EXHIBIT 4.12
$150,000,000
PSYCHIATRIC SOLUTIONS, INC.
10-5/8% SENIOR SUBORDINATED NOTES DUE 2013
PURCHASE AGREEMENT
June 19, 2003
Lehman Brothers Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Jefferies & Company, Inc.
c/o Lehman Brothers, Inc.
745 Seventh Avenue
New York, New York 10019
Ladies and Gentlemen:
Psychiatric Solutions, Inc., a Delaware corporation (the "COMPANY"), proposes,
upon the terms and conditions set forth herein, to issue and sell to you, Lehman
Brothers Inc. ("LEHMAN"), Merrill Lynch, Pierce, Fenner & Smith Incorporated
("MERRILL LYNCH") and Jefferies & Company, Inc., as the initial purchasers (the
"INITIAL PURCHASERS"), $150,000,000 in aggregate principal amount of its 10-5/8%
Senior Subordinated Notes due 2013 (the "NOTES"). The Notes (i) will have terms
and provisions that are summarized in the Offering Memorandum (as defined below)
and (ii) are to be issued pursuant to an Indenture (the "INDENTURE") to be
entered into among the Company, the Guarantors (as defined below) and Wachovia
Bank, National Association, as trustee (the "TRUSTEE"). The Company's
obligations under the Notes, including the due and punctual payment of interest
on the Notes, will be unconditionally guaranteed (the "Guarantees") by (1) each
of the Company's current and future domestic subsidiaries in which the Company
has made an investment of at least $0.1 million, other than certain subsidiaries
listed on Schedule II hereto which were formed solely for the purpose of holding
assets pledged as security in connection with any HUD financing (collectively,
the "HUD FINANCING SUBSIDIARIES"), and PSI Surety, Inc., and (2) any subsidiary
that incurs, guarantees or otherwise provides direct credit support for any
indebtedness of the Company or any of the Company's domestic subsidiaries
(collectively, the "GUARANTORS"). As used herein, the term "Notes" shall include
the Guarantees, unless the context otherwise requires. This is to confirm the
agreement concerning the purchase of the Notes from the Company by the Initial
Purchasers.
1. Preliminary Offering Memorandum and Offering Memorandum. The Notes
will be offered and sold to the Initial Purchasers without registration under
the Securities Act of 1933, as amended (the "ACT"), in reliance on an exemption
pursuant to
Section 4(2) under the Act. The Company and the Guarantors have prepared a
preliminary offering memorandum, dated June 9, 2003 (the "PRELIMINARY OFFERING
MEMORANDUM"), and an offering memorandum, dated June 19, 2003 (the "OFFERING
MEMORANDUM"), setting forth information regarding the Company, the Guarantors,
the Notes, and the Exchange Notes (as defined herein), the Guarantees and the
Exchange Guarantees (as defined herein). The Company and the Guarantors hereby
confirm that they have authorized the use of the Preliminary Offering Memorandum
and the Offering Memorandum in connection with the offering and resale of the
Notes by the Initial Purchasers.
Any reference to the Preliminary Offering Memorandum or the
Offering Memorandum shall be deemed to refer to and include the financial
statements incorporated by reference into the Preliminary Offering Memorandum or
the Offering Memorandum, as the case may be, set forth under the caption
"Incorporation of Documents by Reference" in the Preliminary Offering Memorandum
or the Offering Memorandum, as the case may be.
It is understood and acknowledged that upon original issuance
thereof, and until such time as the same is no longer required under the
applicable requirements of the Act, the Notes (and all securities issued in
exchange therefor, in substitution thereof) shall bear the following legend
(along with such other legends as the Initial Purchasers and their counsel deem
necessary):
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR OTHER
SECURITIES LAWS. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS
NOTE BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING ITS
NOTE IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE
DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY
RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION
THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF
ANY PREDECESSOR OF THIS NOTE) OR THE LAST DAY ON WHICH THE COMPANY OR
ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY
PREDECESSOR OF THIS NOTE) AND (Y) SUCH LATER DATE, IF
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ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE "RESALE RESTRICTION
TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS
THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A INSIDE
THE UNITED STATES, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
(3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND;
PROVIDED THAT THE COMPANY, THE TRUSTEE AND THE REGISTRAR SHALL HAVE THE
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE
(D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATION OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF
THIS NOTE IS COMPLETED AND DELIVERED BY THIS TRANSFEROR TO THE TRUSTEE.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
You have advised the Company that you will make offers (the
"EXEMPT RESALES") of the Notes purchased by you hereunder on the terms set forth
in the Offering Memorandum, as amended or supplemented, solely to (i) persons
whom you reasonably believe to be "qualified institutional buyers" as defined in
Rule 144A under the Act ("QIBS") and (ii) outside the United States to certain
persons in offshore transactions in reliance on Regulation S under the Act
("REGULATION S") (such persons specified in clauses (i) and (ii) being referred
to herein as the "ELIGIBLE PURCHASERS"). As used herein, the terms "offshore
transaction," "United States" and "U.S. Person" have the respective meanings
given to them in Regulation S. You will offer the Notes to Eligible
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Purchasers initially at a price equal to 100.00% of the principal amount
thereof. Such price may be changed at any time without notice.
In connection with the offering of the Notes, the Company will
(i) consummate the transactions contemplated by the purchase agreement, dated as
of April 8, 2003 (the "ACQUISITION AGREEMENT"), with Ramsay Youth Services, Inc.
("RAMSAY"), relating to the acquisition by the Company of all of the outstanding
capital stock of Ramsay (the "ACQUISITION"), (ii) consummate the transactions
contemplated by the Stock Purchase Agreement, dated as of January 6, 2003 (the
"STOCK PURCHASE AGREEMENT"), among the Company and the purchasers named therein,
relating to the second private placement of $12,500,000 of the Company's Series
A Convertible Preferred Stock (the "SERIES A PREFERRED"), and (iii) enter into
the Second Amended and Restated Revolving Credit and Term Loan Agreement, to be
dated as of June 30, 2003, among the Company, the subsidiary borrowers party
thereto, the subsidiary guarantors party thereto, and CapitalSource Finance LLC,
as administrative agent and lender, to provide for a new senior secured term
loan of $17.0 million and a new senior secured revolving credit facility of up
to $50.0 million (the "SECOND AMENDED AND RESTATED CREDIT FACILITY"). The net
proceeds from the sale of the Notes, together with the proceeds from the private
placement of the Series A Preferred, will be used to finance the Acquisition and
repay certain indebtedness of the Company and Ramsay, as described in the "Use
of Proceeds" section of the Offering Memorandum. The Acquisition, the private
placement of the Series A Preferred, the entering into of the Second Amended and
Restated Credit Facility and the offering of the Notes are collectively referred
to herein as the "TRANSACTIONS."
Holders (including subsequent transferees) of the Notes will
have the registration rights set forth in the registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT") among the Company, the Guarantors and the
Initial Purchasers, to be dated as of the Closing Date (as defined below),
substantially in the form of Exhibit A hereto, for so long as such Notes
constitute "TRANSFER RESTRICTED SECURITIES" (as defined in the Registration
Rights Agreement). Pursuant to the Registration Rights Agreement, the Company
and the Guarantors will agree to file with the Securities and Exchange
Commission (the "COMMISSION") under the circumstances set forth therein, (i) a
registration statement under the Securities Act (the "EXCHANGE OFFER
REGISTRATION STATEMENT") relating to a separate series of the Company's 10-5/8%
Senior Subordinated Notes due 2013, unconditionally guaranteed by the
Guarantors, with substantially identical terms to the Notes and the Guarantees
(except for transfer restrictions) (the "EXCHANGE NOTES" and the "EXCHANGE
GUARANTEES") to be offered in exchange for the Notes and the Guarantees (such
offer to exchange being referred to collectively as the "REGISTERED EXCHANGE
OFFER") and (ii) if required by the terms of the Registration Rights Agreement,
a shelf registration statement pursuant to Rule 415 under the Securities Act
(the "SHELF REGISTRATION STATEMENT" and, together with the Exchange Offer
Registration Statement, the "REGISTRATION STATEMENTS") relating to the resale by
certain holders of the Notes, and to use their best efforts to cause such
Registration Statements to be declared effective. This is to confirm the
agreements concerning the purchase of the Notes from the Company by the Initial
Purchasers.
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2. Representations, Warranties and Agreements of the Company and the
Guarantors. The Company and each of the Guarantors, jointly and severally,
represent, warrant and agree as follows (it being understood and agreed that for
purposes of this Section 2, the terms "subsidiary" and "subsidiaries" will
include all entities that will become subsidiaries of the Company following
consummation of the transactions contemplated hereby):
(a) The Preliminary Offering Memorandum and Offering
Memorandum have been prepared by the Company and the Guarantors for use by the
Initial Purchasers in connection with the Exempt Resales. No order or decree
preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum, or any order asserting that the transactions contemplated by this
Agreement are subject to the registration requirements of the Act has been
issued and no proceeding for that purpose has commenced or is pending or, to the
knowledge of the Company or any of the Guarantors is contemplated.
(b) The Preliminary Offering Memorandum and the Offering
Memorandum as of their respective dates did not, and the Offering Memorandum as
of the Closing Date will not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading, except that this representation and
warranty does not apply to statements in or omissions from the Preliminary
Offering Memorandum and Offering Memorandum made in reliance upon and in
conformity with information relating to the Initial Purchasers furnished to the
Company in writing by or on behalf of the Initial Purchasers expressly for use
therein.
(c) The market-related and customer-related data and estimates
included under the captions "Summary" and "Business" in the Preliminary Offering
Memorandum and the Offering Memorandum are based on or derived from sources that
the Company believes to be reliable and accurate.
(d) The Company and each of its subsidiaries have been duly
incorporated, organized or formed, as the case may, and are validly existing as
a corporation, limited liability company, partnership or limited liability
partnership, as the case may be, in good standing under the laws of their
respective jurisdictions of incorporation, organization or formation, as the
case may be, are duly qualified to do business and are in good standing as a
foreign corporation, limited liability company, partnership or limited liability
partnership, as the case may be, in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective businesses
requires such qualification (except such failures to qualify as are not, either
individually or in the aggregate, material to the Company and its subsidiaries
taken as a whole), and have all corporate, limited liability company,
partnership or limited liability partnership, as the case may be, power and
authority necessary to own or hold their respective properties and to conduct
the businesses in which they are engaged.
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(e) The Company has an authorized capitalization as set forth
in the Offering Memorandum, and all of the issued shares of capital stock of the
Company and its subsidiaries have been duly authorized and validly issued and
are fully paid and non-assessable; and all of the issued shares of capital stock
of each subsidiary of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable and (except for directors'
qualifying shares) are owned directly or indirectly by the Company or each
Guarantor, free and clear of all liens, encumbrances, equities or claims, other
than liens, encumbrances, equities or claims under the Company's Second Amended
and Restated Credit Facility, described in the Offering Memorandum, and none of
such shares of capital stock were issued in violation of preemptive or other
similar rights arising by operation of law, under the charter and bylaws (or
similar organizational documents) of the Company or any of its subsidiaries or
under any agreement to which the Company or any of its subsidiaries is a party
or otherwise.
(f) The Company and each Guarantor have all requisite
corporate, limited liability company, partnership or limited liability
partnership, as the case may be, power and authority to enter into the
Indenture. The Indenture has been duly and validly authorized by the Company and
the Guarantors, and upon its execution and delivery and, assuming due
authorization, execution and delivery by the Trustee, will constitute the valid
and binding agreement of the Company and the Guarantors, enforceable against the
Company and the Guarantors in accordance with its terms, except as such
enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally and by general equitable principles; no qualification of the
Indenture under the Trust Indenture Act of 1939 (the "1939 ACT") is required in
connection with the offer and sale of the Notes contemplated hereby or in
connection with the Exempt Resales. The Indenture will conform to the
description thereof in the Offering Memorandum.
(g) The Company has all requisite corporate power and
authority to issue and sell the Notes. The Notes have been duly authorized by
the Company and, when duly executed by the Company in accordance with the terms
of the Indenture, assuming due authentication of the Notes by the Trustee, upon
delivery to the Initial Purchasers against payment therefor in accordance with
the terms hereof, will be validly issued and delivered, and will constitute
valid and binding obligations of the Company entitled to the benefits of the
Indenture, enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles.
The Notes will conform to the description thereof in the Offering Memorandum.
(h) The Company has all requisite corporate power and
authority to issue the Exchange Notes. The Exchange Notes have been duly and
validly authorized by the Company and if and when duly issued and authenticated
in accordance with the terms of the Indenture and delivered in accordance with
the Registered Exchange Offer provided for in the Registration Rights Agreement,
will constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture, enforceable against the Company in accordance with
their terms, except as such enforceability may be
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limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights generally
and by general equitable principles.
(i) Each Guarantor has all requisite corporate, limited
liability company, partnership or limited liability partnership, as the case may
be, power and authority to issue the Guarantees. The Guarantees have been duly
and validly authorized by the Guarantors and when duly executed and delivered by
the Guarantors in accordance with the terms of the Indenture and upon the due
execution, authentication and delivery of the Notes in accordance with the
Indenture and the issuance of the Notes in the sale to the Initial Purchasers
contemplated by this Agreement, will constitute valid and binding obligations of
the Guarantors, enforceable against the Guarantors in accordance with their
terms, except as such enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles.
The Guarantees will conform to the description thereof in the Offering
Memorandum.
(j) Each Guarantor has all requisite corporate, limited
liability company, partnership or limited liability partnership, as the case may
be, power and authority to issue the Exchange Guarantees. The Exchange
Guarantees have been duly and validly authorized by the Guarantors and if and
when duly executed and delivered by the Guarantors in accordance with the terms
of the Indenture and upon the due execution and authentication of the Exchange
Notes in accordance with the Indenture and the issuance and delivery of the
Exchange Notes in the Registered Exchange Offer contemplated by the Registration
Rights Agreement, will constitute valid and binding obligations of the
Guarantors, entitled to the benefits of the Indenture, enforceable against the
Guarantors in accordance with their terms, except as such enforceability may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights generally
and by general equitable principles.
(k) The Company and each Guarantor has all requisite
corporate, limited liability company, partnership or limited liability
partnership, as the case may be, power and authority to enter into the
Registration Rights Agreement. The Registration Rights Agreement has been duly
authorized by the Company and each Guarantor and, when executed and delivered by
the Company and each Guarantor in accordance with the terms hereof and thereof,
will be validly executed and delivered and (assuming the due authorization,
execution and delivery thereof by you) will be the legally valid and binding
obligation of the Company and each Guarantor in accordance with the terms
thereof, enforceable against the Company and each Guarantor in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting creditor's rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and, as to rights of indemnification and contribution, by
principles of public policy. The Registration Rights Agreement will conform to
the description thereof in the Offering Memorandum.
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(l) The Company and each Guarantor has all requisite
corporate, limited liability company, partnership or limited liability
partnership, as the case may be, power and authority to enter into this
Agreement. This Agreement has been duly authorized, executed and delivered by
the Company and the Guarantors.
(m) The Company and its subsidiaries have all requisite
corporate, limited liability company, partnership or limited liability
partnership, as the case may be, power and authority to consummate the
Transactions and all agreements related to the Transactions (collectively, the
"TRANSACTION DOCUMENTS") to which they are a party. Each of the Transaction
Documents has been duly and validly authorized by the Company and its
subsidiaries, as applicable, and when executed and delivered by the Company and
its subsidiaries, as applicable, will (assuming due authorization, execution and
delivery by the other parties thereto) constitute a legal, valid and binding
agreement of each of the Company and such subsidiaries, enforceable against the
Company and each of such subsidiaries in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity). All representations and warranties made by the Company and its
subsidiaries, as applicable, in the Transaction Documents are true and correct
in all material respects as of the date hereof or as of the Closing Date.
