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SELECT MEDICAL CORPORATION
(a Delaware corporation)
o Shares of Common Stock
INTERNATIONAL PURCHASE AGREEMENT
--------------------------------
Dated:
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Table of Contents
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Page
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SECTION 1. Representations and Warranties............................................................ 4
(a) Representations and Warranties by the Company............................................. 4
(i) Compliance with Registration Requirements.......................................... 4
(ii) Independent Accountants............................................................ 5
(iii) Financial Statements............................................................... 5
(iv) No Material Adverse Change in Business............................................. 6
(v) Good Standing of the Company....................................................... 6
(vi) Good Standing of Subsidiaries...................................................... 7
(vii) Capitalization..................................................................... 8
(viii) Authorization of Agreement......................................................... 8
(ix) Authorization and Description of Securities........................................ 8
(x) Authorization of Related Transactions.............................................. 9
(xi) Absence of Defaults and Conflicts.................................................. 9
(xii) Absence of Labor Dispute........................................................... 10
(xiii) Absence of Proceedings............................................................. 10
(xiv) Accuracy of Exhibits............................................................... 10
(xv) Possession of Intellectual Property................................................ 10
(xvi) Absence of Further Requirements.................................................... 11
(xvii) Possession of Licenses and Permits................................................. 11
(xviii) Accounts Receivable................................................................ 12
(xix) Compliance with Social Security Act and Other Federal Enforcement Initiatives...... 12
(xx) Regulatory Filings................................................................. 13
(xxi) Title to Property.................................................................. 13
(xxii) Investment Company Act............................................................. 14
(xxiii) Environmental Laws................................................................. 15
(xxiv) Registration Rights................................................................ 15
(xxv) Insurance.......................................................................... 15
(xxvi) Tax Returns and Payment of Taxes................................................... 15
(xxvii) No Stabilization or Manipulation................................................... 16
(xxviii)Certain Transactions............................................................... 16
(xxix) Statistical and Market Data........................................................ 16
(xxx) Accounting and other Controls...................................................... 16
(b) Officer's Certificates.................................................................... 17
SECTION 2. Sale and Delivery to International Managers; Closing...................................... 17
(a) Initial Securities........................................................................ 17
(b) Option Securities......................................................................... 17
(c) Payment................................................................................... 18
(d) Denominations; Registration............................................................... 18
(e) Appointment of Qualified Independent Underwriter.......................................... 18
SECTION 3. Covenants of the Company.................................................................. 19
(a) Compliance with Securities Regulations and Commission Requests............................ 19
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Table of Contents
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(continued)
(b) Filing of Amendments...................................................................... 19
(c) Delivery of Registration Statements....................................................... 20
(d) Delivery of Prospectuses.................................................................. 20
(e) Continued Compliance with Securities Laws................................................. 20
(f) Blue Sky Qualifications................................................................... 21
(g) Rule 158.................................................................................. 21
(h) Use of Proceeds........................................................................... 21
(i) Listing................................................................................... 21
(j) Restriction on Sale of Securities......................................................... 21
(k) Reporting Requirements.................................................................... 22
(l) Compliance with NASD Rules................................................................ 22
(m) Compliance with Rule 463.................................................................. 22
(n) Medicare Filings and Notices.............................................................. 22
SECTION 4. Payment of Expenses....................................................................... 22
(a) Expenses.................................................................................. 23
(b) Termination of Agreement.................................................................. 23
SECTION 5. Conditions of International Managers' Obligations......................................... 23
(a) Effectiveness of Registration Statement................................................... 23
(b) Opinion of Counsel for Company............................................................ 24
(c) Opinion of Counsel for International Managers............................................. 24
(d) Officers' Certificate..................................................................... 24
(e) Accountant's Comfort Letter............................................................... 25
(f) Bring-down Comfort Letter................................................................. 25
(g) Approval of Listing....................................................................... 25
(h) No Objection.............................................................................. 25
(i) Lock-up Agreements........................................................................ 25
(j) Purchase of Initial International Securities.............................................. 25
(k) Related Transactions...................................................................... 25
(l) Certificate Concerning Predecessor Company Financial Information ......................... 25
(m) Certificate of General Counsel of the Company............................................. 26
(n) Medicare Filings.......................................................................... 26
(o) Conditions to Purchase of International Option Securities................................. 26
(i) Officers' Certificate............................................................... 26
(ii) Opinion of Counsel for Company...................................................... 26
(iii) Opinion of Counsel for International Managers....................................... 26
(iv) Bring-down Comfort Letter........................................................... 26
(v) Certificate of General Counsel of the Company....................................... 27
(p) Additional Documents...................................................................... 27
(q) Termination of Agreement.................................................................. 27
SECTION 6. Indemnification........................................................................... 27
(a) Indemnification of International Managers................................................. 27
(b) Indemnification of Company, Directors and Officers........................................ 29
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Table of Contents
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(continued)
(c) Actions against Parties; Notification..................................................... 29
(d) Settlement without Consent if Failure to Reimburse........................................ 30
(e) Indemnification for Reserved Securities................................................... 31
SECTION 7. Contribution.............................................................................. 31
SECTION 8. Representations, Warranties and Agreements to Survive Delivery............................ 32
SECTION 9. Termination of Agreement.................................................................. 33
(a) Termination; General...................................................................... 33
(b) Liabilities............................................................................... 33
SECTION 10. Default by One or More of the International Managers..................................... 33
SECTION 11. Notices.................................................................................. 34
SECTION 12. Parties.................................................................................. 34
SECTION 13. GOVERNING LAW AND TIME................................................................... 35
SECTION 14. Effect of Headings....................................................................... 35
SCHEDULES
Schedule A - List of Underwriters
Schedule B - Pricing Information
Schedule C - List of Persons Subject to Lock-Up
Schedule D - Document Amendments
Schedule 1 - Significant Subsidiaries
EXHIBITS
Exhibit A-1 - Form of Opinion of Dechert
Exhibit A-2 - Form of Opinion of Company's Special Regulatory Counsel
Exhibit A-3 - Form of Opinion of Company's Canadian Counsel
Exhibit B - Form of Lock-Up Letter
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SELECT MEDICAL CORPORATION
(a Delaware corporation)
Shares of Common Stock
(Par Value $.01 Per Share)
INTERNATIONAL PURCHASE AGREEMENT
, 2001
XXXXXXX XXXXX INTERNATIONAL
X.X. Xxxxxx Securities Ltd.
Credit Suisse First Boston (Europe) Limited
CIBC World Markets plc
XX Xxxxx Securities Corporation
First Union Securities, Inc.
as Lead Managers of the International Managers
c/o Merrill Xxxxx International
Ropemaker Place
00 Xxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Ladies and Gentlemen:
Select Medical Corporation, a Delaware corporation (the "Company"),
confirms its agreement with Xxxxxxx Xxxxx International and each of the other
International Managers named in Schedule A hereto (collectively, the
"International Managers", which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom Xxxxxxx
Xxxxx International, X.X. Xxxxxx Securities Ltd., Credit Suisse First Boston
(Europe) Limited, CIBC World Markets plc, XX Xxxxx Securities Corporation and
First Union Capital Securities, Inc. are acting as representatives (in such
capacity, the "Lead Managers"), with respect to the issue and sale by the
Company and the purchase by the International Managers, acting severally and not
jointly, of the respective numbers of shares of Common Stock, par value $.01 per
share, of the Company ("Common Stock") set forth in said Schedule A, and with
respect to the grant by the Company to the International Managers, acting
severally and not jointly, of the option described in Section 2(b) hereof to
purchase all or any part of additional shares of Common Stock to cover over-
allotments, if any. The aforesaid shares of Common Stock (the "Initial
International Securities") to be purchased by the International
Managers and all or any part of the shares of Common Stock subject to the option
described in Section 2(b) hereof (the "International Option Securities") are
hereinafter called, collectively, the "International Securities".
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "U.S. Purchase Agreement") providing for
the offering by the Company of an aggregate of shares of Common Stock (the
"Initial U.S. Securities") through arrangements with certain underwriters in the
United States and Canada (the "U.S. Underwriters") for which Xxxxxxx Xxxxx &
Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), X.X.
Xxxxxx Securities Inc., Credit Suisse First Boston Corporation, CIBC World
Markets Corp., XX Xxxxx Securities Corporation and First Union Securities, Inc.
are acting as representatives (the "U.S. Representatives") and the grant by the
Company to the U.S. Underwriters, acting severally and not jointly, of an option
to purchase all or any part of the U.S. Underwriters' pro rata portion of up to
additional shares of Common Stock solely to cover overallotments, if any (the
"U.S. Option Securities" and, together with the International Option Securities,
the "Option Securities"). The Initial U.S. Securities and the U.S. Option
Securities are hereinafter called the "U.S. Securities". It is understood that
the Company is not obligated to sell and the International Managers are not
obligated to purchase, any Initial International Securities unless all of the
Initial U.S. Securities are contemporaneously purchased by the U.S.
Underwriters.
The International Managers and the U.S. Underwriters are hereinafter
collectively called the "Underwriters", the Initial International Securities and
the Initial U.S. Securities are hereinafter collectively called the "Initial
Securities", and the International Securities, and the U.S. Securities are
hereinafter collectively called the "Securities".
The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (in
such capacity, the "Global Coordinator").
The Company understands that the International Managers propose to make a
public offering of the International Securities as soon as the International
Managers deem advisable after this Agreement has been executed and delivered.
The Company and the International Managers agree that up to shares of the
Initial International Securities to be purchased by the International Managers
and that up to shares of the Initial U.S. Securities to be purchased by the
U.S. Underwriters (collectively, the "Reserved Securities") shall be reserved
for sale by the Underwriters to some of the Company's directors, officers,
employees, business associates, and related persons, as part of the distribution
of the Securities by the Underwriters, subject to the terms of this Agreement,
the applicable rules, regulations and interpretations of the National
Association of Securities Dealers, Inc. and all other applicable laws, rules and
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regulations. To the extent that such Reserved Securities are not orally
confirmed for purchase by such eligible employees and persons having business
relationships with the Company by the end of the first business day after the
date of this Agreement, such Reserved Securities may be offered to the public as
part of the public offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-48856) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. Two forms of prospectus are to be used in connection
with the offering and sale of the Securities: one relating to the International
Securities (the "Form of International Prospectus") and one relating to the U.S.
