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NATIONAL MEDICAL ENTERPRISES, INC.
AND
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
SALOMON BROTHERS INC
J.P. MORGAN SECURITIES INC.
BT SECURITIES CORPORATION
SMITH BARNEY INC.
BA SECURITIES, INC.
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UNDERWRITING AGREEMENT
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Dated as of February , 1995
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NATIONAL MEDICAL ENTERPRISES, INC.
% SENIOR NOTES DUE 2002
% SENIOR SUBORDINATED NOTES DUE 2005
UNDERWRITING AGREEMENT
February , 1995
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
SALOMON BROTHERS INC
J.P. MORGAN SECURITIES INC.
BT SECURITIES CORPORATION
SMITH BARNEY INC.
BA SECURITIES, INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
140 Broadway
New York, New York 10005
Ladies and Gentlemen:
Subject to the terms and conditions herein contained, National Medical
Enterprises, Inc., a Nevada corporation (the "Company"), proposes to issue and
sell to Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated,
Salomon Brothers Inc, J.P.Morgan Securities Inc., BT Securities Corporation,
Smith Barney Inc. and BA Securities, Inc. (collectively with DLJ, the
"Underwriters") an aggregate of $300 million principal amount of its %
Senior Notes due 2002 (the "Senior Notes") and $700 million principal amount of
its % Senior Subordinated Notes due 2005 (the "Senior Subordinated Notes"
and, together with the Senior Notes, the "Securities"). The Senior Notes are to
be issued pursuant to the provisions of an Indenture (the "Senior Note
Indenture") to be dated as of , 1995, by and between the Company and The
Bank of New York, as Trustee (the "Senior Note Trustee"). The Senior
Subordinated Notes are to be issued pursuant to the provisions of an Indenture
(the "Senior Subordinated Note Indenture" and, together with the Senior Note
Indenture, the "Indentures") to be dated as of , 1995, by and between
the Company and The Bank of New York, as Trustee (the "Senior Subordinated Note
Trustee" and, together with the Senior Note Trustee, the "Trustees").
The Securities are being issued and sold in connection with the acquisition
(the "Acquisition") of American Medical Holdings, Inc., a Delaware corporation
("AMH"), by the Company. The Acquisition is being effected pursuant to an
Agreement and Plan of Merger, dated as of October 10, 1994 (the "Merger
Agreement"), by and among the Company, AMH Acquisition Co., a Delaware
corporation and a wholly owned subsidiary of the Company (the "Merger Sub"),
and AMH. Pursuant to the Merger Agreement, the Company will acquire all of the
issued and outstanding capital stock of AMH (the "Merger"). At the time the
Merger is consummated (the "Effective Time of the Merger") and pursuant to the
Merger Agreement, Merger Sub will be merged with and into AMH with AMH as the
surviving corporation. Prior to or concurrently with the issuance and sale of
the Securities, the Company will enter into a new bank credit facility
(together with the documents and agreements contemplated thereby, the "New
Credit Facility") with Morgan Guaranty Trust Company of New York, as
administrative agent, and certain lenders named therein. The Merger Agreement,
the New Credit Facility, this Agreement, the Securities and the Indentures are
collectively referred to herein as the "Transaction Documents."
1. Registration Statement and Prospectus. The Company has prepared and filed
with the Securities and Exchange Commission (the "Commission") in accordance
with the provisions of the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated pursuant thereto (collectively,
the "Act"), a registration statement on Form S-3 (No. 33-57057), with respect
to the Securities, including a preliminary prospectus, subject to completion,
relating to the Securities. The registration statement, as amended at the time
it becomes effective or, if a post-effective amendment is filed with respect
thereto, as amended by such post-effective amendment at the time of its
effectiveness (including in each case all documents incorporated or deemed to
be incorporated by reference therein, if any, all financial statements and
exhibits, and the information, if any, contained in a prospectus subsequently
filed with the Commission pursuant to Rule 424(b) under the Act and deemed to
be a part of the registration statement at the time of its effectiveness
pursuant to Rule 430A of the Act) is hereinafter referred to as the
"Registration Statement"; and the prospectus constituting a part of the
Registration Statement at the time it became effective, or such revised
prospectus as shall be provided to the Underwriters for use in connection with
the offering of the Securities that differs from the prospectus on file with
the Commission at the time the Registration Statement became effective
(including, in each case, all documents incorporated or deemed to be
incorporated by reference therein, if any), whether or not filed with the
Commission pursuant to Rule 424(b) under the Act, is hereinafter referred to as
the "Prospectus." Any reference herein to the Registration Statement, the
Prospectus, any amendment or supplement thereto or any preliminary prospectus
shall be deemed to refer to and include the documents incorporated by reference
therein, and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement or Prospectus shall be
deemed to refer to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by reference therein.
2. Agreements to Sell and Purchase. On the basis of the representations and
warranties contained in this Agreement, and subject to its terms and
conditions, the Company agrees to issue and sell to the Underwriters, and the
Underwriters agree, severally and not jointly, to purchase from the Company,
(i) the Senior Notes in the respective principal amounts set forth opposite
their names on Schedule I hereto, plus such amount as they may individually
become obligated to purchase pursuant to Section 8 hereof, at a purchase price
equal to % of the principal amount of the Senior Notes (the "Senior Note
Purchase Price") and (ii) the Senior Subordinated Notes in the respective
principal amounts set forth opposite their names on Schedule II hereto, plus
such amount as they may individually become obligated to purchase pursuant to
Section 8 hereof, at a purchase price equal to % of the principal amount of
the Senior Subordinated Notes (the "Senior Subordinated Note Purchase Price"
and, together with the Senior Note Purchase Price, the "Purchase Price").
3. Delivery and Payment. Delivery to you of and payment for the Securities
shall be made at 10:00 A.M., New York City time, on , 1995
(such time and date being referred to as the "Closing Date"), at the offices of
DLJ at 140 Broadway, New York, New York 10005 (Cashier's Window, Main Level),
or such other place as you shall reasonably designate.
The Securities in definitive form shall be registered in such names and
issued in such denominations as you shall request in writing not later than two
full business days prior to the Closing Date, and shall be made available to
you at the offices of DLJ (or at such other place as shall be acceptable to
you) for inspection not later than 10:00 A.M., New York City time, on the
business day next preceding the Closing Date. The Securities shall be delivered
to you on the Closing Date with any transfer taxes payable upon initial
issuance thereof duly paid by the Company, for your respective accounts against
payment of the appropriate Purchase Price by certified or official bank check
or checks payable in New York Clearing House or similar next-day funds to the
order of the Company. The Closing Date and the location of delivery of, and the
form of payment for, the Securities may be varied by agreement between DLJ and
the Company.
4. Agreements of the Company. The Company agrees with each of you that:
(a) It will, if the Registration Statement has not heretofore become
effective under the Act, and if otherwise necessary or required by law,
file an amendment to the Registration Statement or, if necessary
2
pursuant to Rule 430A of the Act, a post-effective amendment to the
Registration Statement, in each case as soon as practicable after the
execution and delivery of this Agreement, and it will use its best efforts
to cause the Registration Statement or such post-effective amendment to
become effective at the earliest possible time. If the Registration
Statement has become effective and the Company, omitting from the
Prospectus certain information in reliance upon Rule 430A of the Act,
elects not to file a post-effective amendment pursuant to Rule 430A of the
Act, it will file the form of Prospectus required by Rule 424(b) of the Act
within the time period specified by Rule 430A and Rule 424(b) of the Act.
The Company will otherwise comply in a timely manner with all applicable
provisions of Rule 424 and Rule 430A of the Act.
(b) It will advise DLJ promptly and, if requested by DLJ, confirm such
advice in writing, (i) when the Registration Statement has become
effective, if and when the Prospectus is sent for filing pursuant to Rule
424 of the Act and when any post-effective amendment to the Registration
Statement becomes effective, (ii) of the receipt of any comments from the
Commission or any state securities commission or any other regulatory
authority that relate to the Registration Statement or requests by the
Commission or any state securities commission or any other regulatory
authority for any amendment or supplement to the Registration Statement or
any amendment or supplements to the Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement, or of the
suspension of qualification of the Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by the
Commission or any state securities commission or any other regulatory
authority and (iv) of the happening of any event during the period referred
to in paragraph (d), below, which makes any statement of a material fact
made in the Registration Statement untrue or which requires the making of
any additions to or changes in the Registration Statement in order to make
the statements therein not misleading or that makes any statement of a
material fact made in the Prospectus untrue or which requires the making of
any addition to or change in the Prospectus in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company shall use its best efforts to prevent the issuance
of any stop order or order suspending the qualification or exemption of the
Securities under any Federal or state securities or Blue Sky laws, and, if
at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or any other regulatory authority shall issue an order
suspending the qualification or exemption of the Securities under any state
securities or Blue Sky laws, the Company shall use every reasonable effort
to obtain the withdrawal or lifting of such order at the earliest possible
time.
(c) Promptly after the Registration Statement becomes effective, and from
time to time thereafter for such period in your reasonable judgment as a
prospectus is required to be delivered in connection with sales of the
Securities by an Underwriter or a dealer, it will furnish to each
Underwriter and each dealer, without charge, as many copies of the
Prospectus, including all documents incorporated by reference therein, (and
of any amendment or supplement to the Prospectus) as you may reasonably
request.
(d) If during the period specified in paragraph (c) of this Section 4 any
event shall occur as a result of which it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in the
light of the circumstances existing as of the date the Prospectus is
delivered to an offeree or a purchaser, not misleading, or if it is
necessary to amend or supplement the Prospectus to comply with any law, it
will promptly prepare and file with the Commission an appropriate amendment
or supplement to the Prospectus so that the statements in the Prospectus,
as so amended or supplemented, will not, in the light of the circumstances
existing as of the date the Prospectus is so delivered, be misleading, and
will comply with applicable law, and will promptly notify you of such event
and amendment or supplement and furnish to you without charge such number
of copies thereof as you may reasonably request.