(n) The issue and sale of the Notes and the Guarantees and the
compliance by the Company and the Guarantors with all of the provisions of the
Notes, the Guarantees, the Exchange Notes, the Exchange Guarantees, the
Indenture, the Registration Rights Agreement, the Transaction Documents and this
Agreement and the consummation of the transactions contemplated hereby and
thereby (i) will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, except for such
conflicts, breaches, violations or defaults that do not have a Material Adverse
Effect (as defined below) (ii) will not result in any violation of the
provisions of the charter or by-laws of the Company or any of its subsidiaries
or (iii) will not violate any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their properties or assets, except for such
conflicts, breaches, violations or defaults that do not have a Material Adverse
Effect; and no consent, approval, authorization or order of, or filing,
registration or qualification with any such court or governmental agency or body
is required for the issue and sale of the Notes and the Guarantees or the
consummation by the Company and the Guarantors of the transactions contemplated
by this Agreement, the Registration Rights Agreement, the Indenture or the
Transaction Documents, except for the filing of a registration statement by the
Company with the Commission pursuant to the Act as required by the Registration
Rights Agreement and such consents, approvals, authorizations, orders, filings,
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registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Notes by
the Initial Purchasers.
(o) There are no contracts, agreements or understandings
between the Company, any Guarantor and any person granting such person the right
to require the Company or any Guarantor to file a registration statement under
the Act with respect to any securities of the Company or any Guarantor (other
than the Registration Rights Agreement) owned or to be owned by such person or
to require the Company or any Guarantor to include such securities in the
securities registered pursuant to the Registration Rights Agreement or in any
securities being registered pursuant to any other registration statement filed
by the Company or any Guarantor under the Act.
(p) During the six-month period preceding the date of the
Offering Memorandum, none of the Company, the Guarantors or any other person
acting on behalf of the Company or any Guarantor has offered or sold to any
person any Notes or Guarantees, or any securities of the same or a similar class
as the Notes or Guarantees, other than Notes or Guarantees offered or sold to
the Initial Purchasers hereunder. The Company and the Guarantors will take
reasonable precautions designed to insure that any offer or sale, direct or
indirect, in the United States or to any U.S. person (as defined in Rule 902
under the Act), of any Notes or any substantially similar security issued by the
Company or any Guarantor, within six months subsequent to the date on which the
distribution of the Notes has been completed (as notified to the Company by the
Initial Purchasers), is made under restrictions and other circumstances
reasonably designed not to affect the status of the offer and sale of the Notes
in the United States and to U.S. persons contemplated by this Agreement as
transactions exempt from the registration provisions of the Act, including any
sales pursuant to Rule 144A under, or Regulations D or S of, the Act.
(q) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements included in
the Offering Memorandum, any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Offering Memorandum;
and, since such date, there has not been any change in the stockholders' equity
or long-term debt of the Company or any of its subsidiaries or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the management, condition, financial or otherwise,
stockholders' equity, results of operations, business or prospects of the
Company and its subsidiaries, taken as a whole (a "MATERIAL ADVERSE EFFECT")
otherwise than as set forth or contemplated in the Offering Memorandum.
(r) The historical financial statements of the Company
(including the related notes and supporting schedules) included in the Offering
Memorandum present fairly the financial condition and results of operations of
the entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved.
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(s) The historical financial statements of the six facilities
acquired from The Brown Schools, Inc. in April 2003 (including the related notes
and supporting schedules) included in the Offering Memorandum present fairly the
financial condition and results of operations of the entities purported to be
shown thereby, at the dates and for the periods indicated, and have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods involved.
(t) The historical financial statements of Ramsay (including
the related notes and supporting schedules) included in the Offering Memorandum
present fairly the financial condition and results of operations of the entities
purported to be shown thereby, at the dates and for the periods indicated, and
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved.
(u) The other financial data, operating data and statistical
information and data included in the Offering Memorandum is presented fairly in
all material respects and, to the extent derived therefrom, has been prepared on
a basis consistent with such financial statements and the books and records of
the Company and its subsidiaries.
(v) The pro forma data included in the Offering Memorandum
include assumptions that provide a reasonable basis for presenting the
significant effects directly attributable to the transactions and events
described therein, the related pro forma adjustments give appropriate effect to
those assumptions, and the pro forma adjustments reflect the proper application
of those adjustments to the historical financial data.
(w) The historical financial statements (including the related
notes and supporting schedules) of (1) Cypress Creek Hospital Inc., West Oaks
Hospital, Inc. and Healthcare Rehabilitation Center of Austin, Inc., (2) Holly
Hill/Charter Behavioral Health System, LLC, (3) Aeries Healthcare Corporation
and Subsidiary (d/b/a Riveredge Hospital), and (4) PMR Corporation, included in
and/or incorporated by reference in the Offering Memorandum present fairly the
financial condition and results of operations of the entities purported to be
shown thereby, at the dates and for the periods indicated, and have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods involved.
(x) The historical interim financial statements of Aeries
Healthcare Corporation and Subsidiary (d/b/a Riveredge Hospital) for the
three-month period ended June 30, 2002 (including the related notes and
supporting schedules) included in and incorporated by reference in the Offering
Memorandum present fairly the financial condition and results of operations of
the entity purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved.
(y) Ernst & Young LLP who have certified certain historical
and pro forma financial statements of (i) the Company, (ii) the five facilities
acquired from The Brown Schools, Inc. in April 2003, including The Brown Schools
of Virginia, Inc., Cedar
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Springs Behavioral Health System, Inc., Healthcare San Antonio, Inc., The Brown
Schools of San Marcos, Inc. and The Oaks Psychiatric Hospital, Inc., (iii)
Cypress Creek Hospital Inc., West Oaks Hospital, Inc. and Healthcare
Rehabilitation Center of Austin, Inc., (iv) Holly Hill/Charter Behavioral Health
System, LLC, and (v) PMR Corporation, whose reports appear or are incorporated
by reference in the Offering Memorandum and who have delivered (a) the initial
letter referred to in Section 7(f)(i) hereof, and (b) the consent letters
referred to in Section 7(h) hereof, are independent public accountants as
required by the Act and the rules and regulations promulgated thereunder (the
"RULES AND REGULATIONS") during the periods covered by the financial statements
on which they reported contained or incorporated by reference in the Offering
Memorandum.
(z) Deloitte & Touche LLP who have certified certain
historical financial statements of Ramsay, whose report appears in the Offering
Memorandum and who have delivered the initial letter referred to in Section
7(f)(ii) hereof, are independent public accountants as required by the Act and
the Rules and Regulations during the periods covered by the financial statements
on which they reported contained in the Offering Memorandum.
(aa) BDO Seidman, LLP who have certified certain historical
financial statements of (i) The Brown Schools of Oklahoma, Inc., and (ii) Aeries
Healthcare Corporation and Subsidiary (d/b/a Riveredge Hospital), whose reports
appear or are incorporated by reference in the Offering Memorandum and who have
delivered (a) the initial letter referred to in Section 7(f)(iii) hereof, and
(b) the consent letter referred to in Section 7(i) hereof, are independent
public accountants as required by the Act and the Rules and Regulations
promulgated thereunder during the periods covered by the financial statements on
which they reported contained or incorporated by reference in the Offering
Memorandum.
(bb) The Company and each of its subsidiaries have good and
marketable title to all real property and good title to all personal property
owned by them, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Offering Memorandum and such as do
not materially affect the value of the property of the Company and its
subsidiaries taken as a whole and do not materially interfere with the use made
and proposed to be made of such property by the Company or any of its
subsidiaries; and all real property and buildings held under lease by the
Company or any of its subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company or any of its subsidiaries.
(cc) The Company and each of its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is customary
for companies engaged in similar businesses in similar industries.
(dd) The Company and each of its subsidiaries own or possess
adequate rights to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark registrations,
copyrights and licenses
11
necessary for the conduct of their respective businesses and have no reason to
believe that the conduct of their respective businesses will conflict with, and
have not received any notice of any claim of conflict with, any such rights of
others, except for such conflicts that do not or would not have a Material
Adverse Effect.
(ee) There are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any property
or assets of the Company or any of its subsidiaries is the subject that, if
determined adversely to the Company or any of its subsidiaries, could have a
Material Adverse Effect, and to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(ff) There are no contracts or other documents which would be
required to be described in a prospectus included in or filed as an exhibit to a
registration statement on Form S-1 under the Securities Act that have not been
described in the Offering Memorandum or filed with the Commission.
(gg) No relationship, direct or indirect, exists between or
among the Company or any of its subsidiaries on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company or any its
subsidiaries on the other hand, which would be required to be described in a
prospectus included in a registration statement on Form S-1 under the Securities
Act that is not described in the Offering Memorandum.
(hh) Except for the HUD Financing Subsidiaries, no subsidiary
of the Company is currently prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distribution on such
subsidiary's capital stock, from repaying to the Company any loans or advances
to such subsidiary from the Company or from transferring any of such
subsidiary's property or assets to the Company or any other subsidiary of the
Company.
(ii) No labor disturbance by the employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company or any of its
subsidiaries, is imminent that could be expected to have a Material Adverse
Effect.
(jj) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for
which the Company or any Guarantor would have any liability; neither the Company
nor any Guarantor has incurred and does not expect to incur liability under (i)
Title IV of ERISA with respect to termination of, or withdrawal from, any
"pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the "CODE"); and each "pension plan" for which the Company or any
Guarantor would have any liability that is intended to be qualified under
Section 401(a)
12
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.
(kk) The Company and each of its subsidiaries has filed all
federal, state and local income and franchise tax returns required to be filed
through the date hereof and has paid all taxes due thereon, and no tax
deficiency has been determined adversely to the Company or any of its
subsidiaries that has had (nor does the Company or any subsidiary have any
knowledge of any tax deficiency that, if determined adversely to the Company or
any of its subsidiaries, might have) a Material Adverse Effect.
(ll) Since the date as of which information is given in the
Preliminary Offering Memorandum through the date hereof, and except as may
otherwise be disclosed in the Offering Memorandum, neither the Company nor any
subsidiary has (i) issued or granted any securities, (ii) incurred any liability
or obligation, direct or contingent, other than liabilities and obligations that
were incurred in the ordinary course of business, (iii) entered into any
transaction not in the ordinary course of business or (iv) declared or paid any
dividend on its capital stock.
(mm) The Company and each subsidiary (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls that
provide reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
(nn) Neither the Company nor any of its subsidiaries (i) is in
violation of its charter or by-laws, (ii) is in default, and no event has
occurred that, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant, condition
or other obligation contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by which it
is bound or to which any of its properties or assets is subject, except for such
violations or defaults that do not have a Material Adverse Effect, or (iii) is
in violation of any law, ordinance, governmental rule, regulation or court
decree to which it or its property or assets may be subject or has failed to
obtain or maintain any license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of its property
or to the conduct of its business, except for such violations or defaults that
do not have a Material Adverse Effect.
(oo) Neither the Company nor any of its subsidiaries, nor any
director, officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its 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.
13
(pp) Except for such matters as would not, individually or in
the aggregate, either result in a Material Adverse Effect or require disclosure
in the Offering Memorandum, the Company, the Guarantors and any of their
respective subsidiaries (or, to the knowledge of the Company, any of their
respective predecessors in interest) (1) are conducting and have conducted their
businesses, operations and facilities in compliance with Environmental Laws (as
defined below); (2) possess, and are in compliance with, any and all permits,
licenses or registrations required under Environmental Law ("ENVIRONMENTAL
PERMITS"); (3) will not require material expenditures to maintain such
compliance with Environmental Law or their Environmental Permits or to
remediate, clean up, abate or remove any Hazardous Substance (as defined below);
and (4) are not subject to any pending or, to the best knowledge of the Company,
the Guarantors or any of their respective subsidiaries, threatened claim or
other legal proceeding under any Environmental Laws against the Company or its
subsidiaries, and have not been named as a "potentially responsible party" under
or pursuant to any Environmental Law. As used in this paragraph, "ENVIRONMENTAL
LAWS" means any and all applicable federal, state, local, and foreign laws,
ordinances, regulations and common law, or any administrative or judicial order,
consent, decree or judgment thereof, relating to pollution or the protection of
human health or the environment, including, without limitation, those related to
(i) emissions, discharges, releases or threatened releases of, or exposure to,
Hazardous Substances, (ii) the generation, manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances, or (iii) the investigation, remediation or cleanup of any
Hazardous Substances. As used in this paragraph, "HAZARDOUS SUBSTANCES" means
pollutants, contaminants or hazardous, dangerous, toxic, biohazardous or
infectious substances, materials or wastes, or any other chemical substance
regulated under Environmental Laws.
(qq) Except as set forth in the Offering Memorandum, neither
the Company nor any of the Guarantors nor, to the knowledge of the Company, any
other person who has a direct or indirect ownership or control interest in the
Company or any of the Guarantors or who is an officer, director, agent or
managing employee of the Company or any Guarantor: (1) has engaged in any
activities which are prohibited, or are cause for criminal or civil penalties
and/or mandatory or permissive exclusion from Medicare or Medicaid, under
Section 1320a-7, 1320a-7a, 1320a-7b, or 1395nn of Title 42 of the United States
Code, the federal TRICARE statute, the Federal False Claims Act 31 U.S.C.
ss. 3729-3733, or the regulations promulgated pursuant to such statutes or
regulations or related state or local statutes or by generally recognized
professional standards of care or conduct, except for such activities as would
not, individually or in the aggregate, result in a Material Adverse Effect; (2)
has had a civil monetary penalty assessed against it under Section 1128A of the
Social Security Act ("SSA"); (3) is currently excluded from participation under
the Medicare program or a Federal Health Care Program (as that term is defined
in SSA Section 1128(B)(f)); or (4) has been convicted (as that term is defined
in 42 C.F.R. ss. 1001.2) of any of the categories of offenses described in SSA
Section 1128(a) and (b)(1), (2) and (3).
(rr) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale of the
Notes), will violate or result in a violation of Section 7 of the Exchange Act,
or any regulation
14
promulgated thereunder, including, without limitation, Regulations T, U and X of
the Board of Governors of the Federal Reserve System.
(ss) The statements set forth in the Offering Memorandum under
the caption "Description of Notes," insofar as they purport to constitute a
summary of the terms of the Notes and the Guarantees and under the captions
"Certain U.S. Federal Income Tax Considerations," "Certain Relationships and
Related Party Transactions" and "Description of Other Indebtedness and Preferred
Stock," insofar as they relate solely to factual matters, are accurate in all
material respects.
(tt) Prior to the date hereof, neither the Company and its
subsidiaries nor any of their respective affiliates nor any person acting on its
or their behalf (other than you, as to whom the Company and its subsidiaries
make no representation) has taken any action that is designed to or that has
constituted or that might have been expected to cause or result in stabilization
or manipulation of the price of any security of the Company or its subsidiaries
in connection with the offering of the Notes.
(uu) The minute books and records of the Company relating to
proceedings of its shareholders, board of directors, and committees of its board
of directors made available to Weil, Gotshal & Manges LLP, counsel for the
Initial Purchasers, are the original minute books and records or are true,
correct and complete copies thereof, with respect to all proceedings of said
shareholders, board of directors and committees since January 1, 1999 through
the date hereof. In the event that definitive minutes have not been prepared
with respect to any proceedings of such shareholders, board of directors or
committees, the Company has provided Weil, Gotshal & Manges LLP with originals
or true, correct and complete copies of draft minutes or written agendas
relating thereto, which drafts and agendas, if any, reflect all events that
occurred in connection with such proceedings; all existing minute books and
records of the Guarantors relating to proceedings of their respective boards of
directors and committees of their respective board of directors have been made
available to Weil, Gotshal & Manges LLP, counsel for the Initial Purchasers, and
such minute books are the original minute books and records or are true, correct
and complete copies thereof, with respect to all proceedings of said board of
directors and committees since January 1, 1999 through the date hereof.
(vv) The Company is subject to and in full compliance with the
reporting requirements of Section 13 or 15(d) of the Exchange Act. All reports
filed by the Company with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act comply as to form in all material respects with the Exchange Act
and the rules and regulations of the Commission thereunder and when filed did
not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(ww) The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-14 under the
Exchange Act), which (i) are designed to ensure that material information
relating to the Company, including its
15
consolidated subsidiaries, is made known to the Company's principal executive
officer and its principal financial officer by others within those entities,
particularly during the periods in which the periodic reports required under the
Exchange Act are being prepared; (ii) have been evaluated for effectiveness as
of a date within 90 days of the filing date of the Company's most recent annual
or quarterly report; and (iii) are effective in all material respects to perform
the functions for which they were established.