Securities (the "Form of U.S. Prospectus"). The Form of U.S. Prospectus is
identical to the Form of International Prospectus, except for the front cover
and back cover pages and the information under the caption "Underwriting." The
information included in any such prospectus that was omitted from such
registration statement at the time it became effective but that is deemed to be
part of such registration statement at the time it became effective pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information." Each Form
of International Prospectus and Form of U.S. Prospectus used before such
registration statement became effective, and any prospectus that omitted the
Rule 430A Information that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final Form of International Prospectus and the final Form of
U.S. Prospectus in the forms first furnished to the Underwriters for use in
connection with the offering of the Securities are herein called the
"International Prospectus" and the "U.S. Prospectus," respectively, and
collectively, the "Prospectuses." For purposes of this Agreement, all
references to the Registration Statement, any preliminary prospectus, the
International Prospectus, the U.S. Prospectus or any amendment or supplement to
any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("XXXXX").
Immediately prior to or upon the consummation of the offering of the
Securities or, in the case of (iv) below, within 30 days following the Closing
Time an such other period as permitted under the applicable agreement (i) the
Company's certificate of incorporation and bylaws will be amended and restated
and the
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Company will file the amended and restated certificate of incorporation with the
Secretary of State of the State of Delaware (the "Charter Amendments"); (ii) a
.576 for 1 reverse split of the Common Stock will be effected (the "Stock
Split"); (iii) conversion of 16,000,000 shares of Class B Preferred Stock of the
Company into 9,216,000 shares of Common Stock will be effected (the
"Conversion"); (iv) certain minority owners of the Company's outpatient
rehabilitation clinics who have exercised their put options to purchase Common
Stock as set forth in certain agreements between such minority owners and the
Company will have these exercises completed (the "Put Exercises"); (v) the
stockholders agreement among the Company and certain of its stockholders will be
terminated (the "Stockholder Agreement Termination"); and (vi) each of the
documents set forth on Schedule D hereto shall have been executed and delivered
(the "Document Amendments"); the Charter Amendments, the Stock Split, the
Conversion, the Put Exercises, the Stockholder Agreement Termination and the
Document Amendments are collectively referred to herein as the "Related
Transactions."
SECTION 1. Representations and Warranties.
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(a) Representations and Warranties by the Company. The Company
represents and warrants to each International Manager as of the date hereof, as
of the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each
International Manager, as follows:
(i) Compliance with Registration Requirements. Each of the Registration
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Statement and any Rule 462(b) Registration Statement has become effective
under the 1933 Act and no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any International Option Securities
are purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Prospectuses, the preliminary prospectuses dated March 7, 2001 and any
supplement thereto or prospectus wrapper prepared in connection therewith, at
their respective times of issuance and at the Closing Time, complied and will
comply in all material respects with any applicable laws or regulations of
foreign jurisdictions in which the Prospectuses
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and such preliminary prospectuses, as amended or supplemented, if applicable,
are distributed in connection with the offer and sale of Reserved Securities.
Neither of the Prospectuses nor any amendments or supplements thereto (including
any prospectus wrapper), at the time the Prospectuses or any amendments or
supplements thereto were issued and at the Closing Time (and, if any
International Option Securities are purchased, at the Date of Delivery),
included or will include an untrue statement of a material fact or omitted or
will omit 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. The representations and warranties in this subsection shall not
apply to statements in or omissions from the Registration Statement or the
Prospectuses made in reliance upon and in conformity with information furnished
to the Company in writing by any International Manager through the Lead Managers
expressly for use in the Registration Statement or the Prospectuses.
The preliminary prospectuses dated March 7, 2001 filed as part of the
Registration Statement and the Prospectuses filed pursuant to Rule 424 under the
1933 Act, complied when so filed in all material respects with the 1933 Act
Regulations and the preliminary prospectuses and the Prospectuses delivered to
the Underwriters for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified the financial
-----------------------
statements and supporting schedules included in the Registration Statement
are independent public accountants as required by the 1933 Act and the 1933
Act Regulations.
(iii) Financial Statements. The consolidated financial statements
--------------------
included in the Registration Statement and the Prospectuses, together with the
related schedules and notes, present fairly the financial position of the
Company and its consolidated subsidiaries, and NovaCare Physical Rehabilitation
and Occupational Health Group, Intensiva Healthcare Corporation and
Subsidiaries, and American Transitional Hospitals, Inc. (collectively, the
"Acquired Entities"), at the dates indicated and the statement of operations,
stockholders' equity and cash flows of the Company, its consolidated
subsidiaries and the Acquired Entities and for the periods specified; said
financial statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules included in the Registration
Statement present fairly in accordance with GAAP the information required to be
stated therein. The selected consolidated financial data and the summary
consolidated financial information of the Company included in the Prospectuses
present fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement. The statement of
5
operations data and balance sheet data of Sports Orthopedic Rehabilitation
Services, PA ("SORS") for December 31, 1996 and the year then ended and the
period January 1, 1997 through February 6, 1997 included in the Prospectus under
the heading "Selected Consolidated Financial and Other Data" (the "SORS
Financial Information") was derived from the compiled financial statements of
SORS. The financial statements of SORS for the above referenced periods (i)
fairly present the financial position of SORS at the dates indicated and the
statement of operations data for the periods specified and (ii) were prepared in
conformity with GAAP, except for the absence of footnotes, statements of cash
flows and the exclusion of certain per share information. There are no material
adjustments that would be required to be made to the SORS Financial Information
if the above referenced financial statements of SORS were reissued to be in
conformity with GAAP. The pro forma financial information and the related notes
thereto included in the Registration Statement and the Prospectuses present
fairly the information shown therein and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein; the as
adjusted financial information included in the Registration Statement and the
Prospectuses has been properly compiled on the basis described therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(iv) No Material Adverse Change in Business. Since the respective dates
--------------------------------------
as of which information is given in the Registration Statement and the
Prospectuses, except as otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
(v) Good Standing of the Company. The Company has been duly organized
----------------------------
and is validly existing as a corporation in good standing under the laws of the
State of Delaware and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under this Agreement;
and the Company is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or the
conduct of
6
business, except where the failure so to qualify or to be in good standing would
not result in a Material Adverse Effect.
(vi) Good Standing of Subsidiaries. (A) Each subsidiary of the Company
set forth on Schedule 1 hereto (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a corporation
or other entity in good standing under the laws of the jurisdiction of its
incorporation, has corporate or other power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and is duly qualified as a foreign corporation or other entity to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect; except as
set forth on Schedule 1 hereto, (a) all of the issued and outstanding capital
stock of each such Subsidiary that is a corporation has been duly authorized and
validly issued, is fully paid and non-assessable and is owned, by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity, and (b) all of the
ownership interests of each such Subsidiary that is not a corporation have been
duly authorized and are owned, by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; none of the outstanding shares of capital stock of any
Subsidiary was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary. The only subsidiaries of the Company are (a)
the subsidiaries listed on Exhibit 21 to the Registration Statement 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.
(B) Except to the extent disclosed in the Prospectuses under the
caption "Selected Consolidated Financial and Other Data" and in the Company's
consolidated financial statements included in the Prospectuses, each of the
specialty acute care hospitals, outpatient rehabilitation clinics and
occupational health centers, (collectively, the "Facilities") described in the
Prospectuses as owned by the Company is owned or leased and operated by a
Subsidiary of which the Company directly or indirectly owns 100% of the
outstanding ownership interests. Except as disclosed in the Prospectuses, there
are no material encumbrances or restrictions on the ability of any Subsidiary
(i) to pay any dividends or make any distributions on such Subsidiary's capital
stock, (ii) to make any loans or advances to, or investments in, the Company or
any Subsidiary, or (iii) to transfer any of its property or assets to the
Company or any Subsidiary.
7
(vii) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectuses in the column entitled
"Actual" under the caption "Capitalization" (except for subsequent issuances, if
any, pursuant to this Agreement, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectuses or pursuant to the
exercise of convertible securities or options referred to in the Prospectuses or
repurchases of an immaterial number of shares of the Company's capital stock
held by former employees). The shares of issued and outstanding capital stock of
the Company have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of the Company
was issued in violation of the preemptive or other similar rights of any
securityholder of the Company that were not subsequently waived. The shares of
issued and outstanding capital stock of the Company, including any shares of
capital stock of the Company issued or to be issued in connection with the
exercise of any put right held by any prior owner of a Facility that was
subsequently acquired by the Company, have been issued in compliance, in all
material respects, with all federal and state securities laws. Except as
disclosed in the Prospectuses, there are no outstanding options or warrants to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of the Company's capital stock or any such
options, warrants, rights, convertible securities or obligations. The
description of the Company's stock option and purchase plans and the options or
other rights granted and exercised thereunder set forth in the Prospectuses
accurately and fairly describe, in all material respects, the information
required to be shown with respect to such plans, arrangements, options and
rights.
(viii) Authorization of Agreement. This Agreement and the International
--------------------------
Purchase Agreement have been duly authorized, executed and delivered by the
Company.
(ix) Authorization and Description of Securities. The Securities to be
-------------------------------------------
purchased by the International Managers and the U.S. Underwriters from the
Company have been duly authorized for issuance and sale to the International
Managers pursuant to this Agreement and the U.S. Underwriters pursuant to the
U.S. Purchase Agreement, respectively, and, when issued and delivered by the
Company pursuant to this Agreement and the U.S. Purchase Agreement,
respectively, against payment of the consideration set forth herein and the U.S.
Purchase Agreement, respectively, will be validly issued, fully paid and non-
assessable; the Common Stock conforms to all statements relating thereto
contained in the Prospectuses and such description conforms to the rights set
forth in the instruments defining the same and the rights conferred by the
Delaware General Corporation Law (the "DGCL"); no holder of the Securities will
be subject to personal liability by reason of being such a holder; and the
issuance of
8
the Securities is not subject to the preemptive or other similar rights of any
securityholder of the Company.
