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Exhibit 1.1
$100,000,000
NCS HEALTHCARE, INC.
5-3/4% Convertible Subordinated Debentures due 2004
PURCHASE AGREEMENT
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August 7, 1997
XXXXX XXXXXX INC.
XXXXXXX XXXXX & COMPANY L.L.C.
XXXXXXXXXX SECURITIES
XXXXXXXX & COMPANY SECURITIES, INC.
As Initial Purchasers
C/O XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
NCS HealthCare, Inc., a Delaware corporation (the "Company"), proposes,
upon the terms and conditions set forth herein, to issue and sell to you, as the
initial purchasers (the "Initial Purchasers"), $100,000,000 aggregate principal
amount of its 5-3/4% Convertible Subordinated Debentures due 2004 (the "Firm
Debentures"). The Company also proposes, upon the terms and conditions set forth
herein, to issue and sell to the Initial Purchasers up to an additional
$15,000,000 aggregate principal amount of its 5-3/4% Convertible Subordinated
Debentures due 2004 (the "Additional Debentures"). The Firm Debentures and the
Additional Debentures are hereinafter collectively referred to as the
"Debentures." The Debentures will be issued pursuant to the provisions of an
Indenture, to be dated as of August 13, 1997 (the "Indenture"), between the
Company and National City Bank, as Trustee (the "Trustee"). The obligations of
the Company under the Indenture and the Debentures will be guaranteed by the
wholly-owned subsidiaries (the "Guarantees") of the Company (collectively, the
"Guarantors") pursuant to a Guarantee Agreement, to be dated as of August 13,
1997 and substantially in the form of Exhibit A hereto, between the Guarantors
and the Trustee (the "Guarantee Agreement"). The Company's Class A common stock,
$.01 par value, is hereinafter referred to as the "Common Stock".
The Company wishes to confirm as follows its agreement with the Initial
Purchasers in connection with the purchase and resale of the Debentures.
1. Preliminary Offering Memorandum and Offering Memorandum. The
Debentures will be offered and sold to the Initial Purchasers without
registration under the Securities Act of 1933, as amended (the "Act"), in
reliance on an exemption pursuant to Section 4(2) under the Act. The Company has
prepared a preliminary offering memorandum, dated July 17, 1997 (the
"Preliminary Offering Memorandum"), and an offering memorandum, dated August 7,
1997 (the "Offering Memorandum"), setting forth information regarding the
Company and the Debentures. Any references herein to the Preliminary Offering
Memorandum and the Offering Memorandum shall be deemed to include all amendments
and supplements thereto and any documents filed under the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Securities and
Exchange Commission (the "Commission") thereunder (collectively, the "Exchange
Act") which are incorporated by reference therein. As used herein, the term
"Incorporated Documents" means the documents which at the time are incorporated
by reference in
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the Preliminary Offering Memorandum, the Offering Memorandum or any amendment or
supplement thereto. The Company hereby confirms that it has authorized the use
of the Preliminary Offering Memorandum and the Offering Memorandum in connection
with the offering and resale of the Debentures by the Initial Purchasers.
The Company understands that the Initial Purchasers propose to make
offers and sales (the "Exempt Resales") of the Debentures purchased by the
Initial Purchasers hereunder only on the terms and in the manner set forth in
the Offering Memorandum and Section 2 hereof, as soon as the Initial Purchasers
deem advisable after this Agreement has been executed and delivered, (i) to
persons whom the Initial Purchasers reasonably believe to be qualified
institutional buyers ("Qualified Institutional Buyers") as defined in Rule 144A
under the Act, as such rule may be amended from time to time ("Rule 144A"), in
transactions under Rule 144A and (ii) outside the United States to non-U.S.
persons in offshore transactions in reliance upon Regulation S (as those terms
are defined in Regulation S under the Act) ("Regulation S") under the Act (such
persons specified in clauses (i) and (ii) being referred to herein as the
"Eligible Purchasers"). As used herein the terms "offshore transactions,"
"United States" and "U.S. persons" have the meaning given them in Regulation S.
It is understood and acknowledged that upon original issuance thereof,
and until such time as the Debentures (and all securities issued in exchange
therefor, in substitution thereof or upon conversion thereof (including the
Common Stock)) have been (i) effectively registered under the Act and disposed
of in accordance with an effective registration statement under the Act, (ii)
distributed to the public pursuant to Rule 144 or (ii) sold or transferred
pursuant to Rule 144(k) under the Act (or any similar provisions then in force)
or otherwise, any certificate representing such securities shall bear the
following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO REGISTRATION UNDER SUCH LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A)
TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
SUBJECT TO THE COMPANY'S AND NATIONAL CITY BANK'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D) OR (E) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM, AND IN EACH OF THE FOREGOING CASES PROVIDED THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO NATIONAL CITY BANK AND SUBJECT TO ANY APPLICABLE SECURITIES
LAWS. THIS LEGEND WILL BE REMOVED UPON THE REQUEST
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OF THE THEN HOLDER OF THIS SECURITY AFTER THE RESALE RESTRICTION TERMINATION
DATE.
It is also understood and acknowledged that holders (including
subsequent transferees) of the Debentures and, if such Debentures are
subsequently converted into Common Stock, the Common Stock, will have the
registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be dated the date hereof, in substantially
the form of Exhibit B hereto, for so long as such Debentures and Common Stock
constitute "Transfer Restricted Securities" (as defined in the Registration
Rights Agreement). Pursuant to the Registration Rights Agreement, the Company
will agree (i) to file with the Commission under the circumstances set forth
therein, a registration statement on the appropriate form under the Act relating
to the resale of the Debentures and the Common Stock by certain holders thereof
from time to time in accordance with the methods of distribution set forth in
such registration statement and Rule 415 under the Act (the "Shelf Registration
Statement") and (ii) to use its best efforts to cause such Shelf Registration
Statement to be declared effective. This Agreement, the Indenture, the
Registration Rights Agreement and the Guarantee Agreement are hereinafter
referred to collectively as the "Operative Documents."
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Indenture or the Offering Memorandum.
2. Agreements to Sell, Purchase and Resell. (a) The Company hereby
agrees, subject to all the terms and conditions set forth herein, to issue and
sell to each Initial Purchaser and, upon the basis of the representations,
warranties and agreements of the Company herein contained and subject to all the
terms and conditions set forth herein, each Initial Purchaser agrees to purchase
from the Company, at a purchase price of 97.25% of the principal amount thereof,
the principal amount of Firm Debentures set forth opposite the name of such
Initial Purchaser in Schedule I hereto.
(b) The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Initial Purchasers, and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, the Initial Purchasers
shall have the right to purchase from the Company pursuant to an option (the
"over-allotment option") which may be exercised at any time and from time to
time prior to 9:00 P.M., New York City time, on the 30th day after the date of
the Offering Memorandum (or, if such 30th day shall be a Saturday or Sunday or a
holiday, on the next business day thereafter when the New York Stock Exchange is
open for trading), up to $15,000,000 principal amount of Additional Debentures
at the same purchase price as the Firm Debentures, plus accrued interest, if
any, from the date of issuance of the Firm Debentures to the date of delivery
and payment. Upon any exercise of the over-allotment option, each Initial
Purchaser, severally and not jointly, agrees to purchase that principal amount
of Additional Debentures which bears the same proportion to the aggregate
principal amount of Additional Debentures to be purchased by the Initial
Purchasers as the principal amount of Firm Debentures set forth opposite the
name of such Initial Purchaser bears to the aggregate principal amount of Firm
Debentures.
(c) The Initial Purchasers have advised the Company that they propose to
offer the Debentures for sale upon the terms and conditions set forth in this
Agreement and in the Offering Memorandum. Each Initial Purchaser hereby
represents and warrants to the Company that such Initial Purchaser (i) is a
Qualified Institutional Buyer within the meaning of Rule 144A and is purchasing
the Debentures pursuant to a private sale exempt from registration under the Act
and is not purchasing the Debentures with a view to or for offer or sale in
connection with any distribution that would be in violation of foreign or U.S.
federal or state securities laws, (ii) will not solicit offers for, or offer or
sell, the Debentures by means of any form of general solicitation or general
advertising or in any mariner involving a public offering within the meaning of
Section 4(2) of the Act, and (iii) has solicited and will solicit offers for the
Debentures only from, and has offered and will offer, sell or deliver the
Debentures as part of its initial offering, only to (A) persons whom the Initial
Purchasers reasonably believe to be Qualified Institutional Buyers, or if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
the Initial Purchaser that each such
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account is a Qualified Institutional Buyer, to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A, in each case, in
transactions under Rule 144A and (B) outside the United States to certain
persons in offshore transactions in reliance on Regulation S. The Initial
Purchasers have advised the Company that they will offer the Debentures to
Eligible Purchasers at a price initially equal to 100% of the principal amount
thereof, plus accrued interest, if any, from the date of issuance of the Firm
Debentures. Such price may be changed by the Initial Purchasers at any time
thereafter without notice.