(xx) Based on the evaluation of its disclosure controls and
procedures, the Company is not aware of (i) any significant deficiency in the
design or operation of internal controls which could adversely affect the
Company's ability to record, process, summarize and report financial data or any
material weaknesses in internal controls; or (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company's internal controls.
(yy) Since the date of the most recent evaluation of such
disclosure controls and procedures, there have been no significant changes in
internal controls or in other factors that could significantly affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.
(zz) Immediately after the consummation of the Transactions,
the fair value and present fair saleable value of the assets of the Company and
the Guarantors on a consolidated basis will exceed the sum of stated liabilities
and identified contingent liabilities; the Company and the Guarantors on a
consolidated basis are and will not be, after giving effect to the execution,
delivery and performance of this Agreement and the Transaction Documents and the
consummation of the Transactions, (A) left with unreasonably small capital with
which to carry on its business as it is proposed to be conducted, (B) unable to
pay its debts (contingent or otherwise) as they mature or (C) otherwise
insolvent.
(aaa) When the Notes and Guarantees are issued and delivered
pursuant to this Agreement, such Notes and Guarantees will not be of the same
class (within the meaning of Rule 144A under the Act) as securities of the
Company or the Guarantors that are listed on a national securities exchange
registered under Section 6 of the Exchange Act or that are quoted in a United
States automated inter-dealer quotation system.
(bbb) Neither the Company nor any of its subsidiaries is, or
after giving effect to the offering and sale of the Notes and upon application
of the proceeds as described under the caption "Use of Proceeds" in the Offering
Memorandum will be, an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(ccc) Assuming that your representations and warranties in
Section 3(b) are true, the purchase and resale of the Notes pursuant hereto
(including pursuant to the Exempt Resales) is exempt from the registration
requirements of the Act. No form of general solicitation or general advertising
within the meaning of Regulation D (including, but not limited to,
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio, or
any
16
seminar or meeting whose attendees have been invited by any general solicitation
or general advertising) was used by the Company, the Guarantors or any of their
respective representatives (other than you, as to whom the Company and the
Guarantors make no representation) in connection with the offer and sale of the
Notes.
(ddd) No form of general solicitation or general advertising
was used by the Company, the Guarantors or any of their respective
representatives (other than you, as to whom the Company and the Guarantors make
no representation) with respect to Notes sold outside the United States to
non-U.S. persons (as defined in Rule 902 under the Act), by means of any
directed selling efforts within the meaning of Rule 902 under the Act, and the
Company, any affiliate of the Company and any person acting on its or their
behalf (other than you, as to when the Company and the Guarantors make no
representation) has complied with and will implement the "offering restrictions"
required by Rule 902.
(eee) Set forth on Exhibit B hereto is a list of each employee
pension or benefit plan with respect to which the Company or any corporation
considered an affiliate of the Company within the meaning of Section 407(d)(7)
of ERISA is a party in interest or disqualified person.
3. Purchase of the Notes by the Initial Purchasers, Agreements to Sell,
Purchase and Resell. (a) The Company and the Guarantors, jointly and severally
hereby agree, on the basis of the representations, warranties and agreements of
the Initial Purchasers contained herein and subject to all the terms and
conditions set forth herein, to issue and sell to the Initial Purchasers and,
upon the basis of the representations, warranties and agreements of the Company
and the Guarantors herein contained and subject to all the terms and conditions
set forth herein, each Initial Purchaser agrees, severally and not jointly, to
purchase from the Company, at a purchase price of 97.25% of the principal amount
thereof, the principal amount of Notes set forth opposite the name of such
Initial Purchaser in Schedule I hereto. The Company and the Guarantors shall not
be obligated to deliver any of the securities to be delivered hereunder except
upon payment for all of the securities to be purchased as provided herein.(b)
Each of the Initial Purchasers, severally and not jointly hereby represents and
warrants to the Company that it will offer the Notes for sale upon the terms and
conditions set forth in this Agreement and in the Offering Memorandum. Each of
the Initial Purchasers hereby represents and warrants to, and agrees with, the
Company that such Initial Purchaser: (i) is a QIB with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Notes; (ii) is purchasing
the Notes pursuant to a private sale exempt from registration under the Act;
(iii) in connection with the Exempt Resales, will solicit offers to buy the
Notes only from, and will offer to sell the Notes only to, the Eligible
Purchasers in accordance with this Agreement and on the terms contemplated by
the Offering Memorandum; and (iv) will not offer or sell the Notes, nor has it
offered or sold the Notes by, or otherwise engaged in, any form of general
solicitation or general advertising (within the meaning of Regulation D,
including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by
17
any general solicitation or general advertising) and will not engage in any
directed selling efforts within the meaning of Rule 902 under the Act, in
connection with the offering of the Notes. The Initial Purchasers have advised
the Company that they will offer the Notes to Eligible Purchasers at a price
initially equal to 100.00% of the principal amount thereof, plus accrued
interest, if any, from the date of issuance of the Notes. Such price may be
changed by the Initial Purchasers at any time without notice.
Each of the Initial Purchasers understands that the Company
and, for purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Sections 7(c), (d) and (e) hereof, counsel to the Company and
counsel to the Initial Purchasers, will rely upon the accuracy and truth of the
foregoing representations, warranties and agreements and the Initial Purchasers
hereby consent to such reliance.
4. Delivery of the Notes and Payment Therefor. Delivery to the Initial
Purchasers of and payment for the Notes shall be made at the office of Waller
Lansden Dortch & Davis PLLC, at 9:00 A.M., New York City time, on June 30, 2003
(the "CLOSING DATE"). The place of closing for the Notes and the Closing Date
may be varied by agreement between the Initial Purchasers and the Company.
The Notes will be delivered to the Initial Purchasers, or the
Trustee as custodian for The Depository Trust Company ("DTC"), against payment
by or on behalf of the Initial Purchasers of the purchase price therefor by wire
transfer in immediately available funds, by causing DTC to credit the Notes to
the account of the Initial Purchasers at DTC. The Notes will be evidenced by one
or more global securities in definitive form (the "GLOBAL NOTES") and will be
registered, in the case of the Global Notes, in the name of Cede & Co. as
nominee of DTC. The Notes to be delivered to the Initial Purchasers shall be
made available to the Initial Purchasers in New York City for inspection and
packaging not later than 9:30 A.M., New York City time, on the business day next
preceding the Closing Date.
5. Agreements of the Company and the Guarantors. The Company and the
Guarantors, jointly and severally agree with each of the Initial Purchasers as
follows:
(a) The Company and the Guarantors will furnish to the Initial
Purchasers, without charge, as of the date of the Offering Memorandum, such
number of copies of the Offering Memorandum as may then be amended or
supplemented as they may reasonably request.
(b) The Company and the Guarantors will not make any amendment
or supplement to the Preliminary Offering Memorandum or to the Offering
Memorandum of which the Initial Purchasers shall not previously have been
advised or to which they shall reasonably object after being so advised.
(c) The Company and each of the Guarantors consents to the
use, in accordance with the securities or Blue Sky laws of the jurisdictions in
which the Notes are offered by the Initial Purchasers and by dealers, prior to
the date of the Offering Memorandum, of each Preliminary Offering Memorandum so
furnished by the Company
18
and the Guarantors. The Company and each of the Guarantors consent to the use of
the Offering Memorandum in accordance with the securities or Blue Sky laws of
the jurisdictions in which the Notes are offered by the Initial Purchasers and
by all dealers to whom Notes may be sold, in connection with the offering and
sale of the Notes.
(d) If, at any time prior to completion of the distribution of
the Notes by the Initial Purchasers to Eligible Purchasers, any event occurs or
information becomes known that, in the judgment of the Company, any of the
Guarantors or in the opinion of counsel for the Initial Purchasers, should be
set forth in the Offering Memorandum so that the Offering Memorandum does not
include any untrue statement of material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the Offering Memorandum in order to comply with any law,
the Company and the Guarantors will forthwith prepare an appropriate supplement
or amendment thereto, and will expeditiously furnish to the Initial Purchasers
and dealers a reasonable number of copies thereof.
(e) The Company and each of the Guarantors will cooperate with
the Initial Purchasers and with their counsel in connection with the
qualification of the Notes for offering and sale by the Initial Purchasers and
by dealers under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchasers may designate and will file such consents to service of
process or other documents necessary or appropriate in order to effect such
qualification; provided that in no event shall the Company or any of the
Guarantors be obligated to qualify to do business in any jurisdiction where it
is not now so qualified or to take any action that would subject it to service
of process in suits, other than those arising out of the offering or sale of the
Notes, in any jurisdiction where it is not now so subject.
(f) For a period of 90 days from the date of the Offering
Memorandum, the Company and the Guarantors agree not to, directly or indirectly,
sell, offer to sell, contract to sell, grant any option to purchase, issue any
instrument convertible into or exchangeable for, or otherwise transfer or
dispose of (or enter into any transaction or device that is designed to, or
could be expected to, result in the disposition in the future of), any debt
securities of the Company, the Guarantors or any of their respective
subsidiaries, except (i) in exchange for the Exchange Notes and the Exchange
Guarantees in connection with the Exchange Offer, (ii) with the prior consent of
Lehman Brothers and Merrill Lynch, or (iii) debt instruments issued pursuant to
the Second Amended and Restated Credit Facility or any HUD financing permitted
by the Indenture.
(g) So long as any of the Notes are outstanding, the Company
will furnish to the holders of the Notes, within the time periods specified in
the Commission's rules and regulations, (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only,
will cause the Company's certified independent accountants to deliver a report
on the annual financial statements, and (ii) all current reports that would
19
be required to be filed with the Commission on Form 8-K if the Company were
required to file such reports.
(h) So long as any of the Notes are outstanding, the Company
and the Guarantors will furnish to the Initial Purchasers (i) as soon as
available, a copy of each report of the Company or any Guarantor mailed to
stockholders generally or filed with any stock exchange or regulatory body and
(ii) from time to time such other information concerning the Company or the
Guarantors as the Initial Purchasers may reasonably request.
(i) The Company and the Guarantors will apply the net proceeds
from the sale of the Notes to be sold by it hereunder, together with the
proceeds from the private placement of the Series A Preferred, substantially in
accordance with the description set forth in the Offering Memorandum under the
caption "Use of Proceeds."
(j) Except as stated in this Agreement and in the Preliminary
Offering Memorandum and Offering Memorandum, neither the Company, the Guarantors
nor any of their respective affiliates has taken, nor will any of them take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
security of the Company or any of the Guarantors to facilitate the sale or
resale of the Notes and the Guarantees. Except as permitted by the Act, the
Company and the Guarantors will not distribute any offering material in
connection with the Exempt Resales.
(k) The Company and the Guarantors will use their best efforts
to permit the Notes to be designated Private Offerings, Resales and Trading
through Automated Linkages (PORTAL(R)) Market (the "PORTAL(R) MARKET")
securities in accordance with the rules and regulations adopted by the National
Association of Securities Dealers, Inc. relating to trading in the PORTAL(R)
Market and to permit the Notes to be eligible for clearance and settlement
through DTC.
(l) During the period of two years after the Closing Date, the
Company and the Guarantors will not, and will not permit any of their
"affiliates" (as defined in Rule 144 under the Act), to, resell any of the Notes
that constitute "restricted securities" under Rule 144 that have been reacquired
by any of them.
(m) The Company and the Guarantors agree not to sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Act) that would be integrated with the sale of the
Notes in a manner that would require the registration under the Act of the sale
to the Initial Purchasers or the Eligible Purchasers of the Notes.
(n) The Company and the Guarantors agree to comply with all
the terms and conditions of the Registration Rights Agreement and all agreements
set forth in the representation letter of the Company and the Guarantors to DTC
relating to the approval of the Notes by DTC for "book entry" transfer.
20
(o) The Company and the Guarantors will take such steps as
shall be necessary to ensure that neither the Company nor any of the Company's
subsidiaries becomes an "investment company" within the meaning of such term
under the Investment Company Act of 1940, as amended.
(p) The Company and the Guarantors will do and perform all
things required or necessary to be done and performed under this Agreement by
them prior to the Closing Date, and to satisfy all conditions precedent to the
Initial Purchasers' obligations hereunder to purchase the Notes.
6. Expenses. Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is terminated,
the Company and the Guarantors, jointly and severally, agree, to pay all costs,
expenses, fees and taxes incident to and in connection with: (i) the
preparation, printing, filing and distribution of the Preliminary Offering
Memorandum and the Offering Memorandum (including, without limitation, financial
statements and exhibits) and all amendments and supplements thereto (including
the fees, disbursements and expenses of the Company's accountants and counsel,
but not, however, legal fees and expenses of the Initial Purchasers' counsel
incurred in connection therewith); (ii) the preparation, printing (including,
without limitation, word processing and duplication costs) and delivery of this
Agreement, the Indenture, the Registration Rights Agreement, all Blue Sky
Memoranda and all other agreements, memoranda, correspondence and other
documents printed and delivered in connection therewith and with the Exempt
Resales (but not, however, legal fees and expenses of your counsel incurred in
connection with any of the foregoing other than fees of such counsel plus
reasonable disbursements incurred in connection with the preparation, printing
and delivery of such Blue Sky Memoranda); (iii) the issuance and delivery by the
Company of the Notes and by the Guarantors of the Guarantees and any taxes
payable in connection therewith; (iv) the qualification of the Notes and
Exchange Notes for offer and sale under the securities or Blue Sky laws of the
several states (including, without limitation, the reasonable fees and
disbursements of your counsel relating to such registration or qualification);
(v) the furnishing of such copies of the Preliminary Offering Memorandum and the
Offering Memorandum, and all amendments and supplements thereto, as may be
reasonably requested for use in connection with the Exempt Resales; (vi) the
preparation of certificates for the Notes (including, without limitation,
printing and engraving thereof); (vii) the application for quotation of the
Notes in the PORTAL(R) Market (including all disbursements and listing fees);
(viii) the approval of the Notes by DTC for "book-entry" transfer (including
fees and expenses of counsel); (ix) the rating of the Notes and the Exchange
Notes; (x) the obligations of the Trustee, any agent of the Trustee and the
counsel for the Trustee in connection with the Indenture, the Notes, the
Guarantees, the Exchange Notes and the Exchange Guarantees; (xi) the performance
by the Company and the Guarantors of their other obligations under this
Agreement; and (xii) 50% of all travel expenses (including 50% of all expenses
related to chartered aircraft) of each Initial Purchaser and the Company's
officers and employees and 50% of any other expenses of each Initial Purchaser
and the Company in connection with attending or hosting meetings with
prospective purchasers of the Notes.
21
7. Conditions to Initial Purchasers' Obligations. The respective
obligations of the Initial Purchasers hereunder are subject to the accuracy,
when made and on and as of the Closing Date, of the representations and
warranties of the Company and the Guarantors contained herein, to the
performance by the Company and the Guarantors of their respective obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Initial Purchasers shall not have discovered and
disclosed to the Company on or prior to the Closing Date that the Offering
Memorandum or any amendment or supplement thereto contains an untrue statement
of a fact that, in the opinion of Weil, Gotshal & Manges LLP, is material or
omits to state a fact that, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements therein not
misleading.
(b) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the Notes, the
Guarantees, the Exchange Notes, the Exchange Guarantees, the Registration Rights
Agreement, the Indenture, the transaction Documents and the Offering Memorandum,
and all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material respects to
counsel for the Initial Purchasers, and the Company and the Guarantors shall
have furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(c) Waller Lansden Dortch & Davis PLLC shall have furnished to
the Initial Purchasers its written opinion, as counsel to the Company and the
Guarantors, addressed to the Initial Purchasers and dated the Closing Date,
substantially in the form of Exhibit C hereto.
(d) The Initial Purchasers shall have received from Weil,
Gotshal & Manges LLP, counsel for the Initial Purchasers, such opinion or
opinions, dated the Closing Date, with respect to the issuance and sale of the
Notes, the Offering Memorandum and other related matters as the Initial
Purchasers may reasonably require, and the Company shall have furnished to such
counsel such documents and information as they reasonably request for the
purpose of enabling them to pass upon such matters.
