably small capital with which to carry on its business as it
is proposed to be conducted, (ii) unable to pay its debts (contingent or
otherwise) as they mature or (iii) otherwise insolvent.
3.17 PRIVATE SALE.
-------------
Assuming the accuracy of the representations of the Purchasers in
Section 4.2, the offering, sale, and issuance of the Applicable Securities, as
the case may be, will be, exempt from registration under the Securities Act and
applicable state securities laws and the rules and regulations promulgated
thereunder. Neither the Company nor any Person authorized or employed by the
Company as agent, broker, dealer or otherwise in connection with the offering,
sale or issuance of the Applicable Securities has offered the same for sale to,
or solicited any offers to buy the same from, or otherwise approached or
negotiated with respect thereto, any Person or Persons other than the
Purchasers.
3.18 BROKERS.
--------
In connection with this transaction, and the closing fee payable to the
Purchasers in an amount equal to the amount set forth on Schedule I, none of the
Company, any of the Company's Subsidiaries or any of their respective officers,
directors, stockholders or employees (or any affiliate of the foregoing) has
employed any broker or finder or incurred any actual or potential Liability or
obligation, whether direct or indirect, for any
14
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
3.19 REGULATORY MATTERS.
-------------------
Neither the Company nor any Subsidiary has engaged in any activities
which are prohibited, or are cause for civil penalties of 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 CHAMPUS
statute, or the regulations promulgated pursuant to such statutes or regulations
or related state or local statutes or which are prohibited by any private
accrediting organization from which the Company or any of its Subsidiaries seeks
accreditation or by generally recognized professional standards of care or
conduct. Neither the Company nor to the Knowledge of the Company any other
Person who has a direct or indirect control interest in the Company or any
Subsidiary or who is an officer, director, [agent or managing employee] of the
Company or any Subsidiary: (1) has had a civil monetary penalty assessed against
it under Section 1128A of the Social Security Act ("SSA"); (2) has been 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 (3) has been convicted
(as that term is defined in 42 C.F.R. (S) 1001.2) of any of the categories of
offenses described in SSA Section 1128(a) and (b)(1), (2) and (3).
3.20 Y2K.
----
(a) Except as set forth on Schedule 3.20(a), all computer hardware and
software owned, licensed or used by the Company (collectively, the "Computer
Products") has been designed to be used prior to, during and after the calendar
year 2000 AD, and will operate during each such time period without error
relating to date data and date-dependent data, specifically including any error
relating to, or the product of, date data which represents or references
different centuries or more than one century.
(b) Without limiting the generality of the foregoing, and at no
additional cost to the Company, except as set forth on Schedule 3.20(b):
(i) each Computer Product will not abnormally end or provide
invalid or incorrect results as a result of date data, specifically
including date data which represents or references different centuries or
more than one century;
(ii) each Computer Product has been designed to ensure year 2000
compatibility, including, but not limited to, date data century
recognition, calculations which accommodate same century and multi-century
formulas and date values and date data interface values that reflect the
century; and
(iii) each Computer Product (A) manages and manipulates data
involving dates, including single century formulas and multi-century
formulas, and will not cause an abnormally ending scenario within the
application or generate incorrect values or invalid results involving such
dates, (B) provides that all date-related user interface functionalities
and data fields include the indication
15
of century and (C) provides that all date-related data interface
functionalities include the indication of century.
(c) At Purchaser's request and upon reasonable notice, the Company will
provide written evidence sufficient to demonstrate adequate testing and
conversion of each Computer Product to meet the foregoing requirements.
3.21 INCORPORATION OF NOVACARE PURCHASE AGREEMENT.
---------------------------------------------
The Company hereby makes to the Purchasers each of the representations
and warranties contained in Section II of the NovaCare Purchase Agreement, and
such representations and warranties, as so made by the Company, shall be
incorporated into this Agreement by reference as if set forth in full herein.
3.22 CERTIFICATES OF OFFICERS.
-------------------------
Any certificate signed by any officer of the Company or any Subsidiary
and delivered to any Purchaser or to counsel for the Purchasers shall be deemed
a joint and several representation and warranty by the Company and each of the
Subsidiaries to each Purchaser as to the matters covered thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser represents and warrants to the Company as to itself
severally, and not jointly as to any other Purchaser, as of the date hereof, as
follows:
4.1 AUTHORIZATION OF THE DOCUMENTS.
-------------------------------
Such Purchaser has all requisite power and authority to execute,
deliver and perform the Documents to which it is a party and the transactions
contemplated thereby, and the execution, delivery and performance by such
Purchaser of the Documents to which it is a party have been duly authorized by
all requisite action by such Purchaser. This Agreement has been duly executed
and delivered by such Purchaser and this Agreement constitutes and, when
executed and delivered by such Purchaser (assuming the due authorization,
execution and delivery by the other parties thereto), each other Document to
which such Purchaser is a party will constitute, a valid and binding obligation
of such Purchaser, enforceable against such Purchaser in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws and subject to general principles
of equity.