(x) Authorization of Related Transactions. To the extent required by
-------------------------------------
law, the Company's certificate of incorporation, by-laws or other constituent
documents, or any agreement between the Company and any of its stockholders or
holders of its indebtedness, the consummation of the Related Transactions has
been duly authorized by the Company's board of directors and securityholders and
no other corporate proceedings on the part of the Company are needed to
authorize the Related Transactions.
(xi) Absence of Defaults and Conflicts. Neither the Company nor any of its
---------------------------------
subsidiaries is in violation of its (1) charter or by-laws or (2) in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments") except for
such defaults under Agreements and Instruments that would not result in a
Material Adverse Effect; and the execution, delivery and performance of this
Agreement and the U.S. Purchase Agreement and the consummation of the
transactions contemplated in this Agreement, the U.S. Purchase Agreement and in
the Registration Statement (including the issuance and sale of the Securities
and the use of the proceeds from the sale of the Securities as described in the
Prospectuses under the caption "Use of Proceeds" and the consummation of the
Related Transactions) and compliance by the Company with its obligations under
this Agreement and the U.S. Purchase Agreement have been duly authorized by all
necessary corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any subsidiary pursuant to, the Agreements and
Instruments (except for such conflicts, breaches or defaults or liens, charges
or encumbrances that would not result in a Material Adverse Effect), nor will
such action result in any violation of the provisions of the charter or by-laws
of the Company or any subsidiary or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any subsidiary or any of their assets, properties or operations. As
used herein, a "Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company or any
subsidiary.
9
(xii) Absence of Labor Dispute. No labor dispute with the employees of
------------------------
the Company or any subsidiary exists or, to the knowledge of the Company, is
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or any subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(xiii) Absence of Proceedings. There is no action, suit, proceeding,
----------------------
inquiry or investigation before or brought by any court or governmental agency
or body, domestic or foreign, now pending (other than any sealed "qui tam"
actions of which the Company has no knowledge), or, to the knowledge of the
Company, threatened, against or affecting the Company or any subsidiary, which
is required to be disclosed in the Registration Statement (other than as
disclosed therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to materially and
adversely affect the properties or assets of the Company and its subsidiaries
taken as a whole or the consummation of the transactions contemplated in this
Agreement and the U.S. Purchase Agreement or the Related Transactions or the
performance by the Company of its obligations hereunder or thereunder; the
aggregate of all pending legal or governmental proceedings to which the Company
or any subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
(xiv) Accuracy of Exhibits. There are no contracts or documents which are
--------------------
required to be described in the Registration Statement or the Prospectuses or to
be filed as exhibits thereto which have not been so described and filed as
required.
(xv) Possession of Intellectual Property. The Company and its
-----------------------------------
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business now operated by them in all
material respects, and neither the Company nor any of its subsidiaries has
received any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual Property or of
any facts or circumstances which would render any Intellectual Property invalid
or inadequate to protect the interest of the Company or any of its subsidiaries
therein, and which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.
10
(xvi) Absence of Further Requirements. No filing with, or authorization,
-------------------------------
approval, consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency is necessary or required for the
performance by the Company of its obligations hereunder, in connection with the
offering, issuance or sale of the Securities under this Agreement and the U.S.
Purchase Agreement, the consummation of the Related Transactions or the
consummation of the transactions contemplated by this Agreement and the U.S.
Purchase Agreement, except (i)(A) such as have been obtained or as may be
required under the 1933 Act or the 1933 Act Regulations and foreign or state
securities or blue sky laws or (B) the filing of a Form 8-A under the Securities
Exchange Act of 1934 as amended (the "1934 Act") and the regulations promulgated
thereunder (the "1934 Act Regulations") and (ii) with regard to offers and sales
of Reserved Securities, such as have been obtained under the laws and
regulations of jurisdictions outside the United States in which the Reserved
Securities are offered.
(xvii) Possession of Licenses and Permits. 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 would not reasonably be
expected to result in 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, singly
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not reasonably be
expected to result in a Material Adverse Effect; and neither the Company nor any
of its subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would reasonably be expected to result in a Material Adverse Effect. All of the
long-term acute care hospitals operated by the Company and its subsidiaries and
all of the Company's and its
11
subsidiaries' outpatient clinics that operate as "rehabilitation agencies" are
"providers of service" as defined in the Social Security Act and the regulations
promulgated thereunder and are eligible to participate in the Medicare and (to
the extent disclosed in the prospectus) Medicaid programs.
(xviii) Accounts Receivable. 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 (including,
without limitation, Blue Cross plans). The accounts receivable, after giving
effect to the allowance for doubtful accounts, relating to such third party
payors do not materially exceed amounts the Company and its subsidiaries are
entitled to receive.
(xix) Compliance with Social Security Act and Other Federal Enforcement
-----------------------------------------------------------------
Initiatives. 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 operated by them, has engaged in any
activities which are prohibited under Federal Medicare and Medicaid statutes
including, but not limited to, 42 U.S.C. (S)(S) 1320a-7 (Program Exclusion),
1320a-7a (Civil Monetary Penalties), 1320a-7b (the Anti-kickback Statute), (S)
1395nn and 1396b (the "Xxxxx" law, prohibiting certain self-referrals), or any
other federal healthcare law, including, but not limited to, the federal TRICARE
statute, 10 U.S.C. (S)1071 et seq., the Federal Civil False Claims Act, 31
U.S.C. (S)(S) 3729-32, Federal Criminal False Claims Act, 18 U.S.C. (S) 287,
False Statements Relating to Health Care Matters, 18 U.S.C. (S) 1035, Health
Care Fraud, 18 U.S.C. (S) 1347, or the federal Food, Drug & Cosmetics Act, 21
U.S.C. (S) 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
12
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 for any such activities which are
specifically described in the Prospectus or which would not, singly or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
(xx) Regulatory Filings. Neither 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 to be so in compliance could not, individually or in the aggregate, have
a Material Adverse Effect. Except as described 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 for any such
failures to be in compliance or deficiencies which would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(xxi) Title to Property. The Company and its subsidiaries have good and
-----------------
marketable title to all real property owned by them and good title to all other
properties owned by them, in each case, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or encumbrances of any
kind except such as (a) are described in the Prospectuses or (b) do not, singly
or in the aggregate, in a manner that would reasonably be expected to result in
a Material Adverse Effect, affect the value of such property or interfere with
the use made or proposed to be made of such property by the Company or any of
its subsidiaries; and all of the leases and subleases of the Company and its
subsidiaries, considered as one enterprise, and under which the Company or any
of its subsidiaries holds properties described in the Prospectuses, are in full
force and effect, and neither the Company or any of its subsidiaries has any
notice of any claim of any sort that
13
has been asserted by anyone adverse to the rights of the Company or any of its
subsidiaries under any of the leases or subleases mentioned above, or affecting
or questioning the rights of the Company or such subsidiary to the continued
possession of the leased or subleased premises under any such lease or sublease,
except where the failure to be in full force and effect or such claim would not
reasonably be expected to have a Material Adverse Effect.
(xxii) Investment Company Act. Neither the Company nor any of its
----------------------
subsidiaries is, and upon the issuance and sale of the Securities as herein
contemplated and the application of the net proceeds therefrom as described in
the Prospectuses none of them will be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
(xxiii) Environmental Laws. Except as described in the Registration
------------------
Statement, (A) neither the Company nor any of its subsidiaries or any of the
Facilities owned, leased or operated by them is in violation of any material
federal, state, local or foreign statute, law, rule, regulation, standard,
guide, ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances (including, without limitation, asbestos, polychlorinated
biphenyls, urea formaldehyde insulation, petroleum or petroleum products)
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company and
its subsidiaries and each of the Facilities owned, leased or operated by them
have all material permits, authorizations and approvals required under any
applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries or any of the
Facilities owned, leased or operated by them except as would not, singly or in
the aggregate, result in a Material Adverse Effect and (D) there are no events
or circumstances that might reasonably be expected to form the basis of an order
for clean-up or remediation, or an action, suit or proceeding by any private
party or governmental body or agency, against or affecting the Company or any of
its subsidiaries or any of the Facilities owned, leased or operated by them
relating to Hazardous Materials or any Environmental Laws
14
except for such events or circumstances that would not, singly or in the
aggregate, result in a Material Adverse Effect.
(xxiv) Registration Rights. Except as disclosed in the Prospectuses
-------------------
under the caption "Shares Eligible for Future Sale-Registration Rights", there
are no persons with registration rights or other similar rights to have any
securities of the Company or any of its subsidiaries registered pursuant to the
Registration Statement or otherwise registered by the Company under the 1933
Act.
(xxv) Insurance. The Company and each of its subsidiaries and each of the
---------
Facilities owned, leased or operated by them are insured by insurers 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 hospitals 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 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
except where the failure to renew or maintain such coverage would not reasonably
be expected to result in a Material Adverse Effect. The officers and directors
of the Company are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as the Company believes are
prudent and customary for officers' and directors' liability insurance of a
public company and as the Company believes would cover claims which would
reasonably be expected to be made in connection with the issuance of the
Securities; and the Company has no reason to believe that it will not be able to
renew its existing directors' and officers' liability insurance coverage as and
when such coverage expires or to obtain coverage consistent with such coverage
in all material respects from insurers with comparable financial strength and
claims paying ability ratings as may be necessary to cover its officers and
directors.
(xxvi) Tax Returns and Payment of Taxes. 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 an extension, or any incorrectness would not
reasonably be expected to result in 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 reasonably be
expected to result in a Material Adverse
15
Effect; and adequate charges, accruals and reserves have been provided for in
the financial statements referred to in Section 1(a)(iii) above in accordance
with GAAP in respect of all Federal, state, local and foreign taxes for all
periods as to which the tax liability of the Company and its subsidiaries has
not been finally determined or remains open to examination by applicable taxing
authorities except (A) for taxes incurred after the date of the financial
statements referred to in Section 1(a)(iii) or (B) where the failure to provide
for such charges, accruals and reserves would not reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any of its
subsidiaries is a "United States real property holding corporation" within the
meaning of Section 897(c)(2) of the Internal Revenue Code of 1986, as amended
(the "Code").