(d) The Initial Purchasers represent and warrant that they (i) have not
offered or sold and prior to the date that is six months after the closing date
with respect to the Offering will not offer or sell any Debentures to persons in
the United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which will
not involve an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995 (the "Regulations"); (ii) have
complied with and will comply with all applicable provisions of the Financial
Services Act of 1986 and the Regulations with respect to anything done by it in
relation to the Debentures in, from, or otherwise involving the United Kingdom;
and (iii) have only issued or passed on and will only issue or pass on to any
person in the United Kingdom any document received by it in connection with the
offer of the Debentures if that person is of a kind described in Article 11(3)
of the Financial Services Act of 1986 (Investment Advertisements) (Exemptions)
Order 1996 or is a person to whom such document may otherwise lawfully be issued
or passed on.
(e) The Initial Purchasers represent and warrant that they have offered
and sold the Debentures and agree that they will offer and sell the Debentures
(i) as part of their distribution at any time, and (ii) otherwise until 40 days
after the later of the commencement of the offering of the Debentures and the
Closing Date, only in accordance with Rule 903 of Regulation S or as otherwise
permitted pursuant to paragraph (c) above. Accordingly, the Initial Purchasers
represent and agree that none of such Initial Purchasers, their affiliates nor
any persons acting on their behalf have engaged or will engage in any directed
selling efforts (as defined in Regulation S under the Act) with respect to the
Debentures, and they have complied and will comply with the offering
restrictions requirement of Regulation S. Such Initial Purchasers agree that, at
or prior to confirmation of the sale of Debentures to non-U.S. persons (as
defined in Regulation S under the Act) other than a sale pursuant to Rule 144A,
they will have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases Debentures from such
Initial Purchasers during the restricted period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933, as amended (the "Securities
Act"), and may not be offered and sold within the United
States or to, or for the account or benefit of, U.S. persons
(i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement
of the offering and the closing date, except in either case
in accordance with Regulation S (or Rule 144A) under the
Securities Act. Terms used above have the meaning given to
them by Regulation S."
The Initial Purchasers understand that the Company and, for purposes of
the opinions to be delivered to the Initial Purchasers pursuant to Sections 7(c)
and 7(d) hereof, counsel to the Company and counsel to the Initial Purchasers,
will rely upon the accuracy and truth of the foregoing representations and
agreements and the Initial Purchasers hereby consent to such reliance.
3. Delivery of the Debentures and Payment Therefor. Delivery to the
Initial Purchasers of and payment for the Firm Debentures shall be made at the
office of Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00
A.M., New York City time, on August 13, 1997 (the "Closing Date"). The place of
closing for the Firm Debentures and the Closing Date may be varied by agreement
between the Initial Purchasers and the Company.
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Delivery to the Initial Purchasers of and payment for any Additional
Debentures to be purchased by the Initial Purchasers shall be made at the
aforementioned office of Xxxxx Xxxxxx Inc. at such time on such date (the
"Option Closing Date"), which may be the same as the Closing Date but shall in
no event be earlier than the Closing Date nor earlier than two nor later than
ten business days after the giving of the notice hereinafter referred to, as
shall be specified in a written notice from the Initial Purchasers to the
Company of the Initial Purchasers' determination to purchase the principal
amount of Additional Debentures specified in such notice. The place of closing
for any Additional Debentures and the Option Closing Date for such Additional
Debentures may be varied by agreement between the Initial Purchasers and the
Company.
The Firm Debentures and any Additional Debentures which the Initial
Purchasers may elect to purchase will be delivered to the Initial Purchasers
against payment of the purchase price therefor in immediately available funds.
Debentures being sold by the Initial Purchasers in Exempt Resales to Qualified
Institutional Buyers in reliance on Rule 144A will be initially evidenced by one
or more global securities, and will be registered in the name of Cede & Co.
("Cede") as nominee of The Depository Trust Company ("DTC"). Debentures being
sold by the Initial Purchasers in Exempt Resales to certain persons in offshore
transactions in reliance on Regulation S will be initially evidenced by one or
more global securities which will be deposited with, or on behalf of DTC, and
registered in the name of Cede as DTC's nominee, for the account of Xxxxxx
Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear System and Cedel, S.A. The Debentures to be delivered to the Initial
Purchasers shall be made available to the Initial Purchasers in New York City
for inspection and packaging not later than 9:30 a.m., New York City time, on
the business day next preceding the Closing Date or the Option Closing Date, as
the case may be.
4. Agreements of the Company. The Company agrees with the Initial
Purchasers as follows:
(a) The Company will advise the Initial Purchasers promptly and, if
requested by them, will confirm such advice in writing, within the period of
time referred to in paragraph (e) below, of any material change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations, or of the happening of any event which makes any
statement of a material fact made in the Offering Memorandum (as then amended or
supplemented) untrue or which requires the making of any additions to or changes
in the Offering Memorandum (as then amended or supplemented) in order to make
the statements therein not misleading, or of the necessity to amend or
supplement the Offering Memorandum (as then amended or supplemented) to comply
with any law.
(b) The Company will furnish to the Initial Purchasers, without charge,
as of the date of the Offering Memorandum, such number of copies of the Offering
Memorandum (as then amended or supplemented) as they may reasonably request.
(c) The Company will not make any amendment or supplement to the
Preliminary Offering Memorandum or to the Offering Memorandum of which the
Initial Purchasers shall not previously have been advised or to which they shall
reasonably object after being so advised or file any document which upon filing
becomes an Incorporated Document, without delivering a copy of such document to
the Initial Purchasers, prior to or concurrently with such filing.
(d) Prior to the execution and delivery of this Agreement, the Company
has delivered or will deliver to the Initial Purchasers, without charge, in such
quantities as the Initial Purchasers shall have requested or may hereafter
request, copies of the Preliminary Offering Memorandum. The Company consents to
the use, in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Debentures are offered by the Initial Purchasers and
by dealers, prior to the date of the Offering Memorandum, of each Preliminary
Offering Memorandum so furnished by the Company. The Company consents to the use
of the Offering Memorandum (and of any amendment or supplement thereto) in
accordance with the securities or Blue Sky laws of the jurisdictions in which
the_ Debentures are offered by the Initial Purchasers and by all dealers to whom
Debentures may be sold, in connection with the offering
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and sale of the Debentures.
(e) If, at any time prior to completion of the distribution of the
Debentures by the Initial Purchasers to Eligible Purchasers, any event shall
occur that in the judgment of the Company or in the opinion of counsel for the
Initial Purchasers is required to be set forth in the Offering Memorandum (as
then amended or supplemented) or should be set forth in the Offering Memorandum
(as then amended or supplemented) in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it is necessary to supplement or amend the Offering Memorandum, or to file under
the Exchange Act any document which upon filing becomes an Incorporated
Document, to comply with any law, the Company will forthwith prepare an
appropriate supplement or amendment thereto or such document, and will
expeditiously furnish to the Initial Purchasers and dealers a reasonable number
of copies thereof. In the event that the Company and the Initial Purchasers
agree that the Offering Memorandum should be amended or supplemented, or that a
document should be filed under the Exchange Act which upon filing becomes an
Incorporated Document, the Company, if requested by the Initial Purchasers, will
promptly issue a press release announcing or disclosing the matters to be
covered by the proposed amendment or supplement or such document.
(f) The Company will cooperate with the Initial Purchasers and with
their counsel in connection with the registration or qualification of the
Debentures and the Common Stock issuable upon conversion of the Debentures for
offering and sale by the Initial Purchasers and by dealers under the securities
or Blue Sky laws of such jurisdictions as the Initial Purchasers may designate
and will file such consents to service of process or other documents necessary
or appropriate in order to effect such qualification; provided that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject it to
service of process in suits, other than those arising out of the offering or
sale of the Debentures, in any jurisdiction where it is not now so subject.
(g) So long as any of the Debentures are outstanding, the Company will
furnish to the Initial Purchasers (i) as soon as reasonably practicable, a copy
of each report of the Company mailed to stockholders or filed with the
Commission and (ii) from time to time, such other information concerning the
Company as the Initial Purchasers may reasonably request.