4.2 INVESTMENT REPRESENTATIONS.
---------------------------
Solely for establishing that the sale or issuance of the Redeemable
Preferred Stock and, if applicable, the other Applicable Securities (if any), to
such Purchaser, is exempt from the registration requirements of the Securities
Act and comparable provisions of state blue-sky laws and not in any way to
mitigate the responsibility or Liability of the Company for any breach of the
representations and warranties made by it in this
16
Agreement, on which such Purchaser is relying in full in connection with its
decision to invest in the Company:
(a) Such Purchaser is acquiring the shares of Redeemable Preferred
Stock for its own account, for investment and not with a view to the
distribution thereof in violation of the Securities Act or applicable state
securities laws.
(b) Such Purchaser understands that (i) the Applicable Securities have
not been registered under the Securities Act or applicable state securities laws
by reason of their issuance by the Company in a transaction exempt from the
registration requirements of the Securities Act and applicable state securities
laws and (ii) the Applicable Securities must be held by such Purchaser
indefinitely unless a subsequent disposition thereof is registered under the
Securities Act and applicable state securities laws or is exempt from such
registration.
(c) Such Purchaser further understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to such
Purchaser) promulgated under the Securities Act depends on the satisfaction of
various conditions, and that, if applicable, Rule 144 may afford the basis for
sales of Securities acquired hereunder in limited amounts.
(d) Such Purchaser has not employed any broker or finder in connection
with the transactions contemplated by this Agreement.
(e) Such Purchaser is an "accredited investor" (as defined in Rule
501(a) of Regulation D promulgated under the Securities Act). Such Purchaser has
such knowledge and experience in financial and business matters that it is
capable of evaluating the risks and merits of this investment. Such Purchaser's
representations in this subsection shall in no way limit the enforceability of
any representations made by the Company in any of the Documents to which it is a
party.
(f) Such Purchaser was not formed for the purpose of consummating the
transactions contemplated hereby.
ARTICLE V
CONDITIONS TO CLOSING
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS.
--------------------------------------
The obligation of each Purchaser to purchase and pay for the Securities
to be purchased hereunder at the Closing is subject to the satisfaction of the
following conditions precedent (unless waived by such Purchaser):
(a) The Company shall have filed the Certificate of Designations with
and such filing shall have been accepted by the Secretary of State of the State
of Delaware.
17
(b) The Company shall have duly issued and delivered to each Purchaser
a certificate for the number of shares of Redeemable Preferred Stock purchased
by such Purchaser.
(c) The Company shall have duly executed and delivered to each
Purchaser the Investor Rights Agreement.
(d) The Company shall have executed and delivered to Chase and Paribas
a Regulation Y Letter.
(e) The Company shall have performed its obligations under, and shall
have complied with, all the covenants and agreements set forth in this Agreement
and all representations and warranties contained in Article III shall be true
and correct in all material respects (except those representations and
warranties that are qualified as to materiality, which shall be true and correct
in all respects) as of the date hereof and at and as of the Closing Date with
the same effect as if such representations and warranties had been made at and
as of the Closing Date, and each Purchaser shall have received a certificate to
that effect signed by an officer of the Company.
(f) Each Purchaser shall have received an opinion from Freedman, Levy,
▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the Company, in a form acceptable to the Purchasers.
(g) Each Purchaser shall have received a certificate from the Secretary
or an Assistant Secretary of the Company, dated as of the Closing Date,
certifying (i) that true and complete copies of the Fundamental Documents of the
Company as in effect on the Closing Date are attached thereto, (ii) as to the
incumbency and genuineness of the signatures of each Person executing this
Agreement and the other Documents on behalf of the Company and (iii) the
genuineness of the resolutions (attached thereto) of the board of directors or
similar governing body of the Company authorizing the execution, delivery and
performance of this Agreement and the other Documents to which the Company is a
party and the consummation of the transactions contemplated hereby and thereby.
(h) The Company shall have filed with the Secretary of State of the
State of Delaware a certificate of cancellation canceling all series of
preferred stock other than the Redeemable Preferred Stock.