(e) It will make generally available to its security holders, as soon as
practicable and for the time period specified by Rule 158 under the Act, a
consolidated earnings statement which shall satisfy the provisions of
Section 11(a) and Rule 158 of the Act.
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(f) Whether or not the transactions contemplated hereby are consummated
or this Agreement is terminated, it will pay and be responsible for all
costs, charges, expenses, fees and taxes incurred in connection with or
incident to (i) the preparation, printing, filing, distribution and
delivery under the Act of the Registration Statement (including financial
statements and exhibits), each preliminary prospectus, the Prospectus and
all amendments and supplements thereto, (ii) the registration with the
Commission and the issuance and delivery of the Securities, (iii) the
printing and delivery of this Agreement, the Indentures, any memoranda
describing state securities or Blue Sky Laws and all other agreements,
memoranda, reports, correspondence and other documents printed, distributed
and delivered in connection with the offering of the Securities, (iv) the
registration or qualification of the Securities for offer and sale under
the securities or Blue Sky laws of the jurisdictions referred to in
paragraph (i), below (including, in each case, the fees and disbursements
of counsel relating to such registration or qualification and memoranda
relating thereto and any filing fees in connection therewith), (v)
furnishing such copies of the Registration Statement (including exhibits),
Prospectus and preliminary prospectuses, and all amendments and supplements
to any of them, including any document incorporated by reference therein,
as may be reasonably requested by the Underwriters or by dealers to whom
Securities may be sold, (vi) the filing, registration and clearance with
the National Association of Securities Dealers, Inc. (the "NASD") of the
Underwriters' compensation in connection with the offering of the
Securities (including, without limitation, any filing fees in connection
therewith but excluding the fees of Latham & Watkins, legal counsel to the
Underwriters ("Underwriters' Counsel")), (vii) the listing of the
Securities on the New York Stock Exchange (the "NYSE"), (viii) the rating
of the Securities by investment rating agencies, (ix) any "qualified
independent underwriter" as required by Schedule E of the Bylaws of the
NASD (including fees and disbursements of counsel for such qualified
independent underwriter) and (x) the performance by the Company of its
other obligations under this Agreement, including (without limitation) the
fees of the Trustees, the cost of its personnel and other internal costs,
the cost of printing and engraving the certificates representing the
Securities, and all expenses and taxes incident to the sale and delivery of
the Securities to the Underwriters.
(g) It will furnish to DLJ, without charge, two (2) signed copies (plus
one additional signed copy to Underwriters' Counsel of the Registration
Statement as first filed with the Commission and of each amendment or
supplement to it, including each post-effective amendment, all exhibits
filed therewith and all documents incorporated by reference therein, and
such number of conformed copies of the Registration Statement as so filed
and of each amendment to it, including each post-effective amendment, but
without exhibits, as you may reasonably request.
(h) It will not file any amendment or supplement to the Registration
Statement, whether before or after the time when it becomes effective, or
make any amendment or supplement to the Prospectus (other than any document
required to be filed under the Securities Exchange Act of 1934, as amended,
including the rules and regulations thereunder (collectively, the "Exchange
Act") that upon filing is deemed to be incorporated by reference therein)
of which you shall not previously have been advised and provided a copy
prior to the filing thereof or to which you shall reasonably object; it
will furnish to you at or prior to the filing thereof a copy of any
document that upon filing is deemed to be incorporated by reference in the
Registration Statement or Prospectus; and it will prepare and file with the
Commission, promptly upon your reasonable request, any amendment or
supplement to the Registration Statement or amendment or supplement to the
Prospectus which may be necessary or advisable in connection with the
distribution of the Securities by you, and will use its best efforts to
cause the same to become effective as promptly as possible.
(i) Prior to any public offering of the Securities, it will cooperate
with you and Underwriters' Counsel in connection with the registration or
qualification of the Securities for offer and sale by the Underwriters
under the state securities or Blue Sky laws of such United States
jurisdictions as you may request [and the securities laws of the United
Kingdom, Switzerland and Japan]. The Company will continue such
qualification in effect so long as required by law for distribution of the
Securities and will file such consents to service of process or other
documents as may be necessary in order to effect such
4
registration or qualification (provided, that the Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction in which
it is not so qualified nor to take any action that would subject it to
general consent to service of process in any jurisdiction in which it is
not now so subject).
(j) It timely will complete all required filings and otherwise comply
fully in a timely manner with all provisions of the Exchange Act to effect
the registration of the Securities pursuant thereto, and will file timely
all reports and any definitive proxy or information statements required to
be filed by the Company with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the
Prospectus and it will use its best efforts to cause the Securities to be
listed on the NYSE and to maintain such listing while any of the Securities
are outstanding.
(k) So long as any of the Securities are outstanding, it will mail to
each of the Underwriters, without charge, a copy of each report or other
publicly available information furnished to holders of the Securities, or
filed with the Commission, whether or not required by law or pursuant to
the applicable Indenture, and such other publicly available information
concerning the Company and its subsidiaries as you may reasonably request,
at the same time as such reports or other information are furnished to such
holders.
(l) It will not voluntarily claim, and will actively resist any attempts
to claim, the benefit of any usury laws against the holders of the
Securities.
(m) It will use the proceeds from the sale of the Securities in the
manner described in the Prospectus under the caption "Use of Proceeds."
(n) During the period beginning on the date of this Agreement and
continuing to and including the Closing Date, it will not offer, sell,
contract to sell or otherwise dispose of any debt securities of the Company
or warrants, rights, or options to purchase debt securities of the Company
(other than (i) the Securities and (ii) commercial paper issued in the
ordinary course of business), without your prior written consent.
(o) It will use its best efforts to do and perform all things required to
be done and performed under this Agreement by it prior to or after the
Closing Date and to satisfy all conditions precedent on its part to be
satisfied prior to the delivery of the Securities.
5. Representations and Warranties. The Company represents and warrants to
each Underwriter that:
(a) When the Registration Statement becomes effective, including on the
date of effectiveness of any post-effective amendment, at the date of the
Prospectus (if different) and at the Closing Date, the Registration
Statement will comply in all material respects with the provisions of the
Act, and will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; the Prospectus and each
supplement or amendment thereto will not at the date of the Prospectus, at
the date of any such supplement or amendment and at the Closing Date,
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
except that the representations and warranties contained in this paragraph
(a) shall not apply to statements in or omissions from the Registration
Statement or the Prospectus (or any supplement or amendment to them) made
in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by or on behalf of any
Underwriter through DLJ expressly for use therein. The Company acknowledges
for all purposes under this Agreement (including this paragraph and Section
6 hereof) that the statements set forth in the last paragraph on the cover
page and the third paragraph under the caption "Underwriting" in the
Prospectus constitute the only written information furnished to the Company
by or on behalf of any Underwriter through DLJ expressly for use in the
Registration Statement, the preliminary prospectus, or the Prospectus (or
any amendment or supplement to any of them) and that the Underwriters shall
not be deemed to have provided any information (and therefore are not
responsible for any statements or omissions) pertaining to any arrangement
or agreement with respect to any party other than the Underwriters. When
the Registration Statement becomes effective, including at the date of any
post-
5
effective amendment, at the date of the Prospectus and any amendment or
supplement thereto (if different) and at the Closing Date, the Indentures
will have been qualified under and will conform in all material respects to
the requirements of the Trust Indenture Act of 1939, as amended, and the
rules and regulations promulgated pursuant thereto (collectively, the
"TIA"). No contract or document of a character required to be described in
the Registration Statement, the Prospectus or any of the documents
incorporated by reference therein or to be filed as an exhibit to the
Registration Statement or to any of the documents incorporated by reference
therein has not been described and filed as required.
(b) Each preliminary prospectus and the Prospectus, filed as part of the
Registration Statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 or 430A under the Act,
complied when so filed in all material respects with the Act.
(c) The documents incorporated by reference in the Registration
Statement, the Prospectus, any amendment or supplement thereto or any
preliminary prospectus, when they became or become effective under the Act
or were or are filed with the Commission under the Exchange Act, as the
case may be, conformed or will conform in all material respects with the
requirements of the Act or the Exchange Act, as applicable.
(d) No action has been taken and no statute, rule, regulation or order
has been enacted, adopted or issued by any United States Federal or state
[or United Kingdom, Swiss or Japanese] governmental body, agency or
official which prevents the issuance of the Securities, suspends the
effectiveness of the Registration Statement, prevents or suspends the use
of any preliminary prospectus or suspends the sale of the Securities in any
jurisdiction referred to in Section 4(i) hereof; no injunction, restraining
order, or order of any nature by any Federal or state court has been issued
with respect to the Company or any of its subsidiaries which would prevent
or suspend the issuance or sale of the Securities, the effectiveness of the
Registration Statement, or the use of any preliminary prospectus or
Prospectus in any jurisdiction referred to in Section 4(i) hereof; and the
Company has complied in all material respects with every request of the
Commission or any securities authority or agency of any jurisdiction for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise).
(e) The capitalization table set forth in the Prospectus under the
caption "Historical and Pro Forma Capitalization" identifies in reasonable
detail all outstanding short-term and long-term indebtedness of the Company
and its subsidiaries, prior to and after giving effect to the Merger and
the related transactions on the terms described in the Prospectus.
(f) The Senior Notes rank and will rank on a parity with all unsecured
indebtedness (other than subordinated indebtedness) of the Company that is
outstanding on the date hereof or that may be incurred hereafter, and
senior to all subordinated indebtedness of the Company that is outstanding
on the date hereof or that may be incurred hereafter. All indebtedness
represented by the Senior Subordinated Notes shall be subordinated in right
of payment only to the Senior Indebtedness identified on Schedule
attached hereto, and only to the extent and in the manner set forth in the
Senior Subordinated Note Indenture and in the Senior Subordinated Notes.