(h) If this Agreement shall terminate or shall be terminated after
execution and delivery pursuant to any provisions hereof (otherwise than
pursuant to Section 10 hereof or by notice given by the Initial Purchasers
terminating this Agreement pursuant to Section 9 or Section 11 hereof) or if
this Agreement shall be terminated by the Initial Purchasers because of any
failure or refusal on the part of the Company to comply with the terms or
fulfill any of the conditions of this Agreement, the Company agrees to reimburse
the Initial Purchasers for all out-of-pocket expenses (including reasonable fees
and expenses of its counsel) incurred by it in connection herewith.
(i) The Company will apply the net proceeds from the sale of the
Debentures to be sold by it hereunder substantially in accordance with the
description set forth in the Offering Memorandum.
(j) Except as provided in this Agreement, the Company will not sell,
offer to sell, contract to sell or otherwise transfer or dispose of any Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or grant any options or warrants to purchase Common Stock, for a
period of 90 days after the date of the Offering Memorandum, without the prior
written consent of Xxxxx Xxxxxx Inc. other than (i) the issuance by the Company
in the manner and to the extent disclosed in the Offering Memorandum of shares
of Common Stock and Class B Common Stock issuable upon the exercise of
outstanding options under the 1995 Amended and Restated Employee Stock Purchase
and Option Plan and the 1996 Long Term Incentive Plan, (ii) the grant to
employees in the ordinary course of business of options to purchase Common Stock
pursuant to the Company's existing option plans, provided that such options are
not exercisable during the 90-day period after the date of the Offering
Memorandum, and (iii) the issuance by the Company of Common Stock or Class B
Common Stock as consideration for acquired businesses under circumstances that
would prohibit resale of such securities during the 90-day period
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provided for in the "lock-up" letters furnished pursuant to paragraph (k) below.
(k) The Company has furnished or will furnish to the Initial Purchasers
"lock-up" letters, in form and substance satisfactory to the Initial Purchasers,
signed by each of its current directors and officers.
(l) Except as stated in this Agreement, the Preliminary Offering
Memorandum and the Offering Memorandum, the Company has not taken, nor will it
take, directly or indirectly, any action designed to or that might reasonably he
expected to cause or result in stabilization or manipulation of the price of the
Debentures to facilitate the sale or resale of the Debentures.
(m) The Company will use its best efforts to cause the Debentures to be
eligible for trading on The PORTAL Market.
(n) From and after the Closing Date, so long as any of the Debentures
are outstanding during any period in which the Company is not subject to Section
13 or 15(d) of the Exchange Act, the Company will furnish to holders of the
Debentures and prospective purchasers of Debentures designated by such holders,
upon request of such holders or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Act to permit
compliance with Rule 144A in connection with resale of the Debentures.
(o) The Company agrees not to sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Debentures in a mariner that would
require the registration under the Act of the sale to the Initial Purchasers or
the Eligible Purchasers of the Debentures.
(p) The Company agrees to comply with all of the terms and conditions
of the Registration Rights Agreement, and all agreements set forth in the
representation letters of the Company to DTC relating to the approval of the
Debentures by DTC for "book entry" transfer.
(q) The Company agrees that prior to any registration of the Debentures
pursuant to the Registration Rights Agreement, or at such earlier time as may be
so required, the Indenture and, if required, the Guarantee Agreement shall be
qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"),
and will cause to be entered into any necessary supplemental indentures or such
other agreements as may be necessary in connection therewith.
(r) The Company agrees that it will cause each of its wholly-owned
subsidiaries to enter into the Guarantee Agreement on or prior to the Closing
Date.
5. Representations and Warranties of the Company. The Company
represents and warrants to the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and Offering Memorandum with
respect to the Debentures have been prepared by the Company for use by the
Initial Purchasers in connection with the Exempt Resales. No order or decree
preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum or any amendment or supplement thereto, or any order asserting that
the transactions contemplated by this Agreement are subject to the registration
requirements of the Act has been issued and no proceeding for that purpose has
commenced or is pending or, to the knowledge of the Company, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum as
of their respective dates and the Offering Memorandum as of the Closing Date,
did not or will not at any such times 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 in light of the circumstances under which they
are made not misleading, except that this representation and warranty does not
apply to statements in or omissions
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from the Preliminary Offering Memorandum and Offering Memorandum made in
reliance upon and in conformity with information relating to the Initial
Purchasers furnished to the Company in writing by or on behalf of the Initial
Purchasers expressly for use therein.
(c) The Incorporated Documents heretofore filed were filed in a timely
mariner and, when they were filed (or, if any amendment with respect to any such
document was filed, when such document was filed), conformed in all material
respects to the requirements of the Exchange Act and did 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
any further Incorporated Documents will, when so filed, be filed in a timely
mariner and conform in all material respects to the requirements of the Exchange
Act 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.
(d) The Indenture has been duly and validly authorized by the Company
and, upon its execution, delivery and performance by the Company and assuming
due authorization, execution, delivery and performance by the Trustee, will be a
valid and binding agreement of the Company, enforceable in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general equitable principles, and
the Indenture conforms in all material respects to the description thereof in
the Offering Memorandum; and no qualification of the Indenture under the 1939
Act is required in connection with the offer and sale of the Debentures
contemplated hereby or in connection with the Exempt Resales.
(e) The Debentures have been duly authorized by the Company and, when
executed by the Company and authenticated by the Trustee in accordance with the
Indenture and delivered to the Initial Purchasers against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable in accordance with their terms, except
as enforcement thereof may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles,
and the Debentures will conform in all material respects to the description
thereof in the Offering Memorandum.
(f) All the outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable, are
free of any preemptive or similar rights and were issued and sold in compliance
with all applicable federal and state securities laws; the shares of Common
Stock issuable upon conversion of the Debentures have been duly authorized and
reserved for issuance and, when delivered upon conversion of the Debentures,
will be validly issued, fully paid and nonassessable and free of any preemptive
or similar rights; and the authorized capital stock of the Company conforms to
the description thereof in the Offering Memorandum and the authorized and
outstanding capital stock of the company is as set forth under the caption
"Capitalization" in the Offering Memorandum."
(g) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify does not have a material adverse effect on the condition
(financial or other), business, prospects, properties, net worth or results of
operations of the Company and the Subsidiaries (as hereinafter defined), taken
as a whole (a "Material Adverse Effect").
(h) The subsidiaries listed on Schedule II hereto constitute all of the
Company's subsidiaries (as defined in Regulation S-X under the Act). Such
subsidiaries are referred to herein individually as a "Subsidiary" and
collectively as the "Subsidiaries." Each Subsidiary is a corporation duly
organized, validly existing and in good standing in the jurisdiction of its
incorporation with full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the
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Offering Memorandum and is duly registered and qualified to conduct its business
and is in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify would not have
a Material Adverse Effect. All the outstanding shares of capital stock of each
of the Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable, and are owned by the Company directly, or indirectly through
one of the other Subsidiaries, free and clear of any lien, adverse claim,
security interest, equity, or other encumbrance, except as disclosed in the
Offering Memorandum.
(i) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or to which
any of their respective properties, is subject, that are not disclosed in the
Offering Memorandum which, if adversely decided, could have a Material Adverse
Effect, or materially affect the issuance of the Debentures or the consummation
of the transactions contemplated by the Operative Documents. There are no
agreements, contracts, indentures, leases or other instruments that would be
required to be described in the Offering Memorandum if it were a prospectus
included in a registration statement on Form S-3 under the Act but are not
described as would be required, or that are required to be filed as an exhibit
to any Incorporated Document that are not so filed as required. Neither the
Company nor any of the Subsidiaries is involved in any strike, job action or
labor dispute, and to the Company's knowledge no such action or dispute is
threatened.
(j) Except as to violations or defaults which would not singularly or
in the aggregate have a Material Adverse Effect, neither the Company nor any of
the Subsidiaries is (i) in violation of its certificate or articles of
incorporation or by-laws or other organizational documents, or of any law,
ordinance, administrative or governmental rule or regulation applicable to the
Company or any of the Subsidiaries or of any decree of any court or governmental
agency or body having jurisdiction over the Company or any of the Subsidiaries,
or (ii) in default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any material agreement, indenture, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound.