(i) The Company shall have paid to each Purchaser a closing fee equal
to the amount set forth opposite such Purchaser's name on Schedule I and shall
have paid all fees and expenses of ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP, counsel to
Chase, and White & Case, counsel to Paribas.
(j) Each of the conditions to the obligations of the Company under the
NovaCare Purchase Agreement shall have been satisfied, the Company shall not
have delivered a notice of mandatory redemption to the holders of the Senior
Subordinated Notes, each of the conditions to the Lenders' obligations set forth
in the Credit Agreement shall have been satisfied or waived and each Purchaser
shall have received a certificate from an officer of the Company certifying to
the foregoing.
18
5.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS.
----------------------------------------
The obligation of the Company to issue the shares of Redeemable
Preferred Stock to the Purchasers at the Closing is subject to the satisfaction
of the following conditions precedent (unless waived by the Company).
(a) Each Purchaser shall have delivered to the Company by wire
transfer, of immediately available funds to an account or accounts designated by
the Company, an aggregate amount equal to the purchase price for the shares of
Redeemable Preferred Stock being purchased by such Purchaser.
(b) Each of the conditions to the obligations of the Company under the
NovaCare Purchase Agreement shall have been satisfied, the Company shall not
have delivered a notice of mandatory redemption to the holders of the Senior
Subordinated Notes and each of the conditions to the Lenders' obligations set
forth in the Credit Agreement shall have been satisfied or waived.
ARTICLE VI
INDEMNIFICATION
6.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS, ETC.
-----------------------------------------------------------------------
All statements contained in this Agreement or any other Document or any
closing certificate delivered by the Company or the Purchasers, pursuant to this
Agreement or in connection with the transactions contemplated by this Agreement
(each, a "Closing Certificate"), shall constitute representations and warranties
by the Company, or the Purchasers, as applicable, under this Agreement.
Notwithstanding any investigation made at any time by or on behalf of any party
hereto, all representations and warranties contained in this Agreement or made
in writing by or on behalf of the Company, or a Purchaser, in connection with
the transactions contemplated by this Agreement shall survive the Closing until
the third anniversary of the Closing Date, provided however, that the
representations and warranties contained in Sections 3.2, 3.3 and 3.4 shall
survive the Closing indefinitely, the representation and warranties contained in
3.8 shall survive the Closing and continue in full force and effect until the
sixtieth day after the expiration of the statute of limitations applicable to
the matters covered thereby and the representations and warranties contained in
Section 3.20 shall survive the Closing until such time as they survive under the
NovaCare Purchase Agreement.
6.2 INDEMNIFICATION.
----------------
(a) In addition to all other rights and remedies available to the
Purchasers, the Company shall indemnify, defend and hold harmless each Purchaser
and its affiliates and their respective partners, officers, directors,
employees, agents and representatives (collectively, the "Purchaser
Representatives"; and together with such Purchaser, the "Purchaser Indemnified
Persons") against all Losses (without giving effect to any qualification as to
materiality), and none of the Purchaser Indemnified Persons shall be liable to
the Company or any other stockholder of the Company for or with respect to any
and all Losses, together with all costs and expenses (including legal and
accounting fees
19
and expenses) related thereto or incurred in enforcing this Article VI, (i)
arising from the untruth, inaccuracy or breach of any of the representations or
warranties of the Company contained in any Document or Closing Certificate or
any facts or circumstances constituting any such untruth, inaccuracy or breach,
(ii) arising from the breach of any covenant or agreement of the Company
contained in any Document or Closing Certificate or any facts or circumstances
constituting such breach, or (iii) arising from any Claim, except for any Claim
made by the Company against such Purchaser pursuant to Section 6.2(b) (whenever
made), resulting from or caused by any transaction, status, event, condition,
occurrence or situation relating to, arising out of or in connection with (A)
the status of, or conduct of the business and affairs of, the Company or (B) the
execution, delivery and performance of this Agreement and the other Documents
and the related documents and agreements contemplated hereby and thereby.
Notwithstanding the foregoing, and subject to the following part of this
sentence, upon judicial determination, which is final and no longer appealable,
that the act or omission giving rise to the indemnification pursuant to Section
6.2(a)(iii) resulted primarily out of or was based primarily upon the
indemnified party's gross negligence, fraud or willful misconduct, (unless such
action was based upon the indemnified party's reliance in good faith upon any of
the representations, warranties, covenants or promises made by the Company
herein, or in the Documents), the Company shall not be responsible for any
Losses sought to be indemnified in connection therewith, and the Company shall
be entitled to recover from the indemnified party all amounts previously paid in
full or partial satisfaction of such indemnity, together with all costs and
expenses of the Company reasonably incurred in effecting such recovery, if any.
