3,246,900 SHARES
KINDRED HEALTHCARE, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
November 7, 2001
Credit Suisse First Boston Corporation
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
UBS Warburg LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇ Brothers Inc.
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Kindred Healthcare, Inc., a Delaware corporation
("COMPANY"), proposes to issue and sell 1,750,000 shares of its common
stock, par value $0.25 per share ("SECURITIES"), and the stockholders
listed in Schedule A hereto (the "SELLING STOCKHOLDERS") propose severally
and not jointly to sell an aggregate of 1,496,900 outstanding shares of the
Securities (such 3,246,900 shares of Securities being hereinafter referred
to as the "FIRM SECURITIES"). The Company also proposes to sell to the
Underwriters, at the option of the Underwriters, an aggregate of not more
than 487,035 additional shares of its Securities (such 487,035 additional
shares being hereinafter referred to as the "OPTIONAL SECURITIES"). The
Firm Securities and the Optional Securities are herein collectively called
the "OFFERED SECURITIES." As part of the offering contemplated by this
Agreement, Credit Suisse First Boston Corporation ("CSFBC" or the
"DESIGNATED UNDERWRITER") has agreed to reserve out of the Firm Securities
purchased by it under this Agreement, up to 25,000 shares, for sale to the
Company's directors, officers, employees and other parties associated with
the Company (collectively, "PARTICIPANTS"), as set forth in the Prospectus
(as defined herein) under the heading "Underwriting" (the "DIRECTED SHARE
PROGRAM"). The Firm Securities to be sold by the Designated Underwriter
pursuant to the Directed Share Program (the "DIRECTED SHARES") will be sold
by the Designated Underwriter pursuant to this Agreement at the public
offering price. Any Directed Shares not subscribed for by the end of the
business day on which this Agreement is executed will be offered to the
public by the Underwriters as set forth in the Prospectus. The Company and
the Selling Stockholders hereby agree with the several Underwriters named
in Schedule B hereto ("UNDERWRITERS") as follows:
2. Representations and Warranties of the Company and the Selling
Stockholders. (a) The Company represents and warrants to, and agrees with,
the several Underwriters that:
(i) A registration statement (No. 333-68838) relating to the
Offered Securities, including a form of prospectus, has been filed
with the Securities and Exchange Commission ("COMMISSION") and either
(A) has been declared effective under the Securities Act of 1933
("ACT") and is not proposed to be amended or (B) is proposed to be
amended by amendment or post-effective amendment. If such registration
statement (the "INITIAL REGISTRATION STATEMENT") has been declared
effective, either (A) an additional registration statement (the
"ADDITIONAL REGISTRATION STATEMENT") relating to the Offered
Securities may have been filed with the Commission pursuant to Rule
462(b) ("RULE 462(B)") under the Act and, if so filed, has become
effective upon filing pursuant to such Rule and the Offered Securities
all have been duly registered under the Act pursuant to the initial
registration statement and, if applicable, the additional registration
statement or (B) such an additional registration statement is proposed
to be filed with the Commission pursuant to Rule 462(b) and will
become effective upon filing pursuant to such Rule and upon such
filing the Offered Securities will all have been duly registered under
the Act pursuant to the initial registration statement and such
additional registration statement. If the Company does not propose to
amend the initial registration statement or if an additional
registration statement has been filed and the Company does not propose
to amend it, and if any post-effective amendment to either such
registration statement has been filed with the Commission prior to the
execution and delivery of this Agreement, the most recent amendment
(if any) to each such registration statement has been declared
effective by the Commission or has become effective upon filing
pursuant to Rule 462(c) ("RULE 462(C)") under the Act or, in the case
of the additional registration statement, Rule 462(b). For purposes of
this Agreement, "EFFECTIVE TIME" with respect to the initial
registration statement or, if filed prior to the execution and
delivery of this Agreement, the additional registration statement
means (A) if the Company has advised the Representatives that it does
not propose to amend such registration statement, the date and time as
of which such registration statement, or the most recent
post-effective amendment thereto (if any) filed prior to the execution
and delivery of this Agreement, was declared effective by the
Commission or has become effective upon filing pursuant to Rule
462(c), or (B) if the Company has advised the Representatives that it
proposes to file an amendment or post-effective amendment to such
registration statement, the date and time as of which such
registration statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the
Commission. If an additional registration statement has not been filed
prior to the execution and delivery of this Agreement but the Company
has advised the Representatives that it proposes to file one,
"EFFECTIVE TIME" with respect to such additional registration
statement means the date and time as of which such registration
statement is filed and becomes effective pursuant to Rule 462(b).
"EFFECTIVE DATE" with respect to the initial registration statement or
the additional registration statement (if any) means the date of the
Effective Time thereof. The initial registration statement, as amended
at its Effective Time, including all material incorporated by
reference therein, including all information contained in the
additional registration statement (if any) and deemed to be a part of
the initial registration statement as of the Effective Time of the
additional registration statement pursuant to the General Instructions
of the Form on which it is filed and including all information (if
any) deemed to be a part of the initial registration statement as of
its Effective Time pursuant to Rule 430A(b) ("RULE 430A(B)") under the
Act, is hereinafter referred to as the "INITIAL REGISTRATION
STATEMENT." The additional registration statement, as amended at its
Effective Time, including the contents of the initial registration
statement incorporated by reference therein and including all
information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "ADDITIONAL REGISTRATION
STATEMENT." The Initial Registration Statement and the Additional
Registration Statement are hereinafter referred to collectively as the
"REGISTRATION STATEMENTS" and individually as a "REGISTRATION
STATEMENT." The form of prospectus relating to the Offered Securities,
as first filed with the Commission pursuant to and in accordance with
Rule 424(b) ("RULE 424(B)") under the Act or (if no such filing is
required) as included in a Registration Statement, including all
material incorporated by reference in such prospectus, is hereinafter
referred to as the "PROSPECTUS." No document has been or will be
prepared or distributed in reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement: (A) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement complied as to form in all respects to the
requirements of the Act and the rules and regulations of the
Commission ("RULES AND REGULATIONS") and did not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, (B) on the Effective Date of the Additional
Registration Statement (if any), each Registration Statement complied,
or will comply, as to form in all respects to the requirements of the
Act and the Rules and Regulations and did not include, or will not
include, any untrue statement of a material fact and did not omit, or
will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
and (C) on the date of this Agreement, the Initial Registration
Statement and, if the Effective Time of the Additional Registration
Statement is prior to the execution and delivery of this Agreement,
the Additional Registration Statement each complies as to form, and at
the time of filing of the Prospectus pursuant to Rule 424(b) or (if no
such filing is required) at the Effective Date of the Additional
Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will comply as to form, in
all respects to the requirements of the Act and the Rules and
Regulations, and neither of such documents includes, or will include,
any untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in the
light of the circumstances under which they were made) not misleading.
If the Effective Time of the Initial Registration Statement is
subsequent to the execution and delivery of this Agreement: on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement and the Prospectus will comply as to form in
all respects to the requirements of the Act and the Rules and
Regulations, neither of such documents will include any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading, and no
Additional Registration Statement has been or will be filed. The two
preceding sentences do not apply to statements in or omissions from a
Registration Statement or the Prospectus based upon written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and
agreed that the only such information is that described as such in
Section 7(c) hereof.
(iii) The documents incorporated or deemed to be incorporated by
reference in the Registration Statements and the Prospectus, at the
time they were or hereafter are filed with the Commission, complied
and will comply as to form in all respects with the requirements of
the Exchange Act and the rules and regulations of the Commission
thereunder.
(iv) The Company has been duly organized and is a validly
existing corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own, lease
and operate its properties and conduct its business as described in
the Prospectus; and the Company is duly qualified to transact business
as a foreign corporation and is in good standing in all other
jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified or in good standing would not, individually
or in the aggregate, have a material adverse effect on the condition
(financial or other), business, business prospects, properties or
results of operations of the Company and its subsidiaries taken as a
whole ("MATERIAL ADVERSE EFFECT").
(v) Each subsidiary of the Company listed on Schedule C hereto
(that purports to identify each subsidiary of the Company that
constitutes a "significant subsidiary" as such term is defined in Rule
1-02 of Regulation S-X) that is a corporation (a "CORPORATE
SUBSIDIARY") has been duly organized and is a validly existing
corporation in good standing under the laws of the jurisdiction of its
incorporation, with power and authority (corporate and other) to own,
lease and operate its properties and conduct its business as described
in the Prospectus, and each Corporate Subsidiary is duly qualified to
transact business as a foreign corporation and is in good standing in
all other jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification, except where
the failure to be so qualified or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect; all
of the issued and outstanding capital stock of each Corporate
Subsidiary has been duly authorized and validly issued, is fully paid
and nonassessable, was not issued in violation of or subject to any
preemptive or similar rights and is owned by the Company, directly or
through subsidiaries, free from liens, encumbrances and defects (other
than liens pursuant to the Credit Agreements (as defined below)) and
no options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert or exchange any
obligations into shares of capital stock or other ownership interests
in any Corporate Subsidiary are outstanding. As used in the this
Agreement, "CREDIT AGREEMENTS" means (1) that certain $120,000,000
Credit Agreement, dated as of April 20, 2001, among Kindred Healthcare
Operating, Inc., the Company, the lenders party thereto, the Swingline
Bank party thereto, the LC Issuing Banks party thereto, ▇▇▇▇▇▇
Guaranty Trust Company of New York, as Administrative Agent and
Collateral Agent, and General Electric Capital Corporation, as
Documentation Agent and Collateral Monitoring Agent, and (2) that
certain Credit Agreement Providing for the Issuance of $300,000,000
Senior Secured Notes due 2008, dated as of April 20, 2001, among
Kindred Healthcare Operating, Inc., the Company, the lenders party
thereto and ▇▇▇▇▇▇ Guaranty Trust Company of New York, as Collateral
Agent and Administrative Agent.
(vi) Each subsidiary of the Company listed on Schedule C hereto
that is a partnership (including, without limitation, general, limited
or limited liability partnerships) (a "SUBSIDIARY PARTNERSHIP") has
been duly organized and is a validly existing partnership in good
standing under the laws of the jurisdiction of its organization, with
power and authority (partnership and other) to own, lease and operate
its properties and conduct its business as described in the
Prospectus, and each Subsidiary Partnership is duly qualified to
transact business as a foreign partnership and is in good standing in
all other jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification, except where
the failure to be so qualified or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect; all
of the issued and outstanding general and limited partnership
interests in each Subsidiary Partnership have been validly issued and,
except as set forth on Schedule D hereto (that purports to identify
each Subsidiary Partnership that is not wholly-owned by the Company
and the Company's percentage ownership thereof), are owned by the
Company, directly or through subsidiaries, free from liens,
encumbrances and defects (other than liens pursuant to the Credit
Agreements); no options, warrants or other rights to purchase,
agreements or other obligations to issue or rights to convert or
exchange any obligations into partnership or other ownership interests
in any Subsidiary Partnership are outstanding; each partnership
agreement pursuant to which the Company or a subsidiary holds a
partnership interest in a Subsidiary Partnership is in full force and
effect and constitutes a valid and legally binding agreement of the
parties thereto, enforceable against such parties in accordance with
the terms thereof, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles; and there has been no material breach of or
default under, and no event which with notice or lapse of time or both
would constitute a material breach of or default under, any such
partnership agreement by the Company or any subsidiary, or to the
Company's knowledge, any other party thereto.