(e) At the time of execution of this Agreement, the Initial
Purchasers shall have received from:
(i) Ernst & Young LLP, a letter with respect to the
financial information of the Company and the five facilities acquired from The
Brown Schools, Inc. in April 2003, including The Brown Schools of Virginia,
Inc., Cedar Springs Behavioral Health System, Inc., Healthcare San Antonio,
Inc., The Brown Schools of San Marcos, Inc. and The Oaks Psychiatric Hospital,
Inc. included in the Offering Memorandum, in form and substance satisfactory to
the Initial Purchasers, addressed to the Initial Purchasers and dated the date
hereof (A) confirming that they are independent public accountants under Rule
101 of the Code of Professional Conduct of the American Institute of Certified
Public Accountants, and its rulings and interpretations and (B)
22
stating, as of the date hereof (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Offering Memorandum, as of a date not more than five
days prior to the date hereof), the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily covered by
accountants' "comfort letters" to initial purchasers;
(ii) Deloitte & Touche LLP, a letter with respect to
the financial information of Ramsay, in form and substance satisfactory to the
Initial Purchasers, addressed to the Initial Purchasers and dated the date
hereof (A) confirming that they are independent public accountants under Rule
101 of the Code of Professional Conduct of the American Institute of Certified
Public Accountants, and its rulings and interpretations and (B) stating, as of
the date hereof, the conclusions and findings of such firm with respect to the
financial information and other matters ordinarily covered by accountants'
"comfort letters" to initial purchasers;
(iii) BDO Seidman, LLP, a letter with respect to the
financial information of The Brown Schools of Oklahoma, Inc., included in the
Offering Memorandum in form and substance satisfactory to the Initial
Purchasers, addressed to the Initial Purchasers and dated the date hereof (A)
confirming that they are independent public accountants under Rule 101 of the
Code of Professional Conduct of the American Institute of Certified Public
Accountants, and its rulings and interpretations and (B) stating, as of the date
hereof (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Offering Memorandum, as of a date not more than five days prior to the date
hereof), the conclusions and findings of such firm with respect to the financial
information and other matters ordinarily covered by accountants' "comfort
letters" to initial purchasers.
(f) With respect to the letters referred to in the immediately
preceding paragraph and delivered to the Initial Purchasers concurrently with
the execution of this Agreement (each, an "INITIAL LETTER"), the Initial
Purchasers shall have received a letter (each, a "BRING-DOWN LETTER") addressed
to the Initial Purchasers and dated as of the Closing Date from:
(i) Ernst & Young LLP, with respect to the financial
information of the Company and the five facilities acquired from The Brown
Schools, Inc. in April 2003, including The Brown Schools of Virginia, Inc.,
Cedar Springs Behavioral Health System, Inc., Healthcare San Antonio, Inc., The
Brown Schools of San Marcos, Inc. and The Oaks Psychiatric Hospital, Inc.
included in the Offering Memorandum, (A) confirming that they are independent
public accountants under Rule 101 of the Code of Professional Conduct of the
American Institute of Certified Public Accountants, and its rulings and
interpretations, (B) stating, as of the date of their bring-down letter (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Offering
Memorandum, as of a date not more than five days prior to the date of their
bring-down letter), the conclusions and findings of such firm with respect to
the financial information
23
and other matters covered by their initial letter and (C) confirming in all
material respects the conclusions and findings set forth in their initial
letter;
(ii) Deloitte & Touche LLP, with respect to the
financial information of Ramsay, included in the Offering Memorandum, (A)
confirming that they are independent public accountants under Rule 101 of the
Code of Professional Conduct of the American Institute of Certified Public
Accountants, and its rulings and interpretations, (B) stating, as of the date of
their bring-down letter, the conclusions and findings of such firm with respect
to the financial information and other matters covered by their initial letter
and (C) confirming in all material respects the conclusions and findings set
forth in their initial letter; and
(iii) BDO Seidman, LLP, with respect to the financial
information of The Brown Schools of Oklahoma, Inc., included in the Offering
Memorandum, (A) confirming that they are independent public accountants under
Rule 101 of the Code of Professional Conduct of the American Institute of
Certified Public Accountants, and its rulings and interpretations, (B) stating,
as of the date of their bring-down letter (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Offering Memorandum, as of a date not more
than five days prior to the date of their bring-down letter), the conclusions
and findings of such firm with respect to the financial information and other
matters covered by their initial letter and (C) confirming in all material
respects the conclusions and findings set forth in their initial letter.
(g) At the time of execution of this Agreement and the Closing
Date, the Company shall have requested and caused Ernst & Young LLP, to furnish
to the Initial Purchasers letters in form and substance satisfactory to the
Initial Purchasers consenting to the incorporation by reference in the Offering
Memorandum of the audited and interim, as applicable, financial statements of
each of (i) Cypress Creek Hospital Inc., West Oaks Hospital, Inc. and Healthcare
Rehabilitation Center of Austin, Inc., (ii) Holly Hill/Charter Behavioral Health
System, LLC, and (iii) PMR Corporation, dated respectively as of the time of
execution of this Agreement and as of the Closing Date, in form and substance
satisfactory to the Initial Purchasers, confirming that (A) they are independent
accountants within the meaning of the Act and the Exchange Act and the
respective applicable rules and regulations adopted by the Commission
thereunder, (B) in their opinion the audited financial statements incorporated
by reference in the Offering Memorandum comply in form in all material respects
with the applicable accounting requirements of the Act and the related rules and
regulations adopted by the SEC, (C) nothing has come to their attention as a
result of performing the procedures as described in SAS No. 71, Interim
Financial Information, that causes them to believe that the interim financial
statements incorporated by reference in the Offering Memorandum do not comply in
form in all material respects with the applicable accounting requirements of the
Act and the related rules and regulations adopted by the SEC, and consenting to
the incorporation by reference in the Offering Memorandum of their report with
respect to the audited financial statements for the relevant periods.
24
(h) At the time of execution of this Agreement and the Closing
Date, the Company shall have requested and caused BDO Seidman, LLP, to furnish
to the Initial Purchasers a letter in form and substance satisfactory to the
Initial Purchasers consenting to the incorporation by reference in the Offering
Memorandum of the audited and interim, as applicable, financial statements of
Aeries Healthcare Corporation and Subsidiary (d/b/a Riveredge Hospital), dated
as of the time of execution of this Agreement and as of the Closing Date, in
form and substance satisfactory to the Initial Purchasers, confirming that (A)
they are independent accountants within the meaning of the Act and the Exchange
Act and the respective applicable rules and regulations adopted by the
Commission thereunder, (B) in their opinion the audited financial statements
incorporated by reference in the Offering Memorandum comply in form in all
material respects with the applicable accounting requirements of the Act and the
related rules and regulations adopted by the SEC, (C) nothing has come to their
attention as a result of performing the procedures as described in SAS No. 71,
Interim Financial Information, that causes them to believe that the interim
financial statements incorporated by reference in the Offering Memorandum do not
comply in form in all material respects with the applicable accounting
requirements of the Act and the related rules and regulations adopted by the
SEC, and consenting to the incorporation by reference in the Offering Memorandum
of their report with respect to the audited financial statements for the
relevant periods.
(i) All consents required for the consummation of the
Transactions shall have been obtained.
(j) The Initial Purchasers and their representatives shall
have been provided the opportunity to review execution copies of the Transaction
Documents, with all schedules, exhibits and amendments thereto, and such
Transaction Documents shall be in form and substance satisfactory to the Initial
Purchasers.
(k) Prior to or concurrently with the purchase of the Notes by
the Initial Purchasers, the other Transactions shall have been consummated.
(l) The Initial Purchasers shall have received (i) a
certificate from the Company, dated as of the Closing Date, signed by its Chief
Executive Officer and Chief Accounting Officer and (ii) a certificate from each
Guarantor, dated the Closing Date, signed by its Chief Executive Officer and
Chief Financial Officer or Chief Accounting Officer, as the case may be,
stating, as applicable, that:
(1) The representations and warranties of the Company and
the Guarantors contained herein, as applicable, are true and correct
(after giving effect to all materiality qualifiers herein) as if made
on and as of the Closing Date (other than to the extent any such
representation or warranty is made expressly to a certain date), and
the Company and the Guarantors, as applicable, have performed all
covenants and agreements and satisfied all conditions (after giving
effect to all materiality qualifiers herein) on their part to be
performed or satisfied hereunder, to the extent a party hereto, at or
prior to the Closing Date;
25
(2) At the Closing Date, since the date hereof or since
the date of the most recent financial statements in the Offering
Memorandum, except as described in the Offering Memorandum, no event or
events have occurred, nor has any information become known that,
individually or in the aggregate, would have a Material Adverse Effect;
and
(3) The issuance and sale of the Notes and Guarantees by
the Company and the Guarantors hereunder has not been enjoined
(temporarily or permanently) by any court or governmental body or
agency.
(m) The Initial Purchasers shall have received a certificate
from the Company and Aeries Healthcare of Illinois, Inc., at the time of the
execution of this Agreement and the Closing Date, signed by the Chief Accounting
Officer of the Company and the Chief Financial Officer of Aeries Healthcare of
Illinois, Inc., in respect of the unaudited condensed consolidated statement of
income of Aeries Healthcare Corporation and Subsidiary (d/b/a Riveredge
Hospital) ("RIVEREDGE HOSPITAL") for the quarterly period ended June 30, 2002,
stating, as applicable, that:
(1) The financial statement attached to the certificate
is, in fact, a true and accurate copy of the unaudited condensed
consolidated statement of income of Riveredge Hospital for the
quarterly period ended June 30, 2002;
(2) As members of management of the Riveredge Hospital,
they are responsible for the fair presentation of its financial
statements and they believe the statements of financial position and
results of operations are fairly presented in conformity with
accounting principles generally accepted in the United States applied
on a basis consistent with that of the preceding periods;
(3) There are no unadjusted audit differences identified
during the current audit and pertaining to the period presented;
(4) No plans or intentions exist that may materially
affect the carrying value or classification of assets and liabilities;
(5) There are no material transactions that have not been
properly recorded in the accounting records underlying the financial
statement;
(6) There are no material weaknesses in internal control,
including any for which they believe the cost of corrective actions
exceeds the benefits and there have been no significant changes in
internal control since March 31, 2002;
(7) Except for the acquisition of Riveredge Hospital by
the Company on July 1, 2002, no events or transactions have occurred
since March 31, 2002 or are pending that would have a material effect
on the financial statements at that date or for the period then ended,
or that are of such significance in relation to Riveredge Hospital's
affairs to require mention in a
26
note to the financial statement in order to make them not misleading
regarding the financial position, results of operations, or cash flows
of the Riveredge Hospital.
(n) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial statements
included in the Offering Memorandum (exclusive of any amendment or supplement
thereto after the date hereof) any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Offering Memorandum or (ii)
since such date there shall not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or contemplated in
the Offering Memorandum, the effect of which, in any such case described in
clause (i) or (ii), is, in the reasonable judgment of Lehman Brothers and
Merrill Lynch, so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or the delivery of the Notes and the
Guarantees being delivered on such Closing Date on the terms and in the manner
contemplated herein and in the Offering Memorandum.
(o) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating organization," as
that term is defined by the Commission for purposes of Rule 436(g)(2) of the
Rules and Regulations and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities.
(p) The Notes shall have been designated for trading on the
PORTAL(R) Market and shall be eligible for clearance and settlement through DTC.
(q) The Company and the Guarantors shall have executed and
delivered the Registration Rights Agreement, and the Initial Purchasers shall
have received an original copy thereof, duly executed by the Company and the
Guarantors.
(r) The Company, the Guarantors and the Trustee shall have
executed and delivered the Indenture, and the Initial Purchasers shall have
received an original copy thereof, duly executed by the Company, the Guarantors
and the Trustee.
(s) Prior to or concurrently with the purchase of the Notes by
the Initial Purchasers, the Acquisition, the private placement of the Series A
Preferred and the entering into of the Second Amended and Restated Credit
Facility shall have been consummated and the Initial Purchasers shall have
received an original copy of each of the Transaction Documents, duly executed by
the Company, its subsidiaries, as applicable, and the other parties thereto.
(t) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in securities
generally on the
27
New York Stock Exchange, the Nasdaq National Market or the American Stock
Exchange or in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, has been suspended or
minimum prices shall have been established on any such exchange or such market
by the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction; (ii) a material disruption in
securities settlement, payment or clearance services in the United States; (iii)
a banking moratorium has been declared by Federal or state authorities; (iv) any
attack on, outbreak or escalation of hostilities or act of terrorism involving
the United States, any declaration of war by Congress or any other national or
international calamity, crisis or emergency if, in the judgment of Lehman
Brothers and Merrill Lynch, the effect of any such attack, outbreak, escalation,
act, declaration, calamity, crisis or emergency makes it impractical or
inadvisable to proceed with completion of the offering or sale of and payment
for the Notes; or (v) the occurrence of any other calamity, crisis (including
without limitation as a result of terrorist activities), or material adverse
change in general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States shall be
such) as to make it, in the judgment of Lehman Brothers and Merrill Lynch,
impracticable or inadvisable to proceed with offering or delivery of the Notes
being delivered on the Closing Date or that, in the judgment of Lehman Brothers
and Merrill Lynch, would materially and adversely affect the financial markets
or the markets for the Notes and other debt securities.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Initial Purchasers.
8. Indemnification and Contribution.
(a) The Company and each Guarantor, hereby agree, jointly and
severally, to indemnify and hold harmless each Initial Purchaser, its directors,
officers and employees and each person, if any, who controls any Initial
Purchaser within the meaning of the Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Notes), to which that Initial Purchaser,
director, officer, employee or controlling person may become subject, under the
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any Preliminary Offering
Memorandum or the Offering Memorandum or in any amendment or supplement thereto,
(B) in any Blue Sky application or other document prepared or executed by the
Company or any Guarantor (or based upon any written information furnished by the
Company or any Guarantor) specifically for the purpose of qualifying any or all
of the Notes under the securities laws of any state or other jurisdiction (any
such application, document or information being hereinafter called a "BLUE SKY
APPLICATION") or (C) in any materials or information provided to investors by,
or with the approval of, the Company in connection with the marketing of the
offering of the Notes ("MARKETING MATERIALS"), including any roadshow or
investor
28
presentations made to investors by the Company (whether in person or
electronically or (ii) the omission or alleged omission to state in any
Preliminary Offering Memorandum or the Offering Memorandum, or in any amendment
or supplement thereto, or in any Blue Sky Application or in any Marketing
Materials, any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, and shall reimburse each Initial Purchaser and each
such director, officer, employee or controlling person promptly upon demand for
any legal or other expenses reasonably incurred by that Initial Purchaser,
director, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company and the Guarantors shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Offering Memorandum or Offering
Memorandum, or in any such amendment or supplement thereto, or in any Blue Sky
Application or in any Marketing Materials, in reliance upon and in conformity
with written information concerning such Initial Purchaser furnished to the
Company through the Initial Purchasers by or on behalf of any Initial Purchaser
specifically for inclusion therein. The foregoing indemnity agreement is in
addition to any liability that the Company or the Guarantors may otherwise have
to any Initial Purchaser or to any director, officer, employee or controlling
person of that Initial Purchaser.