(b) In addition to all other rights and remedies available to the
Company, each Purchaser severally as to itself only and not as to any other
Purchaser, shall indemnify, defend and hold harmless the Company and its
officers, directors, employees, agents and representatives (collectively, the
"Company Indemnified Persons,") against all Losses, together with all reasonable
out-of-pocket costs and expenses (including legal and accounting fees and
expenses) related thereto or incurred in enforcing this Article VI, (i) arising
from the untruth, inaccuracy or breach of any of the representations or
warranties of such Purchaser contained in any Document or Closing Certificate or
any facts or circumstances constituting such untruth, inaccuracy or breach or
(ii) arising from the breach of any covenant or agreement of such Purchaser
contained in any Document or Closing Certificate or any facts or circumstances
constituting such breach.
(c) If for any reason the indemnity provided for in this Section is
unavailable to any Indemnified Person or is insufficient to hold each such
Indemnified Person harmless from all such Losses arising with respect to the
transactions contemplated by this Agreement, then the Indemnifying Persons shall
contribute to the amount paid or payable for such Losses in such proportion as
is appropriate to reflect not only the relative benefits received by the
Indemnifying Persons on the one hand and such Indemnified Person on the other
but also the relative fault of the Indemnifying Persons and the Indemnified
Person as well as any relevant equitable considerations. In addition, the
Indemnifying Persons shall reimburse any Indemnified Person upon demand for all
reasonable expenses (including reasonable fees of legal counsel) incurred by
such Indemnified Person in connection with investigating, preparing for or
defending any such
20
action or claim. The indemnity, contribution and expenses reimbursement
obligations that the Indemnifying Persons have under this Article VI shall be in
addition to any Liability that the Indemnifying Persons may otherwise have. The
Indemnifying Persons further agree that the indemnification and reimbursement
commitments set forth in this Agreement shall apply whether or not the
Indemnified Person is a formal party to any such Claim.
(d) Any indemnification of an Indemnified Person by Indemnifying
Persons pursuant to this Section shall be effected by wire transfer of
immediately available funds from the Indemnifying Persons to an account
designated by the Indemnified Person within 15 days after the determination
thereof.
(e) All indemnification rights hereunder shall survive the execution
and delivery of the Documents and the consummation of the transactions
contemplated herein and therein indefinitely, regardless of any investigation,
inquiry or examination made for or on behalf of, or any knowledge of the
Purchaser and/or any of the other Indemnified Parties or the acceptance by the
Purchaser of any certificate or opinion.
(f) By executing this Agreement, the Company (i) agrees that no
Purchaser Indemnified Person shall have any Liability to the Company or its
Subsidiaries pursuant to this Agreement, the other Documents or the transactions
contemplated hereby or thereby (the "Covered Conduct") except (A) as provided in
Section 6.2(b), and (B) to the extent that a court of competent jurisdiction
shall have determined by final judgment, no longer subject to appeal, that the
losses resulting from such Covered Conduct primarily resulted from or were based
primarily upon such Purchaser Indemnified Person's willful misconduct or gross
negligence, (ii) agrees that it will not make under any circumstances, and it
will cause it Subsidiaries not to make under any circumstances, any claim
against any Purchaser Indemnified Person, with respect to a Claim or Loss with
respect to which such Person is entitled to indemnification hereunder, for any
special, indirect or consequential damages in respect of any breach or wrongful
conduct (whether the claim therefore is based on contract, tort or duty imposed
by law) in connection with, arising out of or in any way related to, the
transactions contemplated by and the relationship established by this Agreement,
the other Documents or the transactions contemplated hereby or thereby, or any
act, omission or event occurring in connection therewith, and (iii) waives,
releases and agrees not to ▇▇▇ upon, and it agrees to cause its Subsidiaries not
to ▇▇▇ upon any such Claim, for any such damages, whether or not accrued and
whether or not known or suspected to exist in any such party's favor.
ARTICLE VII
TRANSFER OF SECURITIES
7.1 RESTRICTION ON TRANSFER.
------------------------
The Applicable Securities shall not be transferable except upon the
conditions specified in this Article VII, which conditions are intended to
insure compliance with the provisions of the Securities Act in respect of the
transfer thereof.