(k) Neither the issuance, offer, sale or delivery of the Debentures,
the issuance of Common Stock upon conversion of the Debentures, the execution,
delivery or performance of this Agreement, the Indenture or the Registration
Rights Agreement by the Company, the execution, delivery or performance of the
Guarantee Agreement by the Guarantors, nor the consummation by the Company and
the Guarantors of the transactions contemplated hereby or thereby (i) requires
any consent, approval, authorization or other order of, or registration or
filing with, any court, regulatory body, administrative agency or other
governmental body, agency or official (except such as may be required in
connection with the registration under the Act of the Debentures, the Common
Stock and the Guarantees in accordance with the Registration Rights Agreement,
the qualification of the Indenture and, if necessary, the Guarantee Agreement
under the 1939 Act and except for compliance with the securities or Blue Sky
laws of various jurisdictions) or conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, the certificate or articles
of incorporation or bylaws, or other organizational documents, of the Company or
any of the Subsidiaries or (ii) conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, any agreement, indenture,
lease or other instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective properties may be bound
which is material to the Company and its Subsidiaries taken as a whole, except
for any such conflict, breach or default that has been waived, or violates or
will violate any statute, law, regulation or filing or judgment, injunction,
order or decree applicable to the Company or any of the Subsidiaries or any of
their respective properties, or will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
the Subsidiaries pursuant to the terms of any agreement or instrument to which
any of them is a party or by which any of them may be bound or to which any of
the property or assets of any of them is subject.
(l) The accountants, Ernst & Young LLP and Xxxxxx Xxxxxxxx, who each
have certified or shall certify the financial statements included as part of the
Offering Memorandum (or any
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amendment or supplement thereto), are independent public accountants under Rule
101 of the AICPA's Code of Professional Conduct, and its interpretation and
rulings.
(m) The historical financial statements, together with related
schedules and notes forming part of the Offering Memorandum, present fairly the
consolidated financial position, results of operations and changes in
stockholders' equity and cash flows of the Company and the Subsidiaries on the
basis stated in the Offering Memorandum at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and data
set forth in the Offering Memorandum, are accurately presented in all material
respects and prepared on a basis consistent with such financial statements and
the books and records of the Company. The pro forma financial statements
(including the notes thereto) and other pro forma financial information included
or incorporated by reference in the Offering Memorandum present fairly the
information shown therein and have been properly computed on the basis described
therein, and the pro forma financial statements incorporated by reference in the
Offering Memorandum have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements (including Article
11 of Regulation S-X). The assumptions used in preparation of the pro forma
financial statements and other pro forma financial information included or
incorporated by reference in the Offering Memorandum are reasonable, and the
adjustments used therein are reasonably appropriate to give effect to the
transactions or circumstances referred to therein.
(n) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and the Registration
Rights Agreement; the execution and delivery of, and the performance by the
Company of its obligations under, this Agreement and the Registration Rights
Agreement have been duly and validly authorized by the Company, and this
Agreement has been, and the Registration Rights Agreement when executed will
have been, duly executed and delivered by the Company and constitute the valid
and legally binding agreements of the Company, enforceable against the Company
in accordance with their terms, except as the enforcement hereof and thereof may
be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and subject to the applicability of general equitable principles, and
except as rights to indemnity and contribution hereunder and thereunder may be
limited by Federal or state securities laws.
(o) The Guarantors have all requisite power and authority to execute,
deliver and perform their respective obligations under the Guarantee Agreement,
the execution and delivery of, and the performance by each Guarantor of its
respective obligations under the Guarantee Agreement have been duly and validly
authorized by such Guarantor and the Guarantee Agreement, when executed, will
have been duly executed and delivered by each of the Guarantors and constitute
the valid and legally binding agreement of each such Guarantor, enforceable
against each such Guarantor in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and subject to the applicability of general
equitable principles; and the Guarantees conform in all material respects to the
description thereof in the Offering Memorandum; and no qualification of the
Guarantees under the 1939 Act is required in connection with the offer and sale
of the Debentures contemplated hereby or in connection with Exempt Resales.
(p) Except as disclosed in or contemplated by the Offering Memorandum
(or any amendment or supplement thereto), subsequent to the date as of which
such information is given in the Offering Memorandum (or any amendment or
supplement thereto), neither the Company nor any of the Subsidiaries has
incurred any liability or obligation, direct or contingent, or entered into any
transaction, that is or would be material to the Company and the Subsidiaries,
taken as a whole, and there has not been any material change in the capital
stock, or material increase in the short-term or long-term debt, of the Company
or any of the Subsidiaries, or any material adverse change, or any development
involving or which could reasonably be expected to involve a prospective
material adverse change, in the condition (financial or other), business,
prospects, properties, net worth or results of operations of the Company and
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the Subsidiaries, taken as a whole.
(q) Each of the Company and the Subsidiaries has good and marketable
title to all property (real and personal) described in the Offering Memorandum
as being owned by it, free and clear of all liens, claims, security interests or
other encumbrances except such as are described in the Offering Memorandum or in
a document filed as an exhibit to an Incorporated Document, subject to such
exceptions as are not material to its respective business or do not or could not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries taken as whole, and all the property
described in the Offering Memorandum as being held under lease by the Company or
any of the Subsidiaries is held by it under valid, subsisting and enforceable
leases.
(r) The Company has not distributed and, prior to the later to occur of
(i) the Closing Date or the Option Closing Date, if any, and (ii) completion of
the distribution of the Debentures, will not distribute any offering material in
connection with the offering and sale of the Debentures other than the
Preliminary Offering Memorandum and Offering Memorandum.
(s) Each of the Company and the Subsidiaries has such permits,
licenses, franchises, authorizations and clearances ("Permits") of governmental
or regulatory authorities as are necessary to own, lease and operate its
properties and to conduct its business in the mariner described in the Offering
Memorandum or in an Incorporated Document, subject to such qualifications as may
be set forth in the Offering Memorandum and except where the failure to have
such Permits would not materially interfere with the ownership, lease or
operation of such properties or the conduct of such business; subject to such
qualifications as may be set forth in the Offering Memorandum, each of the
Company and the Subsidiaries has fulfilled and performed all its material
obligations with respect to the Permits, and no event has occurred which allows,
or after notice or lapse of time would allow, revocation or termination thereof
or results in any other material impairment of the rights of the holder of any
Permit, subject in each case to such qualification as may be set forth in the
Offering Memorandum. Except as described in the Offering Memorandum, none of the
Permits contains any restriction that is materially burdensome to the Company or
the Subsidiaries. Each of the Company and the Subsidiaries has the requisite
provider number or other authorization to xxxx the Medicare program and the
respective Medicaid program in the state or states in which such entity
operates. There is no action pending or, to the Company's knowledge, threatened
which could result in a revocation of any such provider number or authorization
or result in the Company's or any Subsidiary's exclusion from the Medicare or
any state Medicaid programs. The Company's and each Subsidiary's business
practices do not violate any applicable provisions of federal or state laws
governing Medicare or any state Medicaid programs, including, without
limitation, Sections 1320a-7a and 1320a-7b of Title 42 of the United States
Code. No individual with an ownership or control interest, as defined in 42
U.S.C. Section 1320a-3(a)(3), in the Company or any Subsidiary, or who is an
officer, director or managing employee as defined in 42 U.S.C. Section
1320a-5(h), of the Company or any Subsidiary is a person described in 42 U.S.C.
Section 1320a-7(b)(8)(B). The Company's and each Subsidiary's business
practices do not violate any federal or state laws regarding physician
ownership of (or financial relationship with) and referral to entities
providing healthcare related goods or services, or laws requiring disclosure of
financial interests held by physicians in entities to which they may refer
patients for the provisions of health care related goods or services.
(t) The Company and the Subsidiaries maintain insurance of the types
and in amounts generally deemed adequate for its business and consistent with
insurance coverage maintained by similar companies and businesses, all of which
insurance is in full force and effect.
(u) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
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(v) Neither the Company nor any of its Subsidiaries nor, to the
Company's best knowledge, any employee or agent of the Company or any Subsidiary
has made any payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation, which payment,
receipt or retention of funds is of a character that would be required to be
disclosed in the Offering Memorandum if it were a prospectus included in a
registration statement.
(w) There are no material Medicare or Medicaid recoupment or
recoupments of any third party payor being sought, requested or claimed, or to
the Company's knowledge, threatened against the Company or any of the
Subsidiaries.
(x) The property, assets and operations of the Company and the
Subsidiaries comply in all material respects with all applicable Federal, state
and local laws, rules, orders, decrees, judgments, injunctions, licenses,
permits and regulations relating to environmental matters (the "Environmental
Laws"), except to the extent that the lack of compliance with such Environmental
Laws would not, singularly or in the aggregate, have a Material Adverse Effect.
To the Company's best knowledge, none of the Company's or any Subsidiary's
property, assets or operations is the subject of any federal, state or local
investigation evaluating whether any remedial action is needed to respond to a
release of any substance into the environment regulated by or forming the basis
of liability under any Environmental Laws (a "Hazardous Material"). Neither the
Company nor any Subsidiary has received any notice or claim, nor are there any
pending or, to the Company's best knowledge, threatened or reasonably
anticipated lawsuits against it with respect to violations of an Environmental
Law or in connection with the release of any Hazardous Material into the
environment. Neither the Company nor any Subsidiary has any material contingent
liability in connection with any release of Hazardous Material into the
environment.