(vii) Each subsidiary of the Company listed on Schedule C hereto
that is a limited liability company (a "SUBSIDIARY LLC") has been duly
organized and is a validly existing limited liability company in good
standing under the laws of the jurisdiction of its organization, with
power and authority to own, lease and operate its properties and
conduct its business as described in the Prospectus, and each
Subsidiary LLC is duly qualified to transact business as a foreign
limited liability company and is in good standing in all other
jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified or in good standing would not, individually
or in the aggregate, have a Material Adverse Effect; all of the issued
and outstanding membership interests in each Subsidiary LLC have been
validly issued and are owned by the Company, directly or through
subsidiaries, free from liens, encumbrances and defects (other than
liens pursuant to the Credit Agreements); no options, warrants or
other rights to purchase, agreements or other obligations to issue or
rights to convert or exchange any obligations into membership or other
ownership interests in any Subsidiary LLC are outstanding; each
operating agreement pursuant to which the Company or a subsidiary
holds a membership interest in a Subsidiary LLC is in full force and
effect and constitutes a valid and legally binding agreement of the
parties thereto, enforceable against such parties in accordance with
the terms thereof, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles; and there has been no material breach of or
default under, and no event which with notice or lapse of time or both
would constitute a material breach of or default under, any such
operating agreement by the Company or any subsidiary, or to the
Company's knowledge, any other party thereto.
(viii) The only subsidiaries of the Company are (a) the
subsidiaries listed on Schedule C hereto and (b) certain other
subsidiaries which, considered in the aggregate as a single
subsidiary, do not constitute a "significant subsidiary" as defined in
Rule 1-02 of Regulation S-X; each of the long-term acute care
hospitals, general acute care hospitals and nursing centers described
in the Prospectus as owned or leased by the Company is owned or leased
and operated by a subsidiary in which, except as disclosed in Schedule
D hereto, the Company directly or indirectly owns 100% of the
outstanding ownership interests; and except as disclosed in the
Prospectus and as provided in the Credit Agreements, there are no
material encumbrances or restrictions on the ability of any subsidiary
(1) to pay any dividends or make any distributions on such Corporate
Subsidiary's capital stock, such Partnership Subsidiary's partnership
interests or such Subsidiary LLC's membership interests or to pay any
indebtedness owed to the Company or any other subsidiary, (2) to make
any loans or advances to, or investments in, the Company or any other
subsidiary, or (3) to transfer any of its property or assets to the
Company or any other subsidiary.
(ix) The Company has the authorized, issued and outstanding
capitalization as set forth in the Prospectus as of the dates set
forth therein; all of the issued and outstanding shares of capital
stock of the Company have been duly authorized and validly issued, are
fully paid and nonassessable and conform to the description thereof
contained in the Prospectus; none of the outstanding shares of capital
stock of the Company was issued in violation of the preemptive or
other similar rights of any security holder of the Company; except as
disclosed in the Prospectus, there are no outstanding (a) securities
or obligations of the Company or any of its subsidiaries convertible
into or exchangeable for any capital stock of the Company, (b)
warrants, rights or options to subscribe for or purchase from the
Company or any such subsidiary any such capital stock or any such
convertible or exchangeable securities or obligations, or (c)
obligations of the Company or any such subsidiary to issue any shares
of such capital stock, any such convertible or exchangeable securities
or obligations, or any such warrants, rights or options.
(x) The Offered Securities to be issued and sold by the Company
pursuant hereto have been duly authorized and at the applicable
Closing Date (as defined below), after payment therefor in accordance
herewith, will be validly issued, fully paid and nonassessable; and
the issuance and sale of such Offered Securities by the Company are
not subject to the preemptive or other similar rights of any security
holder of the Company.
(xi) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or
any Underwriter for a brokerage commission, finder's fee or other like
payment in connection with this offering.
(xii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered
pursuant to a Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company under the Act.
(xiii) No consent, approval, authorization or order of, or
registration, qualification or filing with, any governmental
authority, agency or body or any court is required to be obtained or
made by the Company for the consummation of the transactions
contemplated by this Agreement in connection with the sale of the
Offered Securities, except such as have been obtained and made under
the Act and such as may be required under state and foreign securities
laws and the rules of the National Association of Securities Dealers,
Inc. ("NASD").
(xiv) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, (a) any statute, any rule, regulation
or order of any governmental authority, agency or body or any court,
domestic or foreign, having jurisdiction over the Company or any
subsidiary of the Company or any of their properties, or (b) any
agreement or instrument to which the Company or any such subsidiary is
a party or by which the Company or any such subsidiary is bound or to
which any of the properties of the Company or any such subsidiary is
subject, or (c) the charter, by-laws or other constitutive document of
the Company or any such subsidiary, except, in the case of clause (b)
only, for such breaches, violations or defaults that would not,
individually or in the aggregate, have a Material Adverse Effect.
(xv) This Agreement has been duly authorized, executed and
delivered by the Company.
(xvi) Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real properties and
all other properties and assets owned by them that, individually or in
the aggregate, are material to it or them, in each case free from
liens, encumbrances and defects (other than liens pursuant to the
Credit Agreements); that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by them;
and except as disclosed in the Prospectus, the Company and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere
with the use made or to be made thereof by them.
(xvii) Neither the Company, nor to the knowledge of the Company,
any officers, directors or stockholders, employees or other agents of
the Company or any of its subsidiaries or the hospitals or nursing
centers operated by them, has engaged in any activities which are
prohibited under federal Medicare and Medicaid statutes (including,
but not limited to, 42 ▇.▇.▇.▇▇.▇▇. 1320a-7 (Program Exclusion),
1320a-7a (Civil Monetary Penalties), 1320a-7b (the Anti-kickback
Statute),ss. 1395nn and 1396b (the "▇▇▇▇▇" law, prohibiting certain
self-referrals)), or any other federal healthcare law (including, but
not limited to, the federal TRICARE statute, 10 U.S.C.ss.1071 et seq.,
the Federal Civil False Claims Act, 31 U.S.C.ss.ss.3729-32, Federal
Criminal False Claims Act, 18 ▇.▇.▇.▇▇. 287, False Statements Relating
to Health Care Matters, 18 U.S.C.ss.1035, Health Care Fraud, 18
U.S.C.ss.1347), or the federal Food, Drug & Cosmetics Act, 21
U.S.C.ss.360aaa, or any regulations promulgated pursuant to such
statutes, or related state or local statutes or regulations or any
rules of professional conduct, including, but not limited to, the
following: (i) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any
applications for any benefit or payment under the Medicare or Medicaid
program or from any third party (where applicable federal or state law
prohibits such payments to third parties); (ii) knowingly and
willfully making or causing to be made any false statement or
representation of a material fact for use in determining rights to any
benefit or payment under the Medicare or Medicaid program or from any
third party (where applicable federal or state law prohibits such
payments to third parties); (iii) failing to disclose knowledge by a
claimant of the occurrence of any event affecting the initial or
continued right to any benefit or payment under the Medicare or
Medicaid program or from any third party (where applicable federal or
state law prohibits such payments to third parties) on its own behalf
or on behalf of another, with intent to secure such benefit or payment
fraudulently; (iv) knowingly and willfully offering, paying,
soliciting or receiving any remuneration (including any kickback,
bribe or rebate), directly or indirectly, overtly or covertly, in cash
or in kind (a) in return for referring an individual to a person for
the furnishing or arranging for the furnishing of any item or service
for which payment may be made in whole or in part by Medicare or
Medicaid or any third party (where applicable federal or state law
prohibits such payments to third parties), or (b) in return for
purchasing, leasing or ordering or arranging for or recommending the
purchasing, leasing or ordering of any good, facility, service, or
item for which payment may be made in whole or in part by Medicare or
Medicaid or any third party (where applicable federal or state law
prohibits such payments to third parties); (v) knowingly and willfully
referring an individual to a person with which they have ownership or
certain other financial arrangements (where applicable federal law
prohibits such referrals); and (vi) knowingly and willfully violating
any enforcement initiative instituted by any governmental agency
(including, without limitation, the Office of the Inspector General
and the Department of Justice), except in each case for any such
activities which are specifically described in the Prospectus or which
would not, individually or in the aggregate, have a Material Adverse
Effect.
(xviii) None of the Company or any of its subsidiaries or any of
the facilities operated by any of them has failed to file with
applicable regulatory authorities any statement, report, information
or form required by any applicable law, regulation or order, except
where the failure so to file would not, individually or in the
aggregate, have a Material Adverse Effect. Except as disclosed in the
Prospectus, all such filings or submissions were in compliance with
applicable laws when filed and no deficiencies have been asserted by
any regulatory commission, agency or authority with respect to any
such filings or submissions, except where failure so to comply or the
assertion of such a deficiency would not, individually or in the
aggregate, have a Material Adverse Effect.
(xix) The Company and its subsidiaries possess required permits,
licenses, provider numbers, certificates, approvals (including without
limitation, certificate of need approvals), consents, orders,
certifications (including, without limitation, certification under the
Medicare and Medicaid programs), accreditations (including, without
limitation, accreditation by the Joint Commission on Accreditation of
Healthcare Organizations) and other authorizations (collectively,
"GOVERNMENTAL LICENSES") issued by, and have made all required
declarations and filings with, the appropriate federal, state, local
or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them (including, without limitation,
Government Licenses as are required (i) under such federal and state
healthcare laws as are applicable to the Company and its subsidiaries
and (ii) with respect to those facilities operated by the Company or
any of its subsidiaries that participate in the Medicare and/or
Medicaid programs, to receive reimbursement thereunder), except where
the failure to possess such Government Licenses or to make such
declarations and filings would not, individually or in the aggregate,
have a Material Adverse Effect; the Company and its subsidiaries are
in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not,
individually or in the aggregate, have a Material Adverse Effect; all
of the Governmental Licenses are valid and in full force and effect,
except where the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect
would not, individually or in the aggregate, have a Material Adverse
Effect; and neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation,
suspension or modification of any such Governmental Licenses or the
imposition of any other sanction for violation of any laws referenced
in paragraph (xvii) above that, if the subject of an unfavorable
decision, ruling or finding, would individually or in the aggregate
have a Material Adverse Effect.
(xx) The accounts receivable of the Company and its subsidiaries
have been adjusted to reflect material changes in the reimbursement
policies of third party payors such as Medicare, Medicaid, private
insurance companies, health maintenance organizations, preferred
provider organizations, managed care systems and other third party
payors. The accounts receivable, after giving effect to the allowance
for doubtful accounts, relating to such third party payors do not
materially exceed amounts the Company and its subsidiaries are
entitled to receive.
(xxi) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent
that might have a Material Adverse Effect.
(xxii) The Company and its subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and
other rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property
(collectively, "INTELLECTUAL PROPERTY RIGHTS") necessary to conduct
the business now operated by them, or presently employed by them, and
have not received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property
rights that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.
(xxiii) Except as disclosed in the Prospectus, neither the
Company nor any of its subsidiaries is in violation of any statute or
any rule, regulation, decision or order of any governmental authority,
agency or body or any court, domestic or foreign, relating to the use,
disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, "ENVIRONMENTAL LAWS"),
owns or operates any real property contaminated with any substance
that is subject to any environmental laws, is liable for any off-site
disposal or contamination pursuant to any environmental laws, or is
subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim would individually or in
the aggregate have a Material Adverse Effect; and the Company is not
aware of any pending investigation which might lead to such a claim.
(xxiv) Except as disclosed in the Prospectus, there are no
pending actions, suits, proceedings or investigations against or
affecting the Company (other than any sealed "qui tam" actions of
which the Company has no knowledge), any of its subsidiaries or any of
their respective properties that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect, or would materially and
adversely affect the ability of the Company to perform its obligations
under this Agreement, or which are otherwise material in the context
of the sale of the Offered Securities; and no such actions, suits,
proceedings or investigations are threatened or, to the Company's
knowledge, contemplated.
(xxv) The accountants who certified the financial statements and
supporting schedules included in each Registration Statement and the
Prospectus are independent public accountants as required by the Act
and the Rules and Regulations.
(xxvi) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of
the Company and its consolidated subsidiaries as of the dates shown
and their results of operations and cash flows for the periods shown,
and such financial statements have been prepared in conformity with
the generally accepted accounting principles ("GAAP") in the United
States applied on a consistent basis; the schedules included in each
Registration Statement present fairly the information required to be
stated therein; and the assumptions used in preparing the pro forma
financial statements included in each Registration Statement and the
Prospectus provide a reasonable basis for presenting the significant
effects directly attributable to the transactions or events described
therein, the related pro forma adjustments give appropriate effect to
those assumptions, and the pro forma columns therein reflect the
proper application of those adjustments to the corresponding
historical financial statement amounts.