(g) The Indentures have been duly authorized by the Company and, when
duly executed and delivered in accordance with their terms, will be valid
and legally binding agreements of the Company, enforceable against the
Company in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except to the extent that a waiver of
rights under any usury laws may be unenforceable.
(h) The Securities have been duly authorized by the Company and, when
executed and delivered by the Company and authenticated by the applicable
Trustee in accordance with the applicable Indenture and paid for in
accordance with the terms of this Agreement, will constitute legal, valid
and binding obligations of the Company, enforceable against the Company
according to their terms, subject to
6
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws affecting creditors' rights and remedies
generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) and except to
the extent that a waiver of rights under any usury laws may be
unenforceable, will be entitled to the benefits of the applicable Indenture
and will conform in all material respects to the description thereof in the
Prospectus.
(i) This Agreement has been duly authorized and validly executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws affecting
creditors' rights and remedies generally and to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law
or in equity) and except to the extent that rights to indemnification and
contribution with respect to liability in connection with Federal or state
securities laws may be unenforceable under such laws or the policies
underlying such laws.
(j) The execution and delivery of this Agreement by the Company, the
execution and delivery of the Indentures and the Securities by the Company,
the execution and delivery of each of the Transaction Documents by each of
the Company, Merger Sub and AMH (each a "Merger Party" and collectively,
the "Merger Parties"), to the extent each is a party thereto, the issuance
and sale of the Securities, the performance of this Agreement, the
Indentures and the Transaction Documents and the consummation of the
transactions contemplated by this Agreement and the other Transaction
Documents will not conflict with or result in a breach or violation of any
of the respective charters or bylaws of the Company, AMH or any of their
respective subsidiaries (each, a "Subsidiary" and collectively, the
"Subsidiaries") or any of the terms or provisions of, or constitute a
default or cause an acceleration of any obligation under or result in the
imposition or creation of (or the obligation to create or impose) any
security interest, mortgage, pledge, claim, lien, encumbrance or adverse
interest of any nature (each, a "Lien") with respect to, any of the
Transaction Documents or any other obligation, bond, agreement, note,
debenture, or other evidence of indebtedness, or any indenture, mortgage,
deed of trust or other agreement, lease or instrument to which the Company,
AMH or any of the Subsidiaries is a party or by which it or any of them is
bound, or to which any properties of the Company, AMH or any of the
Subsidiaries is or may be subject, or any order of any court or
governmental agency, body or official having jurisdiction over the Company,
AMH or any of the Subsidiaries or any of their properties, or violate or
conflict with any statute, rule or regulation or administrative regulation
or decree or court decree applicable to the Company, AMH or any of the
Subsidiaries, or any of their respective assets or properties where, in any
such instance, such conflict, breach, violation, default, acceleration of
indebtedness or Lien would have, singly or in the aggregate, a material
adverse effect or a prospective material adverse effect on the assets,
liabilities, results of operations or financial condition of the Company,
AMH and the Subsidiaries, taken as a whole ( a "Material Adverse Effect").
(k) No authorization, approval or consent or order of, or filing with,
any court or governmental body, agency or official is necessary in
connection with the transactions contemplated by this Agreement, except
such as may be required by the NASD or have been obtained and made under
the Act, the TIA or state securities or Blue Sky laws or regulations.
Neither the Company nor, to the best of the Company's knowledge, any of its
affiliates is presently doing business with the government of Cuba or with
any person or affiliate located in Cuba.
(l) The Securities have been approved for listing on the NYSE, subject to
official notice of issuance.
(m) The Company has been duly organized, is validly existing as a
corporation in good standing under the laws of the State of Nevada and has
the requisite power and authority to carry on its business as it is
currently being conducted, to own, lease and operate its properties and to
authorize the offering of the Securities, to execute, deliver and perform
this Agreement and to issue, sell and deliver the Securities, and is duly
qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction where the operation, ownership or leasing of
property or the conduct of its business
7
requires such qualification. AMH and each of the Subsidiaries of the
Company or of AMH that (i) directly or indirectly own or lease any interest
in any hospitals, healthcare facilities or medical office buildings, (ii)
directly or indirectly conduct any insurance activities or (iii) are
otherwise material to the Company or AMH, as the case may be (collectively,
the "Significant Subsidiaries") has been duly organized, is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the requisite power and authority to
carry on its business as it is currently being conducted and to own, lease
and operate its properties and each is duly qualified and is in good
standing as a foreign corporation authorized to do business in each
jurisdiction where the operation, ownership or leasing of property or the
conduct of its business requires such qualifications.
(n) All of the issued and outstanding shares of capital stock of, or
other ownership interests in, each of the Significant Subsidiaries have
been duly authorized and validly issued, and all of the shares of capital
stock of, or other ownership interests in, each of the Significant
Subsidiaries are owned, directly or through subsidiaries, by the Company or
AMH, as the case may be. All such shares of capital stock are fully paid
and nonassessable, and are owned free and clear of any Lien, except Liens
securing indebtedness under the New Credit Facility, and there are no
outstanding subscriptions, rights, warrants, options, calls, convertible or
exchangeable securities, commitments of sale, or Liens related to or
entitling any person to purchase or otherwise to acquire any shares of the
capital stock of, or other ownership interest in, any of the Subsidiaries,
except that shareholders of Australian Medical Enterprises, Ltd. ("AME")
have certain preemptive rights with respect to rights offerings by AME.
(o) None of the Company, AMH or the Subsidiaries is in violation of its
respective charter or bylaws or in default in the performance of any
obligation, bond, agreement, debenture, note or any other evidence of
indebtedness, or any indenture, mortgage, deed of trust or other contract,
lease or other instrument to which the Company, AMH or any of the
Subsidiaries is a party or by which any of them is bound, or to which any
of the property or assets of the Company, AMH or any of the Subsidiaries is
subject, except as would not have, singly or in the aggregate, a Material
Adverse Effect.
(p) There is no action, suit, proceeding or investigation before or by
any court, governmental agency or body, arbitration board or tribunal, or
governmental or private accrediting body, domestic or foreign, pending
against or affecting the Company, AMH, or any of the Subsidiaries, or any
of their respective assets or properties, which is required to be disclosed
in the Registration Statement or the Prospectus, or which could have,
singly or in the aggregate, a Material Adverse Effect, or which might
materially and adversely affect the Company's or any of its Subsidiaries'
performance of its obligations, as applicable, pursuant to this Agreement
(including, without limitation, the issuance of the Securities), the other
Transaction Documents or the transactions contemplated hereby and thereby,
and to the best of the Company's knowledge, after due inquiry, no such
action, suit, or proceeding is contemplated or threatened.
None of the Company, AMH or the Subsidiaries is subject to any judgment,
order, decree, rule or regulation of any court, governmental authority or
arbitration board or tribunal which has had or which can reasonably be
expected to have, a Material Adverse Effect.
(q) Except as could not reasonably be expected to have, singly or in the
aggregate, a Material Adverse Effect, none of the Company, AMH or the
Subsidiaries is in violation of any Federal, state or local laws or
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including, without
limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of toxic or hazardous substances, materials
or wastes, or petroleum and petroleum products ("Materials of Environmental
Concern"), or otherwise relating to the protection of human health and
safety, or the storage, disposal, transport or handling of Materials of
Environmental Concern (collectively, "Environmental Laws"), which violation
includes, but is not limited to, noncompliance with any permits or other
governmental authorizations; none of the Company, AMH or the Subsidiaries
has received any communication (written or oral), whether from a
governmental authority or otherwise,
8
alleging any such violation or noncompliance, and there are no
circumstances, either past, present or that are reasonably foreseeable,
that may lead to such violation in the future; there is no pending or
threatened claim, action, investigation or notice (written or oral) by any
person or entity alleging potential liability for investigatory, cleanup,
or governmental responses costs, or natural resources or property damages,
or personal injuries, attorney's fees or penalties relating to (x) the
presence, or release into the environment, of any Material of Environmental
Concern at any location owned or operated by the Company, AMH or any of the
Subsidiaries, now or in the past, or (y) circumstances forming the basis of
any violation, or alleged violation, of any Environmental Law
(collectively, "Environmental Claims"); and there are no past or present
actions, activities, circumstances, conditions, events or incidents, that
could form the basis of any Environmental Claim against the Company, AMH or
any of the Subsidiaries or against any person or entity whose liability for
any Environmental Claim the Company, AMH or any of the Subsidiaries has
retained or assumed either contractually or by operation of law. In the
ordinary course of its business, the Company conducts a periodic review of
the effect of Environmental Laws on the business, operations and properties
of the Company and its Subsidiaries, in the course of which it identifies
and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and
any potential liabilities to third parties); on the basis of such review,
the Company has reasonably concluded that such associated costs and
liabilities could not, singly or in the aggregate, have a Material Adverse
Effect.