(xxvii) No Stabilization or Manipulation. Neither the Company nor its
--------------------------------
subsidiaries or, to the best of the Company's knowledge, any of their respective
directors, officers or affiliates has taken or will take, directly or
indirectly, any action designed to, or that could be reasonably expected to,
cause or result in stabilization or manipulation of the price of the Securities
in violation of Regulation M under the Securities Exchange Act of 1934, as
amended (the "1934 Act").
(xxviii) Certain Transactions. Except as disclosed in the Prospectuses,
--------------------
there are no outstanding loans, advances, or guarantees of indebtedness by the
Company or any of its subsidiaries to or for the benefit of any of the executive
officers or directors of the Company or any of the members of the families of
any of them that would be required to be so disclosed under the 1933 Act, the
1933 Act Regulations or Form S-1.
(xxix) Statistical and Market Data. The statistical and market-related
---------------------------
data included in the Prospectuses are derived from sources which the Company
reasonably and in good faith believes to be accurate, reasonable and reliable in
all material respects and the statistical and market-related data included in
the Prospectuses agrees with the sources from which it was derived in all
material respects.
(xxx) Accounting and other Controls. The Company has established a
-----------------------------
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions were, are and will be executed in accordance
with management's general or specific authorization; (ii) transactions were, are
and will be recorded as necessary to permit preparation of financial statements
in conformity with GAAP and to maintain accountability for assets; (iii) access
to assets was, is and will be permitted only in accordance with a management's
general or specific authorizations; and (iv) the recorded accountability for
assets was, is and will be compared with existing assets at reasonable intervals
and appropriate action was, is and will be taken with respect to any
differences.
16
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any its subsidiaries delivered to the Global Coordinator, the
Lead Managers or to counsel for the International Managers shall be deemed
a representation and warranty by the Company to each International Manager
as to the matters covered thereby.
SECTION 2. Sale and Delivery to International Managers; Closing.
----------------------------------------------------
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth,
the Company agrees to sell to each International Manager, severally and not
jointly, and each International Manager, severally and not jointly, agrees
to purchase from the Company, at the price per share set forth in Schedule
B, the number of Initial International Securities set forth in Schedule A
opposite the name of such International Manager, plus any additional number
of Initial International Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the International
Managers, severally and not jointly, to purchase up to an additional shares
of Common Stock at the price per share set forth in Schedule B, less an
amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial International Securities but not payable
on the International Option Securities. The option hereby granted will
expire 30 days after the date hereof and may be exercised in whole or in
part from time to time only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Initial International Securities upon notice by the Global Coordinator to
the Company setting forth the number of International Option Securities as
to which the several International Managers are then exercising the option
and the time and date of payment and delivery for such International Option
Securities. Any such time and date of delivery for the International Option
Securities (a "Date of Delivery") shall be determined by the Global
Coordinator, but shall not be later than seven full business days nor, if
after the Closing Time, later than seven nor less than two full business
days after the exercise of said option, nor in any event prior to the
Closing Time, as hereinafter defined. If the option is exercised as to all
or any portion of the International Option Securities, each of the
International Managers, acting severally and not jointly, will purchase
that proportion of the total number of International Option Securities then
being purchased which the number of Initial International Securities set
forth in Schedule A opposite the name of such International Manager bears
to the total number of Initial International Securities, subject in each
case to such adjustments as the Global Coordinator in its discretion shall
make to eliminate any sales or purchases of fractional shares.
17
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Debevoise & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at
such other place as shall be agreed upon by the Global Coordinator and the
Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing
occurs after 4:30 P.M. (Eastern time) on any given day) business day after
the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business days after such
date as shall be agreed upon by the Global Coordinator and the Company
(such time and date of payment and delivery being herein called "Closing
Time").
In addition, in the event that any or all of the International Option
Securities are purchased by the International Managers, payment of the purchase
price for, and delivery of certificates for, such International Option
Securities shall be made at the above-mentioned offices, or at such other place
as shall be agreed upon by the Global Coordinator and the Company, on each Date
of Delivery as specified in the notice from the Global Coordinator to the
Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Lead Managers for the respective accounts of the International Managers of
certificates for the International Securities to be purchased by them. It is
understood that each U.S. Underwriter has authorized the Lead Managers, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial International Securities and the International Option
Securities, if any, which it has agreed to purchase. Xxxxxxx Xxxxx,
individually and not as representative of the International Managers, may (but
shall not be obligated to) make payment of the purchase price for the Initial
International Securities or the International Option Securities, if any, to be
purchased by any International Manager whose funds have not been received by the
Closing Time or the relevant Date of Delivery, as the case may be, but such
payment shall not relieve such International Manager from its obligations
hereunder.
(d) Denominations; Registration. Certificates for the Initial International
Securities and the International Option Securities, if any, shall be in
such denominations and registered in such names as the Lead Managers may
request in writing at least one full business day before the Closing Time
or the relevant Date of Delivery, as the case may be. The certificates for
the Initial International Securities and the International Option
Securities, if any, will be made available for examination and packaging by
the Lead Mangers in The City of New York not later than 10:00 A.M. (Eastern
time) on the business day prior to the Closing Time or the relevant Date of
Delivery, as the case may be.
(e) Appointment of Qualified Independent Underwriter. The Company hereby
confirms its engagement of Credit Suisse First Boston Corporation as, and
Credit Suisse First Boston Corporation hereby confirms its agreement with
the Company to
18
render services as, a "qualified independent underwriter" within the
meaning of Rule 2720 of the Conduct Rules of the National Association of
Securities Dealers, Inc. with respect to the offering and sale of the
International Securities. Credit Suisse First Boston Corporation, solely in
its capacity as qualified independent underwriter and not otherwise, is
referred to herein as the "Independent Underwriter."
SECTION 3. Covenants of the Company. The Company covenants with each
------------------------
International Manager as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule
430A and will notify the Global Coordinator as soon as practicably
possible, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectuses or any amended Prospectuses shall have been
filed, (ii) of the receipt of any comments from the Commission regarding
the Registration Statement or any of the information contained therein, the
Common Stock or the transactions contemplated by this Agreement, the
International Purchase Agreement or the Registration Statement (iii) of any
request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to the Prospectuses or for additional
information regarding the Registration Statement or any of the information
contained therein, the Common Stock or the transactions contemplated by
this Agreement, the International Purchase Agreement or the Registration
Statement, and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in
any jurisdiction, or of the initiation or threatening of any proceedings
for any of such purposes. The Company will promptly effect the filings
necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted
for filing under Rule 424(b) was received for filing by the Commission and,
in the event that it was not, it will promptly file such prospectus. The
Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof
at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Global Coordinator
notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the
Prospectuses, will furnish the Global Coordinator with copies of any such
documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Global Coordinator or counsel for the International Managers shall
reasonably object.
19
(c) Delivery of Registration Statements. The Company has furnished or will
deliver to the Lead Managers and counsel for the International Managers,
without charge, signed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and copies of all signed consents and
certificates of experts, and will also deliver to the Lead Managers,
without charge, a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) for each
of the International Managers. The copies of the Registration Statement and
each amendment thereto furnished to the International Managers will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by Regulation
S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
International Manager, without charge, as many copies of each preliminary
prospectus as such International Manager reasonably requested, and the
Company hereby consents to the use of such copies for purposes permitted by
the 1933 Act. The Company will furnish to each International Manager,
without charge, during the period when the International Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such number of
copies of the International Prospectus (as amended or supplemented) as such
International Manager may reasonably request. The International Prospectus
and any amendments or supplements thereto furnished to the International
Managers will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent permitted
by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply with
the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in this Agreement, the
U.S. Purchase Agreement and in the Prospectuses. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with
sales of the Securities, any event shall occur or condition shall exist as
a result of which it is necessary, in the judgment of the Company after
consultation with counsel or in the opinion of counsel for the
International Managers or for the Company, to amend the Registration
Statement or amend or supplement any Prospectus in order that the
Prospectuses will not include any untrue statements of a material fact or
omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the
time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration
Statement or amend or supplement any Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company will
promptly prepare and file with the Commission, subject to Section 3(b),
such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectuses
comply with such requirements, and the Company will furnish to the
International Managers such number of copies of such amendment or
supplement as the International Managers may reasonably request.
20
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the International Managers, to qualify the Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions (domestic or foreign) as the Global Coordinator may
designate and to maintain such qualifications in effect for a period of not
less than one year from the later of the effective date of the Registration
Statement and any Rule 462(b) Registration Statement; provided, however,
that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject. In each jurisdiction in which the
Securities have been so qualified, the Company will file such statements
and reports as may be required by the laws of such jurisdiction to continue
such qualification in effect for a period of not less than one year from
the effective date of the Registration Statement and any Rule 462(b)
Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectuses
under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect and, for a
reasonable period after Closing Time, which shall not be less than five
years unless the Company engages in a transaction such as a merger or other
business combination in which the Company is not the surviving entity, or
going private transaction which by its terms provides otherwise and
receives all required Company stockholder approval, maintain the quotation
of the Securities on the Nasdaq National Market or the New York Stock
Exchange (the "NYSE") and will file with the Nasdaq National Market or the
NYSE, as applicable, all documents and notices required by the Nasdaq
National Market or the NYSE, of companies that have securities that are
traded in the over-the-counter market and quotations for which are reported
by the Nasdaq National Market or on the NYSE.
(j) Restriction on Sale of Securities. During a period of 180 days from the
date of the Prospectuses, the Company will not, without the prior written
consent of the Global Coordinator, (i) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant
to purchase or otherwise transfer or dispose of any share of Common Stock
or any securities convertible into or exercisable or exchangeable for
Common Stock or file any registration statement under the 1933 Act with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that
21
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise.