(b) Each Initial Purchaser, severally and not jointly, hereby
agrees to indemnify and hold harmless the Company, each Guarantor, their
respective officers and employees, each of their respective directors, and each
person, if any, who controls the Company or any Guarantor within the meaning of
the Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company, any Guarantor
or any such director, officer, employee or controlling person may become
subject, under the Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto, (B) in any Blue Sky Application, or (C) in any Marketing Materials or
(ii) the omission or alleged omission to state in any Preliminary Offering
Memorandum or the Offering Memorandum, or in any amendment or supplement
thereto, or in any Blue Sky Application or in any Marketing Materials any
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information concerning such
Initial Purchaser furnished to the Company by or on behalf of that Initial
Purchaser specifically for inclusion therein, and shall reimburse the Company,
any Guarantor and any such director, officer, employee or controlling person for
any legal or other expenses reasonably incurred by the Company, any Guarantor or
any such director, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability
29
that any Initial Purchaser may otherwise have to the Company, any Guarantor or
any such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability that it may have under this Section 8 except to the extent it has been
materially prejudiced by such failure and; provided, further, that the failure
to notify the indemnifying party shall not relieve it from any liability that it
may have to an indemnified party otherwise than under this Section 8. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Initial Purchasers shall have the right to employ counsel to represent
jointly the Initial Purchasers and those Initial Purchasers and their respective
directors, officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Initial Purchasers against the Company or any Guarantor under this
Section 8 if, in the reasonable judgment of the Initial Purchasers, it is
advisable for the Initial Purchasers and those directors, officers, employees
and controlling persons to be jointly represented by separate counsel, and in
that event the fees and expenses of such separate counsel shall be paid by the
Company or any Guarantor. No indemnifying party shall (i) without the prior
written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such
30
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and the Guarantors on the
one hand and the Initial Purchasers on the other from the offering of the Notes
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 Guarantors, on the one hand, and the Initial Purchasers on
the other with respect to the statements or omissions that resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Guarantors, on the one hand, and the Initial Purchasers on the
other with respect to such offering shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Notes purchased under this
Agreement (before deducting expenses) received by the Company and the Guarantors
on the one hand, and the total underwriting discounts and commissions received
by the Initial Purchasers with respect to the Notes purchased under this
Agreement, on the other hand, bear to the total gross proceeds from the offering
of the Notes under this Agreement as set forth on the cover page of the Offering
Memorandum. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company, the Guarantors or the Initial Purchasers, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. For purposes of the preceding two sentences,
the net proceeds deemed to be received by the Company shall be deemed to be also
for the benefit of the Guarantors and information supplied by the Company shall
also be deemed to have been supplied by the Guarantors. The Company, the
Guarantors, and the Initial Purchasers agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were to be determined
by pro rata allocation (even if the Initial Purchasers were treated as one
entity for such purpose) or by any other method of allocation that does not take
into account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 8(d)
shall be deemed to include, for purposes of this Section 8(d), 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 8(d), no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at which
the Notes initially purchased by it were offered to the Eligible Purchasers
exceeds the amount of any damages that such Initial Purchaser has otherwise paid
or become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute as provided
in this Section 8(d) are several in proportion to their respective underwriting
obligations and not joint.
(e) The Initial Purchasers severally confirm and the Company
and the Guarantors acknowledge that the statements with respect to the offering
of the Notes by the Initial Purchasers set forth on the second to last paragraph
on the front cover of the
31
Offering Memorandum and the first sentence of the fifth and sixth paragraphs and
the sixth sentence of the tenth paragraph under the section entitled "Plan of
Distribution" in the Offering Memorandum constitute the only information
concerning the Initial Purchasers furnished in writing to the Company by or on
behalf of the Initial Purchasers specifically for inclusion in the Offering
Memorandum.
9. Defaulting Initial Purchasers. If, on the Closing Date, any Initial
Purchaser defaults in the performance of its obligations under this Agreement,
the remaining non-defaulting Initial Purchasers shall be obligated to purchase
the Notes that the defaulting Initial Purchaser agreed but failed to purchase on
the Closing Date in the respective proportions that the number of Notes set
opposite the name of each remaining non-defaulting Initial Purchaser in Schedule
I hereto bears to the total number of Notes set opposite the names of all the
remaining non-defaulting Initial Purchasers in Schedule I hereto; provided,
however, that the remaining non-defaulting Initial Purchasers shall not be
obligated to purchase any of the Notes on the Closing Date if the total number
of Notes that the defaulting Initial Purchaser or Initial Purchasers agreed but
failed to purchase on such date exceeds 9.09% of the total number of Notes to be
purchased on the Closing Date, and any remaining non-defaulting Initial
Purchasers shall not be obligated to purchase more than 110% of the number of
Notes that it agreed to purchase on the Closing Date pursuant to the terms of
Section 3. If the foregoing maximums are exceeded, the remaining non-defaulting
Initial Purchasers, or those other Initial Purchasers satisfactory to the
Initial Purchasers who so agree, shall have the right, but shall not be
obligated, to purchase, in such proportion as may be agreed upon among them, all
the Notes to be purchased on the Closing Date. If the remaining Initial
Purchasers or other Initial Purchasers satisfactory to the Initial Purchasers do
not elect to purchase the Notes that the defaulting Initial Purchaser or Initial
Purchasers agreed but failed to purchase on the Closing Date, this Agreement
shall terminate without liability on the part of any non-defaulting Initial
Purchaser or the Company or the Guarantors, except that the Company and the
Guarantors will continue to be liable for the payment of expenses to the extent
set forth in Sections 6 and 11.
Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company or any Guarantor for
damages caused by its default. If other Initial Purchasers are obligated or
agree to purchase the Notes of a defaulting or withdrawing Initial Purchaser,
either the remaining Initial Purchasers or the Company may postpone the Closing
Date for up to seven full business days in order to effect any changes that in
the opinion of counsel for the Company or counsel for the Initial Purchasers may
be necessary in the Offering Memorandum or in any other document or arrangement.
10. Termination. The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers by notice given to and received by
the Company prior to delivery of and payment for the Notes if, prior to that
time, any of the events described in Sections 7(n), 7(o) or 7(t) shall have
occurred or if the Initial Purchasers shall decline to purchase the Notes for
any reason expressly permitted under this Agreement.
32
11. Reimbursement of Initial Purchasers' Expenses. If the Company fails
to tender the Notes for delivery to the Initial Purchasers by reason of any
failure, refusal or inability on the part of the Company or any Guarantor to
perform any agreement on their part to be performed, or because any other
condition of the obligations hereunder required to be fulfilled by the Company
or any Guarantor is not fulfilled, the Company and the Guarantors shall
reimburse the Initial Purchasers for all reasonable out-of-pocket expenses
(including fees and disbursements of counsel) incurred by the Initial Purchasers
in connection with this Agreement and the proposed purchase of the Notes, and
upon demand the Company and the Guarantors shall pay the full amount thereof to
the Initial Purchasers. If this Agreement is terminated pursuant to Section 9 by
reason of the default of one or more Initial Purchasers, the Company and the
Guarantors shall not be obligated to reimburse any defaulting Initial Purchaser
on account of those expenses.
12. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to any Initial Purchasers, shall be delivered or sent
by hand delivery, mail, telex, overnight courier or facsimile transmission to
Lehman Brothers, 745 Seventh Avenue, New York, New York 10019, Attention: John
C. Cokinos (Fax: (646) 758-1124) and Merrill Lynch, 4 World Financial Center,
New York, New York 10080, Attention: Sarang Gadkari (Fax: (212) 449-7750, with a
copy to Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153,
Attention: Rod Miller (Fax: (212) 310-8007), and with a copy, in the case of any
notice pursuant to Section 8(c), to the Director of Litigation, Office of the
General Counsel, Lehman Brothers Inc., 399 Park Avenue, New York, New York
10022, Fax: (212) 526-2648;
(b) if to the Company or any Guarantor, shall be delivered or
sent by mail, telex, overnight courier or facsimile transmission to Psychiatric
Solutions, Inc., 113 Seaboard Lane, Suite C-100, Franklin, Tennessee 37067,
Attention: Brent Turner (Fax: (615) 312-5711), with a copy to Waller Lansden
Dortch & Davis PLLC, 511 Union Street, Suite 2100, Nashville, Tennessee 37219,
Attention: Christopher L. Howard (Fax: (615) 244-6804);
provided, however, that any notice to an Initial Purchaser pursuant to Section
8(c) shall be delivered or sent by hand delivery, mail, telex or facsimile
transmission to such Initial Purchaser at its address set forth in its
acceptance telex, overnight courier to Lehman Brothers and Merrill Lynch, which
address will be supplied to any other party hereto by Lehman Brothers and
Merrill Lynch upon request. Any such statements, requests, notices or agreements
shall take effect at the time delivered by hand, if personally delivered; two
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery. The Company shall be entitled to act and rely upon any
request, consent, notice or agreement given or made on behalf of the Initial
Purchasers by Lehman Brothers and Merrill Lynch.
33
13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the Company,
the Guarantors and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(A) the representations, warranties, indemnities and agreements of the Company
and the Guarantors contained in this Agreement shall also be deemed to be for
the benefit of directors of the Initial Purchasers, officers of the Initial
Purchasers and any person or persons controlling any Initial Purchaser within
the meaning of Section 15 of the Act and (B) the indemnity agreement of the
Initial Purchasers contained in Section 8(b) of this Agreement shall be deemed
to be for the benefit of directors of the Company and the Guarantors, officers
of the Company and the Guarantors and any person controlling the Company or the
Guarantors within the meaning of Section 15 of the Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 13, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
14. Survival. The respective indemnities, representations, warranties
and agreements of the Company, the Guarantors and the Initial Purchasers
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Notes and shall remain in full force and effect, regardless of any investigation
made by or on behalf of any of them or any person controlling any of them.
15. Definition of the Terms "Business Day" and "Subsidiary." For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF NEW YORK.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
34
If the foregoing correctly sets forth the agreement among the
Company, the Subsidiary Guarantors and the Initial Purchasers, please indicate
your acceptance in the space provided for that purpose below.
Very truly yours,
PSYCHIATRIC SOLUTIONS, INC.
By: /s/ Joey A. Jacobs
------------------------------------------
Name: Joey A. Jacobs
Title: President and Chief Executive
Officer
PSYCHIATRIC SOLUTIONS HOSPITALS, INC.
INFOSCRIBER CORPORATION
COLLABORATIVE CARE CORPORATION
PSYCHIATRIC SOLUTIONS OF ALABAMA, INC.
PSYCHIATRIC SOLUTIONS OF FLORIDA, INC.
PSYCHIATRIC SOLUTIONS OF TENNESSEE, INC.
SOLUTIONS CENTER OF LITTLE ROCK, INC.
PSYCHIATRIC SOLUTIONS OF NORTH CAROLINA,
INC.
PSI COMMUNITY MENTAL HEALTH AGENCY
MANAGEMENT, INC.
PSYCHIATRIC MANAGEMENT RESOURCES, INC.
PSI-EAP, INC.
SUNSTONE BEHAVIORAL HEALTH, INC.
THE COUNSELING CENTER OF MIDDLE TENNESSEE,
INC.
PSI CEDAR SPRINGS HOSPITAL, INC.
PSYCHIATRIC SOLUTIONS OF OKLAHOMA, INC.
AERIES HEALTHCARE CORPORATION
AERIES HEALTHCARE OF ILLINOIS, INC.
PSI HOSPITALS, INC.
PSYCHIATRIC PRACTICE MANAGEMENT OF ARKANSAS,
INC.
By: /s/ Joey A. Jacobs
------------------------------------------
Name: Joey A. Jacobs
Title: President
35
THERAPEUTIC SCHOOL SERVICES, LLC
BY: PSYCHIATRIC SOLUTIONS OF OKLAHOMA, INC.,
AS SOLE MEMBER
By: /s/ Joey A. Jacobs
------------------------------------------
Name: Joey A. Jacobs
Title: President
PSI TEXAS HOSPITALS, LLC
BY: PSYCHIATRIC SOLUTIONS HOSPITALS, INC.,
AS SOLE MEMBER
By: /s/ Joey A. Jacobs
------------------------------------------
Name: Joey A. Jacobs
Title: President
TEXAS CYPRESS CREEK HOSPITAL, LP
TEXAS WEST OAKS HOSPITAL, LP
NEURO INSTITUTE OF AUSTIN, LP
TEXAS LAUREL RIDGE HOSPITAL, LP
TEXAS OAKS PSYCHIATRIC HOSPITAL, LP
TEXAS SAN MARCOS TREATMENT CENTER, LP
BY: PSI TEXAS HOSPITALS, LLC, AS
GENERAL PARTNER
BY: PSYCHIATRIC SOLUTIONS HOSPITAL, INC.,
AS SOLE MEMBER
By: /s/ Joey A. Jacobs
------------------------------------------
Name: Joey A. Jacobs
Title: President
36
Accepted:
LEHMAN BROTHERS INC.
By: /s/ Michael Konigsberg
----------------------------------
Authorized Representative
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Sarang P. Gadkari
----------------------------------
Authorized Representative
JEFFERIES & COMPANY, INC.
By: /s/ Catherine Gemmato-Smith
----------------------------------
Authorized Representative
37
SCHEDULE I
PRINCIPAL
AMOUNT OF
NOTES TO BE
INITIAL PURCHASERS PURCHASED
------------------ -----------
Lehman Brothers Inc.............................................. $67,500,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated............... 67,500,000
Jefferies & Company, Inc......................................... 15,000,000
-----------
Total....................................................... 150,000,000
===========
38
SCHEDULE II
HUD Financing Subsidiaries
Holly Hill Real Estate, LLC
PSI Cedar Springs Hospital Real Estate, Inc.
Psychiatric Solutions of Oklahoma Real Estate, Inc.
Riveredge Real Estate, Inc.
Cypress Creek Real Estate, LP
West Oaks Real Estate, LP
Neuro Rehab Real Estate, LP
Texas Laurel Ridge Hospital Real Estate, LP
Texas Oaks Psychiatric Hospital Real Estate, LP
Texas San Marcos Treatment Center Real Estate, LP
A-1
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
Dated as of June 30, 2003
among
Psychiatric Solutions, Inc.,
The Subsidiary Guarantors from time to time party hereto, and
Lehman Brothers Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Jefferies & Company, Inc.
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
This Exchange and Registration Rights Agreement (this
"AGREEMENT") is made and entered into as of June 30, 2003 by and among
Psychiatric Solutions, Inc., a Delaware corporation (the "COMPANY"), the
Subsidiary Guarantors (as defined herein) and Lehman Brothers Inc. on behalf of
Merrill Lynch & Co. and Jefferies & Company Inc. (collectively, the "INITIAL
PURCHASERS").
This Agreement is made pursuant to the Purchase Agreement,
dated June 19, 2003 (the "PURCHASE AGREEMENT"), by and among the Company, the
Existing Subsidiary Guarantors (as defined herein) and the Initial Purchasers,
which provides for the sale by the Company to the Initial Purchasers of
$150,000,000 aggregate principal amount of the Company's 10-5/8% Senior
Subordinated Notes due 2013 (the "NOTES"). The Notes are, and the Exchange Notes
(as defined herein) will be, guaranteed on a senior subordinated basis by the
Subsidiary Guarantors (as defined herein). In order to induce the Initial
Purchasers to purchase the Notes, the Company and the Existing Subsidiary
Guarantors have agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchasers set forth in Section 7 of the Purchase
Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms
shall have the following meanings:
ADDITIONAL INTEREST: As defined in Section 5(a) hereof.
ADDITIONAL SUBSIDIARY GUARANTOR: Any subsidiary of the Company
that executes a Guarantee under the Indenture after the date of this Agreement.
ADVICE: As defined in Section 6(e) hereof.
AGREEMENT: As defined in the preamble hereto.
BLACKOUT PERIOD: As defined in Section 5(a) hereof.
BLUE SKY APPLICATION: As defined in Section 8(a) hereof.
BROKER-DEALER: Any broker or dealer registered under the
Exchange Act.
CLOSING DATE: The date of this Agreement.
COMMISSION: The U.S. Securities and Exchange Commission.
COMPANY: As defined in the preamble hereto.
3
CONSUMMATE: A Registered Exchange Offer shall be deemed
"Consummated" for purposes of this Agreement upon the occurrence of (i) the
filing and effectiveness under the Securities Act of the Exchange Offer
Registration Statement relating to the Exchange Notes to be issued in the
Exchange Offer, (ii) the maintenance of such Registration Statement continuously
effective and the keeping of the Exchange Offer open for a period not less than
the minimum period required pursuant to Section 3(b) hereof, and (iii) the
delivery by the Company to the Registrar under the Indenture of Exchange Notes
in the same aggregate principal amount as the aggregate principal amount of
Notes that were tendered by Holders thereof pursuant to the Exchange Offer.