(r) None of the Company, AMH or the Subsidiaries is in violation of any
Federal, state or local law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable wage or hour laws that,
singly or in the aggregate, could have a Material Adverse Effect. There is
(A) no significant unfair labor practice complaint pending against the
Company, AMH or any of the Subsidiaries or, to the best knowledge of the
Company, threatened against any of them, before the National Labor
Relations Board or any state or local labor relations board, and no
significant grievance or significant arbitration proceeding arising out of
or under any collective bargaining agreement is so pending against the
Company, AMH or any of the Subsidiaries or, to the best knowledge of the
Company threatened against any of them, and (B) no labor dispute in which
the Company, AMH or any of the Subsidiaries is involved nor, to the best
knowledge of the Company, is any labor dispute imminent, other than routine
disciplinary and grievance matters. The Company, AMH and the Subsidiaries
are in compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the regulations and published interpretations
thereunder; no "reportable event" (as defined in ERISA and the regulations
and published interpretations thereunder) has occurred or is reasonably
expected to occur with respect to any "pension plan" (as defined in ERISA
and the regulations and published interpretations thereunder) established
or maintained by the Company, AMH or any of the Subsidiaries; the amount of
"unfunded benefit liabilities" (as defined in ERISA and the regulations and
published interpretations thereunder) under all "pension plans" does not
exceed $ ; none of the Company, AMH or the Subsidiaries
has incurred or expects to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" [in
excess of $ ] or (ii) Sections 4971, 4975, or 4980B of the
Internal Revenue Code of 1986, as amended (the "Code"); and each "pension
plan" established or maintained by the Company, AMH or any of the
Subsidiaries that is intended to be qualified under Section 401(a) of the
Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of such
qualification.
(s) Except as could not have, singly or in the aggregate, a Material
Adverse Effect, the Company, AMH and each of the Subsidiaries has good and
marketable title, free and clear of all Liens, to all property and assets
of the described in the Registration Statement as being owned by it and
such properties and assets are in good repair and suitable for use as so
described. All leases to which the Company, AMH or each of the Subsidiaries
is a party are valid and binding and no default has occurred or is
continuing thereunder which could result, singly or in the aggregate, in a
Material Adverse Effect,
9
and the Company, AMH and each of the Subsidiaries enjoy peaceful and
undisturbed possession under all such leases to which any of them is a
party as lessee with such exceptions as do not interfere with the use made
by the Company, AMH or such Subsidiary.
(t) The Company, AMH, and each of the Subsidiaries maintain insurance at
least in such amounts and covering at least such risks as is adequate for
the conduct of their respective businesses and the value of their
respective properties and as is customary for companies engaged in similar
businesses in similar industries.
(u) The firms of accountants that have certified or shall certify the
applicable consolidated financial statements and supporting schedules and
the notes thereto of the Company and AMH filed or to be filed with the
Commission as part of the Registration Statement and the Prospectus are
independent public accountants with respect to the Company and its
Subsidiaries, and AMH and its Subsidiaries, respectively, as required by
the Act. The consolidated financial statements, together with related
schedules and notes, set forth or incorporated by reference in the
Prospectus and the Registration Statement, comply as to form in all
material respects with the requirements of the Act and fairly present the
consolidated financial position of the Company and its Subsidiaries and AMH
and its Subsidiaries, as the case may be, at the respective dates indicated
and the results of their operations and their cash flows for the respective
periods indicated, in accordance with generally accepted accounting
principles in the United States of America ("GAAP") consistently applied
throughout such periods and in accordance with Regulation S-X. The pro
forma financial statements contained in the Registration Statement have
been prepared in conformity with the standards set forth in Rule 11-02 of
Regulation S-X and on a basis consistent with such historical statements
and give effect to assumptions made on a reasonable basis and present
fairly the historical and proposed transactions contemplated by the
Prospectus and this Agreement. The Company's and AMH's ratios of earnings
to fixed charges (actual and pro forma) included in the Prospectus under
the captions "Prospectus Summary--Summary Unaudited Pro Forma Condensed
Combined Financial Data," "Pro Forma Financial Information," "Selected
Historical Financial Information of NME," "Selected Historical Financial
Information of AMH" and in Exhibit 12 to the Registration Statement have
been calculated in compliance with Item 503(d) of the Commission's
Regulation S-K. The other financial and statistical information and data
included or incorporated by reference in the Prospectus and in the
Registration Statement, historical and pro forma, are accurately presented
and prepared on a basis consistent with such financial statements and the
books and records of the Company.
(v) The projected amount of operating synergies and other cost reductions
resulting from the Merger included in the Registration Statement (i) is
within the coverage of Rule 175(b) under the Act, (ii) was determined by
the Company with a reasonable basis and in good faith and (iii) was
determined in accordance with Item 10 of the Commission's Regulation S-K.
The assumptions used in the determination of the amount of such projected
operating synergies and other cost reductions are all those the Company
believes are significant in projecting the amount of such synergies and
other cost reductions. The projected amount included in the Registration
Statement reflects a reasonable estimate of the amount of operating
synergies and other cost reductions resulting from the Merger.
Notwithstanding the foregoing, no assurance can be made as to the amount of
cost savings, if any, that actually will be realized.
(w) Except as contemplated by the Registration Statement and the
Prospectus, subsequent to the respective dates as of which information is
presented in the Registration Statement and the Prospectus and up to the
Closing Date (i) none of the Company, AMH or the Subsidiaries has incurred
any liabilities or obligations, direct or contingent, which are material to
the Company, AMH and the Subsidiaries, taken as a whole, or entered into
any transaction not in the ordinary course of business, (ii) there has been
no decision or judgment in the nature of litigation or arbitration that
could reasonably be expected to have a Material Adverse Effect, (iii) there
has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock and (iv) there has not been
any material adverse change, or any development which could involve a
material adverse change, in the results of
10
operations, assets, liabilities or financial condition of the Company or
its Subsidiaries, taken as a whole, or AMH and its Subsidiaries, taken as a
whole (any of the items set forth in clauses (i), (ii), or (iii), above, a
"Material Adverse Change").
(x) All tax returns required to be filed by the Company, AMH or any of
the Subsidiaries in any jurisdiction have been filed and all taxes,
including withholding taxes, penalties and interest, assessments, fees and
other charges due or claimed to be due from such entities have been paid,
other than those being contested in good faith and for which adequate
reserves have been provided or those currently payable without penalty or
interest. All Tax Returns (as hereinafter defined) filed by the Company,
AMH and the Subsidiaries prior to the date hereof were complete and
accurate in all material respects. No material claim for assessment or
collection of Taxes is presently being asserted against the Company, AMH or
the Subsidiaries. Furthermore, none of the Company, AMH or the Subsidiaries
is a party to any pending action, proceeding or investigation by any
governmental authority for the assessment or collection of Taxes, nor does
the Company have knowledge of any such threatened action, proceeding or
investigation. No waivers of statutes of limitation in respect of any Tax
Returns have been given by or requested of the Company, AMH or any of the
Subsidiaries, nor has the Company, AMH or any of the Subsidiaries agreed to
any extension of time with respect to a Tax assessment or deficiency. No
material claim by any authority in a jurisdiction where the Company, AMH or
any of the Subsidiaries does not currently file a Tax Return is pending to
the effect that the Company, AMH or any of the Subsidiaries is or may be
subject to taxation by that jurisdiction. No Liens are presently imposed
upon or asserted against any of the Company's, AMH's or any of the
Subsidiaries' assets as a result of or in connection with any failure, or
alleged failure, to pay any Tax. As of the Closing Date, none of the
Company, AMH or the Subsidiaries will have any agreement, whether or not
written, providing for the payment of Tax liabilities or entitlement to
refunds with any other party. The Company, AMH and the Subsidiaries have
withheld and paid all Taxes required to be withheld in connection with any
amounts paid or owing to any employee, creditor, independent contractor or
other third party with respect to the business of the Company, AMH or the
Subsidiaries, as the case may be. The unpaid Taxes of the Company and its
Subsidiaries and AMH and its Subsidiaries do not exceed the reserve for Tax
liability (as opposed to any reserve for deferred Taxes established to
reflect timing differences between work and tax income) set forth on the
most recent balance sheet of the Company or AMH, respectively, as adjusted
for the passage of time through the date hereof in accordance with the past
custom and practice of the Company and AMH, respectively, in filing its Tax
Returns. For purposes of this Agreement, the terms "Tax" and "Taxes" shall
mean all federal, state, local or foreign income, payroll, employee
withholding, unemployment insurance, social security, sales, use, service
use, leasing use, excise, franchise, gross receipts, value added,
alternative or add-on minimum, estimated, occupation, real and personal
property, stamp, transfer, workers' compensation, severance, windfall
profits, environmental (including taxes under Section 59A of the Internal
Revenue Code of 1986, as amended), or other tax of the same or of a similar
nature, including any interest, penalty, or addition thereto, whether
disputed or not. The term "Tax Return" means any return, declaration,
report, form, claim for refund, or information return or statement relating
to Taxes or income subject to taxation, or any amendment thereto, and
including any schedule or attachment thereto.
(y) (i) Except as described in the Registration Statement or Prospectus
or as could not reasonably be expected to have a Material Adverse Effect,
each of the Company, AMH and the Subsidiaries has all certificates,
consents, exemptions, orders, permits, licenses, authorizations,
accreditations or other approvals or rights (each, an "Authorization") of
and from, and has made all declarations and filings with, all Federal,
state, local and other governmental authorities, all self-regulatory
organizations, all governmental and private accrediting bodies and all
courts and other tribunals, necessary or required to own, lease, license
and use its properties and assets and to conduct its business in the manner
described in the Prospectus, (ii) all such Authorizations are valid and in
full force and effect, except as could not have, singly or in the
aggregate, a Material Adverse Effect, (iii) the Company, AMH and the
Subsidiaries are in compliance in all material respects with the terms and
conditions of all such Authorizations and with the rules and regulations of
the regulatory authorities and governing bodies having jurisdiction with
11
respect thereto and (iv) none of the Company, AMH or the Subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such Authorization.
(z) The Company, AMH and each of the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability; (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 the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(aa) None of the Company, AMH, Merger Sub or any agent acting on their
respective behalf has taken or will take any action that is reasonably
likely to cause the issuance or sale of the Securities or the incurrence of
the indebtedness under the New Credit Facility to violate Regulation G, T,
U, or X of the Board of Governors of the Federal Reserve System, in each
case as in effect, on the date hereof.