(y) No holder of any security of the Company (other than holders of the
Debentures and holders of shares of Common Stock received upon conversion
thereof) has any right to have any Common Stock or other securities of the
Company included in the Shelf Registration Statement or to request or demand
registration of shares of Common Stock or any other security of the Company
because of the consummation of the transactions contemplated by this Agreement
or the Registration Rights Agreement. Except as described in the Offering
Memorandum, no person has the right, contractual or otherwise, to cause the
Company to sell or otherwise issue to them, or to permit them to underwrite the
sale of, any of the Debentures. Except as described in or contemplated by the
Offering Memorandum, there are no outstanding options, warrants or other rights
calling for the issuance of, and, there are no commitments, plans or
arrangements to issue, any shares of capital stock of the Company or any
security convertible into or exchangeable or exercisable for capital stock of
the Company.
(z) The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registrations, service marks, service xxxx registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Offering Memorandum as being owned by any of them or necessary
for the conduct of their respective businesses, and the Company is not aware of
any claim to the contrary or any challenge by any other person to the rights of
the Company and the Subsidiaries with respect to the foregoing.
(aa) The Company is not now, and after sale of the Debentures to be
sold by it hereunder and application of the net proceeds from such sale as
described in the Offering Memorandum under the caption "Use of Proceeds" will
not be, an "investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(bb) Based upon the assumptions and subject to the qualifications set
forth therein, the statements made in the Offering Memorandum under the caption
"Certain United States Federal Income Tax Consequences" accurately summarize the
material United States federal income tax consequences of the ownership,
conversion and disposition of the Debentures for United States holders who
acquire Debentures on original issue and who hold Debentures as "capital assets"
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended.
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(cc) The Company and the Subsidiaries have filed all federal, state,
local and foreign tax returns and tax forms required to be filed; such returns
and forms are complete and correct in all material respects; and all taxes shown
by such returns or otherwise assessed that are due or payable have been paid,
except such taxes as are being contested in good faith and as to which adequate
reserves have been provided.
(dd) When the Debentures are issued and delivered pursuant to this
Agreement, such Debentures will not be of the same class (within the meaning of
Rule 144A(d)(3) under the Act) as any security of the Company that is listed on
a national securities exchange registered under Section 6 of the Exchange Act or
that is quoted in a United States automated interdealer quotation system.
(ee) After giving effect to the intended use of proceeds from the
offering of the Debentures as described in the Offering Memorandum under the
caption "Use of Proceeds" the Debentures do not constitute "corporate
acquisition indebtedness" within the meaning of Section 279 of the Internal
Revenue Code.
(ff) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D ("Regulation D") under the Act) of the Company has directly, or
through any agent (provided that no representation is made as to the Initial
Purchasers or any person acting on their behalf), (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any security (as
defined in the Act) which is or will be integrated with the offering and sale of
the Debentures in a mariner that would require the registration of the
Debentures under the Act or (ii) engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with the
offering of the Debentures.
(gg) The Company is not required to deliver the information specified
in Rule 144A(d)(4) in connection with the offering and resale of the Debentures
by the Initial Purchasers.
(hh) Assuming (i) that the representations and warranties in Section 2
hereof are true, (ii) the Initial Purchasers comply with the covenants set forth
in Section 2 hereof and (iii) that each person to whom the Initial Purchasers
offer, sell or deliver the Debentures is a Qualified Institutional Buyer or a
person other than a U.S. person outside the United States in reliance on
Regulation S under the Act, the purchase and sale of the Debentures pursuant
hereto (including the Initial Purchasers' proposed offering of the Debentures on
the terms and in the manner set forth in the Offering Memorandum and Section 2
hereof) is exempt from the registration requirements of the Act. None of the
Company, its Subsidiaries or affiliates or any person acting on its or their
behalf (provided that no representation is made as to the Initial Purchasers or
any person acting on their behalf) has engaged in any directed selling efforts
(as that term is defined in Regulation S) with respect to the Debentures and the
Company, its Subsidiaries and each person acting on their behalf (provided that
no representation is made as to the Initial Purchasers or any person acting on
their behalf) have complied with the offering restrictions requirement of
Regulation S.
(ii) The execution and delivery of this Agreement, the other Operative
Documents and the sale of the Debentures to the Initial Purchasers or by the
Initial Purchasers to Eligible Purchasers will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Code. The representation made by the Company in the preceding sentence is made
in reliance upon and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by the Eligible Purchasers as
set forth in the Offering Memorandum under the section entitled "Notice to
Investors."
(jj) The Company is not required to obtain stockholder consent or
approval pursuant to the rules of the NASDAQ or any securities exchange or
trading facility in connection with the offering and sale of the Debentures.
(kk) No class of securities of the Company is rated by any "nationally
recognized statistical rating organization," as defined for purposes of Rule
436(g) under the Act.
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6. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in the Preliminary Offering Memorandum or Offering
Memorandum or in any amendment or supplement thereto, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to such Initial
Purchaser furnished in writing to the Company by or on behalf of any Initial
Purchaser expressly for use in connection therewith; provided, however, that the
indemnification contained in this paragraph (a) with respect to the Preliminary
Offering Memorandum shall not inure to the benefit of any Initial Purchaser (or
to the benefit of any person controlling any Initial Purchaser) on account of
any such loss, claim, damage, liability or expense arising from the sale of the
Debentures by such Initial Purchaser to any person if the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in the Preliminary Offering Memorandum was corrected in the Offering
Memorandum and such Initial Purchaser sold Debentures to that person without
sending or giving at or prior to the written confirmation of such sale, a copy
of the Offering Memorandum (as then amended or supplemented) if the Company has
previously furnished sufficient copies thereof to the several Initial
Purchasers. The foregoing indemnity agreement shall be in addition to any
liability which the Company may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Initial Purchaser or any person controlling any Initial Purchaser in respect of
which indemnity may be sought against the Company, such Initial Purchaser or
such controlling person shall promptly notify the Company and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses; provided, however, that the omission so to notify the
Company shall not relieve the Company from any liability that it may have to any
Initial Purchaser (except to the extent that the Company is materially
prejudiced or otherwise forfeits substantive rights or defenses by reason of
such failure). Such Initial Purchaser or any such controlling person shall have
the right to employ separate counsel in any such action, suit or proceeding and
to participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Initial Purchaser or such controlling person
unless (i) the Company has agreed in writing to pay such fees and expenses, (ii)
the Company has failed to assume the defense and employ counsel, or (iii) the
named parties to any such action, suit or proceeding (including any impleaded
parties) include both such Initial Purchaser or such controlling person and the
Company and representation of the Company by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or not
such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the Company shall not
have the right to assume the defense of such action, suit or proceeding on
behalf of such Initial Purchaser or such controlling person). It is understood,
however, that the Company shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Initial Purchasers and controlling persons not having actual or
potential differing interests with the Initial Purchasers or among themselves,
which firm shall be designated in writing by Xxxxx Xxxxxx Inc., and that all
such reasonable fees and expenses shall be reimbursed as they are incurred. The
Company shall not be liable for any settlement of any such action, suit or
proceeding effected without its written consent, but if settled with such
written consent, or if there be a final judgment for the plaintiff in any such
action, suit or proceeding, the Company agrees to indemnify and hold harmless
any Initial Purchaser, to the extent provided in paragraph (a), and any such
controlling person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(c) - Each Initial Purchaser agrees to indemnify and hold harmless the
Company, and
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its directors and officers, and any person who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act to
the same extent as the indemnity from the Company to each Initial Purchaser set
forth in paragraph (a) hereof, but only with respect to information relating to
such Initial Purchaser furnished in writing by or on behalf of such Initial
Purchaser expressly for use in the Preliminary Offering Memorandum or Offering
Memorandum or any amendment or supplement thereto. If any action, suit or
proceeding shall be brought against the Company, any of its directors or
officers, or any such controlling person based on the Preliminary Offering
Memorandum or Offering Memorandum, or any amendment or supplement thereto, and
in respect of which indemnity may be sought against any Initial Purchaser
pursuant to this paragraph (c), such Initial Purchaser shall have the rights and
duties given to the Company by paragraph (b) above (except that if the Company
shall have assumed the defense thereof such Initial Purchaser shall not be
required to do so, but may employ separate counsel therein and participate in
the defense thereof, but the fees and expenses of such counsel shall be at such
Initial Purchaser's expense), and the Company, its directors and officers, and
any such controlling person shall have the rights and duties given to the
Initial Purchasers by paragraph (b) above. The foregoing indemnity agreement
shall be in addition to any liability which the Initial Purchasers may otherwise
have.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Initial Purchasers on the other hand from the
offering of the Debentures, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Initial
Purchasers on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Initial Purchasers on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total discounts
and commissions received by the Initial Purchasers, in each case as set forth in
the table on the cover page of the Offering Memorandum; provided that, in the
event that the Initial Purchasers shall have purchased any Additional Debentures
hereunder, any determination of the relative benefits received by the Company or
the Initial Purchasers from the offering of the Debentures shall include the net
proceeds (before deducting expenses) received by the Company, and the discounts
and commissions received by the Initial Purchasers, from the sale of such
Additional Debentures, in each case computed on the basis of the respective
amounts set forth in the notes to the table on the cover page of the Offering
Memorandum. The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or by the Initial Purchasers on the
other hand and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(e) The Company and the Initial Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section 6 were determined by
a pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 6, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price of the Debentures sold by it to Eligible Purchasers
exceeds the amount of any damages which such Initial Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute pursuant to
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this Section 6 are several in proportion to the respective numbers of Firm
Debentures set forth opposite their names in Schedule I hereto and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 6 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Initial Purchaser or any person
controlling any Initial Purchaser, the Company, its directors or officers or any
person controlling the Company, (ii) acceptance of any Debentures and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
any Initial Purchaser or any person controlling any Initial Purchaser, or to the
Company, its directors or officers or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 6.