DAMAGES PAYMENT DATE: With respect to the Notes, each Interest
Payment Date.
EFFECTIVENESS TARGET DATE: As defined in Section 5(a) hereof.
EXCHANGE ACT: The U.S. Securities Exchange Act of 1934, as
amended.
EXCHANGE NOTES: The Company's 10-5/8% Senior Subordinated
Notes due 2013 to be issued pursuant to the Indenture in the Exchange Offer,
together with the related Guarantees.
EXCHANGE OFFER: The registration by the Company under the
Securities Act of the Exchange Notes on a Registration Statement pursuant to
which the Company offers the Holders of all outstanding Transfer Restricted
Securities the opportunity to exchange all such outstanding Transfer Restricted
Securities held by such Holders for Exchange Notes in an aggregate principal
amount equal to the aggregate principal amount of the Transfer Restricted
Securities validly tendered in such exchange offer by such Holders.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration
Statement relating to the Exchange Offer, including the related Prospectus.
EXISTING SUBSIDIARY GUARANTORS: The various Subsidiary
Guarantors signatory to the Indenture as of the date hereof.
GUARANTEES: Guarantees by the Subsidiary Guarantors of the
Company's obligations under the Notes, the Exchange Notes and the Indenture.
HOLDER: As defined in Section 2(b) hereof.
INDENTURE: The Indenture, dated as of the date hereof, among
the Company, the Existing Subsidiary Guarantors and Wachovia Bank, National
Association, as trustee (the "Trustee"), pursuant to which the Notes and the
Exchange Notes are to be issued, as such Indenture may be amended or
supplemented from time to time in accordance with the terms thereof.
INITIAL PURCHASERS: As defined in the preamble hereto.
4
INTEREST PAYMENT DATE: As defined in the Indenture and the
Notes.
NASD: National Association of Securities Dealers, Inc.
NOTES: As defined in the preamble hereto.
PERSON: An individual, partnership, corporation, limited
liability company, unincorporated organization, association, joint-stock
company, trust, joint venture, government or any agency or political subdivision
thereof or any other entity.
PROSPECTUS: The prospectus included in a Registration
Statement as amended or supplemented by any prospectus supplement and by all
other amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
PURCHASE AGREEMENT: As defined in the preamble hereto.
RECORD HOLDER: With respect to any Damages Payment Date
relating to Notes, each Person who is a Holder of Notes on the record date with
respect to the Interest Payment Date on which such Damages Payment Date shall
occur.
REGISTRATION DEFAULT: As defined in Section 5(a) hereof.
REGISTRATION STATEMENT: Any Registration Statement of the
Company relating to (a) an offering of Exchange Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, which is filed pursuant to the
provisions of this Agreement, in each case including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
SECURITIES ACT: The U.S. Securities Act of 1933, as amended.
SHELF FILING DEADLINE: As defined in Section 4(a) hereof.
SHELF REGISTRATION PERIOD: As defined in Section 4(a) hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 4(a)
hereof.
SUBSIDIARY GUARANTORS: The Additional Subsidiary Guarantors
and the Existing Subsidiary Guarantors.
TIA: The U.S. Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Note or Exchange Note
(including the related Guarantees), as applicable, until the earliest to occur
of (a) the date on which
5
such Note is exchanged by a person other than a Broker-Dealer in the Exchange
Offer in exchange for an Exchange Note, so long as such person is not prohibited
from reselling such Exchange Notes to the public without delivering a prospectus
and the Prospectus contained in the Exchange Offer Registration Statement is not
sufficient for such purpose, (b) following the exchange by a Broker-Dealer in
the Exchange Offer of a Note for an Exchange Note, the date on which that
Exchange Note is sold to a purchaser who receives from that Broker-Dealer on or
prior to the date of such sale a copy of the Prospectus contained in the
Exchange Offer Registration Statement, (c) the date on which such Note has been
effectively registered under the Securities Act and disposed of in accordance
with a Shelf Registration Statement and (d) the date on which such Note is
eligible to be distributed to the public pursuant to Rule 144 under the
Securities Act.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING:
A registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to
the benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is
deemed to be a holder of Transfer Restricted Securities (each, a "HOLDER")
whenever such Person owns Transfer Restricted Securities.
3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under
applicable law or Commission policy (after the procedures set forth in Section
6(a) below have been complied with) or one of the events set forth in Section
4(a)(ii) has occurred, the Company and the Subsidiary Guarantors shall (i) cause
to be filed with the Commission as soon as practicable after the Closing Date,
but in no event later than 90 days after the Closing Date, a Registration
Statement under the Securities Act relating to the Exchange Notes and the
Exchange Offer, (ii) use their reasonable best efforts to cause such
Registration Statement to be declared effective on or prior to 180 days after
the Closing Date, (iii) in connection with the foregoing, file (A) all
pre-effective amendments to such Registration Statement as may be necessary in
order to cause such Registration Statement to become effective, (B) if
applicable, a post-effective amendment to such Registration Statement pursuant
to Rule 430A under the Securities Act and (C) cause all necessary filings in
connection with the registration and qualification of the Exchange Notes to be
made under the blue sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer and (iv) upon the effectiveness of such
Registration Statement, commence the Exchange Offer. The Exchange Offer shall be
on the appropriate form permitting registration of the Exchange Notes to be
offered in exchange for the Transfer Restricted Securities and to permit resales
of Exchange Notes held by Broker-Dealers as contemplated by Section 3(c) below.
6
(b) The Company and the Subsidiary Guarantors shall use their
reasonable best efforts to cause the Exchange Offer Registration Statement to be
effective continuously and shall keep the Exchange Offer open for a period of
not less than the minimum period required under applicable U.S. federal and
state securities laws to Consummate the Exchange Offer; provided, however, that
in no event shall such period be less than 20 business days. The Company and the
Subsidiary Guarantors shall cause the Exchange Offer to comply with all
applicable U.S. federal and state securities laws. No securities other than the
Exchange Notes and the Guarantees shall be included in the Exchange Offer
Registration Statement. The Company and the Subsidiary Guarantors shall use
their reasonable best efforts to cause the Exchange Offer to be Consummated 30
business days after the date on which the Exchange Offer Registration Statement
was declared effective by the Commission.
(c) The Company and the Subsidiary Guarantors shall indicate
in a "Plan of Distribution" section of the Prospectus contained in the Exchange
Offer Registration Statement that any Broker-Dealer who holds Notes that are
Transfer Restricted Securities and that were acquired for its own account as a
result of market-making activities or other trading activities (other than
Transfer Restricted Securities acquired directly from the Company), may exchange
such Notes pursuant to the Exchange Offer; however, such Broker-Dealer may be
deemed to be an "underwriter" within the meaning of the Securities Act and must,
therefore, deliver a Prospectus meeting the requirements of the Securities Act
in connection with any resales of the Exchange Notes received by such
Broker-Dealer in the Exchange Offer, which Prospectus delivery requirement may
be satisfied by the delivery by such Broker-Dealer of the Prospectus contained
in the Exchange Offer Registration Statement. Such "Plan of Distribution"
section shall also contain all other information with respect to such resales by
Broker-Dealers that the Commission may require in order to permit such resales
pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer
except to the extent required by the Commission.
The Company and the Subsidiary Guarantors shall use their
reasonable best efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented and amended as required by the provisions
of Section 6(c) below to the extent necessary to ensure that it is available for
resales of Exchange Notes acquired by Broker-Dealers for their own accounts as a
result of market-making activities or other trading activities, and to ensure
that it conforms with the requirements of this Agreement, the Securities Act and
the policies, rules and regulations of the Commission as announced from time to
time, for a period of at least 90 days after the Consummation of the Exchange
Offer.
The Company and the Subsidiary Guarantors shall provide
sufficient copies of the latest version of such Prospectus to Broker-Dealers
promptly upon request at any time during such 90-day period in order to
facilitate such resales.
7
4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company and the Subsidiary
Guarantors are not required to file an Exchange Offer Registration Statement or
cannot Consummate the Exchange Offer because the Exchange Offer is not permitted
by applicable U.S. law or Commission policy (after the procedures set forth in
Section 6(a) below have been complied with) or (ii) any Holder of Transfer
Restricted Securities shall notify the Company prior to the 20th day following
the Consummation of the Exchange Offer that such Holder (A) is prohibited by
applicable U.S. law or Commission policy from participating in the Exchange
Offer, (B) may not resell the Exchange Notes acquired by it in the Exchange
Offer to the public without delivering a prospectus and that the Prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder or (C) is a Broker-Dealer and holds
Notes acquired directly from the Company or one of its affiliates, then the
Company and the Subsidiary Guarantors shall:
(x) use their reasonable best efforts to cause to be filed a
Registration Statement pursuant to Rule 415 under the Securities Act,
which may be an amendment to the Exchange Offer Registration Statement
if permitted by the rules and regulations of the Commission (in either
event, the "SHELF REGISTRATION STATEMENT") on or prior to the earliest
to occur of (1) the 30th day after the date on which the Company
determines that they are not required to file the Exchange Offer
Registration Statement, or permitted to Consummate the Exchange Offer
and (2) the 30th day after the date on which the Company receives
notice from a Holder of Transfer Restricted Securities as contemplated
by clause (ii) of paragraph (a) above (such earliest date being the
"SHELF FILING DEADLINE"), which Shelf Registration Statement shall
provide for resales of all Transfer Restricted Securities by the
Holders which shall have provided the information required pursuant to
Section 4(b) hereof; and
(y) use their reasonable best efforts to cause such Shelf
Registration Statement to be declared effective by the Commission on or
before the 90th day after the Shelf Filing Deadline.
Subject to Section 5(b), the Company and the Subsidiary Guarantors shall use
their reasonable best efforts to keep such Shelf Registration Statement
continuously effective, supplemented and amended as required by the provisions
of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for resales of Notes or Exchange Notes by the Holders of Transfer
Restricted Securities entitled to the benefit of this Section 4(a), and to
ensure that it conforms with the requirements of this Agreement, the Securities
Act and the policies, rules and regulations of the Commission as announced from
time to time, for a period of at least two years following the Closing Date or
such shorter period that will terminate when all Notes or Exchange Notes covered
by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement (such period being the "SHELF REGISTRATION PERIOD").
8
(b) Provision by Holders of Certain Information in Connection
with the Shelf Registration Statement. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 20 days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Additional Interest pursuant to Section 5 hereof unless and until
such Holder shall have used its reasonable best efforts to provide all such
reasonably requested information. Each Holder as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
5. ADDITIONAL INTEREST
(a) If (i) any of the Registration Statements required by this
Agreement are not filed with the Commission on or prior to the date specified
for such filing in Sections 3(a) and 4(a), as applicable, (ii) any of such
required Registration Statements have not been declared effective by the
Commission on or prior to the date specified for such effectiveness in Sections
3(a) and 4(a), as applicable, (each, an "EFFECTIVENESS TARGET Date"), (iii) the
Exchange Offer has not been Consummated within 30 business days, or longer, if
required by federal securities laws, after the Effectiveness Target Date with
respect to the Exchange Offer Registration Statement has been declared effective
or (iv) any Registration Statement required by this Agreement is filed and
declared effective but shall thereafter cease to be effective or fail to be
usable in connection with resales of Transfer Restricted Securities without
being succeeded immediately by a post-effective amendment to such Registration
Statement that cures such failure and that is itself immediately declared
effective (except as permitted in paragraph (b); such period of time during
which any such Registration Statement is not effective or any such Registration
Statement or the related Prospectus is not usable being referred to as a
"BLACKOUT PERIOD") (each such event referred to in clauses (i) through (iv), a
"REGISTRATION DEFAULT"), the Company and the Subsidiary Guarantors, jointly and
severally, agree to pay additional interest ("ADDITIONAL INTEREST") to each
Holder of Transfer Restricted Securities adversely affected by such Registration
Default, in an amount equal to $.05 per week per $1,000 principal amount of
Transfer Restricted Securities held by such Holder with respect to the first
90-day period immediately following the occurrence of such Registration Default.
The amount of Additional Interest shall increase by an additional $.05 per week
per $1,000 principal amount of Transfer Restricted Securities with respect to
each subsequent 90-day period (or portion thereof) until all Registration
Defaults have been cured, up to a maximum amount of Additional Interest of $.50
per week per $1,000 principal amount of Transfer Restricted Securities. All
accrued Additional Interest shall be paid to Record Holders by the Company and
the Subsidiary Guarantors in the same manner as interest is paid under the
Notes. Following the cure of all Registration Defaults relating to any
particular Transfer Restricted
9
Securities, the accrual of Additional Interest with respect to such Transfer
Restricted Securities will cease.
(b) A Registration Default referred to in Section 5(a)(iv)
shall be deemed not to have occurred and be continuing in relation to a
Registration Statement or the related Prospectus if (i) the Blackout Period has
occurred solely as a result of (x) the filing of a post-effective amendment to
such Shelf Registration Statement to incorporate annual audited financial
information with respect to the Company where such post-effective amendment is
not yet effective and needs to be declared effective to permit Holders to use
the related Prospectus or (y) the occurrence of other material events with
respect to the Company that would need to be described in such Registration
Statement or the related Prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement
(including by way of filing documents under the Exchange Act which are
incorporated by reference into the Registration Statement) such Registration
Statement and the related Prospectus to describe such events; provided, however,
that in any case if such Blackout Period occurs for a continuous period in
excess of 30 days, a Registration Default shall be deemed to have occurred on
the 31st day of such Blackout Period and Additional Interest shall be payable in
accordance with the above paragraph from the day such Registration Default
occurs until such Registration Default is cured or until the Company is no
longer required pursuant to this Agreement to keep such Registration Statement
effective or such Registration Statement or the related Prospectus usable;
provided, further, that in no event shall the total of all Blackout Periods
exceed 45 days in the aggregate of any 12-month period.
All payment obligations of the Company and the Subsidiary
Guarantors set forth in this section that are outstanding with respect to any
Transfer Restricted Security at the time such security ceases to be a Transfer
Restricted Security shall survive until such time as all such payment
obligations with respect to such security shall have been satisfied in full.
6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with
the Exchange Offer, the Company and the Subsidiary Guarantors shall comply with
all of the provisions of Section 6(c) below, shall use their reasonable best
efforts to effect such exchange to permit the sale of Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof, and shall comply with all of the following provisions:
(i) As a condition to its participation in the Exchange
Offer pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the Consummation thereof, a written representation to the
Company and the Subsidiary Guarantors (which may be contained in the
letter of transmittal contemplated by the Exchange Offer Registration
Statement) to the effect that (A)
10
it is not an affiliate of the Company, (B) it is not engaged in, and
does not intend to engage in, and has no arrangement or understanding
with any Person to participate in, a distribution of the Exchange Notes
to be issued in the Exchange Offer and (C) it is acquiring the Exchange
Notes in its ordinary course of business. In addition, all such Holders
of Transfer Restricted Securities shall otherwise cooperate in the
Company's and the Subsidiary Guarantors' preparations for the Exchange
Offer. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be acquired in the
Exchange Offer (1) could not under Commission policy as in effect on
the date of this Agreement rely on the position of the Commission
enunciated in Exxon Capital Holdings Corporation (available May 13,
1988) and Morgan Stanley and Co., Inc. (available June 5, 1991), as
interpreted in the Commission's letter to Shearman & Sterling dated
July 2, 1993, and similar no-action letters, and (2) must comply with
the registration and prospectus delivery requirements of the Securities
Act in connection with a secondary resale transaction and that such a
secondary resale transaction should be covered by an effective
Registration Statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K if the resales are of Exchange Notes obtained by such Holder in
exchange for Notes acquired by such Holder directly from the Company.