(xxvii) Except as disclosed in the Prospectus, since the date of
the latest audited financial statements included in the Prospectus,
there has been no material adverse change, nor any development or
event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole, and,
except as disclosed in or contemplated by the Prospectus, there has
been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
(xxviii) The Company is not, and upon the issuance and sale of
the Offered Securities by the Company as herein contemplated and the
application by the Company of the net proceeds therefrom as described
in the Prospectus will not be, an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended (the
"INVESTMENT COMPANY ACT").
(xxix) There are no contracts or documents that are required to
be described in the Registration Statements or the Prospectus or to be
filed as exhibits thereto which have not been so described or filed as
required.
(xxx) The Company and each of its subsidiaries and each of the
facilities owned, leased or operated by them are insured by
Cornerstone Insurance Company ("Cornerstone") and other insurers (each
such other insurer being an insurer of recognized financial
responsibility) against such losses and risks and in such amounts as
are prudent and customary in the healthcare industry; neither the
Company nor any of its subsidiaries or any of the facilities owned,
leased or operated by them has been refused any material insurance
coverage sought or applied for since January 1, 1999; and the Company
has no reason to believe that it, any of its subsidiaries or any of
the facilities owned, leased or operated by it or any of its
subsidiaries will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain coverage consistent
with such coverage in all material respects from insurers with
comparable financial strength and claims paying ability ratings as may
be necessary to continue its operations.
(xxxi) Since December 31, 2000, (a) Cornerstone has not sustained
any material loss or material interference with its business from any
action, notice, order or decree from an insurance regulatory authority
and (b) except as described in the Prospectus, there has been (1) no
material adverse change in case reserves or losses or loss expense of
Cornerstone and (2) no material adverse change, nor any development or
event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of
operations of Cornerstone, in either case whether or not arising in
the ordinary course of business.
(xxxii) The Company and its subsidiaries have timely filed all
federal, state, local and foreign tax returns that are required to be
filed or has duly requested extensions thereof and all such tax
returns are true, correct and complete, except to the extent that any
failure to file or request for extension, or any incorrectness, would
not, individually or in the aggregate, have a Material Adverse Effect.
The Company and its subsidiaries have timely paid all taxes shown as
due on such filed tax returns (including any related assessments,
fines or penalties), except to the extent that any such taxes are
being contested in good faith and by appropriate proceedings, or to
the extent that any failure to pay would not, individually or in the
aggregate, have a Material Adverse Effect; and adequate charges,
accruals and reserves have been provided for in the financial
statements in accordance with GAAP in respect of all federal, state,
local and foreign taxes for all periods as to which the tax liability
of the Company and its subsidiaries has not been fully determined or
remains open to examination by applicable taxing authorities except
for taxes incurred after the date of the financial statements.
(xxxiii) Neither the Company nor any of its subsidiaries or, to
the best of the Company's knowledge, any of their respective
directors, officers or affiliates has taken or will take, directly or
indirectly, any action designed to, or that could reasonably be
expected to, cause or result in stabilization or manipulation of the
price of the Securities in violation of Regulation M under the
Securities Exchange Act of 1934, as amended ("EXCHANGE ACT").
(xxxiv) All of the Participants to whom any Directed Shares will
be offered are domiciled in, and residents of, the United States.
(xxxv) The Company has not offered, or caused the Underwriters to
offer, any Offered Securities to any person pursuant to the Directed
Share Program with the specific intent to unlawfully influence (i) a
customer or supplier of the Company to alter the customer's or
supplier's level or type of business with the Company or (ii) a trade
journalist or publication to write or publish favorable information
about the Company or its products.
(b) Each Selling Stockholder severally and not jointly represents and
warrants to, and agrees with, the several Underwriters and the QIU that:
(i) The Offered Securities to be sold by such Selling Stockholder
pursuant to this Agreement are certificated securities in registered
form and are not held in any securities account or by or through any
securities intermediary within the meaning of the Uniform Commercial
Code as in effect in the State of New York ("NYUCC"). Such Selling
Stockholder has, and at the relevant Closing Date will have, full
right, power and authority to enter into this Agreement and to hold,
sell, transfer and deliver the Offered Securities to be sold by such
Selling Stockholder pursuant to this Agreement; and upon the
Underwriters' acquiring possession of such Offered Securities (or an
agent's acquiring possession of such Offered Securities on the
Underwriters' behalf) and paying the purchase price therefor as herein
contemplated, the Underwriters will acquire their respective interests
in such Offered Securities (including, without limitation, all rights
that such Selling Stockholder had or has the power to transfer in such
Offered Securities) free of any adverse claim. Certificates for all of
the Offered Securities to be sold by such Selling Stockholder pursuant
to this Agreement, in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or assignment in
blank, with signatures guaranteed, have been placed in custody with
the Custodian under the Power of Attorney and the related Custody
Agreement (each as defined below) with irrevocable conditional
instructions to deliver such Offered Securities to the Underwriters
pursuant to this Agreement.
(ii) If the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement: (A) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement did not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
(B) on the Effective Date of the Additional Registration Statement (if
any), each Registration Statement did not include, or will not
include, any untrue statement of a material fact and did not omit, or
will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
and (C) on the date of this Agreement, the Initial Registration
Statement and, if the Effective Time of the Additional Registration
Statement is prior to the execution and delivery of this Agreement,
the Additional Registration Statement does not include and at the time
of filing of the Prospectus pursuant to Rule 424(b) or (if no such
filing is required) at the Effective Date of the Additional
Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will not include, any untrue
statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading. If the
Effective Time of the Initial Registration Statement is subsequent to
the execution and delivery of this Agreement: on the Effective Date of
the Initial Registration Statement, neither the Initial Registration
Statement nor the Prospectus will include any untrue statement of a
material fact or will omit to state any material fact required to be
stated therein or necessary to make the statements therein (in the
case of the Prospectus, in the light of the circumstances under which
they were made) not misleading. In respect of each Selling
Stockholder, the first two sentences of this clause (ii) apply only to
the extent that any statements in or omissions from a Registration
Statement or the Prospectus are based on and in conformity with
written information furnished to the Company by such Selling
Stockholder (in its capacity as a Selling Stockholder) specifically
for use therein, it being understood and agreed that the only such
information is that described in Section 7(b).
(iii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between such Selling
Stockholder and any person that would give rise to a valid claim
against such Selling Stockholder, the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection
with this offering.
(iv) No consent, approval, authorization or order of, or
registration, qualification or filing with, any domestic governmental
authority, agency or body or any domestic court is required to be
obtained or made by such Selling Stockholder for the consummation of
the transactions contemplated by the Custody Agreement or this
Agreement in connection with the sale of the Offered Securities to be
sold by such Selling Stockholder, except such as have been obtained
and made under the Act and such as may be required under state and
foreign securities laws and the rules of the NASD.
(v) The execution, delivery and performance of the Custody
Agreement and this Agreement by such Selling Stockholder and the sale
of the Offered Securities to be sold by such Selling Stockholder
pursuant hereto will not result in a breach or violation of any of the
terms or provisions of, or constitute a default under, (a) any
statute, any rule, regulation or order of any domestic governmental
authority, agency or body or any domestic court having jurisdiction
over such Selling Stockholder or any of its properties, (b) any
agreement or instrument to which such Selling Stockholder is a party
or by which such Selling Stockholder is bound or to which any of the
properties of such Selling Stockholder is subject or (c) any charter,
by-laws or other constitutive document of such Selling Stockholder,
except, in the case of clause (b) only, for such beaches, violations
or defaults that would not materially adversely affect the ability of
such Selling Stockholder to perform its obligations under this
Agreement or the Custody Agreement or to consummate the transactions
contemplated hereby or thereby.
(vi) The Power of Attorney and related Custody Agreement with
respect to such Selling Stockholder have been duly authorized,
executed and delivered by such Selling Stockholder and constitute
valid and binding obligations of such Selling Stockholder enforceable
in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and
to general equity principles.
(vii) This Agreement has been duly authorized, executed and
delivered by such Selling Stockholder.
(viii) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to, or that could
reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Securities in violation of Regulation
M under the Exchange Act.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company and each
Selling Stockholder agree, severally and not jointly, to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Company and each Selling Stockholder, at a purchase price
of $43.70 per share, that number of Firm Securities (rounded up or down, as
determined by CSFBC in its discretion, in order to avoid fractions)
obtained by multiplying 1,750,000 Firm Securities in the case of the
Company and the number of Firm Securities set forth opposite the name of
such Selling Stockholder in Schedule A hereto, in the case of a Selling
Stockholder, in each case by a fraction the numerator of which is the
number of Firm Securities set forth opposite the name of such Underwriter
in Schedule B hereto and the denominator of which is the total number of
Firm Securities.
Certificates in negotiable form for the Offered Securities to be sold
by the Selling Stockholders hereunder have been placed in custody, for
delivery under this Agreement, under Custody Agreements made with National
City Bank, as custodian ("CUSTODIAN"). Each Selling Stockholder agrees that
the shares represented by the certificates held in custody for the Selling
Stockholders under such Custody Agreements are subject to the interests of
the Underwriters hereunder, that the arrangements made by the Selling
Stockholders for such custody are to that extent irrevocable, and that the
obligations of the Selling Stockholders hereunder shall not be terminated
by operation of law, whether by the death of any individual Selling
Stockholder or the occurrence of any other event, or in the case of a
trust, by the death of any trustee or trustees or the termination of such
trust. If any individual Selling Stockholder or any such trustee or
trustees should die, or if any other such event should occur, or if any of
such trusts should terminate, before the delivery of the Offered Securities
hereunder, certificates for such Offered Securities shall be delivered by
the Custodian in accordance with the terms and conditions of this Agreement
as if such death or other event or termination had not occurred, regardless
of whether or not the Custodian shall have received notice of such death or
other event or termination.
The Company and the Custodian will deliver the Firm Securities to
CSFBC for the accounts of the Underwriters, against payment of the purchase
price in Federal (same day) funds by wire transfer to an account at banks
reasonably acceptable to CSFBC drawn to the order of the Company in the
case of 1,750,000 shares of Firm Securities and to the Custodian in the
case of 1,496,000 shares of Firm Securities, at the office of Shearman &
Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, at 9:00 A.M., New
York time, on November 14, or at such other time not later than seven full
business days thereafter as CSFBC and the Company shall determine, such
time being herein referred to as the "FIRST CLOSING DATE." For purposes of
Rule 15c6-1 under the Exchange Act, the First Closing Date (if later than
the otherwise applicable settlement date) shall be the settlement date for
payment of funds and delivery of securities for all the Offered Securities
sold pursuant to the offering. The certificates for the Firm Securities so
to be delivered will be in definitive form, in such denominations and
registered in such names as CSFBC requests and will be made available for
checking and packaging at the above office of Shearman & Sterling at least
24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company and
the Selling Stockholders from time to time not more than 30 days subsequent
to the date of the Prospectus, the Underwriters may purchase all or less
than all of the Optional Securities at the purchase price per share to be
paid for the Firm Securities. The Company agrees to sell to the
Underwriters the number of Optional Securities specified in such notice and
the Underwriters agree, severally and not jointly, to purchase such
Optional Securities. Such Optional Securities shall be purchased from the
Company for the account of each Underwriter in the same proportion as the
number of Firm Securities set forth opposite such Underwriter's name bears
to the total number of Firm Securities (subject to adjustment by CSFBC to
eliminate fractions) and may be purchased by the Underwriters only for the
purpose of covering over-allotments made in connection with the sale of the
Firm Securities. No Optional Securities shall be sold or delivered unless
the Firm Securities previously have been, or simultaneously are, sold and
delivered. The right to purchase the Optional Securities or any portion
thereof may be exercised from time to time and to the extent not previously
exercised may be surrendered and terminated at any time upon notice by
CSFBC to the Company and the Selling Stockholders.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "OPTIONAL CLOSING DATE," which may be the
First Closing Date (the First Closing Date and each Optional Closing Date,
if any, being sometimes referred to as a "CLOSING DATE"), shall be
determined by CSFBC but shall be not later than five full business days
after written notice of election to purchase Optional Securities is given.