21
7.2 RESTRICTIVE LEGENDS.
--------------------
Each certificate evidencing the Applicable Securities and each
certificate for any such securities issued to subsequent transferees of any such
certificate shall (unless otherwise permitted by the provisions of Section 7.3
hereof) be stamped or otherwise imprinted with a legend in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT OR APPLICABLE STATE BLUE
SKY LAWS. ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS
SUBJECT TO THE CONDITIONS SPECIFIED IN THE SECURITIES PURCHASE
AGREEMENT DATED AS OF JUNE 16, 1999, AMONG THE ISSUER HEREOF
AND CERTAIN OTHER SIGNATORIES THERETO, AND NO TRANSFER OF
THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED. COPIES OF SUCH AGREEMENT MAY
BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE ISSUER
HEREOF."
7.3 NOTICE OF TRANSFER.
-------------------
(a) The holder of any Applicable Securities, by acceptance thereof
agrees, prior to any transfer of any Applicable Securities, to give written
notice to the Company of such holder's intention to effect such transfer and to
comply in all other respects with the provisions of this Section 7.3. Each such
notice shall describe the manner and circumstances of the proposed transfer and
shall be accompanied by the written opinion, addressed to the Company, of
counsel for the holder of Applicable Securities, as to whether in the opinion of
such counsel (which opinion and counsel shall be reasonably satisfactory to the
Company) such proposed transfer involves a transaction requiring registration of
such Applicable Securities under the Securities Act; provided, however, that (i)
in the case of a holder of Applicable Securities which is a partnership, no such
opinion of counsel shall be necessary for a transfer by such holder of
Applicable Securities to a partner of such holder of Applicable Securities, or a
retired partner of such holder who retires after the date hereof, or the estate
of any such partner or retired partner, if in each case the transferee agrees in
writing to be subject to the terms of this Article VII to the same extent as if
such transferee were originally a signatory to this Agreement, (ii) in the case
of a holder of Applicable Securities which is a corporation, no such opinion of
counsel shall be necessary for a transfer by such holder of Applicable
Securities to an Affiliate, officer or director of such corporation and (iii) no
such opinion shall be required in connection with a transfer pursuant to Rule
144 (as amended from time to time) promulgated under the Securities Act (or
successor rule thereto), provided,
22
that the Company, shall be provided with customary written representations
relating to such transaction.
(b) If in the opinion of such counsel (if such opinion is required
hereunder) the proposed transfer of Applicable Securities may be effected
without registration under the Securities Act, the holder of Applicable
Securities shall thereupon be entitled to transfer Applicable Securities in
accordance with the terms of the notice delivered by it to the Company.
(c) Each certificate or other instrument evidencing the securities
issued upon the transfer of any Applicable Securities (and each certificate or
other instrument evidencing any untransferred balance of such securities) shall
bear the legend set forth in Section 7.2 hereof unless (i) in the opinion of
such counsel registration of future transfer is not required by the applicable
provisions of the Securities Act or (ii) the Company shall have waived the
requirement of such legends; provided, however, that such legend shall not be
required on any certificate or other instrument evidencing the securities issued
upon such transfer in the event such transfer shall be made in compliance with
the requirements of Rule 144 (as amended from time to time) promulgated under
the Securities Act (or successor rule thereto).
7.4 TRANSFER PURSUANT TO RULE 144.
------------------------------
The Company agrees to make publicly available the current information
with respect to the Company that is required by Rule 144(c) under the Securities
Act and otherwise to take any other action or to execute any certificates
necessary to permit a transfer by any holder of Applicable Securities to qualify
for the exemption set forth in Rule 144. Without limiting the foregoing, if such
information is not publicly available, then, upon a holder's request, the
Company will provide such information to such holder or any prospective
purchaser designated by such holder.
ARTICLE VIII
ADDITIONAL AGREEMENTS OF THE COMPANY
8.1 ESCROW OF PROCEEDS OF SENIOR SUBORDINATED NOTES.
------------------------------------------------
The Company will deposit the net proceeds from the sale of the Senior
Subordinated Notes with the Trustee in a special account established under the
Indenture, pending the closing of the transactions contemplated by the NovaCare
Purchase Agreement. Upon the Closing, the Company will apply the net proceeds
from the sale of the Senior Subordinated Notes as set forth under "Sources and
Uses of Funds" in the Final Memorandum.
8.2 CONDUCT PENDING CLOSING.
------------------------
(a) From the date hereof to the Closing Date, the Company shall, and
shall cause each Subsidiary to, carry on its business in the ordinary course
consistent with past practice and use reasonable efforts to preserve intact its
current business organization, keep available the services of its current
officers and employees and preserve its
23
relationships with customers, suppliers, licensors, licensees and others having
significant business dealings with it. Without limiting the generality of the
foregoing, from the date hereof to the Closing Date, the Company shall not and
shall cause each Subsidiary not to (except as expressly permitted by this
Agreement or with the Purchaser's consent) (i) take any action or omit to take
any action which would or reasonably could be expected to cause any of the
representations and warranties contained in Article III to be untrue as of the
Closing Date as if made as of the Closing Date or (ii) take any action which is
not expressly permitted under Section 3.3 of the Certificate of Designations.