7. Conditions of the Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers to purchase the Firm Debentures hereunder
are subject to the following conditions:
(a) At the time of execution of this Agreement and on the Closing Date,
no order or decree preventing the use of the Offering Memorandum or any
amendment or supplement thereto, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act shall have been issued and no proceedings for that purpose shall have
been commenced or shall be pending or, to the knowledge of the Company, be
contemplated. No stop order suspending the sale of the Debentures in any
jurisdiction designated by the Initial Purchasers shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending or,
to the knowledge of the Company, shall be contemplated.
(b) Subsequent to the effective date of this Agreement, there shall not
have occurred (i) any change, or any development involving a prospective change,
in or affecting the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company or the
Subsidiaries not contemplated by the Offering Memorandum, which in the opinion
of the Initial Purchasers, would materially adversely affect the market for the
Debentures, or (ii) any event or development relating to or involving the
Company or any officer or director of the Company which makes any statement made
in the Offering Memorandum untrue or which, in the opinion of the Company and
its counsel or the Initial Purchasers and their counsel, requires the making of
any addition to or change in the Offering Memorandum in order to state a
material fact required by any law to be stated therein or necessary in order to
make the statements therein not misleading, if amending or supplementing the
Offering Memorandum to reflect such event or development would, in the opinion
of the Initial Purchasers, materially adversely affect the market for the
Debentures.
(c) The Initial Purchasers shall have received on the Closing Date an
opinion of Xxxxxx, Halter & Xxxxxxxx LLP, counsel for the Company, dated the
Closing Date and addressed to the Initial Purchasers, to the effect that:
(i) The Incorporated Documents (except for the financial statements
and the notes thereto and the schedules and other financial and statistical data
included therein, as to which such counsel need not express any opinion), at the
time they were filed, complied as to form in all material respects with the
requirements of the Exchange Act;
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(ii) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Offering Memorandum (and any amendment
or supplement thereto), and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where the nature
of its properties or the conduct of its business requires such registration or
qualification, except where the failure to so register or qualify does not have
a Material Adverse Effect;
(iii) Each Material Subsidiary (as hereinafter defined) is a
corporation duly incorporated and validly existing and in good standing under
the laws of the jurisdiction of its organization, with full corporate power and
authority to own, lease, and operate its properties and to conduct its business
as described in the Offering Memorandum (and any amendment or supplement
thereto); each Material Subsidiary is duly registered and qualified to conduct
its business and is in good standing as a foreign corporation in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify or to be in good standing would not have a Material
Adverse Effect; and all the outstanding shares of capital stock of each of the
Material Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable, and are owned of record by the Company directly, or
indirectly through one of the other Material Subsidiaries, free and clear of any
perfected security interest or, to such counsel's knowledge, any other lien,
adverse claim, equity or other encumbrance, except as disclosed in, or
contemplated by, the Offering Memorandum (or any amendment or supplement
thereto);
(iv) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and the Registration Rights Agreement and to
issue, sell and deliver the Debentures to be sold by it to the Initial
Purchasers as provided herein, and this Agreement and the Registration Rights
Agreement have each been duly authorized, executed and delivered by the Company
and each constitutes a valid and binding agreement of the Company, enforceable
in accordance with its terms, except as enforcement of rights to indemnity and
contribution under each agreement may be limited by Federal or state securities
laws or principles of public policy and except to the extent that enforceability
of each agreement is subject to (i) applicable bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting creditors' rights generally and (ii) general
principles of equity;
(v) The Indenture has been duly and validly authorized, executed
and delivered by the Company and, assuming due authorization, execution and
delivery by the Trustee, is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except to the extent that
enforceability thereof is subject to (i) applicable bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting creditors' rights generally and (ii) general
principles of equity;
(vi) The Debentures have been duly and validly authorized by the
Company and when executed by the Company in accordance with the Indenture and,
assuming due authentication of the Debentures by the Trustee, upon delivery to
the Initial Purchasers against payment therefor in accordance with the terms
hereof, will have been validly issued and delivered, and will constitute valid
and binding obligations of the Company entitled to the benefits of the
Indenture, except to the extent that enforceability thereof is subject to (i)
applicable bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect affecting creditors'
rights generally and (ii) general principles of equity;
(vii) The shares of Common Stock issuable upon conversion of the
Debentures have been duly authorized and reserved for issuance and, when issued
and delivered upon conversion of the Debentures, in accordance with the terms
thereof, will be validly issued, fully paid and nonassessable and will be free
of any (A) preemptive rights under the Amended and Restated Certificate of
Incorporation of the Company or the Delaware General Corporation Law or (B) to
the best knowledge of such counsel after reasonable inquiry, similar rights;
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(viii) The authorized capital stock of the Company is as set forth
under the caption "Capitalization" in the Offering Memorandum; and the
authorized capital stock of the Company conforms in all material respects as to
legal matters to the description thereof contained in the Offering Memorandum
under the caption "Description of Capital Stock";
(ix) All the shares of capital stock of the Company outstanding
prior to the issuance of the Debentures to be issued and sold by the Company
hereunder have been duly authorized and validly issued, are fully paid and
nonassessable and were issued and sold in compliance with all applicable Federal
and state securities laws;
(x) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or official is required on the part of the
Company or any Subsidiary (except such as may be required under state securities
or Blue Sky laws governing the purchase and distribution of the Debentures, or
such as may be required to qualify the Indenture and, if necessary, the
Guarantees under the 1939 Act, and such as may be required in connection with
the performance by the Company of its obligations under the Registration Rights
Agreement, as to which counsel need not express any opinion) for the valid
issuance and sale of the Debentures to the Initial Purchasers as contemplated by
this Agreement;
(xi) Neither the offer, sale or delivery of the Debentures, nor the
issuance of Common Stock upon conversion of the Debentures in accordance with
the terms of the Debentures, nor the execution, delivery or performance by the
Company of this Agreement, the Registration Rights Agreement or the Indenture,
the execution, delivery or performance of the Guarantee Agreement by the
Guarantors, nor compliance by the Company and the Guarantors with the provisions
hereof or thereof, nor consummation by the Company and the Guarantors of the
transactions contemplated hereby or thereby, conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under the certificate
or articles of incorporation or bylaws or other organizational documents of the
Company or any of the Subsidiaries or any agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties is bound which is
material to the Company and its Subsidiaries taken as a whole and that is an
exhibit to any Incorporated Document, or to the knowledge of such counsel will
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the Subsidiaries, nor will any such
action result in any violation of any existing law, or any regulation, ruling
(assuming compliance with all applicable state securities and Blue Sky laws
and, in the case of the Registration Rights Agreement, the Act, the Exchange Act
and the 1939 Act), judgment, injunction, order or decree known to such counsel,
and applicable to the Company, the Subsidiaries or any of their respective
properties;
(xii) To the knowledge of such counsel, (A) there are no legal or
governmental proceedings pending or threatened against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or any of
their property, are subject, which are of the type that would be required to be
described in the Offering Memorandum if it were a prospectus included in a
registration statement on Form S-3 under the Act or in any of the Incorporated
Documents but are not so described as required and (B) there are no agreements,
contracts, indentures, leases or other instruments, that are of the type that
would be required to be described in the Offering Memorandum if it were a
prospectus included in a registration statement on Form S-3 under the Act or in
any of the Incorporated Documents but are not so described as required, or that
are required to be filed as an exhibit to any of the Incorporated Documents that
are not so filed as required;
(xiii) No registration of the Debentures under the Act nor
qualification of the Indenture or the Guarantees under the 1939 Act is required
for the sale of the Debentures to the Initial Purchasers as contemplated in this
Agreement or for the Exempt Resales (assuming (A) that all representations and
warranties made by the Initial Purchasers and the Company in this Agreement and
in the Offering Memorandum are true, correct and accurate (including but not
limited to the representations by the Initial Purchasers and the Company
regarding the absence of general solicitation in connection with the
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Exempt Resales and regarding offers and sales outside the United States in
reliance on Regulation S), (B) the Initial Purchasers comply with all of the
covenants set forth in this Agreement (including but not limited to the
covenants set forth in Section 2 hereof), (C) none of the Company, its
Subsidiaries and each person acting on its or their behalf have complied with
the offering restrictions requirements of Regulation S, (D) that each person to
whom the Initial Purchasers offer, sell or deliver the Debentures in the Exempt
Resales is (x) a Qualified Institutional Buyer or (y) a person other than a U.S.