(ii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company and the Subsidiary Guarantors shall
state to the Commission that the Company and the Subsidiary Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available
May 13, 1988) and Morgan Stanley and Co., Inc. (available June 5, 1991)
and shall represent to the Commission that neither the Company nor any
Subsidiary Guarantor has entered into any arrangement or understanding
with any Person to distribute the Exchange Notes to be received in the
Exchange Offer and that, to the best of the Company's and each
Subsidiary Guarantor's information and belief, each Holder
participating in the Exchange Offer is acquiring the Exchange Notes in
its ordinary course of business and has no arrangement or understanding
with any Person to participate in the distribution of the Exchange
Notes received in the Exchange Offer; and
(iii) The Company and the Subsidiary Guarantors shall
issue, upon the request of any Holder of Notes covered by the Exchange
Offer, Exchange Notes (including the related guarantees), having an
aggregate principal amount equal to the aggregate principal amount of
Notes surrendered to the Company by such Holder in exchange therefor;
such Exchange Notes (including the related guarantees) to be registered
in the name of such Holder or in the name of the purchaser(s) of such
Exchange Notes (including the related guarantees), as the case may be;
in return, the Notes held by such Holder shall be surrendered to the
Company for cancellation.
11
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and the Subsidiary Guarantors shall comply
with all the provisions of Section 6(c) below and shall use their reasonable
best efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof, and pursuant thereto the Company and the
Subsidiary Guarantors will as expeditiously as possible prepare and file with
the Commission a Registration Statement relating to the registration on any
appropriate form under the Securities Act, which form shall be available for the
sale of the Transfer Restricted Securities in accordance with the intended
method or methods of distribution thereof.
(c) General Provisions. In connection with any Registration
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Registration Statement and the related Prospectus required to permit resales of
Notes and Exchange Notes by Broker-Dealers), the Company and the Subsidiary
Guarantors shall:
(i) use their reasonable best efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements (including, if required by the Securities Act or
any regulation thereunder, financial statements of any Subsidiary
Guarantors), unless such financial statements are publicly available,
for the period specified in Sections 3 or 4 of this Agreement, as
applicable; upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to
contain a material misstatement or omission or (B) not to be effective
and usable for resale of Transfer Restricted Securities during the
period required by this Agreement, the Company and the Subsidiary
Guarantors shall file promptly an appropriate amendment to such
Registration Statement, in the case of clause (A), correcting any such
misstatement or omission, and, in the case of either clause (A) or (B),
use their reasonable best efforts to cause such amendment to be
declared effective and such Registration Statement and the related
Prospectus to become usable for their intended purpose(s) as soon as
practicable thereafter. Notwithstanding the foregoing, the Company and
the Subsidiary Guarantors may allow the Shelf Registration Statement to
cease to become effective and usable if (x) the board of directors of
the Company determines in good faith that it is in the best interests
of the Company not to disclose the existence of or facts surrounding
any proposed or pending material corporate transaction involving the
Company or the Subsidiary Guarantors, and the Company notifies the
Holders within two business days after such boards of directors make
such determination or (y) the Prospectus contained in the Shelf
Registration Statement contains an untrue statement of a material fact
or omits to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading; provided that the two-year period
referred to in Section 4(a) hereof during which the Shelf Registration
Statement is required to be effective and usable shall be extended by
the number of days during which such Registration
12
Statement was not effective or usable pursuant to the foregoing
provisions; and provided further that Additional Interest shall accrue
on the Notes as provided in Section 5 hereof;
(ii) prepare and file with the Commission such amendments
and post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the
applicable period set forth in Sections 3 or 4 hereof, as applicable;
cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act, and to comply fully with the applicable
provisions of Rules 424 and 430A under the Securities Act in a timely
manner; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with
the intended method or methods of distribution by the sellers thereof
set forth in such Registration Statement or supplement to the
Prospectus;
(iii) cooperate with the selling Holders of Transfer
Restricted Securities and the underwriter(s), if any, to facilitate the
timely preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any restrictive
legends; and enable such Transfer Restricted Securities to be in such
denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least two business days prior to
any sale of Transfer Restricted Securities made by such underwriter(s);
(iv) use their reasonable best efforts to cause the
Transfer Restricted Securities covered by the Registration Statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof
or the underwriter(s), if any, to consummate the disposition of such
Transfer Restricted Securities;
(v) if any fact or event contemplated by clause (d)(i)(D)
below shall exist or have occurred, prepare a supplement or
post-effective amendment to the Registration Statement or related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading;
(vi) provide a CUSIP, CINS or ISIN number, as applicable,
for all Transfer Restricted Securities not later than the effective
date of the Registration Statement and provide the Trustee under the
Indenture with printed certificates for the Transfer Restricted
Securities which are in a form eligible for deposit with the
depositary;
13
(vii) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD;
(viii) otherwise use their reasonable best efforts to
comply with all applicable rules and regulations of the Commission, and
make generally available to their security holders, as soon as
practicable, a consolidated earnings statement meeting the requirements
of Rule 158 (which need not be audited) for the twelve-month period (A)
commencing at the end of any fiscal quarter in which Transfer
Restricted Securities are sold to underwriters in a firm or best
efforts Underwritten Offering or (B) if not sold to underwriters in
such an offering, beginning with the first month of the Company's first
fiscal quarter commencing after the effective date of the Registration
Statement;
(ix) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement, and, in connection therewith, cooperate
with the Trustee and the Holders of Notes and Exchange Notes to effect
such changes to the Indenture as may be required for such Indenture to
be so qualified in accordance with the terms of the TIA; and execute,
and use their reasonable best efforts to cause the Trustee to execute,
all documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable
such Indenture to be so qualified in a timely manner; and
(x) provide promptly to any Holder upon such Holder's
written request each document filed with the Commission pursuant to the
requirements of Section 13 and Section 15 of the Exchange Act to the
extent such documents are not otherwise filed with the Commission and
available to the public free of cost.
(d) Additional Provisions Applicable to Shelf Registration
Statements. In connection with each Shelf Registration Statement, during the
Shelf Registration Period, the Company and the Subsidiary Guarantors shall:
(i) advise the underwriter(s), if any, and selling Holders
of Transfer Restricted Securities promptly and, if requested by such
Persons, to confirm such advice in writing, (A) when the Prospectus or
any Prospectus supplement or post-effective amendment has been filed,
and, with respect to the Shelf Registration Statement or any
post-effective amendment thereto, when the same has become effective,
(B) of any request by the Commission for amendments to the Shelf
Registration Statement or amendments or supplements to the Prospectus
or for additional information relating thereto, (C) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement under the Securities Act, of the suspension by
any state securities commission of the qualification of the Transfer
Restricted Securities for offering or sale in any jurisdiction or of
the initiation of any proceeding for any of
14
the preceding purposes and (D) of the existence of any fact or the
happening of any event that requires the making of any additions to or
changes in the Shelf Registration Statement or the Prospectus in order
that the Shelf Registration Statement and the Prospectus do not contain
an untrue statement of a material fact or omit to state a material fact
necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. If at any
time the Commission shall issue any stop order suspending the
effectiveness of the Shelf Registration Statement, or any U.S. state
securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption from qualification of
the Transfer Restricted Securities under U.S. state securities or blue
sky laws, the Company and the Subsidiary Guarantors shall use their
reasonable best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time;
(ii) if requested in writing, furnish to each of the
selling Holders of Transfer Restricted Securities and each of the
underwriter(s), if any, before filing with the Commission, copies of
any Shelf Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Shelf Registration Statement
or Prospectus (including all documents incorporated by reference after
the initial filing of such Shelf Registration Statement), which
documents will be subject to the review of such Holders and
underwriter(s), if any, for a period of at least five business days,
and the Company and the Subsidiary Guarantors will not file any such
Shelf Registration Statement or Prospectus or any amendment or
supplement to any such Shelf Registration Statement or Prospectus
(including all such documents incorporated by reference) if a selling
Holder of Transfer Restricted Securities covered by such Shelf
Registration Statement or the underwriter(s), if any, shall not have
had an opportunity to review the Shelf Registration Statement as set
forth above; such Holders and underwriter(s) shall be deemed to have
reasonably objected to such filing if such Shelf Registration
Statement, amendment, Prospectus or supplement, as applicable, as
proposed to be filed, contains an untrue statement of a material fact
or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or fails to comply with the applicable requirements of
the Securities Act;
(iii) promptly prior to the filing of any document that is
to be incorporated by reference into a Shelf Registration Statement or
Prospectus, provide copies of such document to the selling Holders and
to the underwriter(s), if any, make the Company's and the Subsidiary
Guarantors' representatives available for discussion of such document
and other customary due diligence matters, and include such information
in such document prior to the filing thereof as such selling Holders or
underwriter(s), if any, reasonably may request in writing;
15
(iv) make available for inspection at reasonable times at
each of the Company's principal places of business by the selling
Holders of Transfer Restricted Securities, any underwriter
participating in any disposition pursuant to such Shelf Registration
Statement, and any attorney or accountant retained by such selling
Holders or any of the underwriter(s) who shall certify to the Company
and the Subsidiary Guarantors that they have a current intention to
sell Transfer Restricted Securities pursuant to a Shelf Registration
Statement, such relevant financial and other records, pertinent
corporate documents and properties of the Company and the Subsidiary
Guarantors as reasonably requested and cause the Company's and the
Subsidiary Guarantors' officers, directors and employees to respond to
such inquiries as shall be reasonably necessary, in the reasonable
judgment of counsel to such Holders, to conduct a reasonable
investigation; provided, however, that the foregoing inspection and
information gathering shall be coordinated on behalf of the selling
Holders by one counsel designated by and on behalf of such Holders and,
provided, further, that each such party shall be required to maintain
in confidence and not disclose to any other Person any information or
records reasonably designated by the Company in writing as being
confidential, until such time as (A) such information becomes a matter
of public record (whether by virtue of its inclusion in such Shelf
Registration Statement or otherwise), (B) such Person shall be required
so to disclose such information pursuant to a subpoena or order of any
court or other governmental agency or body having jurisdiction over the
matter (subject to the requirements of such order, and only after such
Person shall have given the Company prompt prior written notice of such
requirement) or (C) such information is required to be set forth in
such Shelf Registration Statement or the Prospectus included therein or
in an amendment to such Shelf Registration Statement or an amendment or
supplement to such Prospectus in order that such Shelf Registration
Statement, Prospectus, amendment or supplement, as the case may be,
does not contain an untrue statement of a material fact or omit to
state therein a material fact required to be stated therein or
necessary to make the statements made therein not misleading;
(v) if requested by any selling Holders of Transfer
Restricted Securities or the underwriter(s), if any, promptly
incorporate in any Shelf Registration Statement or Prospectus pursuant
to a supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriter(s), if any, may
reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of the
Transfer Restricted Securities, information with respect to the
principal amount of Transfer Restricted Securities being sold to such
underwriter(s), the purchase price being paid therefor and any other
terms of the offering of the Transfer Restricted Securities to be sold
in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; provided, however,
that the Company
16
shall not be required to take any action pursuant to this Section
6(d)(v) that would, in the opinion of counsel for the Company
reasonably satisfactory to the Initial Purchasers, violate applicable
law;
(vi) deliver to each selling Holder of Transfer Restricted
Securities and each of the underwriter(s), if any, without charge, as
many copies of the Prospectus (including each preliminary Prospectus)
and any amendment or supplement thereto as such Persons reasonably may
request; the Company and the Subsidiary Guarantors hereby consent to
the use of the Prospectus and any amendment or supplement thereto by
each of the selling Holders and each of the underwriter(s), if any, in
connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement
thereto;
(vii) furnish to each Holder whose Transfer Restricted
Securities have been included in a Shelf Registration Statement in
connection with such exchange or sale, without charge, at least one
copy of the Registration Statement, as first filed with the Commission,
and of each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits incorporated
therein by reference) to the extent such documents are not otherwise
filed with the Commission and available to the public free of cost;
(viii) enter into an underwriting agreement on not more
than one occasion in the case of an offering pursuant to a Shelf
Registration, and make such representations and warranties, and take
all such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities
pursuant to any Registration Statement contemplated by this Agreement,
all to such extent as may be reasonably requested by any Holder or
Holders of Transfer Restricted Securities who hold at least 25% in
aggregate principal amount of such class of Transfer Restricted
Securities; provided that the Company and the Subsidiary Guarantors
shall not be required to enter into any such agreement more than once
with respect to all of the Transfer Restricted Securities and may delay
entering into such agreement if the board of directors of each of the
Company and the Subsidiary Guarantors determines in good faith that it
is in the best interests of the Company and the Subsidiary Guarantors
not to disclose the existence of or facts surrounding any proposed or
pending material corporate transaction involving the Company and the
Subsidiary Guarantors; and in connection with an Underwritten
Registration, the Company and the Subsidiary Guarantors shall:
(1) furnish to the Initial Purchasers, the Holders of
Transfer Restricted Securities who hold at least 25% in
aggregate principal amount of such class of Transfer
Restricted Securities and each underwriter, if any, in such
substance and scope as they may reasonably request and as are
customarily made in connection with an offering of debt
securities pursuant to a Shelf Registration Statement upon the
effective
17
date of the Shelf Registration Statement (and if such Shelf
Registration Statement contemplates an Underwritten Offering
of Transfer Restricted Securities upon the date of the closing
under the underwriting agreement related thereto):
(A) a certificate, dated the date of
effectiveness of the Shelf Registration Statement
signed by (y) the respective chief executive officer,
the respective President or any Vice President and
(z) the respective chief financial officer of each of
the Company and each of the Subsidiary Guarantors
confirming, as of the date thereof, the matters set
forth in Section 7(l) of the Purchase Agreement and
such other matters as such parties may reasonably
request;
(B) an opinion, dated the date of
effectiveness of such Shelf Registration Statement,
of securities counsel for the Company covering
matters similar to those set forth in Section 7(c) of
the Purchase Agreement and such other matters as such
parties may reasonably request, and in any event
including a statement to the effect that such counsel
has participated in conferences with officers and
other representatives of the Company, representatives
of the independent public accountants for the
Company, the Initial Purchasers' representatives and
the Initial Purchasers' counsel in connection with
the preparation of such Shelf Registration Statement
and the related Prospectus although such counsel has
not independently verified the accuracy, completeness
or fairness of such statements in such Shelf
Registration Statement; and that such counsel advises
that, on the basis of the foregoing, such counsel's
work in connection with this work did not disclose
information that gave such counsel reason to believe
that the Shelf Registration Statement, at the time
such Shelf Registration Statement or any
post-effective amendment thereto became effective
contained an untrue statement of a material fact or
omitted to state a material fact required to be
stated therein or necessary to make the statements
therein not misleading, or that the Prospectus
contained in such Shelf Registration Statement as of
its date contained an untrue statement of a material
fact or omitted to state a material fact necessary in
order to make the statements made therein, in the
light of the circumstances under which they were
made, not misleading. Such counsel may state further
that such counsel expresses no view with respect to,
and has not independently verified, the accuracy,
completeness or fairness of the financial statements,
notes and schedules, the financial projections and
other financial, statistical and accounting data
included or incorporated
18
by reference in the Shelf Registration Statement
contemplated by this Agreement or the related
Prospectus; and
(C) a customary comfort letter, dated as of
the date of effectiveness of the Shelf Registration
Statement from the Company's independent accountants,
in the customary form and covering matters of the
type customarily covered in comfort letters to
underwriters in connection with primary underwritten
offerings, and affirming the matters set forth in the
comfort letters delivered pursuant to Sections 7(e)
and 7(f) of the Purchase Agreement;
(2) set forth in full or incorporated by reference in
the underwriting agreement, if any, the indemnification
provisions and procedures of Section 8 hereof with respect to
all parties to be indemnified pursuant to said Section; and
(3) deliver such other documents and certificates as
may be reasonably requested by such parties to evidence
compliance with clause (A) above and with any customary
conditions contained in the underwriting agreement or other
agreement entered into by the Company and the Subsidiary
Guarantors pursuant to this clause (viii), if any.
If at any time during the Shelf Registration Period the representations and
warranties of the Company or the Subsidiary Guarantors contemplated in clause
(A)(1) above cease to be true and correct, the Company or the Subsidiary
Guarantors shall so advise the Initial Purchasers and the underwriters, if any,
and each selling Holder promptly and, if requested by such Persons, shall
confirm such advice in writing; and
(ix) prior to any public offering of Transfer Restricted
Securities cooperate with the selling Holders of Transfer Restricted
Securities the underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or blue sky laws of such
jurisdictions as the selling Holders of Transfer Restricted Securities
or underwriter(s) may reasonably request and do any and all other acts
or things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
Shelf Registration Statement filed pursuant to Section 4 hereof;
provided, however, that the Company and the Subsidiary Guarantors shall
not be obligated to qualify as a foreign corporation in any
jurisdiction in which they are not now so qualified or to take any
action that would subject them to general consent to service of
process, other than as to matters and transactions relating to the
Shelf Registration Statement, in any jurisdiction where they are not
now so subject.