(b) The Company shall use its best efforts to ensure that all
conditions to the Closing set forth in Section 5.1 are satisfied on or prior to
the Closing Date, including executing and delivering all documents required to
be delivered by the Company at the Closing and taking any and all actions which
may be necessary on its part to cause each other party to the Documents to so
execute and deliver each Document.
8.3 EXISTING WARRANTS AND COMMON STOCK.
-----------------------------------
(a) The Company acknowledges and consents to any transfer by Chase
Venture Capital Associates, L.P. ("CVCA") of any and all shares of Common Stock
of the Company and/or any and all warrants to purchase shares of Common Stock of
the Company held by CVCA to Chase or any of Chase's affiliates.
(b) Simultaneously with the effectiveness of the Charter Amendment, the
Company shall amend each outstanding warrant to purchase shares of Common Stock
held by Chase or any of its affiliates to cause such warrant to be exercisable
for (i) shares of Non-Voting Common Stock or (ii) shares of Voting Common Stock
(to the extent that shares of Non-Voting Common Stock could be converted by such
holder into shares of Voting Common Stock). Each such amendment shall contain
such other terms and conditions as shall be reasonably satisfactory to Chase and
the Company.
(c) If the Convertibility Effective Date has not occurred prior to
December 31, 1999, the Company shall create a new series of non-voting preferred
stock (the "Junior Preferred Stock"). The Junior Preferred Stock shall be
substantially similar to the Non-Voting Common Stock, except that upon any
Liquidation of the Company, (i) the holders thereof shall be entitled to a
receive before any payment shall be made to the holders of any shares of Common
Stock the greater of (A) $1.00 per share and (B) the amount that such holders
would have received assuming that the Charter Amendment had been approved prior
to such Liquidation and such holders had exercised their warrants to purchase
shares of Non-Voting Common Stock) and (ii) the shares of Junior Preferred Stock
shall rank junior to the Redeemable Preferred Stock. Without limiting the
foregoing, the Junior Preferred Stock shall not be redeemable, the holders of
Junior Preferred Stock shall be entitled to receive dividends to the same extent
as the holders of shares of Voting Common Stock are entitled to receive
dividends, the holders of shares of Junior Preferred Stock shall not have any
preference over shares of Common Stock with respect to the payment of dividends
and the Junior Preferred Stock shall contain such other terms and conditions as
are reasonably satisfactory to the Purchasers and the Company. If the Charter
Amendment shall not have become effective on or prior to
24
December 31, 1999, the Company shall amend each outstanding warrant to purchase
shares of Common Stock held by Chase or any of its affiliates to cause such
warrant to be exercisable from and after such date for shares of either (x)
Junior Preferred Stock or (y) shares of Voting Common Stock to the extent that
shares of Non-Voting Common Stock, if issued, could have been converted by such
holder into shares of Voting Common Stock.
(d) Prior to the Convertibility Effective Date, Chase will not exercise
any warrant held by it if after giving effect to such conversion, Chase would
own in excess of the maximum amount of Voting Common Stock as is permissible
under Applicable Law.
8.4 AMENDMENT OF BY-LAWS.
---------------------
The Company shall amend the by-laws of the Company to provide for the
rights granted to the Investors pursuant to the Certificate of Designations and
the Investor Rights Agreement. Without limiting the foregoing, the by-laws of
the Company shall provide (a) for the directors elected by the Investors
pursuant to the Certificate of Designations to be included on the Board's
committees from and after the occurrence of an Event of Non-Compliance, (b) for
the board observation rights in accordance with the terms and conditions set
forth in the Investor Rights Agreement and (c) that meetings of the Board or any
committee thereof may be held by telephone conference call.