The Company will deliver the Optional Securities being purchased on each
Optional Closing Date to the Representatives for the accounts of the
several Underwriters, against payment of the purchase price therefor in
Federal (same day) funds by official bank check or checks or wire transfer
to an account at a bank acceptable to CSFBC drawn to the order of the
Company, at the above office of Shearman & Sterling. The certificates for
the Optional Securities being purchased on each Optional Closing Date will
be in definitive form, in such denominations and registered in such names
as CSFBC requests upon reasonable notice prior to such Optional Closing
Date and will be made available for checking and packaging at the above
office of Shearman & Sterling at a reasonable time in advance of such
Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public
as set forth in the Prospectus.
5. Certain Agreements of the Company and the Selling Stockholders. The
Company (with respect to paragraphs 5(a) through 5(l) below) and each
Selling Stockholder (with respect only to paragraph 5(i) below) agree with
the several Underwriters that:
(a) If the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by CSFBC (which
consent shall not be unreasonably withheld), subparagraph 4)) of Rule
424(b) not later than the earlier of (A) the second business day following
the execution and delivery of this Agreement or (B) the fifteenth business
day after the Effective Date of the Initial Registration Statement. The
Company will advise CSFBC promptly of any such filing pursuant to Rule
424(b). If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement and an additional
registration statement is necessary to register a portion of the Offered
Securities under the Act but the Effective Time thereof has not occurred as
of such execution and delivery, the Company will file the additional
registration statement or, if filed, will file a post-effective amendment
thereto with the Commission pursuant to and in accordance with Rule 462(b)
on or prior to 10:00 P.M., New York time, on the date of this Agreement or,
if earlier, on or prior to the time the Prospectus is printed and
distributed to any Underwriter, or will make such filing at such later date
as shall have been consented to by CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to
amend or supplement the initial or any additional registration statement as
filed or the related prospectus or the Initial Registration Statement, the
Additional Registration Statement (if any) or the Prospectus and will not
effect such amendment or supplementation without CSFBC's consent (which
consent shall not be unreasonably withheld); and the Company will also
advise CSFBC promptly of the effectiveness of each Registration Statement
(if its Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment of or supplement to a Registration
Statement or the Prospectus and of the institution by the Commission of any
stop order proceedings in respect of a Registration Statement and will use
its reasonable best efforts to prevent the issuance of any such stop order
and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Act, the Company will promptly
notify CSFBC of such event and will promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance. Neither CSFBC's consent to, nor the Underwriters' delivery of,
any such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6.
(d) Not later than the Availability Date (as defined below), the
Company will make generally available to its security holders an earnings
statement covering a period of at least 12 months beginning after the
Effective Date of the Initial Registration Statement (or, if later, the
Effective Date of the Additional Registration Statement) which will satisfy
the provisions of Section 11(a) of the Act. For the purpose of the
preceding sentence, "AVAILABILITY DATE" means the 45th day after the end of
the fourth fiscal quarter following the fiscal quarter that includes such
Effective Date, except that, if such fourth fiscal quarter is the last
quarter of the Company's fiscal year, "AVAILABILITY DATE" means the 90th
day after the end of such fourth fiscal quarter.
(e) The Company will furnish to the Representatives copies of
each Registration Statement (one of which will be signed and will include
all exhibits), each related preliminary prospectus, and, so long as a
prospectus relating to the Offered Securities is required to be delivered
under the Act in connection with sales by any Underwriter or dealer, the
Prospectus and all amendments and supplements to such documents, in each
case in such quantities as CSFBC requests. The Prospectus shall be so
furnished on or prior to 3:00 P.M., New York time, on the business day
following the later of the execution and delivery of this Agreement or the
Effective Time of the Initial Registration Statement. All other such
documents shall be so furnished as soon as available. The Company will pay
the expenses of printing and distributing to the Underwriters all such
documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC
designates and will continue such qualifications in effect so long as
required for the distribution, provided that the Company shall not be
required to (a) qualify generally to do business in any jurisdiction where
it is not then so qualified, (b) take any action which would subject it to
taxation or general service of process in any such jurisdiction where it is
not then so subject or (c) make any change in its charter or by-laws that
the board of directors of the Company determines in good faith to be
contrary to the best interests of the Company and its stockholders.
(g) During the period of three years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the Company
will furnish during such period to the Representatives (i) as soon as
available, a copy of each report and any definitive proxy statement of the
Company filed with the Commission under the Exchange Act or mailed to
stockholders, and (ii) from time to time, such other public information
concerning the Company as CSFBC may reasonably request.
(h) For a period of 90 days after the Effective Date, the Company
will not offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, or file with the Commission a registration
statement under the Act (other than any amendment to the Registration
Statement on Form S-3 (File No. 333-69646) of the Company which was filed
with the Commission on September 19, 2001 or related prospectus or
prospectus supplement) relating to, any additional shares of its Securities
or securities convertible into or exchangeable or exercisable for any
shares of its Securities, or publicly disclose the intention to make any
such offer, sale, pledge, disposition or filing, without the prior written
consent of CSFBC, except issuances of Securities pursuant to the conversion
or exchange of convertible or exchangeable securities or the exercise of
warrants or options, in each case outstanding on the date hereof, grants of
employee stock options pursuant to the terms of a plan in effect on the
date hereof, or issuances of Securities pursuant to the exercise of such
options.
(i) The Company agrees with the several Underwriters that the
Company will pay all expenses incident to the performance of the
obligations of the Company under this Agreement, for the filing fees of the
Commission relating to the Offered Securities, for any filing fees and
other expenses (including fees and disbursements of counsel) in connection
with qualification of the Offered Securities for sale under the laws of
such jurisdictions as CSFBC designates and the printing of memoranda
relating thereto, for the filing fee and other expenses (including fees and
disbursements of counsel) incident to the review by the NASD of the
underwriting terms and arrangements relating to the sale of the Offered
Securities, for any fees associated with the quotation of the Securities on
The Nasdaq National Market, for any travel expenses of the Company's
officers and employees and any other expenses of the Company in connection
with attending or hosting meetings with prospective purchasers of the
Offered Securities for expenses incurred in distributing preliminary
prospectuses and the Prospectus (including any amendments and supplements
thereto) to the Underwriters. Each Selling Stockholder agrees with the
several Underwriters that such Selling Stockholder will pay all expenses
incident to the performance of the obligations of such Selling Stockholder
under the Agreement and for any transfer taxes on the sale by such Selling
Stockholder of Offered Securities to the Underwriters. As between the
Company and the Selling Stockholders that are party to the Registration
Rights Agreement (described below), the expenses set forth in this
paragraph (i) shall be paid according to the provisions of Section 7 of the
Registration Rights Agreement, dated as of April 20, 2001, as amended, by
and among the Company and the persons identified on Schedule 1 thereto.
(j) The Company will use its best efforts to cause the Custodian
to deliver to CSFBC, attention: Transactions Advisory Group, on the Closing
Date a letter stating that they will deliver to each Selling Stockholder a
United States Treasury Department Form 1099 (or other applicable form or
statement specified by the United States Treasury Department regulations in
lieu thereof) on or before January 31 of the year following the date of
this Agreement.
(k) In connection with the Directed Share Program, the Company
will ensure that the Directed Shares will be restricted to the extent
required by the NASD or the NASD rules from sale, transfer, assignment,
pledge or hypothecation for a period of three months following the date of
the effectiveness of the Registration Statement. The Designated Underwriter
will notify the Company as to which Participants will need to be so
restricted. The Company will direct the transfer agent to place stop
transfer restrictions upon such securities for such period of time.
(l) The Company will pay all fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share Program
and stamp duties, similar taxes or duties or other taxes, if any, incurred
by the Underwriters in connection with the Directed Share Program.
6. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Firm Securities on
the First Closing Date and the Optional Securities to be purchased on each
Optional Closing Date will be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholders herein, to the accuracy of the written statements of Company
officers made pursuant to the provisions hereof, to the performance by the
Company and the Selling Stockholders of their respective obligations
hereunder and to the following additional conditions precedent:
(a) The Representatives shall have received a letter, dated the
date of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, shall be at or prior to the time
of filing of the amendment or post-effective amendment to the registration
statement to be filed shortly prior to such Effective Time), of
PricewaterhouseCoopers LLP confirming that they are independent public
accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and schedules and
summary of earnings examined by them and included in the Registration
Statements comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on the unaudited financial
statements included in the Registration Statements;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that:
(A) the unaudited financial statements included in the
Registration Statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act
and the related published Rules and Regulations or any material
modifications should be made to such unaudited financial
statements for them to be in conformity with generally accepted
accounting principles;
(B) the unaudited consolidated revenues, operating income,
net income and net income per share amounts for the three-month
period ended September 30, 2001 included in the Prospectus do not
agree with the amounts set forth in the unaudited consolidated
financial statements for those same periods or were not
determined on a basis substantially consistent with that of the
corresponding amounts in the audited statements of income;
(C) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more
than three business days prior to the date of this Agreement,
there was any change in the capital stock, any increase in
current liabilities, long-term debt or professional liability
risks, or any decreases in consolidated net assets or
stockholders' equity of the Company and its consolidated
subsidiaries, as compared with amounts shown on the latest
balance sheet included in the Prospectus; or
(D) for the period from the closing date of the latest
income statement included in the Prospectus to the closing date
of the latest available income statement read by such
accountants, or to a specified date not more than three business
days prior to the date of this Agreement, there were any
decreases, as compared with the corresponding period of the
previous year, in consolidated revenues or in the total or per
share amounts of consolidated income from operations before
extraordinary items or of net income;
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases that the Prospectus discloses have
occurred or may occur or which are described in such letter;
(iv) they have read the unaudited pro forma condensed financial
statements included in the Registration Statements, inquired of
officials of the Company who have responsibility for financial and
accounting matters about the basis for their determination of the pro
forma adjustments and whether such unaudited pro forma condensed
financial statements comply as to form in all material respects with
the applicable accounting requirements of rule 11-02 of Regulation S-X
and proved the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts in such unaudited pro forma
condensed consolidated financial statements;
(v) nothing came to their attention as a result of the procedures
referred to in clause (iv) above that caused them to believe that the
unaudited pro forma condensed consolidated financial statements
included in the Registration Statements do not comply as to form in
all material respects with the applicable accounting requirements of
rule 11-02 of Regulation S-X and that the pro forma adjustments have
not been properly applied to the historical amounts in the compilation
of those statements; and
(vi) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Registration Statements (in each case to the extent
that such dollar amounts, percentages and other financial information
are derived from the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statements is subsequent to the execution and
delivery of this Agreement, "REGISTRATION STATEMENTS" shall mean the
initial registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to its
Effective Time, (ii) if the Effective Time of the Initial Registration
Statements is prior to the execution and delivery of this Agreement
but the Effective Time of the Additional Registration Statement is
subsequent to such execution and delivery, "REGISTRATION Statements"
shall mean the Initial Registration Statement and the additional
registration statement as proposed to be filed or as proposed to be
amended by the post-effective amendment to be filed shortly prior to
its Effective Time, and (iii) "PROSPECTUS" shall mean the prospectus
included in the Registration Statements. All financial statements and
schedules included in material incorporated by reference into the
Prospectus shall be deemed included in the Registration Statements for
purposes of this subsection.