The foregoing sentence shall not apply to (A) the Securities to be sold
hereunder or under the U.S. Purchase Agreement, (B) any shares of Common
Stock issued by the Company upon the exercise of an option or warrant or
the conversion of a security outstanding on the date hereof and referred to
in the Prospectuses, (C) any shares of Common Stock issued or options to
purchase Common Stock granted pursuant to existing employee benefit plans
of the Company referred to in the Prospectuses, (D) any shares of Common
Stock issued pursuant to any non-employee director stock plan or dividend
reinvestment plan, or (E) the issuance by the Company of shares of Common
Stock in connection with any Put Exercises immediately prior to or after
the consummation of the offering of the Securities or any other Related
Transaction.
(k) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934
Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act
and the rules and regulations of the Commission thereunder.
(l) Compliance with NASD Rules. The Company hereby agrees that it will
ensure that the Reserved Securities will be restricted as required by the
National Association of Securities Dealers, Inc. (the "NASD") or the NASD
rules from sale, transfer, assignment, pledge or hypothecation for a period
of three months following the date of this Agreement. The Underwriters will
notify the Company as to which persons will need to be so restricted. At
the request of the Underwriters, the Company will direct the transfer agent
to place a stop transfer restriction upon such securities for such period
of time. Should the Company release, or seek to release, from such
restrictions any of the Reserved Securities, the Company agrees to
reimburse the Underwriters for any reasonable expenses (including, without
limitation, legal expenses) they incur in connection with such release.
(m) Compliance with Rule 463. The Company will comply with the requirements
of Rule 463 of the 1933 Act Regulations.
(n) Medicare Filings and Notices. The Company and its Subsidiaries will
make all required filings and provide all required notices to update
indirect ownership information that has been supplied in connection with
the Company's facilities that participate in the Medicare Program and other
U.S. Federal programs ("Medicare Filings and Notices").
SECTION 4. Payment of Expenses.
-------------------
(a) Expenses. The Company will pay all expenses incident to the performance
of its obligations under this Agreement, including (i) the preparation,
22
printing and filing of the Registration Statement (including financial
statements and exhibits) as originally filed and of each amendment thereto,
(ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may
be required in connection with the offering, purchase, sale, issuance or
delivery of the Securities, (iii) the preparation, issuance and delivery of
the certificates for the Securities to the Underwriters, including any
stock or other transfer taxes and any stamp or other duties payable upon
the sale, issuance or delivery of the Securities to the Underwriters and
the transfer of the Securities between the International Managers and the
U.S. Underwriters, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the
Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith and
in connection with the preparation of the Blue Sky Survey and any
supplement thereto, (vi) the printing and delivery to the Underwriters of
copies of each preliminary prospectus and of the Prospectuses and any
amendments or supplements thereto, (vii) the preparation, printing and
delivery to the Underwriters of copies of the Blue Sky Survey and any
supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in
connection with, the review by the National Association of Securities
Dealers, Inc. (the "NASD") of the terms of the sale of the Securities and
(x) the fees and expenses incurred in connection with the inclusion of the
Securities in the Nasdaq National Market and (xi) all costs and expenses of
the Underwriters, including the fees and disbursements of counsel for the
Underwriters, in connection with matters related to the Reserved Securities
which are designated by the Company for sale to directors, officers,
employees, business associates and related persons of the Company, provided
that such costs and expenses shall not exceed $25,000 in the aggregate
(exclusive of any costs and expenses of foreign counsel).
(b) Termination of Agreement. If this Agreement is terminated by the Lead
Managers in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Company shall reimburse the International Managers for all of
their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the International Managers.
SECTION 5. Conditions of International Managers' Obligations. The
-------------------------------------------------
obligations of the several International Managers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any
subsidiary of the Company delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and
at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have
23
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, and any request on the part of the Commission
for additional information shall have been complied with to the reasonable
satisfaction of counsel to the International Managers. A prospectus
containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 424(b) (or a post-effective amendment
providing such information shall have been filed and declared effective in
accordance with the requirements of Rule 430A).
(b) Opinion of Counsel for Company. At Closing Time, the Lead Managers
shall have received the favorable opinions, dated as of Closing Time, of:
(i) Dechert, counsel for the Company, in form and substance
satisfactory to counsel for the International Managers, together with
signed or reproduced copies of such letter for each of the other
International Managers, to the effect set forth in Exhibit A-1 hereto and
to such further effect as counsel to the International Managers may
reasonably request; (ii) Xxxx Xxxxx LLP, special regulatory counsel for the
Company, in form and substance satisfactory to counsel for the
International Managers, together with signed or reproduced copies of such
letter for each of the other International Managers, to the effect set
forth in Exhibit A-2 hereto and to such further effect as counsel to the
International Managers may reasonably request; and (iii) Torys, special
Canadian counsel to the Company, in form and substance reasonably
satisfactory to counsel for the International Managers, together with
signed or reproduced copies of such letter for each of the other
International Managers to the effect set forth in Exhibit A-3 hereto and to
such further effect as counsel for the International Managers may
reasonably request.
(c) Opinion of Counsel for International Managers. At Closing Time, the
Lead Managers shall have received the favorable opinion, dated as of
Closing Time, of Debevoise & Xxxxxxxx, counsel for the International
Managers, together with signed or reproduced copies of such letter for each
of the other International Managers in form and substance satisfactory to
the International Managers.
(d) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information
is given in the Prospectuses, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the Lead
Managers shall have received a certificate of the Chief Executive Officer,
the President and Chief Operating Officer, and the Senior Vice President
and Chief Financial Officer of the Company, dated as of Closing Time, to
the effect that (i) there has been no such material adverse change, (ii)
the representations and warranties in Section 1(a) hereof are true and
correct with the same force and effect as though expressly made at and as
of Closing Time, (iii) the Company has complied with all
24
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
threatened or, to their knowledge, are contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Lead Managers shall have received from
PricewaterhouseCoopers LLP a letter dated such date, in form and substance
satisfactory to the Lead Managers and PricewaterhouseCoopers LLP, together
with signed or reproduced copies of such letter for each of the other
International Managers containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectuses.
(f) Bring-down Comfort Letter. At Closing Time, the Lead Managers shall
have received from PricewaterhouseCoopers LLP, a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the
letter previously furnished to the International Managers at the time of
execution of this Agreement pursuant to subsection (e) of this Section,
except that the specified date referred to shall be a date not more than
three business days prior to Closing Time.
(g) Approval of Listing. At Closing Time, the Securities shall have been
approved for listing on the Nasdaq National Market, subject only to
official notice of issuance.
(h) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(i) Lock-up Agreements. At the date of this Agreement, the Lead Managers
shall have received an agreement substantially in the form of Exhibit B
hereto signed by the persons listed on Schedule C hereto.
(j) Purchase of Initial International Securities. Contemporaneously with
the purchase by the International Managers of the Initial International
Securities under this Agreement, the U.S. Underwriters shall have purchased
the Initial U.S. Securities under the U.S. Purchase Agreement.
(k) Related Transactions. Prior to or upon the purchase of the Securities
by the Underwriters, the Related Transactions, other than the Put
Exercises, shall have been consummated.
(l) Certificate Concerning Predecessor Company Financial Information. Prior
to the purchase of the Securities by the Underwriters, the Lead Managers
shall have received a certificate of the Chief Financial Officer and the
Controller of the Company
25
concerning the financial information of SORS
contained in the Prospectuses in form and substance reasonably satisfactory
for counsel for the International Managers.
(m) Certificate of General Counsel of the Company. At Closing Time, the
Lead Managers shall have received a certificate of Xxxxxxx X. Xxxxxx,
Senior Vice President and General Counsel of the Company, in form and
substance reasonably satisfactory to counsel the International Managers.
(n) Medicare Filings. All Medicare Filings and Notices required to be made
or provided prior to Closing Time shall have been made or provided.
(o) Conditions to Purchase of International Option Securities. In the event
that the International Managers exercise their option provided in Section
2(b) hereof to purchase all or any portion of the International Option
Securities, the representations and warranties of the Company contained
herein and the statements in any certificates furnished by the Company or
any subsidiary of the Company hereunder shall be true and correct as of
each Date of Delivery and, at the relevant Date of Delivery, the Lead
Managers shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
---------------------
Delivery, of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company confirming that
the certificate delivered at the Closing Time pursuant to Section 5(d)
hereof remains true and correct as of such Date of Delivery.
(ii) Opinion of Counsel for Company. The opinion of Dechert counsel
------------------------------
for the Company, Xxxx Xxxxx LLP, special regulatory counsel for the
Company, and Torys, special Canadian counsel for the Company, each in form
and substance reasonably satisfactory to counsel for the International
Managers, dated such Date of Delivery, relating to the International Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinions required by Section 5(b) hereof.
(iii) Opinion of Counsel for International Managers. The favorable
---------------------------------------------
opinion of Debevoise & Xxxxxxxx, counsel for the International Managers,
dated such Date of Delivery, relating to the International Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 5(c) hereof.
(iv) Bring-down Comfort Letter. A letter from
-------------------------
PricewaterhouseCoopers LLP, in form and substance reasonably satisfactory
to counsel for the International Managers and dated such Date of Delivery,
substantially in the same form and substance as the letter furnished to the
U.S. Representatives pursuant to Section 5(f) hereof, except that the
"specified date" in
26
the letter furnished pursuant to this paragraph shall be a date not more
than five days prior to such Date of Delivery.
(v) Certificate of General Counsel of the Company. A certificate
---------------------------------------------
of Xxxxxxx X. Xxxxxx, Senior Vice President and General Counsel of the
Company, dated such Date of Delivery, in form and substance reasonably
satisfactory to counsel for the International Managers.
(p) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the International Managers shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance and
sale of the Securities as herein contemplated shall be reasonably satisfactory
in form and substance to the Lead Managers and counsel for the International
Managers.