ARTICLE IX
MISCELLANEOUS
9.1 FEES.
-----
(a) The Company will pay, and save the Purchasers harmless against all
Liability, whether or not the Closing hereunder occurs, for the payment of, (i)
all costs and other expenses incurred from time to time by the Company in
connection with the Company's performance of and compliance with all agreements
and conditions contained herein on its part to be performed or complied with
(including the reasonable costs and expenses of counsel incurred in connection
with the review and preparation of the Documents), (ii) the actual and
reasonable out-of-pocket costs and expenses incurred by the Purchasers in
connection with the transactions contemplated hereby, including reasonable fees,
expenses and charges of ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP (counsel to Chase) and
White & Case (counsel to Paribas), (iii) the reasonable costs and expenses
(including fees, expenses and charges of counsel) incurred by the Purchasers in
connection with any amendment or waiver of, or enforcement of, any Document
relating to the transactions contemplated hereby and (iv) the reasonable costs
and expenses incurred by each Purchaser in any filing with any Governmental
Authority with respect to its investment in the Company or in any other filing
with any Governmental Authority with respect to the Company that mentions such
Purchaser.
(b) The Company further agrees that it will pay, and will save the
Purchasers harmless from, any and all Liability with respect to any stamp or
similar taxes which may be determined to be payable in connection with the
execution and delivery
25
and performance of the Documents or any modification, amendment or alteration of
the terms or provisions of the Documents, and that it will similarly pay and
hold the Purchasers harmless from all issue taxes in respect of the issuance of
any Applicable Securities to the Purchasers.
(c) The Company further agrees to pay to each Purchaser the fees set
forth in Schedule I opposite such Purchaser's name.
(d) Notwithstanding anything to the contrary set forth in this
Agreement, any fees, expenses, costs or charges which are payable by the Company
pursuant to this Section 9.1 may be paid by the applicable Purchaser by set-off
by reducing the consideration to be paid at the Closing in respect of the shares
of Redeemable Preferred Stock to be purchased by such Purchaser. Notwithstanding
any such set-off, such shares shall be fully paid and non-assessable.
9.2 FURTHER ASSURANCES.
-------------------
The Company shall duly execute and deliver, or cause to be duly
executed and delivered, at its own cost and expense, such further instruments
and documents and to take all such action, in each case as may be necessary or
proper in the reasonable judgment of the Purchasers to carry out the provisions
and purposes of the Agreement and the other Documents.
9.3 REMEDIES.
---------
In case any one or more of the representations, warranties, covenants
and/or agreements set forth in this Agreement shall have been breached by the
Company, the Purchasers (or any Purchaser) may proceed to protect and enforce
its or their rights either by suit in equity and/or by action at law, including
an action for damages as a result of any such breach and/or an action for
specific performance of any such covenant or agreement contained in this
Agreement.
9.4 SUCCESSORS AND ASSIGNS.
-----------------------
This Agreement shall bind and inure to the benefit of the Company and
the Purchasers and their respective successors, assigns, heirs and personal
representatives. Upon any transfer of any Applicable Securities, the transferee
shall be bound by, and entitled to the benefits of, this Agreement with respect
to such transferred Securities in the same manner as the transferring Purchaser.
9.5 ENTIRE AGREEMENT.
-----------------
This Agreement and the other writings referred to herein or delivered
pursuant hereto which form a part hereof contain the entire agreement among the
parties with respect to the subject matter hereof and thereof and supersede all
prior and contemporaneous arrangements or understandings with respect thereto.
26
9.6 NOTICES.
--------
All notices and other communications delivered hereunder (whether or
not required to be delivered hereunder) shall be deemed to be sufficient and
duly given if contained in a written instrument (a) personally delivered, (b)
sent by telecopier, (c) sent by nationally-recognized overnight courier
guaranteeing next Business Day delivery or (d) sent by first class registered or
certified mail, postage prepaid, return receipt requested, in each case
addressed as follows:
if to the Company, to:
Hanger Orthopedic Group, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇, Secretary
with a copy to:
Freedman, Levy, ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
if to any Purchaser, to him, her or it at his, her or its address set forth on
Schedule I attached hereto;
with a copy to:
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
or to such other address as the party to whom such notice or other communication
is to be given may have furnished to each other party in writing in accordance
herewith. Any such notice or communication shall be deemed to have been received
(i) when delivered, if personally delivered, (ii) when sent, if sent by telecopy
on a Business Day (or, if not sent on a Business Day, on the next Business Day
after the date sent by telecopy), (iii) on the next Business Day after dispatch,
if sent by nationally recognized, overnight courier guaranteeing next Business
Day delivery, and (iv) on the fifth Business Day following
27
the date on which the piece of mail containing such communication is posted, if
sent by mail.