person outside the United States in reliance on Regulation S under the Act, and
(E) that the representations made by each person to whom Debentures are sold in
reliance on Rule 144A or Regulation S are true. correct and accurate);
(xiv) To the knowledge of such counsel, neither the Company nor any
of the Subsidiaries is in violation of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of the
Subsidiaries, the violation of which would have a Material Adverse Effect or of
any decree of any court or governmental agency or body having jurisdiction over
the Company or any of the Subsidiaries;
(xv) The statements m: (A) the Offering Memorandum under the
captions "Risk Factors -- Regulation and Reimbursement," "Risk Factors --
Uncertainty Due to Proposed Changes in National and State Health Care Policies,"
"Risk Factors -- Potential Effect of Anti-Takeover Provisions and Certain
Provisions of Delaware Laws," "Risk Factors -- Subordination of Debentures,"
"Risk Factors -- Risks Relating to Enforceability of Subsidiary Guarantees,"
"Risk Factors -- Limitations Upon a Repurchase Event," "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources," "Business -- Reimbursement and Billing," "Business --
Government Regulation," "Description of Debentures," "Description of Capital
Stock," "Plan of Distribution" (other than the ninth paragraph thereunder, as
to which no opinion need be expressed by such counsel) and "Notice to
Investors"; (B) the Company's 10-K for the year ended June 30, 1996 under the
captions "Business -- Reimbursement and Billing" and "Business -- Government
Regulation"; (C) the Company's 8-K dated August 1, 1996 under the caption
"Acquisition or Disposition of Assets"; (D) the Company's 8-K dated August 13,
1996 under the caption "Acquisition or Disposition of Assets"; (E) the Company's
8-K dated November 1, 1996 under the caption "Other Events"; and (F) the
Company's Proxy Statement dated October 18, 1996 under the captions "Executive
Compensation" and "Certain Transactions," insofar as such statements are
descriptions of contracts, agreements or other legal documents, or refer to
statements of law or legal conclusions, are accurate and present fairly the
information shown;
(xvi) Except as disclosed in the Offering Memorandum, such counsel
does not know of any outstanding option, warrant or other right calling for the
issuance of, and such counsel does not know of any commitment, plan or
arrangement to issue, any share of capital stock of the Company or any security
convertible into or exchangeable or exercisable for capital stock of the
Company; and such counsel does not know of any holder of any security of the
Company (except for holders of the Debentures and the Common Stock issuable upon
conversion thereof) or any other person who has the right, contractual or
otherwise, to cause the Company to sell or otherwise issue to them, or to permit
them to underwrite the sale of, any of the Debentures or the right to have any
Common Stock or other securities of the Company included in the Shelf
Registration Statement or the right, as a result of the consummation of the
transactions contemplated by the Operative Documents, to require registration
under the Act of any shares of Common Stock or other securities of the Company;
(xvii) To the knowledge of such counsel, neither the Company nor
any of the Subsidiaries is in violation of its respective certificate or
articles of incorporation or bylaws, or other organizational documents, or is in
default in the performance of any material obligation, agreement or condition
contained in any bond, debenture, note or other evidence of indebtedness made an
exhibit to any Incorporated Document;
(xviii) Each of the Company and the Subsidiaries has full corporate
power and authority and all necessary Permits (except where the failure to so
have any such Permits, individually or in the aggregate, would not have a
Material Adverse Effect) to own its properties and to conduct its business as
now being conducted as described in the Offering Memorandum;
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(xix) When the Debentures are issued and delivered pursuant to this
Agreement, such Debentures will not be of the same class (within the meaning of
Rule 144A(d)(3) under the Act) as any security of the Company that is listed on
a national securities exchange registered under Section 6 of the Exchange Act or
that is quoted in a United States automated interdealer quotation system;
(xx) The Company is not required to deliver the information
specified in Rule 144A(d)(4) in connection with the offering and resale of the
Debentures by the Initial Purchasers;
(xxi) Based upon the assumptions and subject to the qualifications
set forth therein, the statements made in the Offering Memorandum under the
caption "Certain United States Federal Income Tax Consequences" accurately
summarize the material United States federal income tax consequences of the
ownership, conversion and disposition of the Debentures for United States
holders who acquire Debentures on original issue and who hold Debentures as
"capital assets" within the meaning of Section 1221 of the Internal Revenue Code
of 1986, as amended;
(xxii) The Company is not required to obtain stockholder consent or
approval pursuant to the rules of Nasdaq in connection with the issuance,
offering and resale of the Debentures;
(xxiii) Neither the Company nor any of the Subsidiaries is an
"investment company or a person "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended; and
(xxiv) Each Guarantor has all necessary corporate power and
authority to execute and deliver the Guarantee Agreement, and the Guarantee
Agreement has been duly authorized, executed and delivered by each Guarantor.
In addition, such counsel shall state that, although such counsel has
not undertaken, except as otherwise indicated in their opinion, to determine
independently, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements in the Offering Memorandum, such
counsel has participated in the preparation of the Offering Memorandum,
including review and discussion of the content thereof, and nothing has come to
the attention of such counsel that has caused it to believe that the Offering
Memorandum, as of its date, and as of the Closing Date or the Option Closing
Date, as the case may be, contained 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 or that any amendment or supplement to the Offering
Memorandum, as of its date, and as of the Closing Date or the Option Closing
Date, as the case may be, contained or contains 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 light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express no
opinion with respect to the financial statements and the notes thereto and the
schedules and other financial and statistical data included or incorporated by
reference in the Offering Memorandum).
In rendering their opinion as aforesaid, counsel may rely upon an
opinion or opinions, each dated the Closing Date, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the federal laws
of the United States or the State of Ohio or the corporation law of the State of
Delaware, provided that (l) each such local counsel is acceptable to the Initial
Purchasers, (2) such reliance is expressly authorized by each opinion so relied
upon and a copy of each such opinion is delivered to the Initial Purchasers and
is, in form and substance, satisfactory to them and counsel for the Initial
Purchasers and (3) counsel shall state in their opinion that they believe that
they and the Initial Purchasers are justified in relying thereon. For purposes
of the opinion of such counsel rendered pursuant to clause (iii) of this
paragraph (c), "Material Subsidiary" shall mean each Subsidiary other than those
Subsidiaries which would not, when considered in the aggregate, constitute a
"significant subsidiary" as defined in Regulation S-X under the Act. The
Material Subsidiaries shall be identified in an exhibit to such counsel's
opinion.
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(d) The Initial Purchasers shall have received on the Closing Date an
opinion of Xxxxx Xxxxxxxxxx, counsel for the Initial Purchasers, dated the
Closing Date, and addressed to the Initial Purchasers, with respect to the
matters referred to in clauses (iv), (v), (vi), (vii) (other than subclause (B)
thereof) and (xiii) of the foregoing paragraph (c), and the penultimate
paragraph of the foregoing paragraph (c) and such other related matters as the
Initial Purchasers may request.
(e) The Initial Purchasers shall have received letters addressed to the
Initial Purchasers, and dated the date hereof and the Closing Date, from Ernst &
Young LLP, independent certified public accountants, substantially in the forms
heretofore approved by the Initial Purchasers.