(bb) None of the Company, AMH or the Significant Subsidiaries is (i) an
"investment company" or a company "controlled" by an investment company
within the meaning of the Investment Company Act of 1940, as amended, or
(ii) a "holding company" or a "subsidiary company" of a holding company, or
an "affiliate" thereof within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(cc) Except as described in the Registration Statement or Prospectus,
none of the Company, AMH or the Subsidiaries, nor any director, officer,
agent, employee or other person associated with or acting on behalf of the
Company, AMH or any of the Subsidiaries, has used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(dd) Each certificate signed by any officer of the Company and delivered
to the Underwriters or the Underwriters' Counsel shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
(ee) The Company, Merger Sub and AMH (each, a "Merger Party" and,
collectively the "Merger Parties") have, to the extent each is or will be a
party thereto, all requisite corporate power and authority to execute,
deliver and perform their respective obligations under each of the
Transaction Documents; each of the Transaction Documents has been (or, with
respect to the New Credit Facility, at or prior to the Effective Time of
the Merger, will be) duly and validly authorized, executed and delivered by
the Merger Parties, to the extent each is a party thereto, and each
constitutes a valid and legally binding agreement of the Merger Party
enforceable against each Merger Party in accordance with its terms
(assuming due authorization, execution and delivery of each Transaction
Document by any other party thereto) except that enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity); except
as set forth in the Prospectus, no consent, approval, authorization or
order of any court or governmental agency or body is required for the
performance of any of the Transaction Documents by each of the Merger
Parties, to the extent each is a party thereto, or the consummation by each
of the Merger Parties of any of the transactions contemplated thereby,
except such as may be required and have been obtained, or upon
effectiveness of the Registration Statement, will have been obtained, under
the Act, the TIA or state securities or "Blue Sky" laws in connection with
the purchase and distribution of the Securities by the Underwriters; and
none of the Merger Parties is in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any of the
Transaction Documents, which default would have a Material Adverse Effect.
12
(ff) The Merger has been duly authorized by the Merger Parties and the
Merger has been approved by stockholders of AMH holding the requisite
number of shares required to approve the Merger; approval of the Merger by
the shareholders of the Company is not required; insofar as the Prospectus
contains summaries of the Merger Agreement and the Merger, such summaries
are in all material respects accurate.
(gg) Immediately after the consummation of the Merger and the
transactions contemplated by the Transaction Documents, the fair value and
present fair saleable value of the assets of the Company will exceed the
sum of its stated liabilities and identified contingent liabilities;
neither the Company nor AMH will be, after giving effect to the execution,
delivery and performance of the Transaction Documents, to the extent each
is a party thereto, and the consummation of the transactions contemplated
thereby, (i) left with unreasonably small capital with which to carry on
its business as it is proposed to be conducted, (ii) unable to pay its
debts (contingent or otherwise) as they mature or (iii) otherwise
insolvent.
(hh) The Company has delivered to the Underwriters a true and correct
copy of each of the Transaction Documents that have been executed and
delivered prior to the date of this Agreement and each other Transaction
Document in the form substantially as it will be executed and delivered on
or prior to the Closing Date, together with all related agreements and all
schedules and exhibits thereto, and there have been no amendments,
alterations, modifications or waivers of any of the provisions of any of
the Transaction Documents since their date of execution or from the form in
which it has been delivered to the Underwriters; there exists as of the
date hereof (after giving effect to the transactions contemplated by the
Transaction Documents) no event or condition which would constitute a
default or an event of default (in each case as defined in the New Credit
Facility) under the New Credit Facility and no event or condition which
would constitute a default or an event of default (in each case as defined
in each of the Transaction Documents) under any of the Transaction
Documents other than the New Credit Facility which would reasonably be
expected to result in a Material Adverse Effect or materially adversely
effect the ability of each of the Merger Parties to consummate the Merger
and the transactions contemplated by the Merger Agreement.
6. Indemnification.
(a) The Company agrees to indemnify and hold harmless (i) each of the
Underwriters and their respective affiliates, (ii) each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any of the Underwriters or any of their respective affiliates
(any of the persons referred to in this clause (ii) being hereinafter
referred to as a "Controlling Person"), and (iii) each of the respective
officers, directors, partners, employees, representatives and agents of any
of the Underwriters or any Controlling Person, and each of their respective
officers, directors, partners, employees, representatives and agents (any
person referred to in clause (i), (ii) or (iii) of this Section 6(a) may
hereinafter be referred to as an "Indemnified Person") to the fullest
extent lawful, from and against any and all losses, claims, damages,
judgments, actions, costs, assessments, expenses and other liabilities
(collectively, "Liabilities"), including without limitation and as
incurred, reimbursement of all reasonable costs of investigating,
preparing, pursuing or defending any claim or action, or any investigation
or proceeding by any federal, state or local authority, regulatory body,
administrative agency, court or other governmental or quasi-governmental
body, commenced or threatened, including the reasonable fees and expenses
of counsel to any Indemnified Person, to the extent such Liabilities are
directly or indirectly caused by, related to, based upon or arising out of,
or in connection with, (A) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or any
supplement or amendment thereto), or the Prospectus (including any
amendment or supplement thereto) or any preliminary prospectus, or any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein (in the case
of the Prospectus, in light of the circumstances under which they were
made) not misleading, except insofar as such Liabilities are caused by an
untrue statement or omission or alleged untrue statement or omission that
is (x) made in reliance upon and in conformity with information relating to
any of the Underwriters furnished in writing to the Company by or on behalf
of the Underwriter through DLJ expressly for use
13
in the Registration Statement (or any amendment or supplement thereto) or
the Prospectus (or any amendment or supplement thereto) or any preliminary
prospectus or (y) with respect to the Underwriter from whom the person
asserting the Liabilities purchased Securities, made in any preliminary
prospectus if a copy of the Prospectus (as amended or supplemented, if the
Company shall have furnished the Underwriters with such amendments or
supplements thereto on a timely basis) was not delivered by or on behalf of
such Underwriter to the person asserting the Liabilities, if required by
law to have been so delivered by the Underwriter seeking indemnification,
at or prior to the written confirmation of the sale of the Securities, and
it shall be finally determined by a court of competent jurisdiction, in a
judgment not subject to appeal or review, that the Prospectus (as so
amended or supplemented) would have completely corrected such untrue
statement or omission; or (B) any breach by the Company of any
representation or warranty or failure to comply with any of its agreements
contained herein. The foregoing indemnity shall be in addition to any
liability that the Company might otherwise have to any of the Underwriters
and such other Indemnified Persons. The Company shall notify you promptly
of the institution, threat or assertion of any claim, proceeding (including
any governmental investigation) or litigation in connection with the
matters addressed by this Agreement which involves the Company or an
Indemnified Person.
(b) In case any action or proceeding (for all purposes of this Section 6,
including any governmental or quasi-governmental investigation) shall be
brought or asserted against any of the Indemnified Persons with respect to
which indemnity under this Section 6 may be sought against the Company,
such Underwriter (or the Underwriter controlled by such Controlling Person)
promptly shall notify the Company in writing and the Company shall assume
the defense thereof, including the employment of counsel reasonably
satisfactory to such Underwriter and payment of all fees and expenses;
provided, that the delay or failure to give such notice shall not relieve
the Company from any liability that it may have on account of the indemnity
under this Section 6, unless and only to the extent that such delay or
omission materially adversely affects the ability of the Company to defend
or assume the defense of such action or proceeding. Upon receiving such
notice, the Company shall be entitled to participate in any such action or
proceeding and to assume, at its sole expense, the defense thereof, with
counsel reasonably satisfactory to such Indemnified Person (who shall not,
except with the consent of the Indemnified Person to be represented, be
counsel to the Company or any of the Subsidiaries) and, after written
notice from the Company to such Indemnified Person of its election so to
assume the defense thereof within five business days after receipt of the
notice from the Indemnified Person of such action or proceeding, the
Company shall not be liable to such Indemnified Person hereunder for legal
expenses of other counsel subsequently incurred by such Indemnified Person
in connection with the defense thereof, other than reasonable costs of
investigation, unless (i) the Company agrees in writing to pay such fees
and expenses, or (ii) the Company fails promptly to assume such defense or
fails to employ counsel reasonably satisfactory to such Indemnified Person,
or (iii) the named parties to any such action or proceeding (including any
impleaded parties) include both such Indemnified Person and the Company or
an affiliate of the Company, and that Indemnified Person shall have been
advised by counsel that either (x) there may be one or more legal defenses
available to such Indemnified Person that are different from or additional
to those available to the Company or such affiliate or (y) a conflict may
exist between such Indemnified Person and the Company or such affiliate. In
the event of any of clause (i), (ii) and (iii) of the immediately preceding
sentence, the Company shall not have the right to assume the defense
thereof on behalf of the Indemnified Person and such Indemnified Person
shall have the right to employ its own counsel in any such action and the
fees and expenses of such counsel shall be paid, as incurred, by the
Company, subject to repayment to the Company if it is ultimately determined
that an Indemnified Party is not entitled to indemnification hereunder, it
being understood, however, that the Company shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) for
all of the Indemnified Persons which firm shall be designated in writing by
DLJ. The Company shall be not be liable for any settlement of any such
action or proceeding effected without the Company's written
14
consent, which consent may not be unreasonably withheld, but if settled
with the written consent of the Company, the Company agrees to indemnify
and hold harmless any Indemnified Person from and against any loss or
liability by reason of such settlement. The Company shall not, without the
prior written consent of each Indemnified Person, settle or compromise or
consent to the entry of any judgment in or otherwise seek to terminate any
pending or threatened action, claim, suit, investigation or other
proceeding in respect of which any Indemnified Person is or could have been
a party and indemnification or contribution could have been sought
hereunder by such Indemnified Person, unless such settlement, compromise,
consent or termination includes an unconditional release of each
Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
(c) Each of the Underwriters agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who
sign the Registration Statement, and any person controlling (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the
Company, to the same extent as the foregoing indemnity from the Company to
each of the Indemnified Persons, but only with respect to claims and
actions based on information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter through DLJ expressly for use
in the Registration Statement, Prospectus or preliminary prospectus, as
applicable. In case any action shall be brought against the Company, any of
its directors, any such officer, or any such controlling person based on
the Registration Statement, the Prospectus or any preliminary prospectus in
respect of which indemnity is sought against any Underwriter pursuant to
the foregoing sentence, the Underwriter shall have the rights and duties
given to the Company (except that if the Company shall have assumed the
defense thereof, such Underwriter 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 the expense of such
Underwriter), and the Company, its directors, any such officers, and each
such controlling person shall have the rights and duties given to the
Indemnified Person by Section 6(b) above.