9.7 AMENDMENTS, MODIFICATIONS AND WAIVERS.
--------------------------------------
The terms and provisions of this Agreement may not be modified or
amended, nor may any of the provisions hereof be waived, temporarily or
permanently, except pursuant to a written instrument executed by the Company and
the Requisite Senior Holders; provided however that any such amendment,
modification or waiver that would adversely affect the rights hereunder of any
Purchaser, in its capacity as a Purchaser, without similarly affecting the
rights hereunder of all Purchasers, in their capacities as Purchasers, shall not
be effective as to such Purchaser without its prior written consent. No waiver
by any party shall operate or be construed as a waiver of any subsequent breach
by any other party.
9.8 GOVERNING LAW; WAIVER OF JURY TRIAL.
------------------------------------
All questions concerning the construction, interpretation and validity
of the Documents shall be governed by and construed and enforced in accordance
with the domestic laws of the State of Delaware, without giving effect to any
choice or conflict of law provision or rule (whether in the State of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware. In furtherance of the foregoing,
the internal law of the State of Delaware will control the interpretation and
construction of the Documents, even if under such jurisdiction's choice of law
or conflict of law analysis, the substantive law of some other jurisdiction
would ordinarily or necessarily apply.
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO
ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS
RELATED HERETO.
9.9 NO THIRD PARTY RELIANCE.
------------------------
Anything contained herein to the contrary notwithstanding, the
representations and warranties of the Company contained in this Agreement (a)
are being given by the Company as an inducement to the Purchasers to enter into
this Agreement and the other Documents (and the Company acknowledges that the
Purchasers have expressly relied thereon) and (b) are solely for the benefit of
the Purchasers. Accordingly, no third party (including, without limitation, any
holder of capital stock of the Company) or anyone
28
acting on behalf of any thereof other than the Purchasers, and each of them,
shall be a third party or other beneficiary of such representations and
warranties and no such third party shall have any rights of contribution against
the Purchasers or the Company with respect to such representations or warranties
or any matter subject to or resulting in indemnification under this Agreement or
otherwise.
9.10 SUBMISSION TO JURISDICTION.
---------------------------
Any legal action or proceeding with respect to this Agreement or the
other Documents may be brought in the courts of the State of New York and the
United States of America for the Southern District of New York and, by execution
and delivery of this Agreement, the Company hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The Company hereby irrevocably waives, in connection with any
such action or proceeding, any objection, including, without limitation, any
objection to the venue or based on the grounds of forum non conveniens, which it
may now or hereafter have to the bringing of any such action or proceeding in
such respective jurisdictions. The Company hereby irrevocably consents to the
service of process of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at its address as set forth herein. Nothing herein shall
affect the right of the Purchasers to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
the Company in any other jurisdiction.
9.11 SEVERABILITY.
-------------
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not be invalid,
prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
9.12 INDEPENDENCE OF AGREEMENTS, COVENANTS, REPRESENTATIONS AND WARRANTIES.
----------------------------------------------------------------------
All agreements and covenants hereunder shall be given independent
effect so that if a certain action or condition constitutes a default under a
certain agreement or covenant, the fact that such action or condition is
permitted by another agreement or covenant shall not affect the occurrence of
such default, unless expressly permitted under an exception to such initial
covenant. In addition, all representations and warranties hereunder shall be
given independent effect so that if a particular representation or warranty
proves to be incorrect or is breached, the fact that another representation or
29
warranty concerning the same or similar subject matter is correct or is not
breached will not affect the incorrectness of or a breach of a representation
and warranty hereunder.
9.13 COUNTERPARTS; FACSIMILE SIGNATURES.
-----------------------------------
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement. Facsimile
counterpart signatures to this Agreement shall be acceptable and binding.
* * * *
30
IN WITNESS WHEREOF, the parties hereto have executed this
Securities Purchase Agreement as of the date first above written.
HANGER ORTHOPEDIC GROUP, INC.
By: ______________________________
Name:
Title:
PURCHASERS
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners,
its General Partner
By: ______________________________
Name:
Title:
PARIBAS NORTH AMERICA, INC.
By: ______________________________
Name:
Title:
31
SCHEDULE I
-------------------------------------------------------------------------------------------------------------------------
AGGREGATE
NAME AND ADDRESS NUMBER OF SHARES PRICE OF SHARES CLOSING FEE
-------------------------------------------------------------------------------------------------------------------------
CHASE EQUITY ASSOCIATES, L.P. 50,000 $50,000,000 $500,000
c/o Chase Capital Partners
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-------------------------------------------------------------------------------------------------------------------------
PARIBAS NORTH AMERICA, INC. 10,000 $10,000,000 $100,000
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-------------------------------------------------------------------------------------------------------------------------
TOTAL 60,000 $60,000,000 $600,000
-------------------------------------------------------------------------------------------------------------------------