(q) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of International
Option Securities on a Date of Delivery which is after the Closing Time, the
obligations of the several International Managers to purchase the relevant
Option Securities, may be terminated by the Lead Managers by notice to the
Company at any time at or prior to Closing Time or such Date of Delivery, as the
case may be, and such termination shall be without liability of any party to any
other party except as provided in Section 4 and except that Sections 1, 6, 7 and
8 shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
---------------
(a) Indemnification of International Managers. (1) The Company agrees to
indemnify and hold harmless each International Manager and each person, if
any, who controls any U.S. Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading
or arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the Prospectuses
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact
27
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of (A) the violation of any applicable
laws or regulations of foreign jurisdictions where Reserved Securities have
been offered and (B) any untrue statement or alleged untrue statement of a
material fact included in the supplement or prospectus wrapper material
distributed in any jurisdiction in connection with the reservation and sale
of the Reserved Securities to directors, officers, employees, business
associates and related persons of the Company or the omission or alleged
omission therefrom of a material fact necessary to make the statements
therein, when considered in conjunction with the Prospectuses or
preliminary prospectuses, not misleading;
(iii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission or in connection with any violation of
the nature referred to in Section 6(a)(1)(ii)(A) hereof; provided that
(subject to Section 6(d) below) any such settlement is effected with the
written consent of the Company; and
(iv) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Xxxxxxx Xxxxx), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission or
in connection with any violation of the nature referred to in Section
6(a)(1)(ii)(A) hereof, to the extent that any such expense is not paid
under (i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any
-------- -------
loss, liability, claim, damage or expense to the extent (x) arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any International Manager through the Lead Managers expressly for use
in the Registration Statement (or any amendment thereto), including the Rule
430A Information, or any preliminary prospectus or the International Prospectus
(or any amendment or supplement thereto) or (y) resulting from the fact that
such loss, liability, claim, damage or expense resulted from an untrue statement
or omission of a material fact in or omitted from the preliminary prospectus and
a court of competent jurisdiction having made a final, non-appealable
determination that (1) the untrue statement or omission was corrected in the
Prospectus, (2) that at a time sufficiently prior to the Closing Time, the
Company
28
furnished copies of the International Prospectus in sufficient quantities to
such International Manager, (3) that the Company shall have sustained the burden
of proving that such International Manager failed to send or give a copy of the
International Prospectus to the person asserting such loss, liability, claim,
damage or expense prior to the written confirmation or the sale of Securities to
such person by such International Manager as required by the 1933 Act or the
1933 Act Regulations, and (4) that the sending of the International Prospectus
to the person asserting such loss, liability, claim, damage or expense would
have constituted a defense to the claim asserted by such person or persons.
(2) In addition to and without limitation of the Company's obligation to
indemnify Credit Suisse First Boston Corporation as an Underwriter, the Company
also agrees to indemnify and hold harmless the Independent Underwriter and each
person, if any, who controls the Independent Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, from and against any
and all loss, liability, claim, damage and expense whatsoever, as incurred,
incurred as a result of the Independent Underwriter's participation as a
"qualified independent underwriter" within the meaning of Rule 2720 of the
Conduct Rules of the National Association of Securities Dealers, Inc. in
connection with the offering of the International Securities.
(b) Indemnification of Company, Directors and Officers. Each International
Manager severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendment thereto), including
the Rule 430A Information, or any preliminary International prospectus or
the International Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such International Manager through the Lead Managers expressly
for use in the Registration Statement (or any amendment thereto) or such
preliminary prospectus or the International Prospectus (or any amendment or
supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may
be sought hereunder, but failure to so notify an indemnifying party shall
not relieve such indemnifying party from any liability hereunder to the
extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 6(a)(1) above, counsel to
29
the indemnified parties shall be selected by Xxxxxxx Xxxxx, and, in the
case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party
may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except
with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions
in the same jurisdiction arising out of the same general allegations or
circumstances; provided, that, if indemnity is sought pursuant to Section
6(a)(2), then, in addition to the fees and expenses of such counsel for the
indemnified parties, the indemnifying party shall be liable for the
reasonable fees and expenses of not more than one counsel (in addition to
any local counsel) separate from its own counsel and that of the other
indemnified parties for the Independent Underwriter in its capacity as a
"qualified independent underwriter" and all persons, if any, who control
the Independent Underwriter within the meaning of Section 15 of the 1933
Act or Section 20 of 1934 Act in connection with any one action or separate
but similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances if, in the reasonable judgment of
the Independent Underwriter, there may exist a conflict of interest between
the Independent Underwriter and the other indemnified parties. Any such
separate counsel for the Independent Underwriter and such control persons
of the Independent Underwriter shall be designated in writing by the
Independent Underwriter. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent
to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever in respect of which indemnification
or contribution could be sought under this Section 6 or Section 7 hereof
(whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising
out of such litigation, investigation, proceeding or claim 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 any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 6(a)(1)(iii) effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by
such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least
30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
Notwithstanding the immediately preceding sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel, an indemnifying
party shall not be liable for any settlement of the nature contemplated by
Section 6(a)(1)(iii) effected
30
without its consent if such indemnifying party (i) reimburses such
indemnified party in accordance with such request to the extent it
considers such request to be reasonable and (ii) provides written notice to
the indemnified party specifying the basis for its claim that the unpaid
balance is unreasonable, in each case prior to the date of such settlement.
(e) Indemnification for Reserved Securities. In connection with the offer
and sale of the Reserved Securities, the Company agrees, promptly upon a
written request, to indemnify and hold harmless the Underwriters from and
against any and all losses, liabilities, claims, damages and expenses
incurred by them as a result of the failure of directors, officers,
employees, business associates and related persons of the Company to pay
for and accept delivery of Reserved Securities which, by the end of the
first business day following the date of this Agreement, were subject to a
properly confirmed agreement to purchase.
SECTION 7. Contribution. If the indemnification provided for in Section 6
------------
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the International Managers on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
International Managers on the other hand in connection with the statements or
omissions, or in connection with any violation of the nature referred to in
Section 6(a)(1)(ii)(A) hereof, which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
The relative benefits received by the Company on the one hand and the
International Managers on the other hand in connection with the offering of the
International Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds (i.e., after deducting the
total underwriting discount) from the offering of the International Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the International Managers, in
each case as set forth on the cover of the U.S. Prospectus bear to the aggregate
initial public offering price of the International Securities as set forth on
such cover.
The relative fault of the Company on the one hand and the International
Managers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the
31
International Managers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission or
any violation of the nature referred to in Section 6(a)(1)(ii)(A) hereof.
The Company and the International Managers agree that Credit Suisse First
Boston Corporation will not receive any additional benefits hereunder for
serving as the Independent Underwriter in connection with the offering and sale
of the International Securities.
The Company and the International Managers agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the International Managers were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 7.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no International Manager
shall be required to contribute any amount in excess of the amount by which the
total price at which the International Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such International Manager has otherwise been required to pay by
reason of any 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 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
International Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company.
The International Managers' respective obligations to contribute pursuant to
this Section 7 are several, and in proportion to the number of Initial
International Securities set forth opposite their respective names in Schedule A
hereto, and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
---------------
Delivery. All representations, warranties and agreements contained in this
Agreement or in
32
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any International Manager or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities to the International Managers.
SECTION 9. Termination of Agreement.
------------------------
(a) Termination; General. The Lead Managers may terminate this Agreement,
by notice to the Company, at any time at or prior to Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the International
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise, whether or
not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, any outbreak of hostilities
or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of
which is such as to make it, in the judgment of the Lead Managers,
impracticable to market the Securities or to enforce contracts for the sale
of the Securities, or (iii) if trading in any securities of the Company has
been suspended or materially limited by the Commission on the Nasdaq
National Market, or if trading generally on the American Stock Exchange or
the New York Stock Exchange or in the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of
said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or (iv) if a banking moratorium has been declared by either
Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the International Managers. If
----------------------------------------------------
one or more of the International Managers shall fail at Closing Time or a Date
of Delivery to purchase the Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), the Lead Managers
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting International Managers, or any other underwriters,
to purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
the Lead Managers shall not have completed such arrangements within such 24-hour
period, then:
33
(a) if the number of Defaulted Securities does not exceed 10% of the number
of International Securities to be purchased on such date, each of the non-
defaulting International Managers shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting International Managers, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
International Securities to be purchased on such date, this Agreement or,
with respect to any Date of Delivery which occurs after the Closing Time,
the obligation of the International Managers to purchase and of the Company
to sell the Option Securities to be purchased and sold on such Date of
Delivery shall terminate without liability on the part of any non-
defaulting International Manager.
No action taken pursuant to this Section shall relieve any defaulting
International Manager from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
International Managers to purchase and the Company to sell the relevant
International Option Securities, as the case may be, either the Lead Managers or
the Company shall have the right to postpone Closing Time or the relevant Date
of Delivery, as the case may be, for a period not exceeding seven days in order
to effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "International
Manager" includes any person substituted for an International Manager under this
Section 10.
SECTION 11. Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication (with confirmation of
transmission if by telecommunication). Notices to the International Managers
shall be directed to the Lead Managers at North Tower, World Financial Center,
New York, New York 10281-1201, attention of Xxxxx Xxxxxx and Syndicate
Operations, facsimile (000) 000-0000/ (000) 000-0000, with a copy to Debevoise &
Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, attention of Xxxxxxx X. Xxxxx,
facsimile (000) 000-0000; and notices to the Company shall be directed to it at
0000 Xxx Xxxxxxxxxx Xxxx, X.X. Xxx 0000, Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000,
attention of Xxxxxxx X. Xxxxxx, Senior Vice President, Secretary and General
Counsel, facsimile (000) 000-0000, with a copy to Dechert, 4000 Xxxx Atlantic
Tower, 0000 Xxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, attention of
Xxxxxxxxxxx X. Xxxxxx, facsimile (000) 000-0000.
SECTION 12. Parties. This Agreement shall each inure to the benefit of
-------
and be binding upon the International Managers and the Company and their
respective
34
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
International Managers and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the International Managers and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any International Manager shall be deemed to be a successor by reason merely of
such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
----------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
------------------
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
35
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the International Managers and the Company in accordance with its terms.
Very truly yours,
SELECT MEDICAL CORPORATION
By:______________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX INTERNATIONAL
X.X. Xxxxxx Securities Ltd.
Credit Suisse First Boston (Europe) Limited
CIBC World Markets plc
XX Xxxxx Securities Corporation
First Union Securities, Inc.