(d) If the indemnification provided for in this Section 6 is finally
determined by a court of competent jurisdiction to be unavailable to an
Indemnified Person in respect of any Liabilities referred to herein, then
the Company, in lieu of indemnifying such Indemnified Person, shall
contribute to the amount paid or payable by such Indemnified Person as a
result of such Liabilities: (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and
the Indemnified Person on the other hand from the offering of the
Securities, or (ii) if the allocation provided by clause (i), above, is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i), above,
but also the relative fault of the Company and the Indemnified Person in
connection with the actions, statements or omissions that resulted in such
Liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company, on the one hand, and any of the
Underwriters (and its related Indemnified Persons), on the other hand,
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by such Underwriter, in each case as set
forth in the Prospectus. The relative fault of the Company and the
Underwriter 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 related to
information supplied by the Company or the Underwriter and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The indemnity and
contribution obligations of the Company set forth herein shall be in
addition to any liability or obligation the Company may otherwise have to
any Indemnified Person.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, judgments, liabilities or expenses referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above,
15
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, none of the Underwriters (and
its related Indemnified Persons referred to in Section 6 above) shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total underwriting discount applicable to the Securities purchased by
such Underwriter exceeds the amount of any damages or liabilities which such
Underwriter (and its related Indemnified Persons referred to in Section 6
above) has otherwise been required to pay or incur by reason of such untrue or
alleged untrue statement or omission or alleged omission or other indemnified
action or proceeding. Notwithstanding anything to the contrary contained
herein, no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 6(d) are several in
proportion to the respective aggregate principal amount of Securities purchased
by each of the Underwriters hereunder and not joint.
7. Conditions of Underwriters' Obligations. The respective obligations of the
several Underwriters to purchase any Securities under this Agreement are
subject to the satisfaction or waiver by the several Underwriters of each of
the following conditions on the Closing Date:
(a) All the representations and warranties of the Company contained in
this Agreement shall be true and correct on the Closing Date and as of the
Effective Time of the Merger after giving effect to the transactions
contemplated by the Transaction Documents, with the same force and effect
as if made on and as of the Closing Date and as of the Effective Time of
the Merger, respectively. The Company and its Subsidiaries shall have
performed or complied with all of their obligations and agreements herein
contained and required to be performed or complied with by it at or prior
to the Closing Date.
(b) (i) The Registration Statement shall have become effective (or, if a
post-effective amendment is required to be filed pursuant to Rule 430A of
the Act, such post-effective amendment shall have become effective (or, if
any Securities are sold in reliance upon Rule 430A of the Act and no post-
effective amendment is so required to be filed, the Prospectus shall have
been timely filed with the Commission in accordance with Section 4(a)
hereof)) on the date of this Agreement or at such later date and time as
you may approve in writing, (ii) at the Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been commenced or
shall be pending before or contemplated by the Commission and every request
for additional information on the part of the Commission shall have been
complied with in all respects, (iii) no stop order suspending the sale of
the Securities in any jurisdiction referred to in Section 4(i) shall have
been issued and no proceeding for that purpose shall have been commenced or
shall be pending or threatened, and (iv) since the effective date of the
Registration Statement, there shall not have occurred any event required to
be set forth in an amendment or supplement to the Registration Statement or
Prospectus that has not been set forth, and there shall not have been any
document required to be filed under the Exchange Act that upon such filing
would be deemed to be incorporated by reference in the Prospectus that has
not been so filed.
(c) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental
agency, body or official which would, as of the Closing Date, prevent the
issuance of the Securities; and no injunction, restraining order or order
of any nature by any Federal or state court shall have been issued as of
the Closing Date which would prevent the issuance of the Securities.
Subsequent to the execution and delivery of this Agreement and prior to the
Closing Date, there shall not have been any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's securities by
any "nationally recognized statistical rating organization," as such term
is defined for purposes of Rule 436(g)(2) of the Act.
(d) (i) Since the earlier of the date hereof or the dates as of which
information is given in the Registration Statement and the Prospectus,
there shall not have been any Material Adverse Change, (ii) since the date
of the latest balance sheet included in the Registration Statement and the
Prospectus,
16
there shall not have been any material adverse change, or development
involving a prospective material adverse change, in the capital stock or
debt, of the Company, AMH and the Subsidiaries, taken as a whole, and (iii)
the Company, AMH and the Subsidiaries shall have no liability or
obligation, direct or contingent, that is material to the Company, AMH and
the Subsidiaries, taken as a whole, and which is not disclosed in the
Registration Statement and the Prospectus.
(e) You shall have received a certificate of the Company, dated the
Closing Date, executed on behalf of the Company, by an executive officer
and a financial officer of the Company satisfactory to you confirming, as
of the Closing Date, the matters set forth in paragraphs (a), (b), (c) and
(d) of this Section 7.
(f) On the Closing Date, you shall have received:
(1) an opinion (satisfactory to you and your counsel), dated the
Closing Date, of Skadden, Arps, Slate, Meagher & Flom, counsel for the
Company ("Skadden, Arps"), to the effect that:
(i) the Registration Statement was declared effective in
compliance with the Act; any required filing of the Prospectus, and
any amendments or supplements thereto, pursuant to Rule 424(b) has
been sent for filing in the manner and within the time period
required by Rule 424(b); and, to the best of such counsel's
knowledge, no stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no
proceedings therefor have been instituted or are pending or
contemplated under the Act; and the Indentures have been qualified
under the TIA;
(ii) at the time it became effective and on the Closing Date, the
Registration Statement, including all documents incorporated by
reference therein (except for financial statements, the notes
thereto and related schedules and other financial and statistical
data included therein and the Statements of Eligibility and
Qualification of the Trustees on Forms T-l (the "Forms T-1"), as to
which no opinion need be expressed), complied as to form in all
material respects with the Act, the Exchange Act and the TIA;
(iii) each document filed pursuant to the Exchange Act and
incorporated by reference in the Prospectus, at the time it was
filed or last amended (except for financial statements, the notes
thereto and related schedules and other financial, numerical,
statistical or accounting data included or incorporated by reference
therein or omitted therefrom, as to which such counsel need express
no opinion), complied as to form in all material respects to the
applicable requirements of the Exchange Act;
(iv) the Company has full power and authority to execute, deliver
and perform this Agreement and the Company has full power and
authority to authorize, issue and sell the Securities as
contemplated by this Agreement; this Agreement has been duly
authorized, executed and delivered by the Company, and the
Securities and the Indentures have been duly authorized, executed
and delivered by the Company;
(v) when authenticated in accordance with the terms of the
Indentures and delivered and paid for by the Underwriters in
accordance with the terms of this Agreement, the Securities will
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective
terms and entitled to the benefits of their respective Indenture,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law
or in equity) and except to the extent that a waiver of rights under
any usury laws may be unenforceable;
(vi) the Indentures, assuming due authorization, execution and
delivery thereof by the applicable Trustee, each constitute a valid
and legally binding agreement of the Company, enforceable against
the Company in accordance with their terms, subject to applicable
17
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) and
except to the extent that a waiver of rights under any usury laws
may be unenforceable;
(vii) the Securities and the Indentures conform in all material
respects to the descriptions thereof contained in the Prospectus;
(viii) the Company and each of its Significant Subsidiaries (as
defined under the Commission's Regulation S-X) is a duly organized
and validly existing corporation in good standing under the laws of
its jurisdiction of organization, has the requisite corporate power
and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and
the Prospectus, and, to the extent each is a party thereto, to
execute, deliver and perform its obligations pursuant to the
Indentures and this Agreement, and is duly qualified as a foreign
corporation and in good standing in each jurisdiction where the
ownership, leasing or operation of property or the conduct of its
business requires such qualification, except where the failure so to
be qualified could not have, singly or in the aggregate, a Material
Adverse Effect;
(ix) neither the Company nor any of its Significant Subsidiaries
is (a) an "investment company" or a company "controlled" by an
investment company within the meaning of the Investment Company Act
of 1940, as amended, or (b) a "holding company" or a "subsidiary
company" of a holding company, or an "affiliate" thereof within the
meaning of the Public Utility Holding Company Act of 1935, as
amended;
(x) the descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings,
contracts and other documents, other than the descriptions of such
matters in the Registration Statement and the Prospectus under the
captions set forth in subsection (f)(3)(i) of this Section 7, are
accurate in all material respects as of the dates thereof and such
counsel does not know of any legal or governmental proceedings
required to be described in the Registration Statement or Prospectus
which are not described as required or of any contracts or documents
of a character required to be described in the Registration
Statement or Prospectus (or required to be filed under the Exchange
Act if upon such filing they would be incorporated by reference
therein) or to be filed as exhibits to the Registration Statement
which are not described and filed as required; it being understood
that such counsel need express no opinion as to the financial
statements, notes or schedules or other financial data included
therein or those parts of the Registration Statement that constitute
the Forms T-1);
(xi) no consent, approval, authorization or order of any United
States governmental agency or body is required for the consummation
by the Company of the transactions contemplated by this Agreement
and the Indentures in connection with the sale of the Securities,
except such as may be required under the Act, the TIA or state
securities or "blue sky" laws, provided, that the opinion set forth
in this paragraph may be limited to those statutes, laws and
regulations currently in effect which, in the experience of such
counsel, are ordinarily applicable to transactions of the type
contemplated by this Agreement and the Indentures;
(xii) the execution and delivery by the Company of this Agreement
and the Indentures and the issuance and sale of the Securities to
you as contemplated thereby and the performance of its obligations
pursuant to this Agreement and the Indentures will not conflict with
or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, (a) any of the respective
charters or bylaws of the Company or any of its Significant
Subsidiaries, (b) assuming compliance with all applicable securities
laws and "blue sky" laws of those jurisdictions in which the
Securities may be offered or sold, any existing applicable statute,
rule
18
or regulation or any order of any court or governmental agency or
body having jurisdiction over the Company or any of its Significant
Subsidiaries or any of their properties or (c) any agreement or
instrument to which the Company or any of its Subsidiaries is a
party and that has been specifically identified to us by the Company
as being material to the Company and its Subsidiaries taken as a
whole and set forth on Schedule hereto; provided that the
opinion expressed in clause (b) is limited to those statutes, rules
or regulations which, in the experience of such counsel, are
normally applicable to transactions of the type contemplated by this
Agreement in connection with the sale of the Securities;
(xiii) to the best of such counsel's knowledge, there is no
current, pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any arbitrator
involving the Company or any of its Subsidiaries or to which any of
their respective property is subject of a character required to be
disclosed in the Registration Statement which is not adequately
disclosed in the Prospectus;
(xiv) all of the issued and outstanding shares of capital stock
of, or other ownership interests in, each Significant Subsidiary of
the Company have been duly and validly authorized and issued, and
the shares of capital stock of, or other ownership interests in,
each such subsidiary are owned of record, directly or through
subsidiaries, by the Company, are fully paid and nonassessable, and
to the best knowledge of such counsel are owned free and clear of
any Lien;
(xv) the Company and its Subsidiaries, to the extent each is a
party thereto, have full power and authority to execute, deliver and
perform the Merger Agreement;
(xvi) the Merger Agreement and the New Credit Facility conform in
all material respects to the descriptions thereof contained in the
Prospectus and are valid, duly authorized and enforceable agreements
against the Merger Parties, to the extent each is a party thereto;
and
(xvii) the approval of the Merger by the shareholders of the
Company is not required.