(f)(i) There shall not have been any material change in the capital
stock of the Company nor any material increase in the short-term or long-term
debt of the Company from that set forth or contemplated in the Offering
Memorandum (or any amendment or supplement thereto); (ii) there shall not have
been, since the respective dates as of which information is given in the
Offering Memorandum (or any amendment or supplement thereto), except as may
otherwise be stated in the Offering Memorandum (or any amendment or supplement
thereto), any material adverse change in the condition (financial or other),
business, prospects, properties, net worth or results of operations of the
Company and the Subsidiaries, taken as a whole; (iii) the Company and the
Subsidiaries shall not have any liabilities or obligations, direct or contingent
(whether or not in the ordinary course of business), that are material to the
Company and the Subsidiaries, taken as a whole, other than those reflected in
the Offering Memorandum (or any amendment or supplement thereto); and (iv) all
the representations and warranties of the Company contained in this Agreement
shall be true and correct in all material respects on and as of the date hereof
and on and as of the Closing Date as if made on and as of the Closing Date, and
the Initial Purchasers shall have received a certificate, dated the Closing Date
and signed by the chief executive officer and the chief financial officer of the
Company (or such other officers as are acceptable to the Initial Purchasers), to
the effect set forth in this Section 7(f) and in Section 7(g) hereof.
(g) The Company shall not have failed at or prior to the Closing Date
to have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(h) You shall have received a certificate dated the Closing Date signed
by the chief accounting officer of the Company substantially in the form
heretofore approved by you, respecting the Company's compliance with the
financial covenants contained in credit agreements to which the Company is a
party.
(i) The Debentures shall have been designated for trading on PORTAL.
(j) The Company and the Initial Purchasers shall have executed and
delivered the Registration Rights Agreement.
(k) The Company and the Trustee shall have executed and delivered the
Indenture.
(l) Each wholly-owned subsidiary of the Company and the Trustee shall
have executed and delivered the Guarantee Agreement.
(m) The Company shall have furnished or caused to be furnished to the
Initial Purchasers such further certificates and documents as the Initial
Purchasers shall have reasonably requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Initial Purchasers and counsel for the Initial
Purchasers.
Any certificate or document signed by any officer of the Company and
delivered to the initial Purchasers, or to counsel for the Initial Purchasers,
shall be deemed a representation and warranty by
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the Company to the Initial Purchasers as to the statements made therein.
The obligations of the Initial Purchasers to purchase any Additional
Debentures hereunder are subject to the satisfaction on and as of any Option
Closing Date of the conditions set forth in this Section 7, except that, if any
Option Closing Date is other than the Closing Date, the certificates, opinions
and letters referred to in paragraphs (c) through (f) and paragraphs (a) and (m)
shall be dated the Option Closing Date in question and the opinion called for by
paragraphs (c) and (d) shall be revised to reflect the sale of Additional
Debentures.
8. Expenses. The Company agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction of the
Offering Memorandum (including financial statements thereto), and each amendment
or supplement thereto; (ii) the printing (or reproduction) and delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of the Offering Memorandum, the Preliminary Offering Memorandum,
the Incorporated Documents, and all amendments or supplements to any of them as
may be reasonably requested for use in connection with the offering and sale of
the Debentures; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Debentures, including any stamp taxes in
connection with the original issuance and sale of the Debentures; (iv) the
printing (or reproduction) and delivery of this Agreement, Blue Sky Memoranda
and all other agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Debentures; (v) the application for
designation of the Debentures on PORTAL; (vi) the registration of the Common
Stock and the listing of the shares of Common Stock issuable upon conversion of
the Debentures on the NASDAQ; (vii) the qualification of the Debentures and the
shares of Common Stock issuable upon conversion of the Debentures for offer and
sale under the securities or Blue Sky laws of the several states as provided in
Section 4(f) hereof (including the reasonable fees and expenses and
disbursements of counsel for the Initial Purchasers relating to the preparation,
printing or reproduction, and delivery of Blue Sky Memoranda and such
qualification); (viii) the transportation and other expenses incurred by or on
behalf of Company representatives in connection with presentations to
prospective purchasers of the Debentures; (ix) the performance by the Company of
its obligations under the Registration Rights Agreement; (x) the fees and
expenses of the Trustee and (xi) the fees and expenses of the Company's
accountants and the fees and expenses of counsel (including local and special
counsel) for the Company.
9. Effective Date of Agreement. This Agreement shall become effective
upon the execution and delivery hereof by all the parties hereto. Until such
time as this Agreement shall have become effective, it may be terminated by the
Company, by notifying the Initial Purchasers, or by the Initial Purchasers, by
notifying the Company.
Any notice under this Section 9 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
10. Default by an Initial Purchaser. If any one or more of the Initial
Purchasers shall fail or refuse to purchase the Debentures which it is obligated
to purchase on the Closing Date, and arrangements satisfactory to the
non-defaulting Initial Purchasers or by another party or parties satisfactory to
the non-defaulting Initial Purchasers and the Company for the purchase of such
Debentures by the non-defaulting Initial Purchasers and the Company are not made
within thirty-six (36) hours after such default, this Agreement shall terminate
without liability on the part of the non-defaulting Initial Purchasers or the
Company. In any such case which does not result in termination of this
Agreement, either the non-defaulting Initial Purchasers or the Company shall
have the right to postpone the Closing Date, but in no event for longer than
seven (7) days, in order that the required changes, if any, in the Offering
Memorandum or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve the defaulting Initial Purchasers
from liability in respect of such default under this Agreement. The term
"Initial Purchaser" as used in this Agreement includes, for all purposes of this
Agreement, any party not identified in this Agreement who purchases Debentures
which a defaulting Initial Purchaser is obligated, but fails or refuses to
purchase.
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11. Termination of Agreement. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchasers, without
liability on the part of the Initial Purchasers to the Company, by notice to the
Company, if prior to the Closing Date or any Option Closing Date (if different
from the Closing Date and then only as to the Additional Debentures), as the
case may be, (i) trading in securities generally on the New York Stock Exchange,
American Stock Exchange or The Nasdaq Stock Market's National Market shall have
been suspended or materially limited, (ii) a general moratorium on commercial
banking activities in New York shall have been declared by either federal or
state authorities, or (iii) there shall have occurred any outbreak or escalation
of hostilities or other international or domestic calamity, crisis or change in
political, financial or economic conditions, the effect of which on the
financial markets of the United States is such as to make it, in the judgment of
the Initial Purchasers, impracticable or inadvisable to commence or continue the
offering of the Debentures on the terms set forth on the cover page of the
Offering Memorandum or to enforce contracts for the resale of the Debentures by
the Initial Purchasers. Notice of such termination may be given to the Company
by telegram, telecopy or telephone and shall be subsequently confirmed by
letter.
12. Information Furnished by the Initial Purchasers. The statements set
forth in the last paragraph on the cover page, the stabilization legend on page
2 and in the first, third, fourth, sixth and ninth paragraphs under the caption
"Plan of Distribution" in the Preliminary Offering Memorandum and Offering
Memorandum, constitute the only information furnished by or on behalf of the
Initial Purchasers, as such information is referred to in Sections 5(b) and 6
hereof.
13. Miscellaneous. Except as otherwise provided in Sections 4, 9 and 11
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at 0000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxx 00000, Attention:
X.X. Xxxxxxx, Chairman of the Board, with a copy to Xxxxxx, Halter & Xxxxxxxx
LLP, 1400 XxXxxxxx Investment Center, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx
00000, Attention: Xxxxxx X. XxXxx, Esq. or (ii) if to the Initial Purchasers, to
Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Manager,
Investment Banking Division, with a copy to Xxxxx Xxxxxxxxxx, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxxx X. Xxxxxx, Esq.
This Agreement has been and is made solely for the benefit of the
Initial Purchasers, the Company, its directors, its officers and the controlling
persons referred to in Section 6 hereof and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from the Initial Purchasers of any of the Debentures
in his status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York without giving
effect to the choice of laws or conflict of laws principles thereof.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Initial Purchasers.
Very truly yours,
NCS HEALTHCARE, INC.
By: /s/ Xxx X. Xxxxxxx
--------------------------
Confirmed as of the date first
above mentioned.
XXXXX XXXXXX INC.
XXXXXXX XXXXX & COMPANY, L.L.C.
XXXXXXXXXX SECURITIES
XXXXXXXX & COMPANY SECURITIES, INC.
By: XXXXX XXXXXX INC.
By: /s/ Xxx Xxxxxxx
-----------------------------------
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SCHEDULE I
NCS HEALTHCARE, INC.
Principal Amount
Initial Purchaser of Firm Debentures
----------------- ------------------
Xxxxx Xxxxxx Inc ..................... $60,000,000
Xxxxxxx Xxxxx & Company, L.L.C. ...... 20,000,000
Xxxxxxxxxx Securities ................ 15,000.000
XxXxxxxx & Company Securities, Inc ... 5,000,000
---------
Total ........................ $100,000,000
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