(e) Each Holder agrees by acquisition of a Transfer Restricted
Security that, upon receipt of any notice from the Company of the existence of
any fact of the kind described in Section 6(d)(i) hereof, such Holder will
forthwith discontinue
19
disposition of Transfer Restricted Securities pursuant to the Shelf Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 6(d)(vi) hereof, or until it is
advised in writing (the "Advice") by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus. If so directed by
the Company, each Holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Transfer Restricted Securities that was current
at the time of receipt of such notice. In the event the Company shall give any
such notice, the time period regarding the effectiveness of such Shelf
Registration Statement set forth in Section 4 hereof, as applicable, shall be
extended by the number of days during the period from and including the date of
the giving of such notice pursuant to Section 6(d)(i) hereof to and including
the date when each selling Holder covered by such Shelf Registration Statement
shall have received the copies of the supplemented or amended Prospectus
contemplated by Section 6(d)(vi) hereof or shall have received the Advice.
(f) The Company and the Subsidiary Guarantors may require each
Holder of Transfer Restricted Securities as to which any registration is being
effected to furnish to the Company such information regarding such Holder and
such Holder's intended method of distribution of the applicable Transfer
Restricted Securities as the Company may from time to time reasonably request in
writing, but only to the extent that such information is required in order to
comply with the Securities Act. Each such Holder agrees to notify the Company as
promptly as practicable of (i) any inaccuracy or change in information
previously furnished by such Holder to the Company or (ii) the occurrence of any
event, in either case, as a result of which any Prospectus relating to such
registration contains or would contain an untrue statement of a material fact
regarding such Holder or such Holder's intended method of distribution of the
applicable Transfer Restricted Securities or omits to state any material fact
regarding such Holder or such Holder's intended method of distribution of the
applicable Transfer Restricted Securities required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading and promptly to furnish to the
Company any additional information required to correct and update any previously
furnished information or required so that such Prospectus shall not contain,
with respect to such Holder or the distribution of the applicable Transfer
Restricted Securities an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Subsidiary
Guarantors' performance of or compliance with this Agreement will be borne by
the Company regardless of whether a Registration Statement becomes effective,
including without limitation and as applicable: (i) all Commission, securities
exchange or NASD registration and filing fees and expenses (including filings
made by any Initial Purchasers or Holder with the NASD (and, if applicable, the
fees and expenses of any "qualified
20
independent underwriter" and its counsel that may be required by the rules and
regulations of the NASD)); (ii) all fees and expenses of compliance with U.S.
federal securities and state blue sky or securities laws and compliance with the
rules of the NASD (including reasonable fees and disbursements of one counsel
for Holders in connection with blue sky and/or NASD qualification of the
Exchange Notes); (iii) all expenses of printing (including printing certificates
for the Exchange Notes to be issued in the Exchange Offer and printing of
Prospectuses), messenger and delivery services; (iv) all fees and disbursements
of counsel for the Company and the Subsidiary Guarantors; (v) all fees and
disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by or
incident to such performance) and (vi) the reasonable fees and disbursements of
one counsel designated by the Holders of a majority in principal amount of
Transfer Restricted Securities covered by the Shelf Registration Statement to
act as counsel for the Holders of those Transfer Restricted Securities in
connection therewith.
The Company will, in any event, bear its and the Subsidiary
Guarantors' internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expenses of any annual audit and the fees and expenses of any Person,
including special experts, retained by the Company or the Subsidiary Guarantors.
(b) Each Holder of Transfer Restricted Securities will pay all
underwriting discounts, if any, and commissions and transfer taxes, if any,
relating to the disposition of such Holder's Transfer Restricted Securities.
8. INDEMNIFICATION
(a) The Company and each Subsidiary Guarantor shall, jointly
and severally, indemnify and hold harmless each Holder of Transfer Restricted
Securities, its officers and employees and each Person, if any, who controls any
such Holders, within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases, sales and registration of the Notes, the
Guarantees and the Exchange Notes), to which that Holder, officer, employee or
controlling Person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in any Registration Statement or preliminary Prospectus or
Prospectus or in any amendment or supplement thereto, (B) in any Blue Sky
Application (as defined below) or other document prepared or executed by any
Company or any Subsidiary Guarantor (or based upon any written information
furnished by any Company or any Subsidiary Guarantor) specifically for the
purpose of qualifying any or all of the Notes under the securities laws of any
state or other jurisdiction (any such application, document or information being
hereinafter called a "Blue Sky Application") or (C) in any materials or
information provided to investors by, or with the approval of, the Company in
connection with the marketing of the offering of the Exchange Notes ("Marketing
Materials"), including any
21
roadshow or investor presentations made to investors by the Company (whether in
person or electronically); (ii) the omission or alleged omission to state in any
Registration Statement, preliminary Prospectus or Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application or Marketing
Materials any 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, or (iii) any act or failure to act or any alleged act or
failure to act by any Holder of Transfer Restricted Securities in connection
with, or relating in any manner to, the Notes, the Guarantees or the Exchange
Notes or the offering contemplated by any Registration Statement, and which is
included as part of or referred to in any loss, claim, damage, liability or
action arising out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company and the Subsidiary Guarantors shall not be liable
under this clause (iii) to the extent that it is determined in a final judgment
by a court of competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such Holder through its gross negligence or willful
misconduct); and shall reimburse each Holder and each such officer, employee or
controlling Person promptly upon demand for any legal or other expenses
reasonably incurred by that Holder, officer, employee or controlling Person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company and the Subsidiary Guarantors shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any
Registration Statement, preliminary Prospectus or Prospectus, or in any such
amendment or supplement, or in any Blue Sky Application or Marketing Materials,
in reliance upon and in conformity with written information concerning such
Holder furnished to the Company by or on behalf of any Holder specifically for
inclusion therein; provided, further, that with respect to any such untrue
statement or omission made in any preliminary Prospectus or Prospectus, the
indemnity agreement contained in this Section 8(a) shall not inure to the
benefit of the Holder from whom the Person asserting any such losses, claims,
damages or liabilities purchased the Notes, Guarantees or Exchange Notes
concerned if, to the extent that such sale was a sale by the Holder and any such
loss, claim, damage or liability of such Holder is a result of the fact that
both (A) a copy of the Prospectus (or the Prospectus as then amended or
supplemented) was not sent or given to such Person at or prior to written
confirmation of the sale of such Notes or Exchange Notes to such Person and (B)
the untrue statement or omission in the preliminary Prospectus or Prospectus was
corrected in the Prospectus (or the Prospectus as then amended or supplemented)
unless such failure to deliver the Prospectus was a result of noncompliance by
the Company with Section 6(d)(vi) hereof. The foregoing indemnity agreement is
in addition to any liability which the Company and the Subsidiary Guarantors may
otherwise have to any Holder or to any officer, employee or controlling Person
of that Holder.
(b) Each Holder, severally and not jointly, shall indemnify
and hold harmless each of the Company, each of the Subsidiary Guarantors, their
respective
22
directors, officers and employees, and each Person, if any, who controls either
of the Company or any of the Subsidiary Guarantors within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company, the Subsidiary
Guarantors or any such director, officer or controlling Person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in any
Registration Statement, preliminary Prospectus or Prospectus, or in any
amendment or supplement thereto or (B) in any Blue Sky Application or (ii) the
omission or alleged omission to state in any Registration Statement, preliminary
Prospectus or Prospectus, or in any amendment or supplement thereto, or in any
Blue Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information concerning such Holders furnished to the Company by or on behalf of
that Holder specifically for inclusion therein, and shall reimburse the Company,
each of the Subsidiary Guarantors and each such director, officer, employee and
controlling Person for any legal or other expenses reasonably incurred by the
Company, each such Subsidiary Guarantor or each such director, officer, employee
or controlling Person in connection with investigating or defending or preparing
to defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which any Holder may otherwise have to the Company, any of the
Subsidiary Guarantors or any such director, officer, employee or controlling
Person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and; provided, further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, any
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof but the fees and expenses of
such counsel shall be at the expense of the
23
indemnified party unless (i) the employment of such counsel has been
specifically authorized by the indemnifying party in writing, or (ii) such
indemnified party shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional to
those available to the indemnifying party and in the reasonable judgment of such
counsel it is advisable for such indemnified party to employ separate counsel or
(iii) the indemnifying party has failed to assume the defense of such action and
employ counsel reasonably satisfactory to the indemnified party, in which case,
if such indemnified party notifies the indemnifying party in writing that it
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to local counsel) at any
time for all such indemnified parties, which firm shall be designated in writing
by (x) Lehman Brothers Inc. if the indemnified parties under this Section 8
consist of the Initial Purchasers or any of their respective officers, employees
or controlling Persons or (y) by the Company, if the indemnified parties under
this Section 8 consist of any of the Company, any of the Subsidiary Guarantors
or any of their respective directors, officers, employees or controlling
Persons. No indemnifying party shall (i) without the prior written consent of
the indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Subsidiary Guarantors, on the one hand, and the
Holders on the other, from the sale of the Transfer Restricted 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 Subsidiary Guarantors, on the one hand and the Holders on
the other with respect to the statements or omissions which
24
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative fault shall
be determined by reference to whether the untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or any of the Subsidiary Guarantors, on
the one hand, or the Holders, on the other hand, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Subsidiary Guarantors and
the Holders agree that it would not be just and equitable if contributions
pursuant to this Section 8(d) were to be determined by pro rata allocation (even
if the Holders were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section shall be deemed to include, for
purposes of this Section 8(d), 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 8(d), no Holder
shall be required to contribute any amount in excess of the amount by which the
net proceeds received by it in connection with its sale of Notes exceeds the
amount of any damages which such Holder has otherwise paid or become liable to
pay by reason of the untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute as provided in this Section 8(d) are several and not
joint.
9. RULE 144A
The Company and each Subsidiary Guarantor hereby agrees with
each Holder of Transfer Restricted Securities, during any period in which the
Company or such Subsidiary Guarantor is not subject to Section 13 or 15(d) of
the Exchange Act within the two-year period following the Closing Date, to make
available to any Holder or beneficial owner of Transfer Restricted Securities,
in connection with any sale thereof and any prospective purchaser of such
Transfer Restricted Securities from such Holder or beneficial owner, the
information required by Rule 144A(d)(4) under the Securities Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A.
10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration
hereunder unless such Holder (a) agrees to sell such Holder's Transfer
Restricted Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other documents
required under the terms of such underwriting arrangements.
25
11. SELECTION OF UNDERWRITERS
Subject to Section 6(d)(i), the Holders of Transfer Restricted
Securities covered by the Shelf Registration Statement who desire to do so may
sell such Transfer Restricted Securities in an Underwritten Offering at such
Holders' expense. In any such Underwritten Offering, the investment banker or
investment bankers and manager or managers that will administer the offering
will be selected by the Holders of a majority in aggregate principal amount of
the Transfer Restricted Securities included in such offering; provided that such
investment bankers and managers must be reasonably satisfactory to the Company.
12. MISCELLANEOUS
(a) Remedies. The Company and the Subsidiary Guarantors agree
that monetary damages (including Additional Interest) would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agree to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any
Subsidiary Guarantor will, on or after the date of this Agreement, enter into
any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Except as disclosed in the Offering Memorandum (as such term
is defined in the Purchase Agreement), neither the Company nor any Subsidiary
Guarantor has previously entered into any agreement granting any registration
rights with respect to its securities to any Person. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's or any Subsidiary Guarantor's
securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Notes. The Company and the
Subsidiary Guarantors will not take any action, or permit any change to occur,
with respect to the Notes that would materially and adversely affect the ability
of the Holders to Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Company has
obtained the written consent of Holders of a majority of the outstanding
principal amount of the Transfer Restricted Securities affected by such
amendment, modification, supplement, waiver or consent. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer and that does not affect directly or indirectly
the rights of other Holders whose securities are not being tendered pursuant to
such Exchange Offer may be given by the Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities being tendered or registered.
26
(e) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, facsimile or
air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the
Registrar under the Indenture; and
if to the Company or the Subsidiary Guarantors to:
Psychiatric Solutions, Inc.
113 Seaboard Lane,
Suite C-100
Franklin, Tennessee 37067
Attention: Joey A. Jacobs
Fax: (615) 312-5700
with a copy to:
Waller Lansden Dortch & Davis PLLC
511 Union Street, Suite 2100
Nashville, Tennessee 37219
Attention: Christopher L. Howard, Esq.
Fax: (615) 244-6804
Any such notices and communications shall take effect at the
time of receipt thereof. The Company shall be entitled to act and rely upon any
notice or communication given or made by the Initial Purchasers.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign of a Holder
unless and to the extent such successor or assign acquired Transfer Restricted
Securities from such Holder.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
27
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED, IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement together with the other
Transaction Documents (as defined in the Purchase Agreement) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company and the
Subsidiary Guarantors with respect to the Transfer Restricted Securities. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
[Signature pages follow.]
28
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Very truly yours,
PSYCHIATRIC SOLUTIONS, INC.
By:
------------------------------------------
Name: Joey A. Jacobs
Title: President and Chief Executive
Officer
PSYCHIATRIC SOLUTIONS HOSPITALS, INC.
INFOSCRIBER CORPORATION
COLLABORATIVE CARE CORPORATION
PSYCHIATRIC SOLUTIONS OF ALABAMA, INC.
PSYCHIATRIC SOLUTIONS OF FLORIDA, INC.
PSYCHIATRIC SOLUTIONS OF TENNESSEE, INC.
SOLUTIONS CENTER OF LITTLE ROCK, INC.
PSYCHIATRIC SOLUTIONS OF NORTH CAROLINA, INC.
PSI COMMUNITY MENTAL HEALTH AGENCY
MANAGEMENT, INC.
PSYCHIATRIC MANAGEMENT RESOURCES, INC.
PSI-EAP, INC.
SUNSTONE BEHAVIORAL HEALTH, INC.
THE COUNSELING CENTER OF MIDDLE TENNESSEE,
INC.
PSI CEDAR SPRINGS HOSPITAL, INC.
PSYCHIATRIC SOLUTIONS OF OKLAHOMA, INC.
AERIES HEALTHCARE CORPORATION
AERIES HEALTHCARE OF ILLINOIS, INC.
PSI HOSPITALS, INC.
PSYCHIATRIC PRACTICE MANAGEMENT OF ARKANSAS,
INC.
By:
------------------------------------------
Name: Joey A. Jacobs
Title: President
1
THERAPEUTIC SCHOOL SERVICES, LLC
BY: PSYCHIATRIC SOLUTIONS OF OKLAHOMA, INC.,
AS SOLE MEMBER
By:
------------------------------------------
Name: Joey A. Jacobs
Title: President
PSI TEXAS HOSPITALS, LLC
BY: PSYCHIATRIC SOLUTIONS HOSPITALS, INC.,
AS SOLE MEMBER
By:
------------------------------------------
Name: Joey A. Jacobs
Title: President
TEXAS CYPRESS CREEK HOSPITAL, LP
TEXAS WEST OAKS HOSPITAL, LP
NEURO INSTITUTE OF AUSTIN, LP
TEXAS LAUREL RIDGE HOSPITAL, LP
TEXAS OAKS PSYCHIATRIC HOSPITAL, LP
TEXAS SAN MARCOS TREATMENT CENTER, LP
BY: PSI TEXAS HOSPITALS, LLC, AS
GENERAL PARTNER
BY: PSYCHIATRIC SOLUTIONS HOSPITAL, INC.,
AS SOLE MEMBER
By:
------------------------------------------
Name: Joey A. Jacobs
Title: President
2
Accepted:
LEHMAN BROTHERS INC.
By:
----------------------------------------
Authorized Representative
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
----------------------------------------
Authorized Representative
JEFFERIES & COMPANY, INC.
By:
----------------------------------------
Authorized Representative
3