(2) In giving their opinion required by subsection (f)(l) of this
Section 7, such counsel (i) may state that such opinions are limited to
matters governed by the Federal laws of the United States of America,
the laws of the State of New York, the laws of the State of Delaware
and the laws of the State of Nevada, and (ii) shall state that (a) such
counsel has acted as counsel to the Company in connection with the
preparation of the Registration Statement and (b) such counsel has
participated in conferences with officers and other representatives of
the Company and AMH, representatives of the independent public
accountants for the Company and AMH, your representatives and your
counsel at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in
the Registration Statement or the Prospectus on the basis of the
foregoing, no fact has come to the attention of such counsel that leads
it to believe that the Registration Statement, at the time it became
effective, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus, as
of its date and as of the Closing Date, contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, it being
understood that such counsel is not expressing any opinion or belief as
to the financial statements, schedules and other financial or
statistical data included in or excluded from the Registration
Statement or the Prospectus, or the Statements of Eligibility and
Qualifications of the Trustees on Form T-1.
19
In rendering the foregoing opinions, Skadden, Arps may rely as to
matters of Nevada law on the opinion of Woodburn & Wedge, Nevada
counsel to the Company, or such other counsel as is reasonably
satisfactory to the Underwriters' Counsel.
(3) an opinion (satisfactory to you and Underwriters' Counsel), dated
the Closing Date, of , regulatory counsel for the Company,
to the effect that:
(i) the descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings,
contracts and other documents and regulatory matters described in
the Prospectus under the captions "Risk Factors--Limits on
Reimbursement," "-- Extensive Regulation," "--Healthcare Reform
Legislation," "Healthcare Industry Overview," "Business--Medicare,
Medicaid and other Revenues," and "--Healthcare Regulation and
Licensing," and in the Company's Annual Report on Form 10-K for the
fiscal year ended May 31, 1994 under the captions "Medicare,
Medicaid and Other Revenues" and "Health Care Reform, Regulation,
Licensing and Insurance" insofar as such statements constitute
summaries of legal matters, documents or proceedings referred to
therein are accurate in all material respects and fairly present the
information shown as of the dates thereof; and
(ii) each of the Company and its Subsidiaries has such
Authorizations from all regulatory or governmental officials, bodies
and tribunals as are necessary to own, lease and operate its
respective properties and to conduct its business in the manner
described in the Prospectus.
(4) In giving their opinion required by subsection f(3) of this
Section 7, such counsel shall state that no fact has come to the
attention of such counsel that leads it to believe that the
descriptions of statutes, legal and governmental proceedings, contracts
and other documents and regulatory matters described in the
Registration Statement and the Prospectus under the captions set forth
in subsection (f)(3)(i) of this Section 7 contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(g) You shall have received an opinion, dated the Closing Date, of Latham
& Watkins, counsel for the Underwriters, in form and substance reasonably
satisfactory to you.
(h) You shall have received each of the opinions required to be delivered
under any of the other Transaction Documents, together with appropriate
reliance letters addressed to the Underwriters.
(i) You shall have received letters on and as of the date hereof as well
as on and as of the Closing Date, in the latter case constituting an
affirmation of the statements set forth in the earlier letters, in form and
substance satisfactory to you, from KPMG Peat Marwick LLP and Price
Waterhouse LLP, independent public accountants to the Company and AMH,
respectively, with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectus as you shall reasonably require.
(j) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Securities, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be reasonably satisfactory in all respects to Latham & Watkins, and such
counsel shall have been furnished with such documents and opinions, in
addition to those set forth above, as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
this Section 7, in order to evidence the accuracy, completeness and
satisfaction in all material respects of any of the representations,
warranties or conditions herein contained and to render the opinion
referred to in Section 7(g).
(k) The Company shall not have failed at or prior to the Closing Date to
perform or comply with any of the agreements herein contained and required
to be performed or complied with by the Company at or prior to the Closing
Date.
20
(l) There shall have been no amendments, alterations, modifications, or
waivers of any provisions of the Transaction Documents since the date of
the execution and delivery thereof by the parties thereto other than those
which are disclosed in the Registration Statement or the Prospectus or any
supplement thereto or which under the Act are not required to be disclosed
in the Prospectus or any supplement thereto and which have been disclosed
to the Underwriters prior to the date hereof.
(m) Each of the Merger Parties shall, to the extent each is a party
thereto, have complied in all respects with all agreements and covenants in
the Transaction Documents and performed all conditions specified therein
that the terms thereof require to be complied with or performed at or prior
to the Effective Time of the Merger, except to the extent that such
compliance or performance has been waived by the other parties to the
applicable Transaction Documents.
(n) The certificate of merger with respect to the Merger shall have been
filed with the Secretary of State of the State of Delaware and shall have
become effective, the Merger shall have occurred and all other transactions
contemplated by the Transaction Documents (other than the closing of the
offering and sale of the Securities under this Agreement) to be consummated
at or prior to the Effective Time of the Merger shall have been consummated
prior to or simultaneously with the consummation of the purchase and sale
of the Securities hereunder.
(o) Prior to or concurrently with the purchase and sale of the Securities
hereunder, the Company shall have entered into the New Credit Facility and
satisfied all conditions to borrowing thereunder and you shall have
received counterparts, conformed as executed, thereof. The Lenders under
the New Credit Facility shall have indicated to you that all such
conditions have been satisfied and that they are prepared to fund term
loans in the amount of $ and revolving loans in the amount of
$ .
(p) Except as is disclosed to the Underwriters in writing, the
representations and warranties of the Company set forth in the Transaction
Documents shall be true, accurate and complete in all respects.
(q) On or before the Closing Date, the Underwriters and Latham & Watkins,
counsel for the Underwriters, shall have received such further documents,
opinions, certificates and schedules or instruments relating to the
business, corporate, legal and financial affairs of each of the Merger
Parties as they shall have heretofore reasonably requested.
(r) Prior to the purchase and sale of the Securities hereunder, the
Company's tender offers to purchase for cash any and all of the Company's
outstanding Medium Term Notes, with maturities ranging through 1997 and 7 %
unsecured Notes due 1997 (the "NME Tender Offers") and the Company's tender
offers to purchase for cash any and all of the 11% Senior Notes due 2000,
9% Senior Subordinated Notes due 2006, 13% Senior Subordinated Notes due
2001 and 15% Junior Subordinated Debentures due 2005 of American Medical
International, Inc. ("AMI") (collectively, the "AMI Post 1991 Debt
Securities") and the related consent solicitations (collectively, the "AMI
Post 1991 Debt Securities Tender Offers") and the Company's tender offers
(the "AMI Swiss Bonds Tender Offers" and, together with the AMI Post 1991
Debt Securities Tender Offers, the "AMI Tender Offers") to purchase for
cash any and all of the 6% Dual Currency Bonds due 1997 and the 5% Swiss
Franc Bonds due 1996 of AMI (collectively, the "AMI Swiss Bonds") shall
have expired, the Company shall have accepted for payment all such
securities validly tendered pursuant to such tender offers and each of the
indentures governing the AMI Post 1991 Debt Securities shall have been
amended as contemplated by the applicable offer to purchase and consent
solicitation; immediately after the Effective Time of the Merger, the
Company shall have assigned its rights and obligations to purchase the AMI
Post 1991 Debt Securities and the AMI Swiss Bonds under the AMI Tender
Offers to AMI and transferred to AMI, from borrowings under the New Credit
Facility, the amount of funds necessary to consummate such AMI Tender
Offers and the Company and AMI shall have made provisions satisfactory to
the Underwriters so that the NME Tender Offers and the AMI Tender Offers,
respectively, are consummated as soon as practicable following the Closing
Date. You shall have received evidence satisfactory to you that the Company
has accepted for payment all securities validly tendered pursuant to the
NME Tender Offers and the AMI Tender Offers, the indentures governing the
AMI Post 1991
21
Debt Securities have been amended pursuant to the applicable offer to
purchase and consent solicitation, the Company has assigned to AMI its
rights and obligations to purchase the AMI Post 1991 Debt Securities and
the AMI Swiss Bonds under the AMI Tender Offers, and the Company and AMI
will consummate the NME Tender Offers and the AMI Tender Offers,
respectively, as soon as practicable following the Closing Date.