By: XXXXXXX XXXXX INTERNATIONAL
By:
-------------------------
Authorized Signatory
For themselves and as Lead
Managers of the other International
Managers named in Schedule A
hereto.
36
Exhibit A-1
FORM OF OPINION OF DECHERT,
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(i)
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and corporate authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under the U.S.
Purchase Agreement and the International Purchase Agreement.
(iii) The Company is duly qualified as a foreign corporation to transact
business and is in good standing in the jurisdictions listed on Exhibit A
hereto.
(iv) The authorized, issued and outstanding capital stock of the Company is
as set forth in the Prospectuses in the column entitled "Actual" under the
caption "Capitalization" (except for subsequent issuances, if any, pursuant to
the U.S. Purchase Agreement and the International Purchase Agreement or pursuant
to reservations, agreements or employee benefit plans referred to in the
Prospectuses or pursuant to the exercise of convertible securities or options
referred to in the Prospectuses or repurchases of an immaterial number of shares
of the Company's capital stock held by former employees); the shares of issued
and outstanding capital stock have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of capital
stock of the Company was issued in violation of the preemptive or other similar
rights that were not subsequently waived of any securityholder of the Company
existing by virtue of the DGCL, the restated certificate of incorporation of the
Company, the restated by-laws of the Company or any contract to which the
Company is a party and which is filed as an exhibit to the Registration
Statement or identified in a certificate of the General Counsel of the Company
attached hereto as Exhibit B (that purports to identify all material contracts
or group of similar contracts that are material in the aggregate to which the
Company or any of its subsidiaries is a party); and the shares of issued and
outstanding capital stock of the Company (including any shares of capital stock
of the Company issued or to be issued in connection with the exercise of the put
rights pursuant to the agreements set forth on Exhibit C hereto (that purports
to identify the only agreements with respect to put rights), assuming such
shares are issued and sold in accordance with the agreements set forth on
Exhibit C hereto), have been issued or will be issued in compliance, in all
material respects, with all federal securities laws.
A-1-1
(v) Based solely on a certificate from the Secretary of State or similar
government official of each Subsidiary's respective jurisdiction of
incorporation or organization, each 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, has corporate or other power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction set forth on Schedule 1 hereto
(that purports to identify all jurisdictions in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or be in good
standing would not result in a Material Adverse Effect). Except as otherwise
disclosed on Schedule 2 hereto, (a) all of the issued and outstanding capital
stock of each such Subsidiary that is a corporation has been duly authorized and
validly issued, is fully paid and non-assessable and, to our knowledge, is owned
by the Company, directly or through subsidiaries and (b) all of the ownership
interests of each such Subsidiary that is not a corporation have been duly
authorized and, to our knowledge, are owned, by the Company, directly or through
subsidiaries.
(vi) The Securities to be purchased by the U.S. Underwriters and the
International Managers from the Company have been duly authorized for issuance
and sale to the Underwriters pursuant to the U.S. Purchase Agreement and the
International Purchase Agreement, respectively, and, when issued and delivered
by the Company pursuant to the U.S. Purchase Agreement and the International
Purchase Agreement, respectively, against payment of the consideration set forth
in the U.S. Purchase Agreement and the International Purchase Agreement, will be
validly issued and fully paid and non-assessable and no holder of the Securities
is or will be subject to personal liability by reason of being such a holder.
(vii) The issuance of the Securities is not subject to the preemptive or
other similar rights of any securityholder of the Company existing by virtue of
the DGCL, the certificate of incorporation and by-laws of the Company in effect
immediately prior to and at Closing Time or any contract to which the Company is
a party and which is filed as an exhibit to the Registration Statement pursuant
to Item 601(b)(2) or 601(b)(10) of Regulation S-K of the 1933 Act or identified
in a certificate of the General Counsel of the Company attached hereto as
Exhibit D (that purports to identify any agreements with respect to such
preemptive or other similar rights).
(viii) The U.S. Purchase Agreement and the International Purchase
Agreement have been duly authorized, executed and delivered by the Company.
(viii) The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; any required filing
of the Prospectuses pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); and, to our knowledge, no stop
order suspending the
A-1-2
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that purpose
have been instituted or are pending or threatened by the Commission.
(x) The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information, the Prospectuses and each amendment or
supplement to the Registration Statement and the Prospectuses filed on or before
the date hereof as of their respective effective or issue dates (other than the
financial statements, footnotes thereto, supporting schedules, other financial
information and statistical information derived from the financial statements
included therein or omitted therefrom, as to which we express no opinion)
complied as to form in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations.
(xi) The form of certificate used to evidence the Common Stock complies in
all material respects with all applicable statutory requirements and with any
applicable requirements of the restated certificate of incorporation and the
restated by-laws of the Company in effect at Closing Time.
(xii) Except as disclosed in the Prospectuses, there are no encumbrances or
restrictions pursuant to any agreement filed as an exhibit to the Registration
Statement pursuant to Item 601(b)(2) or 601(b)(10) of Regulation S-K of the 1933
Act or identified on a schedule provided by the General Counsel of the Company
attached hereto as Exhibit E containing agreements that impose encumbrances or
restrictions, on the ability of any Subsidiary (i) to pay any dividends or make
any distributions on such Subsidiary's capital stock, (ii) to make any loans or
advances to, or investments in, the Company or any such Subsidiary, or (iii) to
transfer any of its property or assets to the Company or any such Subsidiary.
(xiii) To our knowledge, (A) there are no legal or governmental
proceedings or investigations pending or threatened against the Company, or to
which the Company, or any of its properties is subject, that are required to be
described in the Registration Statement or Prospectuses (or any amendment or
supplement thereto) that are not so described, (B) there are no agreements,
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments that are required to be described or referred to in the
Registration Statement or the Prospectuses (or any amendment or supplement
thereto) or to be filed as an exhibit to the Registration Statement that are not
so described or filed, as the case may be, and such descriptions are accurate in
all material respects, and (C) there are no legal or governmental proceedings or
investigations pending, or threatened in writing, that would materially affect
the issuance, sale or delivery of the Shares to the Underwriters under the U.S.
Purchase Agreement or the International Purchase Agreement or the performance by
the Company of its obligation thereunder.
(xiv) The information in the Prospectuses under "Description of Capital
Stock", "Management-Employment Agreements", "Management - Select Medical
Corporation 1997 Amended and Restated Stock Option Plan", "Related Party
Transactions", "Shares
A-1-3
Eligible for Future Sale" and "United States Federal Income Tax Considerations
for Non-United States Holders" and in the Registration Statement under Items 14
and 15, to the extent that it constitutes matters of law, summaries of legal
matters, summaries of the Company's restated certificate of incorporation and
bylaws or legal conclusions, has been reviewed by us and is correct in all
material respects.
(xv) To our knowledge, other than with respect to Health Care Laws (as to
which we express no opinion), there are no Federal, Delaware or Pennsylvania
statutes or regulations that are required to be described in the Prospectuses
that are not described as required.
(xvi) To our knowledge, neither the Company nor any of the Subsidiaries
is in violation of its restated certificate of incorporation or restated by-laws
and no default by the Company or any of its subsidiaries exists in the due
performance or observance of any material 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 the
Registration Statement or the Prospectuses or filed or incorporated by reference
as an exhibit to the Registration Statement.
(xviii) No filing with, or authorization, approval, consent, license,
order, registration, qualification of or with any United States, New York,
Pennsylvania or with respect to the DGCL, Delaware court or governmental
authority or agency (other than under the 1933 Act and the 1933 Act Regulations
or Form 8-A under 1934 Act or 1934 Act Regulations, which have been obtained,
or as may be required under the securities or blue sky laws of the various
states, as to which we express no opinion) is necessary or required in
connection with the due authorization, execution and delivery of the U.S.
Purchase Agreement and the International Purchase Agreement or for the offering,
issuance, sale or delivery of the Securities.
(xix) The execution, delivery and performance of the U.S. Purchase
Agreement and the International Purchase Agreement and the consummation of the
transactions contemplated in the U.S. Purchase Agreement, the International
Purchase Agreement and in the Registration Statement (including the completion
of the Related Transactions and the issuance and sale of the Securities, and the
use of the proceeds from the sale of the Securities as described in the
Prospectuses under the caption "Use Of Proceeds") and compliance by the Company
with its obligations under the U.S. Purchase Agreement and the International
Purchase Agreement do not and will not, whether with or without the giving of
notice or lapse of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined in Section 1(a)(x) of the Purchase
Agreements) under or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease or any other agreement or instrument filed as
an exhibit to the Registration Statement pursuant to Item 601(b)(2) or
601(b)(10) of Regulation S-K of the 1933 Act or any other material agreement of
the
A-1-4
Company or any of its subsidiaries identified on a schedule provided by the
General Counsel of the Company attached hereto as Exhibit B, to which the
Company or any of its subsidiaries is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or any of its
subsidiaries is subject (except for such conflicts, breaches or defaults or
liens, charges or encumbrances that could not have a Material Adverse Effect),
nor will such action result in any violation of the provisions of the charter or
by-laws of the Company or any Subsidiary, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any of its subsidiaries or any of their respective
properties, assets or operations.
(xx) Except as disclosed in the Prospectuses, to our knowledge, there are
no persons with registration rights or other similar rights to have any
securities registered pursuant to the Registration Statement or otherwise
registered by the Company or any of its subsidiaries under the 1933 Act.
(xxi) Neither the Company or any of its subsidiaries is, and upon the
issuance and sale of the Securities as contemplated in the Purchase Agreements
and the application of the net proceeds therefrom as described in the
Prospectuses none of them will be, an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
(xxii) The Stock Split and the Charter Amendments were duly authorized by
the Company's Board of Directors and stockholders, the Stock Split has been
consummated in accordance with its terms and the Charter Amendments have become
effective.