(b) The Representatives shall have received a letter, dated the
date of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, shall be at or prior to the time
of filing of the amendment or post-effective amendment to the registration
statement to be filed shortly prior to such Effective Time), of Ernst &
Young LLP confirming that they are independent public accountants within
the meaning of the Act and the applicable published Rules and Regulations
thereunder and stating to the effect that:
(i) in their opinion the financial statements and schedules
examined by them and included in the Registration Statements comply as
to form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations;
(ii) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Registration Statements (in each case to the extent
that such dollar amounts, percentages and other financial information
are derived from the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statements is subsequent to the execution and
delivery of this Agreement, "REGISTRATION STATEMENTS" shall mean the
initial registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to its
Effective Time, (ii) if the Effective Time of the Initial Registration
Statements is prior to the execution and delivery of this Agreement
but the Effective Time of the Additional Registration Statement is
subsequent to such execution and delivery, "REGISTRATION Statements"
shall mean the Initial Registration Statement and the additional
registration statement as proposed to be filed or as proposed to be
amended by the post-effective amendment to be filed shortly prior to
its Effective Time, and (iii) "PROSPECTUS" shall mean the prospectus
included in the Registration Statements. All financial statements and
schedules included in material incorporated by reference into the
Prospectus shall be deemed included in the Registration Statements for
purposes of this subsection.
(c) If the Effective Time of the Initial Registration Statement
is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York
time, on the date of this Agreement or such later date as shall have been
consented to by CSFBC. If the Effective Time of the Additional Registration
Statement (if any) is not prior to the execution and delivery of this
Agreement, such Effective Time shall have occurred not later than 10:00
P.M., New York time, on the date of this Agreement or, if earlier, the time
the Prospectus is printed and distributed to any Underwriter, or shall have
occurred at such later date as shall have been consented to by CSFBC. If
the Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement, the Prospectus shall have been
filed with the Commission in accordance with the Rules and Regulations and
Section 5(a) of this Agreement. Prior to such Closing Date, no stop order
suspending the effectiveness of a Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or,
to the knowledge of any Selling Stockholder, the Company or the
Representatives, shall be contemplated by the Commission.
(d) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as one enterprise which, in the judgment of a majority
in interest of the Representatives, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities; (ii) any
downgrading in the rating of any debt securities of the Company by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), or any public announcement that any
such organization has under surveillance or review its rating of any debt
securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any change in U.S. or international
financial, political or economic conditions as would, in the judgment of a
majority in interest of the Representatives, be likely to prejudice
materially the success of the proposed issue, sale or distribution of the
Offered Securities, whether in the primary market or in respect of dealings
in the secondary market; (iv) any material suspension or material
limitation of trading in securities generally on the New York Stock
Exchange, or any setting of minimum prices for trading on such exchange, or
any suspension of trading of any securities of the Company on any exchange
or in the over-the-counter market; (v) any material disruption in
securities settlement or clearance services in the United States; (vi) any
banking moratorium declared by U.S. Federal or New York authorities; or
(vii) any outbreak or escalation of hostilities which the United States,
any declaration of war by Congress or any other national or international
calamity or emergency if, in the judgment of a majority in interest of the
Representatives, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the public offering or the sale of and payment for the
Offered Securities.
(e) The Representatives shall have received an opinion, dated
such Closing Date, of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the
Company, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters, to the effect that:
(i) the Company is validly existing as a corporation in good
standing under the laws of the State of Delaware, with corporate power
to own and lease its properties and conduct its business as described
in the Prospectus;
(ii) the Company has the authorized, issued and outstanding
capitalization as set forth in the Prospectus as of the dates set
forth therein; all of the issued and outstanding shares of capital
stock of the Company have been duly authorized and validly issued, are
fully paid and nonassessable and conform to the description thereof
contained in the Prospectus (but we express no opinion with respect to
any options or shares issued with respect to the Company's stock
option plans); none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive rights of any
security holder of the Company arising under the amended and restated
certificate of incorporation or amended and restated by-laws of the
Company or the laws of the State of Delaware;
(iii) the Offered Securities to be issued and sold by the Company
pursuant hereto have been duly authorized by all necessary corporate
action of the Company and at such Closing Date, after payment therefor
in accordance herewith, will be validly issued, fully paid and
nonassessable; and the holders of outstanding shares of capital stock
of the Company are not entitled to any preemptive rights to subscribe
for the Offered Securities under the amended and restated certificate
of incorporation or amended and restated by-laws of the Company or the
laws of the State of Delaware;
(iv) no consent, approval, authorization, or registration or
qualification of or with any governmental body, agency or court of the
United States, the State of Delaware or the State of New York is
required (other than under any Health Care Laws) to be obtained or
made by the Company for the issuance and sale of the Offered
Securities to the Underwriters pursuant to this Agreement or the
performance by the Company of its obligations under this Agreement,
except such as have been obtained or effected under the Act and the
Exchange Act (but we express no opinion as to any consent, approval,
authorization, registration or qualification that may be required
under state securities or Blue Sky laws);
(v) the issuance and sale of the Offered Securities to the
Underwriters pursuant to this Agreement and the performance by the
Company of its obligations under this Agreement do not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, (a) any United States federal or New York
state law, rule or regulation (other than any Health Care Laws) or the
Delaware General Corporation Law, (b) any judgment, decree or order of
any governmental body, agency or court that is identified in an
attached officer's certificate of the Company as applicable to the
Company or any subsidiary of the Company or any of their properties,
(c) any agreement or instrument to which the Company or any such
subsidiary is a party or by which the Company or any such subsidiary
is bound or to which any of the properties of the Company or any such
subsidiary is subject that is filed as an exhibit to a Registration
Statement, or (d) the amended and restated certificate of
incorporation or amended and restated by-laws of the Company;
(vi) based solely on a telephonic confirmation from a
representative of the Commission, such counsel confirms that the
Initial Registration Statement is effective under the Act, and the
Additional Registration Statement (if any) is effective under the Act;
the Prospectus either was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the date
specified therein or was included in the Initial Registration
Statement or the Additional Registration Statement (as the case may
be), and, to the best of the knowledge of such counsel, no stop order
with respect to a Registration Statement has been issued and no
proceedings for that purpose have been instituted or are, to the best
of the knowledge of such counsel, threatened by the Commission; each
Registration Statement and the Prospectus, and each amendment or
supplement thereto, as of their respective effective or issue dates,
appeared on their face to be appropriately responsive in all material
respects to the requirements of the Act and the Rules and Regulations
other than Regulation S-T under the Act and the documents incorporated
in each Registration Statement and the Prospectus, as of the
respective dates of their filing with the Commission, appeared on
their face to be appropriately responsive in all material respects to
the requirements of the Exchange Act and the Rules and Regulations of
the Commission thereunder; such counsel have no reason to believe that
(1) a Registration Statement or any amendment thereto, as of its
effective date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or (2) the
Prospectus or any amendment or supplement thereto, as of its issue
date or as of such Closing Date, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and such counsel do not
know of any legal or governmental proceedings or investigations to
which the Company is a party or the subject that are currently pending
before any adjudicative tribunal or that have been threatened by a
written communication manifesting an intention to initiate such
proceedings or investigations received by the management of the
Company or by such counsel that are required to be described in a
Registration Statement or the Prospectus which are not disclosed; it
being understood that such counsel need express no opinion as to the
financial statements and schedules or other financial data contained
in the Registration Statements or the Prospectus (or the documents
incorporated by reference therein);
(vii) the execution and delivery of this Agreement have been duly
authorized by all necessary corporate action of the Company and this
Agreement has been duly executed and delivered by the Company;
(viii) the form of certificate used to evidence the Securities
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the amended and
restated certificate of incorporation and amended and restated by-laws
of the Company and with all applicable Nasdaq requirements, in each
case as in effect on such Closing Date;
(ix) the statements set forth (A) in the Prospectus under
"Business--Our Reorganization," "Business--Master Lease Agreements,"
"Business--Corporate Integrity Agreement," "Description of Capital
Stock" and "Shares Eligible for Future Sale," insofar as such
statements purport to summarize certain legal matters, documents or
proceedings referred to therein, or the Company's charter or by-laws
provide a fair summary of such matters, documents or proceedings or
the Company's charter or by-laws;
(x) the statements set forth in the Prospectus under the caption
"United States Federal Income Tax Considerations For Non-United States
Holders," insofar as such statements purport to summarize certain
federal income tax laws of the United States, constitute a fair
summary of the principal U.S. federal income tax consequences of an
investment in the Offered Securities by non-United States Holders as
defined in the Prospectus; and
(xi) the Company is not, and upon the issuance and sale of the
Offered Securities by the Company as contemplated herein and the
application by the Company of the net proceeds therefrom as described
in the Prospectus will not be, an "investment company," within the
meaning of the Investment Company Act;
(f) The Representatives shall have received an opinion, dated
such Closing Date, of M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq., Senior Vice President and
General Counsel of the Company, in form and substance satisfactory to
counsel for the Underwriters, together with signed or reproduced copies of
such letter for each of the other Underwriters, to the effect that:
(i) the Company is duly qualified to transact business as a
foreign corporation and is in good standing in all jurisdictions in
which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to be
so qualified or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect;
(ii) each subsidiary identified on Schedule E hereto (that
purports to identify each subsidiary operating in any state where all
of the Company's subsidiaries so operating in such state, considered
in the aggregate as a single subsidiary, would constitute a
"significant subsidiary" as defined in Rule 1-02 of Regulation S-X)
(each a "Material Subsidiary") has been duly incorporated or organized
and is validly existing as a corporation or other entity in good
standing under the laws of the jurisdiction of its incorporation or
organization, with power and authority (corporate or other) to own,
lease and operate its properties and conduct its business as described
in the Prospectus, and each Material Subsidiary is duly qualified to
transact business as a foreign corporation or other entity and is in
good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, have a Material
Adverse Effect; all of the issued and outstanding capital stock of
each Material Subsidiary that is a corporation has been duly
authorized and validly issued, is fully paid and nonassessable, was
not issued in violation of or subject to any preemptive or similar
rights and is owned by the Company, directly or through subsidiaries,
free from liens, encumbrances and defects (other than liens pursuant
to the Credit Agreements); and all of the partnership, membership or
other ownership interests of each Material Subsidiary that is not a
corporation have been validly issued and, except as set forth on
Schedule D hereto, are owned by the Company, directly or through
subsidiaries, free from liens, encumbrances and defects (other than
liens pursuant to the Credit Agreements);
(iii) except as disclosed in the Prospectus and as provided in
the Credit Agreements, there are no material encumbrances or
restrictions on the ability of any subsidiary of the Company (A) to
pay any dividends or make any distributions on such subsidiary's
capital stock or partnership, membership or other ownership interests
or to pay any indebtedness owed to the Company or any other
subsidiary, (B) to make any loans or advances to, or investments in,
the Company or any other subsidiary, or (iii) to transfer any of its
property or assets to the Company or any other subsidiary;
(iv) no consent, approval, authorization or order of, or
registration, qualification or filing with, any governmental agency or
body or any court is required under any Health Care Laws to be
obtained or made by the Company for the consummation of the
transactions contemplated by this Agreement in connection with the
sale of the Offered Securities, except such as have been obtained and
made and such required filings and notices furnished by the Company in
connection with the participation of the Company's facilities in the
Medicare program and other U.S. federal programs (the "Medicare
Filings and Notices") as are not yet required to be made;
(v) the execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, (a) any Health Care Laws, (b) any
agreement or instrument to which the Company or any such subsidiary is
a party or by which the Company or any such subsidiary is bound or to
which any of the properties of the Company or any such subsidiary is
subject, or (c) the charter, by-laws or other constitutive document of
the Company or any such subsidiary, except, in the case of clause (b)
only, for such breaches, violations or defaults that would not,
individually or in the aggregate, have a Material Adverse Effect;
(vi) such counsel has no reason to believe that (1) any part of a
Registration Statement or any amendment thereto, as of its effective
date, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading or (2) the Prospectus or
any amendment or supplement thereto, as of its issue date or as of
such Closing Date, contained any untrue statement of a material fact
or omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; the descriptions in the Registration
Statements and Prospectus of statutes and regulations (including any
Health Care Laws), legal and governmental proceedings and
investigations and contracts and other documents are accurate and
fairly present the information required to be shown; and such counsel
does not know of any legal or governmental proceedings or
investigations required to be described in a Registration Statement or
the Prospectus which are not described as required or of any contracts
or documents of a character required to be described in a Registration
Statement or the Prospectus or to be filed as exhibits to a
Registration Statement which are not described and filed as required;
it being understood that such counsel need express no opinion as to
the financial statements and schedules or other financial data
contained in the Registration Statements or the Prospectus;
(vii) the statements set forth in (A) the Prospectus under "Risk
Factors--Changes in the reimbursement rates or methods of payment from
third-party payors, including the Medicare and Medicaid programs, or
the implementation of other measures to reduce reimbursement for our
services could result in a substantial reduction in our revenues and
operating margins," "Risk Factors--Significant legal actions,
particularly in the State of Florida, could subject us to increased
operating costs and substantial uninsured liabilities, which could
materially and adversely affect our liquidity, financial condition and
results of operations," "Risk Factors--We conduct business in a
heavily regulated industry, and changes in regulations or violations
of regulations may result in increased costs or sanctions that reduce
our revenues and profitability," "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Regulatory Changes,"
"Business--Government Regulation," "Business--Legal Proceedings," and
"Business--Environmental Matters," and (B) in the 2000 Form 10-K/A
under "Business--Government Regulation," and "Legal Proceedings," to
the extent that it constitutes matters of law, summaries of legal
matters, documents or proceedings referred to therein or legal
conclusions, has been reviewed by such counsel and is correct in all
material respects;
(viii) neither the Company nor any of its subsidiaries is in
violation of its charter, by-laws or other constitutive document or of
any Health Care Laws, except for such violations of Health Care Laws
that would not, individually or in the aggregate, have a Material
Adverse Effect; and no default by the Company or any of its
subsidiaries exists in the due performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described or referred to in a
Registration Statement or the Prospectus or filed or incorporated by
reference as an exhibit to a Registration Statement, except for such
defaults that would not, individually or in the aggregate, have a
Material Adverse Effect;
(ix) the Company and its subsidiaries possess all required
Governmental Licenses issued by, and have made all required
declarations and filings with, the appropriate federal, state, local
or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them (including, without limitation,
Government Licenses as are required (i) under such federal and state
healthcare laws as are applicable to the Company and its subsidiaries
and (ii) with respect to those facilities operated by the Company or
any of its subsidiaries that participate in the Medicare and/or
Medicaid programs, to receive reimbursement thereunder), except where
the failure to possess such Government Licenses or to make such
declarations and filings would not, individually or in the aggregate,
have a Material Adverse Effect; the Company and its subsidiaries are
in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not,
individually or in the aggregate, have a Material Adverse Effect; all
of the Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect
would not, individually or in the aggregate, have a Material Adverse
Effect; and, to the best of such counsel's knowledge after due
inquiry, neither the Company nor any of its subsidiaries has received
any notice of proceedings relating to the revocation, suspension or
modification of any such Governmental Licenses or the imposition of
any other sanction for violation of any Health Care Law that, if the
subject of an unfavorable decision, ruling or finding, would
individually or in the aggregate have a Material Adverse Effect;
(x) the Company is in compliance with the terms and conditions of
its Corporate Integrity Agreement with the Office of the Inspector
General of the U.S. Department of Health and Human Services, except
where the failure so to comply would not, individually or in the
aggregate, have a Material Adverse Effect; and
(xi) except as disclosed in the Prospectus, there are no
contracts, agreements or understandings known to such counsel between
the Company and any person granting such person the right to require
the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Act.