(s) Prior to or concurrently with the purchase and sale of the Securities
hereunder, AMI shall have mailed redemption notices with respect to all of
its outstanding 11% Senior Notes due 2015 and 9% Convertible Debentures due
2001 and you shall have received evidence satisfactory to you that such
redemption notices have been so mailed by AMI.
8. Effective Date of Agreement, Default and Termination. This Agreement shall
become effective upon the later of (i) the execution and delivery of this
Agreement by the parties hereto, (ii) unless the Company intends to rely on
Rule 430A of the Act, the effectiveness of the Registration Statement, and
(iii) if the Company intends to rely on Rule 430A of the Act, the earlier of
the effectiveness of a post-effective amendment filed in compliance with Rule
430A of the Act or the filing of a final prospectus pursuant to Rule 424(b).
This Agreement may be terminated at any time on or prior to the Closing Date
by you by notice to the Company if any of the following has occurred: (i)
subsequent to the date the Registration Statement is declared effective or the
date of this Agreement, any Material Adverse Change which, in your judgment,
impairs the investment quality of the Securities, (ii) any outbreak or
escalation of hostilities or other national or international calamity or crisis
or material adverse change in the financial markets of the United States or
elsewhere, or any other substantial national or international calamity or
emergency if the effect of such outbreak, escalation, calamity, crisis or
emergency would, in your judgment make it impracticable or inadvisable to
market the Securities or to enforce contracts for the sale of the Securities,
(iii) any suspension or limitation of trading generally in securities on the
New York, American or Pacific Stock Exchanges, the National Association of
Securities Dealers Automated Quotation National Market, or the over-the-counter
markets or any setting of minimum prices for trading on such exchanges or
markets, (iv) any declaration of a general banking moratorium by either Federal
or New York authorities, (v) the taking of any action by any Federal, state or
local government or agency in respect of its monetary or fiscal affairs that in
your judgment has a material adverse effect on the financial markets in the
United States, and would, in your judgment, make it impracticable or
inadvisable to market the Securities or to enforce contracts for the sale of
the Securities, (vi) any securities of the Company or any of its Subsidiaries
shall have been downgraded or placed on any "watch list" for possible
downgrading or reviewed for a possible change that does not indicate the
direction of the possible change by any "nationally recognized statistical
rating organization," as such term is defined for purposes of Rule 436(g)(2) of
the Act, or (vii) the enactment, publication, decree or other promulgation of
any Federal or state statute, regulation, or rule or order of any court or
other governmental authority which in your judgment could have a Material
Adverse Effect.
If this Agreement shall be terminated by you pursuant to clause (i), (vi) or
(vii) of the second paragraph of this Section 8 or because of the failure or
refusal on the part of the Company to comply with the terms or to fulfill any
of the conditions of this Agreement, the Company agrees to reimburse you for
all reasonable out-of-pocket expenses (including the reasonable fees and
disbursements of counsel) incurred by you. Notwithstanding any termination of
this Agreement, the Company shall be liable for all expenses which it has
agreed to pay pursuant to Section 4(f) hereof. If this Agreement is terminated
pursuant to this Section 8, such termination shall be without liability of any
Underwriter to the Company or any of its Subsidiaries.
If on the Closing Date any of the Underwriters shall fail or refuse to
purchase the Securities which it has agreed to purchase hereunder on such date,
and the aggregate principal amount of such Securities that such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused
to purchase does not exceed 10% of the total principal amount of such
Securities to be purchased on such date by all Underwriters, each non-
defaulting Underwriter shall be obligated severally, in the proportion which
the
22
amount of Securities set forth opposite its name in Schedule I and Schedule II,
respectively, hereto bears to the aggregate principal amount of Securities
which all the non-defaulting Underwriters, as the case may be, have agreed to
purchase, or in such other proportion as you (at your option) may specify, to
purchase the Securities that such defaulting Underwriter or Underwriters, as
the case may be, agreed but failed or refused to purchase on such date;
provided that in no event shall the aggregate principal amount of Securities
that any Underwriter has agreed to purchase pursuant to Section 2 hereof be
increased pursuant to this Section 8 by an amount in excess of one-ninth of
such principal amount of Securities without the written consent of such
Underwriter. If, on the Closing Date any of the Underwriters shall fail or
refuse to purchase the Securities, as the case may be, and the total principal
amount of Securities with respect to which such default occurs exceeds 10% of
the total amount of Securities to be purchased on such date by all Underwriters
and arrangements satisfactory to you and the Company for the purchase of such
Securities are not made within 48 hours after such default, this Agreement
shall terminate without liability on the part of the non-defaulting
Underwriters and the Company, except as otherwise provided in this Section 8.
In any such case that does not result in termination of this Agreement, either
you or the Company may postpone the Closing Date for not longer than seven (7)
days, in order that the required changes, if any, in the Registration Statement
and the Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve a defaulting Underwriter
from liability in respect of any default of any such Underwriter under this
Agreement.
9. Notices. Notices given pursuant to any provision of this Agreement shall
be addressed as follows: (a) if to the Company, to it at 2700 Colorado Avenue,
Santa Monica, California 90404, Attention: Treasurer, with copies to Attention:
General Counsel and to Skadden, Arps, Slate, Meagher & Flom, 300 South Grand
Avenue, Suite 3400, Los Angeles, California 90071, Attention: Thomas C. Janson,
Jr. and (b) if to any Underwriter, to Donaldson, Lufkin & Jenrette Securities
Corporation, 140 Broadway, New York, New York 10005, Attention: Syndicate
Department, and, in each case, with a copy to Latham & Watkins, 855 Third
Avenue, Suite 1000, New York, New York 10022, Attention: Kirk A. Davenport,
Esq., or in any case to such other address as the person to be notified may
have requested in writing.
10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS
LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING RELATED TO THIS AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED HEREBY,
IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL JURISDICTION AND IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN ANY SUCH COURT. THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
11. Severability. Any determination that any provision of this Agreement may
be, or is, unenforceable shall not affect the enforceability of the remainder
of this Agreement.
12. Successors. Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Underwriters, any Indemnified Person referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The terms "successors and assigns" shall not include a purchaser of
any of the Securities from any of the Underwriters merely because of such
purchase.
23
13. Certain Definitions. For purposes of this Agreement, (a) "business day"
means any day on which the NYSE, Inc. is open for trading and (b) "subsidiary"
has the meaning set forth in Rule 405 of the Act.
14. Counterparts. This Agreement may be executed in one or more counterparts
and, if executed in one or more counterparts, the executed counterparts shall
each be deemed to be an original, not all such counterparts shall together
constitute one and the same instrument.
15. Headings. The headings herein are inserted for convenience of reference
only and are not intended to be part of, or to effect the meaning or
interpretation of, this Agreement.
16. Survival. The indemnities and contribution provisions and the other
agreements, representations and warranties of the Company, its officers and
directors and of the Underwriters set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, and will survive
delivery of and payment for the Securities, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any of the Underwriters or by or on behalf of the Company, the officers or
directors of the Company or any controlling person of the Company, (ii)
acceptance of the Securities and payment for them hereunder and (iii)
termination of this Agreement.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument. Please confirm that the foregoing
correctly sets forth the agreement among the Company and you.
Very truly yours,
NATIONAL MEDICAL ENTERPRISES, INC.
By:
-----------------------------------
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
SALOMON BROTHERS INC
J.P. MORGAN SECURITIES INC.
BT SECURITIES CORPORATION
SMITH BARNEY INC.
BA SECURITIES, INC.
Acting on behalf of themselves
By Donaldson, Lufkin & Jenrette
Securities Corporation
By:
----------------------------------------
Name:
Title:
24
SCHEDULE I
SENIOR NOTES
PRINCIPAL PERCENTAGE
UNDERWRITER AMOUNT OF TOTAL
- ----------- --------- ----------
Donaldson, Lufkin & Jenrette Securities Corporation........ $ $
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................
Morgan Stanley & Co. Incorporated..........................
Salomon Brothers Inc.......................................
J.P. Morgan Securities Inc.................................
BT Securities Corporation..................................
Smith Barney Inc...........................................
BA Securities, Inc.........................................
-------- --------
Total.................................................... $ $
======== ========
25
SCHEDULE II
SENIOR SUBORDINATED NOTES
PRINCIPAL PERCENTAGE
UNDERWRITER AMOUNT OF TOTAL
- ----------- --------- ----------
Donaldson, Lufkin & Jenrette Securities Corporation........ $ $
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................
Morgan Stanley & Co. Incorporated..........................
Salomon Brothers Inc.......................................
J.P. Morgan Securities Inc.................................
BT Securities Corporation..................................
Smith Barney Inc...........................................
BA Securities, Inc.........................................
-------- --------
Total.................................................... $ $
======== ========
26