Such opinion shall not state that it is to be governed or qualified by, or
that it is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
[The following statement shall be set forth in a separate letter]
We have participated in conferences with officers and other representatives
of the Company and representatives of the U.S. Underwriters and their counsel
during which the contents of the Registration Statement and related matters were
discussed and reviewed and, although we do not pass upon and do not assume
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement (except to the extent described in
paragraphs (xiii) and (xiv) in our separate opinion to you dated today), on the
basis of the information that was developed in the course of the services
referred to above, considered in the light of our understanding of the
applicable law, that, nothing has come to our attention that would lead us to
believe
A-1-5
that the Registration Statement or any amendment thereto, including the Rule
430A Information, (except for financial statements, footnotes and schedules,
other financial data and statistical information derived from the financial
statements included therein or omitted therefrom, as to which we need make no
statement), at the time such Registration Statement or any such amendment became
effective on or prior to the Closing Time, 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 that the
Prospectuses or any amendment or supplement thereto (except for financial
statements, footnotes and schedules, other financial data and statistical
information derived from the financial statements included therein or omitted
therefrom, as to which we need make no statement), at the time the Prospectuses
were issued, at the time any such amended or supplemented prospectus was issued
on or prior to the Closing Time, included or includes an untrue statement of a
material fact or omitted or omits 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.
X-0-0
Xxxxxxx X-0
FORM OF OPINION OF COMPANY'S SPECIAL REGULATORY COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(ii)
(i) The information in the Prospectuses under "Risk Factors --If there are
changes in the rates or methods of government reimbursements for our services,
our services, our net operating revenues and income could decline", "Risk
Factors --If our hospitals fail to maintain their exemption from the Medicare
prospective payment system or fail to maintain their status as a "hospital
within a hospital," our profitability may decline", "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 net operating revenues and profitability", "Our Business-- Government
Regulations", to the extent that it describes federal and state laws of the
United States, has been reviewed by me and fairly presents the information set
forth therein in all material respects.
(ii) Each of the 54 specialty acute care hospitals described in the
Prospectuses as owned or operated by the Company or its subsidiaries is duly
licensed as a hospital by the state in which it is located and is certified to
participate in the federal Medicare program. This opinion is based solely upon
our examination of originals or copies of such licenses and certifications
presented to us by the Company, and a Certificate of the Company that such
licenses and certifications are currently in effect.
(iii) We have reviewed the Certificate of the General Counsel of the
Company attached hereto as Exhibit A concerning the outpatient therapy clinics
owned, leased or operated by the Company or its subsidiaries. In the course of
our representation of the Company as special regulatory counsel, nothing has
come to our attention that would lead us to believe that the Certificate is not
accurate.
(iv) Except as disclosed in the Prospectuses, in the course of our
representation of the Company as special regulatory counsel, we have not become
aware of any pending or threatened action, suit, proceeding, inquiry or
investigation, relating to any Health Care Law, to which the Company or any of
its subsidiaries is a party, brought by any court or governmental agency or
body, which could reasonably be expected to result in a Material Adverse Effect.
(v) No filing with, or authorization, approval, consent, license, order,
registration, qualification (collectively, "Approvals") of or with any (A)
United States governmental authority or agency, is necessary or required under
any federal Health Care Law, other than Medicare Filings and Notices that have
been made or given or that are not yet required to be made or given or (B)
Pennsylvania governmental authority or agency is necessary or required under any
Pennsylvania Health Care Law, other than such Approvals as have been obtained or
made, in connection with the due authorization, execution and delivery of the
U.S. Purchase Agreement and the International Purchase
A-2-1
Agreement or for the offering, issuance, sale or delivery of the Securities.
Without having investigated the laws of states other than Pennsylvania for
purposes of this opinion, based on our experience as special regulatory counsel
representing other issuers owning and operating other health care businesses,
and our ongoing representation of the Company as special regulatory counsel, we
are not aware of any Approvals under any other State Health Care Laws required
to be obtained or made in connection with the execution delivery and performance
of the U.S. Purchase Agreement and the International Purchase Agreement that, if
not obtained or made, would result in a Material Adverse Effect.
In the course of our representation of the Company as special regulatory
counsel, nothing has come to our attention that would lead us to believe that
the information contained in the Registration Statement under "Risk Factors --If
there are changes in the rates or methods of government reimbursements for our
services, our services, our net operating revenues and income could decline",
"Risk Factors --If our hospitals fail to maintain their exemption from the
Medicare prospective payment system or fail to maintain their status as a
"hospital within a hospital," our profitability may decline", "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 net operating revenues and profitability", "Our Business-- Government
Regulations" (A) at the time such Registration Statement or any such amendment
thereto became effective, 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 and (B) at the time the Prospectuses
were issued, at the time any such amended or supplemented prospectus was issued
or at the Closing Time, included or includes an untrue statement of a material
fact or omitted or omits 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.
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 --If
there are changes in the rates or methods of government reimbursements for our
services, our net operating revenues and income could decline", "Risk Factors --
If our hospitals fail to maintain their exemption from the Medicare prospective
payment system or fail to maintain their status as a "hospital within a
hospital," our profitability may decline", "Risk Factors -We conduct business in
heavily regulated industry, and changes in regulations or violations of
regulations may result in increased costs or sanctions that reduce our net
operating revenues and profitability", "Our Business -- Government Regulations"
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 Xxxxx Laws (as
defined in the Prospectus) and the regulations promulgated thereunder, (e) the
False Claims Act, (f) Title II of the Health Insurance
A-2-2
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, municipalities or special
political subdivisions.
Such opinion shall not state that it is to be governed or qualified by, or
that it is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
X-0-0
Xxxxxxx X-0
OPINION OF COMPANY'S SPECIAL CANADIAN COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(b)(iv)
(i) Each of Canadian Back Institute ("CBI") and Rehab Health Inc. ("Rehab
Health") is incorporated and existing under the Business Corporations Act
(Ontario).
(ii) Each of CBI Calgary Limited Partnership, CBI Etobicoke Limited
Partnership, CBI Scarborough Limited Partnership, CBI South Calgary Limited
Partnership, CBI Toronto Limited Partnership, CBI Victoria Limited Partnership,
(collectively, the "Limited Partnerships") has been formed and exists as a
limited partnership under the Limited Partnership Act (Ontario).
(iii) CBI has the corporate power and capacity to carry on its business as
presently conducted (including, in the case of the Limited Partnerships, the
business of the Limited Partnerships) and to own its properties and assets.
(iv) Rehab Health has the corporate power and capacity to carry on its
business as presently conducted and to own its properties and assets.
A-3-1
[Form of lock-up from directors, officers or other stockholders pursuant to
Section 5(i)]
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated,
X.X. Xxxxxx Securities Inc.
Credit Suisse First Boston Corporation.
CIBC World Markets Corp.
XX Xxxxx Securities Corporation
First Union Securities, Inc.
as U.S. Representatives of the several
U.S. Underwriters to be named in the
within-mentioned U.S. Purchase Agreement
Xxxxxxx Xxxxx International
X.X. Xxxxxx Securities Ltd.
Credit Suisse First Boston (Europe) Limited
CIBC World Markets plc
XX Xxxxx Securities Corporation
First Union Securities, Inc.
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Proposed Public Offering by Select Medical Corporation
Dear Sirs:
The undersigned, a stockholder [and an officer and/or director] of Select
Medical Corporation, a Delaware corporation (the "Company"), understands that
(i) Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
("Xxxxxxx Xxxxx") and X.X. Xxxxxx Securities Inc., Credit Suisse First Boston
Corporation, CIBC World Markets Corp., XX Xxxxx Securities Corporation and First
Union Securities, Inc. propose to enter into a U.S. Purchase Agreement (the
"U.S. Purchase Agreement") with the Company providing for the public offering of
shares (the "Securities") of the Company's common stock, par value $.01 per
share (the "Common Stock") and (ii) Xxxxxxx Xxxxx International, X.X. Xxxxxx
Securities Ltd., Credit Suisse First Boston (Europe) Limited, CIBC World Markets
plc, XX Xxxxx Securities Corporation and First Union Securities, Inc. propose to
enter into an International Purchase Agreement with the
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Company providing for the public offering of the Common Stock of the Company
(together with the U.S. Purchase Agreement, the "Purchase Agreements". In
recognition of the benefit that such an offering will confer upon the
undersigned as a stockholder [and an officer and/or director] of the Company,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned agrees with each underwriter to
be named in the Purchase Agreements that, during a period of 180 days from the
date of the Purchase Agreements, the undersigned will not, without the prior
written consent of Xxxxxxx Xxxxx, directly or indirectly, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale of,
or otherwise dispose of or transfer any shares of the Company's Common Stock or
any securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition, or
file any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap or transaction is to be settled by delivery of Common Stock or
other securities, in cash or otherwise. Notwithstanding the foregoing, Xxxxxxx
Xxxxx'x prior written consent is not required for transactions by persons not
subject to Section 16 of the Securities Exchange Act of 1934, as amended, with
respect to the Company, relating to (A) Reserved Securities, as defined in the
U.S. Purchase Agreement, (B) shares of Common Stock or other securities of the
Company acquired in open market transactions after the completion of the public
offering and (C) sales of shares of Common Stock underlying employee stock
options in connection with cashless exercises of those stock options by former
employees of the Company that were not subject to Section 16 with respect to the
Company while they were employed by the Company.
In addition, the undersigned agrees that the Company and/or Xxxxxxx Xxxxx may,
and the undersigned will, (i) with respect to any shares of Common Stock for
which the undersigned is the record holder, cause the transfer agent for the
Company to note stop transfer instructions with respect to such shares of Common
Stock on the transfer books and records of the Company and (ii) with respect to
any shares of Common Stock for which the undersigned is the beneficial holder
but not the record holder, cause the record holder of such shares of Common
Stock to cause the transfer agent for the Company to note stop transfer
instructions with respect to such shares of Common Stock on the transfer books
and records of the Company.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to enter into this letter agreement, and that, upon request,
the undersigned will execute any additional documents necessary or desirable in
connection with the enforcement hereof. All authority herein conferred or
agreed to be conferred shall survive the death or incapacity of the undersigned
and any obligations of the undersigned
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shall be binding upon the heirs, personal representatives, successors, and
assigns of the undersigned.
Very truly yours,
Signature:
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Print Name:
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