For purposes of this opinion, the term "Health Care Laws" shall
mean those statutes, rules and regulations, judgments, decrees or
orders specifically regulating health care providers, as such, of the
type owned and operated by the Company and its subsidiaries as
described under the headings "Risk Factors--Changes in the
reimbursement rates or methods of payment from third-party payors,
including the Medicare and Medicaid programs, or the implementation of
other measures to reduce reimbursement for our services could result
in a substantial reduction in our revenues and operating margins,"
"Risk Factors--Significant legal actions, particularly in the State of
Florida, could subject us to increased operating costs and substantial
uninsured liabilities, which could materially and adversely affect our
liquidity, financial condition and results of operations," "Risk
Factors--We conduct business in a heavily regulated industry, and
changes in regulations or violations of regulations may result in
increased costs or sanctions that reduce our revenues and
profitability," "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Regulatory Changes,"
"Business--Government Regulation," "Business--Legal Proceedings," and
"Business--Environmental Matters" in the Prospectus, including without
limitation, (a) health care licensure, permit and certificate of need
requirements, (b) Title XVIII, XIX and XXI of the Social Security Act,
(c) the Anti-Kickback Amendments (as defined in the Prospectus) and
the regulations promulgated thereunder, (d) the ▇▇▇▇▇ Laws (as defined
in the Prospectus) and the regulations promulgated thereunder, (e) the
False Claims Act, (f) Title II of the Health Insurance Portability and
Accountability Act of 1996, (g) Title IV of the Balanced Budget Act of
1997, (h) any initiatives under Operation Restore Trust and (i) state
statutes, rules and regulations concerning matters similar to (b)
through (h) above, but specifically excluding statutes, ordinances,
administrative decisions, rules and regulations of counties, towns or
municipalities.
(g) The Representatives shall have received an opinion, dated
such Closing Date, of each Selling Stockholder's counsel set forth opposite
its name on Schedule A hereto, in form and substance satisfactory to
counsel for the Underwriters, together with signed or reproduced copies of
such letter for each of the other Underwriters, to the effect that:
(i) such Selling Stockholder has full right, power and authority
to sell, transfer and deliver the Offered Securities to be sold by
such Selling Stockholder on such Closing Date pursuant to this
Agreement. Assuming that (i) the certificate or certificates
representing such Offered Securities have been effectively indorsed in
blank in accordance with NYUCC Article 8 and (ii) neither the
Underwriters, nor the agents acquiring possession of such Offered
Securities on their behalf, have notice of any adverse claim to such
Offered Securities, then upon the Underwriters' acquiring possession
of such certificate or certificates for such Offered Securities (or
the agent's acquiring possession of such certificate or certificates
for such Offered Securities on the Underwriters' behalf) and paying
the purchase price therefor pursuant to this Agreement, each
Underwriter will be a "protected purchaser" of such Offered Securities
to be purchased by it (within the meaning of Section 8-303 of the
NYUCC) and will acquire its interest in such Offered Securities
(including, without limitation, all rights that such Selling
Stockholder had or has the power to transfer in such Offered
Securities) free of any adverse claim.
(ii) no consent, approval, authorization or order of, or
registration, qualification or filing with, any United States federal
or New York state governmental authority, agency or body or any United
States federal or New York state court is required to be obtained or
made by such Selling Stockholder for the consummation of the
transactions contemplated by the Custody Agreement or this Agreement
in connection with the sale of the Offered Securities to be sold by
such Selling Stockholder, except such as have been obtained and made
under the Act and such as may be required under state or foreign
securities laws and the rules of the NASD;
(iii) the execution, delivery and performance of the Custody
Agreement and this Agreement by such Selling Stockholder and the
consummation by such Selling Stockholder of the transactions therein
and herein contemplated will not result in a breach or violation of
any of the terms and provisions of, or constitute a default under, (a)
any United States federal or New York state law, rule or regulation,
(b) any judgment, decree or order of any governmental authority,
agency or body or any court having jurisdiction over such Selling
Stockholder or any of its properties that is identified in an attached
officer's certificate of such Selling Stockholder as applicable to
such Selling Stockholder's investment in the Offered Securities or
consummation of the transactions contemplated in this Agreement and
the Custody Agreement, (c) any agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder is
bound or to which any of its properties is subject that is identified
in an attached officer's certificate of such selling Stockholder as
applicable to such Selling Stockholder's investment in the Offered
Securities or consummation of the transactions contemplated in this
Agreement and the Custody Agreement or (d) the charter, by-laws or
other constitutive document of such Selling Stockholder, except, in
the case of clauses (b) and (c) only, for such breaches, violations or
defaults that would not materially adversely affect the ability of
such Selling Stockholder to perform its obligations under this
Agreement or the Custody Agreement or to consummate the transactions
contemplated hereby or thereby;
(iv) the Power of Attorney and related Custody Agreement with
respect to such Selling Stockholder have been duly authorized,
executed and delivered by such Selling Stockholder and constitute
valid and binding obligations of such Selling Stockholder enforceable
in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and
to general equity principles; and
(v) this Agreement has been duly authorized, executed and
delivered by such Selling Stockholder.
(h) The Representatives shall have received from Shearman &
Sterling, counsel for the Underwriters, such opinion or opinions, dated
such Closing Date, with respect to the incorporation of the Company, the
validity of the Offered Securities delivered by the Company on such Closing
Date, the Registration Statements, the Prospectus and other related matters
as the Representatives may require, and the Selling Stockholders and the
Company shall have furnished to such counsel such documents as they request
for purposes of enabling them to pass upon such matters.
(i) The Representatives shall have received an opinion, dated the
Closing Date, of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, special counsel to the
Underwriters, in form and substance satisfactory to the Representatives, to
the effect that:
(i) the statements set forth in (A) the Prospectus under "Risk
Factors - Changes in the reimbursement rates or methods of payment
from third-party payors, including the Medicare and Medicaid programs
or, the implementation of other measures to reduce reimbursement for
our services could result in a substantial reduction in our revenues
and operating margins," Risk Factors - We conduct business in a
heavily regulated industry, and changes in regulations or violations
of regulations may result in increased costs or sanctions that reduce
our revenues and profitability," and "Business - Government
Regulation," to the extent that such statements purport to summarize
statutes, rules and regulations constituting Health Care Laws have
been reviewed by such counsel and those statements provide an accurate
and fair summary of such statutes, rules and regulations; provided
that with respect to the foregoing opinion, the Company shall have
furnished to ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, such documents as they request
for purpose of enabling them to pass upon such matters; and
(ii) although such counsel has undertaken no investigation to
verify independently the accuracy, completeness or fairness or the
statements contained in the Prospectus (except as stated in paragraph
(i) above), no facts have come to such counsel's attention that lead
them to believe that, as of the Effective Date or on the date hereof,
the statements contained in the above referenced portions of the
Prospectus summarizing the statutes, rules and regulations
constituting Health Care Laws contained or contain any untrue
statements of a material fact or omitted or omit to state a material
fact required to be stated therein or necessary to make such
statements, in the light of the circumstances under which they were
made, not misleading.
(j) The Representatives shall have received a certificate, dated
such Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers shall
state that, to the best of their knowledge after reasonable investigation:
the representations and warranties of the Company in this Agreement are
true and correct; the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date; no stop order suspending the
effectiveness of any Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated by
the Commission; the Additional Registration Statement (if any) satisfying
the requirements of subparagraphs (1) and (3) of Rule 462(b) was filed
pursuant to Rule 462(b), including payment of the applicable filing fee in
accordance with Rule 111(a) or (b) under the Act, prior to the time the
Prospectus was printed and distributed to any Underwriter; and, subsequent
to the date of the most recent financial statements in the Prospectus,
there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(k) The Representatives shall have received a letter, dated such
Closing Date, from PricewaterhouseCoopers LLP which meets the requirements
of subsection (a) of this Section, except that the specified date referred
to in such subsection will be a date not more than three days prior to such
Closing Date for the purposes of this subsection.
(l) The Representatives shall have received a letter, dated such
Closing Date, from Ernst & Young LLP which meets the requirements of
subsection (b) of this Section.
(m) On or prior to the date on which the Company first furnishes
to the Underwriters a preliminary prospectus for use in connection with the
offering of the Offered Securities, the Representatives shall have received
a lockup letter, in form and substance satisfactory to the Representatives,
from each Selling Stockholder and from each executive officer and director
of the Company who is not a Selling Stockholder.
(n) On or prior to the date of this Agreement, the NASD shall
have confirmed that it has not raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(o) On or prior to the date of this Agreement, the Securities
shall have been approved for quotation on The Nasdaq National Market,
subject only to notice of issuance.
The Selling Stockholders and the Company will furnish the Representatives
with such conformed copies of such opinions, certificates, letters and
documents as the Representatives reasonably request. CSFBC may in its sole
discretion waive on behalf of the Underwriters compliance with any
conditions to the obligations of the Underwriters hereunder, whether in
respect of an Optional Closing Date or otherwise.
7. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each
Underwriter, its partners, directors and officers and each person, if any,
who controls such Underwriter within the meaning of Section 15 of the Act,
against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein (in the case
of the Prospectus, in the light of the circumstances under which they were
made) not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, the Company will
not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any of
such documents in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein, it being understood and agreed that the only
such information furnished by any Underwriter consists of the information
described as such in subsection (c) below; and provided, further, that with
respect to any untrue statement or alleged untrue statement in or omission
or alleged omission from any preliminary prospectus, which statement or
omission was corrected in the Prospectus, the indemnity agreement contained
in this Section 7(a) shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages or liabilities
purchased the Offered Securities concerned, to the extent that a prospectus
relating to such Offered Securities was required to be delivered by such
Underwriter under the Act in connection with such purchase and any such
loss, claim, damage or liability of such Underwriter results from the fact
that there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Offered Securities to such person, a copy
of the Prospectus if the Company had previously furnished copies thereof to
such Underwriter.
The Company agrees to indemnify and hold harmless the Designated
Underwriter and each person, if any, who controls the Designated
Underwriter within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act (the "DESIGNATED ENTITIES"), from and
against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) (i)
caused by any untrue statement or alleged untrue statement of a material
fact contained in any material prepared by or with the consent of the
Company for distribution to Participants in connection with the Directed
Share Program or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; (ii) caused by the failure of any
Participant to pay for and accept delivery of Directed Shares that the
participant agreed to purchase; or (iii) related to, arising out of, or in
connection with the Directed Share Program, other than losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the bad faith or gross
negligence of the Designated Entities.
(b) Each Selling Stockholder will severally and not jointly
indemnify and hold harmless each Underwriter, its partners, directors and
officers and each person who controls such Underwriter within the meaning
of Section 15 of the Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by such Selling
Stockholder (in its capacity as a Selling Stockholder) specifically for use
therein, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred, it being understood and agreed that
the only such information furnished by any Selling Stockholder consists of
the information pertaining to such Selling Stockholder included in the
Prospectus under the caption "Principal and Selling Stockholders," and;
provided, however, that with respect to any untrue statement or alleged
untrue statement in or omission or alleged omission from any preliminary
prospectus, which statement or omission was corrected in the Prospectus,
the indemnity agreement contained in this Section 7(b) shall not inure to
the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased the Offered Securities
concerned, to the extent that a prospectus relating to such Offered
Securities was required to be delivered by such Underwriter under the Act
in connection with such purchase and any such loss, claim, damage or
liability of such Underwriter results from the fact that there was not sent
or given to such person, at or prior to the written confirmation of the
sale of such Offered Securities to such person, a copy of the Prospectus if
the Company had previously furnished copies thereof to such Underwriter.
The liability under this subsection of each Selling Stockholder shall be
limited to an amount equal to the aggregate gross proceeds (net of
underwriting discounts and commissions but before deducting expenses) to
such Selling Stockholder from the sale of the Offered Securities sold by
such Selling Stockholder hereunder.
(c) Each Underwriter will severally and not jointly indemnify and
hold harmless the Company, its directors, each officer of the Company who
signed a Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Act, and each Selling
Stockholder, against any losses, claims, damages or liabilities to which
the Company or such Selling Stockholder may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are
based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in the light of the circumstances
under which they were made) not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by such Underwriter
through the Representatives specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the Company
and each Selling Stockholder in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Underwriter consists of (i) the following information in
the Prospectus furnished on behalf of each Underwriter: the concession and
reallowance figures appearing in the fourth paragraph under the caption
"Underwriting," and the information contained in the fourteenth and
fifteenth paragraphs under the caption "Underwriting;" and (ii) the
following information in the Prospectus furnished on behalf of ▇▇▇▇▇▇▇,
▇▇▇▇▇ & Co.: the third sentence appearing in the last paragraph under the
caption "Underwriting," and (iii) the following information in the
Prospectus furnished on behalf of ▇.▇. ▇▇▇▇▇▇ Securities Inc.: the fourth,
fifth and sixth sentences appearing in the last paragraph under the caption
"Underwriting."
(d) Promptly after receipt by an indemnified party under this
Section or Section 9 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party under subsection (a), (b) or (c) above or Section 9,
notify the indemnifying party of the commencement thereof; but the omission
so to notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than under subsection
(a), (b) or (c) above or Section 9. In case any such action is brought
against any indemnified party and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party under this Section or
Section 9, as the case may be, for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party unless such settlement (i)
includes an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action and (ii)
does not include a statement as to, or an admission of, fault, culpability
or a failure to act by or on behalf of an indemnified party.
(e) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in
subsection (a), (b) or (c) above (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other from the
offering of the Offered Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company and the Selling
Stockholders on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds from
the offering (before deducting expenses) received by the Company and the
Selling Stockholders bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, the Selling Stockholders (in their capacity as Selling
Stockholders) or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the
first sentence of this subsection (e) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim which is the
subject of this subsection (e). Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the Offered
Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such 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 Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this
subsection (e) to contribute are several in proportion to their respective
underwriting obligations and not joint. Notwithstanding anything in this
subsection (e) to the contrary, the liability under this subsection (e) of
each Selling Stockholder shall be limited to an amount equal to the
aggregate gross proceeds (net of underwriting discounts and commissions but
before deducting expenses) to such Selling Stockholder from the sale of the
Offered Securities sold by such Selling Stockholder hereunder.
(f) The obligations of the Company and any Selling Stockholder
under this Section or Section 9 shall be in addition to any liability which
the Company and such Selling Stockholders may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter or the QIU (as hereinafter defined) within the
meaning of the Act; and the obligations of the Underwriters under this
Section shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company, to each officer of the Company
who has signed a Registration Statement and to each person, if any, who
controls the Company or such Selling Stockholder within the meaning of the
Act.
8. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities hereunder on either the
First or any Optional Closing Date and the aggregate number of shares of
Offered Securities that such defaulting Underwriter or Underwriters agreed
but failed to purchase does not exceed 10% of the total number of shares of
Offered Securities that the Underwriters are obligated to purchase on such
Closing Date, CSFBC may make arrangements satisfactory to the Company and
the Selling Stockholders for the purchase of such Offered Securities by
other persons, including any of the Underwriters, but if no such
arrangements are made by such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Offered Securities that such defaulting
Underwriters agreed but failed to purchase on such Closing Date. If any
Underwriter or Underwriters so default and the aggregate number of shares
of Offered Securities with respect to which such default or defaults occur
exceeds 10% of the total number of shares of Offered Securities that the
Underwriters are obligated to purchase on such Closing Date and
arrangements satisfactory to CSFBC, the Company and the Selling
Stockholders for the purchase of such Offered Securities by other persons
are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter,
the Company or the Selling Stockholders, except as provided in Section 10
(provided that if such default occurs with respect to Optional Securities
after the First Closing Date, this Agreement will not terminate as to the
Firm Securities or any Optional Securities purchased prior to such
termination). As used in this Agreement, the term "UNDERWRITER" includes
any person substituted for an Underwriter under this Section. Nothing
herein will relieve a defaulting Underwriter from liability for its
default.
9. Qualified Independent Underwriter. The Company hereby confirms that
at its request CSFBC has without compensation acted as "qualified
independent underwriter" (in such capacity, the "QIU") within the meaning
of Rule 2710 of the Conduct Rules of the National Association of Securities
Dealers, Inc. in connection with the offering of the Offered Securities.
The Company and the Selling Stockholders will severally and not jointly
indemnify and hold harmless the QIU against any losses, claims, damages or
liabilities, joint or several, to which the QIU may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
the QIU's acting (or alleged failure to act) as such "qualified independent
underwriter" and will reimburse the QIU for any legal or other expenses
reasonably incurred by the QIU in connection with investigating or
defending any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that any Selling Stockholder
shall only be subject to liability under this Section to the extent such
liability arises out of or is based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or upon an omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Stockholder (in its capacity as a Selling Stockholder) specifically
for use therein.
10. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Selling Stockholders, of the Company or its officers and
of the several Underwriters set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of any
Underwriter, any Selling Stockholder, the Company or any of their
respective representatives, officers or directors or any controlling
person, and will survive delivery of and payment for the Offered
Securities. If this Agreement is terminated pursuant to Section 8 or if for
any reason the purchase of the Offered Securities by the Underwriters is
not consummated, the Company and the Selling Stockholders shall remain
responsible for the expenses to be paid or reimbursed by them respectively
pursuant to Section 5 and the respective obligations of the Company, the
Selling Stockholders, and the Underwriters pursuant to Section 7 and the
obligations of the Company and the Selling Stockholders pursuant to Section
9 shall remain in effect, and if any Offered Securities have been purchased
hereunder the representations and warranties in Section 2 and all
obligations under Section 5 shall also remain in effect. If the purchase of
the Offered Securities by the Underwriters is not consummated for any
reason other than solely because of the termination of this Agreement
pursuant to Section 8 or the occurrence of any event specified in clause
(iii), (iv), (v), (vi) or (vii) of Section 6(d), the Company will reimburse
the Underwriters for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by them in connection with
the offering of the Offered Securities.
11. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to the Representatives, c/o Credit Suisse First Boston
Corporation, Eleven Madison Avenue, New York, N.Y. 10010-3629, Attention:
Transactions Advisory Group, or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at Kindred Healthcare, Inc.,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
General Counsel, or, if sent to any Selling Stockholder, will be mailed,
delivered or telegraphed and confirmed to such Selling Stockholder at the
address set forth below its name on the signature page to hereto; provided,
however, that any notice to an Underwriter pursuant to Section 7 will be
mailed, delivered or telegraphed and confirmed to such Underwriter.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective personal
representatives and successors and the officers and directors and
controlling persons referred to in Section 7, and no other person will have
any right or obligation hereunder.
13. Representation. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this
Agreement, and any action under this Agreement taken by the Representatives
or by CSFBC will be binding upon all the Underwriters. The Attorney-in-Fact
appointed by each Selling Stockholder will act for such Selling Stockholder
in connection with such transactions, and any action under or in respect of
this Agreement taken by such Attorney-in-Fact will be binding upon such
Selling Stockholder.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
15. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
The Company and each Selling Stockholder hereby submit to the
non-exclusive jurisdiction of the Federal and state courts in the Borough
of Manhattan in The City of New York in any suit or proceeding arising out
of or relating to this Agreement or the transactions contemplated hereby.
[The remainder of this page is intentionally left blank]
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one
of the counterparts hereof, whereupon it will become a binding agreement
among the Selling Stockholders, the Company and the several Underwriters in
accordance with its terms.
Very truly yours,
Kindred Healthcare, Inc.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title CEO
Selling Stockholders
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title........................
For himself and as Authorized
Signatory for each of the
Selling Stockholders named herein.
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of
the date first above written.
Credit Suisse First Boston Corporation
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
UBS Warburg LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇ Brothers Inc.
Acting on behalf of themselves and as the
Representatives of the several
Underwriters.
By Credit Suisse First Boston Corporation
By /s/ [illegible]
..........................................
Managing Director
SCHEDULE A
NUMBER OF
FIRM SECURITIES
COUNSEL SELLING STOCKHOLDER TO BE SOLD
------- ------------------- ----------
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. 250,000
▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ LLP ▇▇▇ ▇▇▇▇▇▇ Prime Rate Income Trust 86,100
▇▇▇▇ ▇▇▇▇▇▇▇ LLP ▇▇▇ ▇▇▇▇▇▇ Senior Income Trust 44,000
▇▇▇▇ ▇▇▇▇▇▇▇ LLP ▇▇▇ ▇▇▇▇▇▇ Senior Floating Fund 4,900
▇▇▇ ▇▇▇▇▇▇ Appaloosa Investment Limited Partnership I 266,500
▇▇▇ ▇▇▇▇▇▇ Palomino Fund Ltd. 233,500
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ Guaranty Trust Co. of New York 59,500
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Mutual Beacon Fund 89,299
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Mutual Beacon Fund (Canada) 1,994
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Mutual Discovery Securities Fund 3,754
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Mutual Shares Fund 155,805
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Mutual Shares Discovery Fund 61,063
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Mutual Shares Securities Fund 9,170
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Mutual Qualified Fund 78,915
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Ventas Realty, Limited Partnership 83,300
▇▇▇▇▇, Tarrant & ▇▇▇▇▇, LLP ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 3,900
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 3,000
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 7,500
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. 1,200
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 10,000
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇. 2,500
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 1,000
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 10,000
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 6,500
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇ ▇. ▇▇▇▇ 1,500
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1,800
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 400
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 1,500
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇▇ ▇. ▇▇▇▇ 700
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2,000
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,300
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2,500
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 7,500
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP T. ▇▇▇▇▇ ▇▇▇▇▇▇▇ 3,300
Total...................... 1,496,000
=========
SCHEDULE B
NUMBER OF
FIRM SECURITIES
UNDERWRITER TO BE PURCHASED
----------- ---------------
Credit Suisse First Boston Corporation.................. 1,101,415
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. ................................... 1,101,415
UBS Warburg LLC ........................................ 472,035
▇.▇. ▇▇▇▇▇▇ Securities Inc. ............................ 314,690
▇▇▇▇▇▇ Brothers Inc..................................... 157,345
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated.................... 25,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc......................... 25,000
▇▇▇▇▇▇▇▇ Inc............................................ 25,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC.............................. 25,000
--------------
Total ....................................... 3,246,900
==============
SCHEDULE C
LIST OF COMPANY'S SIGNIFICANT SUBSIDIARIES
------------------------------------------
Kindred Healthcare Operating, Inc.
Kindred Hospitals East, L.L.C.
Kindred Hospitals West, L.L.C.
Kindred Nursing Centers East, L.L.C.
Kindred Nursing Centers West, L.L.C.
Kindred Rehab Services, Inc.
Kindred Systems, Inc.
Kindred Hospitals Limited Partnership
Kindred Nursing Centers Limited Partnership
SCHEDULE D
LIST OF PARTNERSHIPS NOT WHOLLY-OWNED
-------------------------------------
% OF
NAME OWNERSHIP
---- ---------
None
SCHEDULE E
LIST OF MATERIAL SUBSIDIARIES
-----------------------------
===============================================================================
NO. NAME STATE OF ORGANIZATION
-------------------------------------------------------------------------------
1. Advanced Infusion Systems, Inc. CA
2. American X-Rays, Inc. LA
3. C.P.C. of Louisiana, Inc. LA
4. Caribbean Behavioral Health Systems, Inc. NV
5. Community Behavioral Health System, Inc. LA
6. Community Psychiatric Centers of Arkansas, Inc. AR
7. Community Psychiatric Centers of California CA
8. Community Psychiatric Centers of Florida, Inc. FL
9. Community Psychiatric Centers of Idaho, Inc. ID
10. Community Psychiatric Centers of Indiana, Inc. IN
11. Community Psychiatric Centers of Kansas, Inc. KS
12. Community Psychiatric Centers of Mississippi, Inc. MS
13. Community Psychiatric Centers of Missouri, Inc. MO
14. Community Psychiatric Centers of North Carolina, Inc. NC
15. Community Psychiatric Centers of Oklahoma, Inc. OK
16. Community Psychiatric Centers of Utah, Inc. UT
17. Community Psychiatric Centers Properties Incorporated CA
18. Community Psychiatric Centers Properties of Oklahoma, Inc. OK
19. Community Psychiatric Centers Properties of Texas, Inc. TX
20. Community Psychiatric Centers Properties of Utah, Inc. UT
21. Cornerstone Insurance Company CI
22. Courtland Gardens Health Center, Inc. CT
23. CPC Investment Corp. CA
24. CPC Managed Care Health Services, Inc. DE
25. CPC of Georgia, Inc. GA
26. CPC Properties of Arkansas, Inc. AR
27. CPC Properties of Illinois, Inc. IL
28. CPC Properties of Indiana, Inc. IN
29. CPC Properties of Kansas, Inc. KS
30. CPC Properties of Louisiana, Inc. LA
31. CPC Properties of Mississippi, Inc. MS
32. CPC Properties of Missouri, Inc. MO
33. CPC Properties of North Carolina, Inc. NC
34. First Rehab, Inc. DE
35. Florida Hospital Properties, Inc. FL
36. Health Care Holdings, Inc. DE
37. Health Care Technology, Inc. DE
38. Helian ASC of Northridge, Inc. CA
39. Helian Health Group, Inc. DE
40. Helian Recovery Corporation CA
41. Homestead Health Center, Inc. CT
42. Horizon Healthcare Services, Inc. GA
43. Interamericana Health Care Group NV
44. ▇. ▇. ▇▇▇▇▇▇ Hospital, Inc. MA
45. Kindred Acute Pulmonary East, Inc. DE
46. Kindred Acute Pulmonary West, Inc. DE
47. Kindred Facility Services, Inc. DE
(f/k/a Vencor Facility Services, Inc.)
48. Kindred Healthcare Operating, Inc. DE
(f/k/a Vencor Operating, Inc.)
49. Kindred Healthcare Services, Inc. DE
(f/k/a Vencare, Inc.)
50. Kindred Healthcare, Inc. DE
(f/k/a Vencor, Inc.)
51. Kindred Holdings, L.L.C. DE
(f/k/a Vencor Holdings, L.L.C.)
52. Kindred Home Care Services, Inc. DE
(f/k/a Vencor Home Care Services, Inc.)
53. Kindred Hospice, Inc. KY
(f/k/a Vencor Hospice, Inc.)
54. Kindred Hospitals East, L.L.C. DE
(f/k/a Vencor Hospitals East, L.L.C.)
55. Kindred Hospitals West, L.L.C. DE
(f/k/a Vencor Hospitals West, L.L.C.)
56. Kindred Insurance Holdings, Inc. DE
(f/k/a Vencor Insurance Holdings, Inc.)
57. Kindred Investment Company DE
(f/k/a Vencor Investment Company)
58. Kindred Nevada, L.L.C. DE
(f/k/a Vencor Nevada, L.L.C.)
59. Kindred Nursing Centers Central, L.L.C. DE
(f/k/a Vencor Nursing Centers Central, L.L.C.)
60. Kindred Nursing Centers East, L.L.C. DE
(f/k/a Vencor Nursing Centers East, L.L.C.)
61. Kindred Nursing Centers North, L.L.C. DE
(f/k/a Vencor Nursing Centers North, L.L.C.)
62. Kindred Nursing Centers South, L.L.C. DE
(f/k/a Vencor Nursing Centers South, L.L.C.)
63. Kindred Nursing Centers West, L.L.C. DE
(f/k/a Vencor Nursing Centers West, L.L.C.)
64. Kindred Pediatric Care, Inc. DE
(f/k/a Vencor Pediatric Care, Inc.)
65. Kindred Provider Network, Inc. DE
(f/k/a Vencor Provider Network, Inc.)
66. Kindred Rehab Services, Inc.(1) DE
(f/k/a Vencare Rehab Services, Inc.)
--------------------------
(1) Formerly TheraTx, Inc.
67. Kindred Systems, Inc. DE
(f/k/a Ventech Systems, Inc.)
68. Lafayette Health Care Center, Inc. GA
69. MedAssure, L.L.C. KY
70. MedEquities, Inc. CA
71. Medisave of Tennessee, Inc. DE
72. Medisave Pharmacies, Inc. DE
73. Old Orchard Hospital, Inc. IL
74. Palo Alto Surgecenter Corporation CA
75. Peachtree-Parkwood Hospital, Inc. GA
76. PersonaCare Living Center of Clearwater, Inc. DE
77. PersonaCare of Bradenton, Inc. DE
78. PersonaCare of Clearwater, Inc. DE
79. PersonaCare of Connecticut, Inc. CT
80. PersonaCare of Georgia, Inc. DE
81. PersonaCare of Huntsville, Inc. DE
82. PersonaCare of Little Rock, Inc. DE
83. PersonaCare of Ohio, Inc. DE
84. PersonaCare of Owensboro, Inc. DE
85. PersonaCare of Pennsylvania, Inc. DE
86. PersonaCare of Pompano East, Inc. DE
87. PersonaCare of Pompano West, Inc. DE
88. PersonaCare of Reading, Inc. DE
89. PersonaCare of San Antonio, Inc. DE
90. PersonaCare of San ▇▇▇▇▇, Inc. DE
91. PersonaCare of Shreveport, Inc. DE
92. PersonaCare of St. Petersburg, Inc. DE
93. PersonaCare of Warner Robins, Inc. DE
94. PersonaCare of Wisconsin, Inc. DE
95. PersonaCare Properties, Inc. GA
96. PersonaCare, Inc. DE
97. ProData Systems, Inc. AL
98. Recovery Inns of America, Inc. CA
99. Respiratory Care Services, Inc. DE
100. Stamford Health Facilities, Inc. CT
101. THC - Chicago, Inc. IL
102. THC - Hollywood, Inc. FL
103. THC - Houston, Inc. TX
104. THC - Minneapolis, Inc. MN
105. THC - North Shore, Inc. IL
106. THC - Orange County, Inc. CA
107. THC - San Diego, Inc. CA
108. THC - Seattle, Inc. ▇▇
▇▇▇. TheraTx Health Services, Inc. DE
110. TheraTx Healthcare Management, Inc. DE
111. TheraTx Management Services, Inc. CA
112. TheraTx Medical Supplies, Inc. DE
113. TheraTx Rehabilitation Services, Inc. DE
114. TheraTx Staffing, Inc. IL
115. Transitional Hospitals Corporation NV
116. Transitional Hospitals Corporation DE
117. Transitional Hospitals Corporation of Indiana, Inc. IN
118. Transitional Hospitals Corporation of Louisiana, Inc. LA
119. Transitional Hospitals Corporation of Michigan, Inc. MI
120. Transitional Hospitals Corporation of Nevada, Inc. NV
121. Transitional Hospitals Corporation of New Mexico, Inc. NM
122. Transitional Hospitals Corporation of Tampa, Inc. FL
123. Transitional Hospitals Corporation of Texas, Inc. TX
124. Transitional Hospitals Corporation of Wisconsin, Inc. WI
125. ▇▇▇▇▇▇ Nursing Center, Inc. GA
126. ▇▇▇▇▇▇▇▇ Enterprises, Inc. GA
127. VC - OIA, Inc. AZ
128. VC - TOHC, Inc. AZ
129. ▇▇ - ▇▇, Inc. FL
130. California Respiratory Care Partnership CA
131. Foothill Nursing Company Partnership CA
132. Fox Hill Village Partnership MA
133. Hillhaven-MSC Partnership CA
134. Kindred Acute Pulmonary Limited Partnership DE
135. Kindred Home Care and Hospice Indiana Partnership IN
(f/k/a Vencor Home Care and Hospice Indiana Partnership)
136. Kindred Hospitals Limited Partnership DE
(f/k/a Vencor Hospitals Limited Partnership)
137. Kindred Nursing Centers Central Limited Partnership DE
(f/k/a Vencor Nursing Centers Central Limited Partnership)
138. Kindred Nursing Centers Limited Partnership DE
(f/k/a Vencor Nursing Centers Limited Partnership)
139. Northridge Surgery Center Development, Ltd. CA
140. Northridge Surgery Center, Ltd. CA
141. Pharmaceutical Infusion Therapy CA
142. Recovery Inn of Menlo Park, L.P. CA
143. Starr Farm Partnership VT
144. Visiting Nurse Advanced Infusion Systems - Anaheim CA
145. Visiting Nurse Advanced Infusion Systems - Colton CA
146. Visiting Nurse Advanced Infusion Systems - Newbury Park CA
