EXHIBIT 4.3
EXECUTION COPY
MedCath Corporation
and
MedCath Holdings Corp.
and
the guarantors listed on Schedule B hereto
$150 Million 9 7/8% Senior Notes due 2012
Purchase Agreement
dated June 29, 2004
Banc of America Securities LLC
Wachovia Capital Markets, LLC
Citigroup Global Markets Inc.
J.P. Morgan Securities Inc.
TABLE OF CONTENTS
PAGE
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SECTION 1. REPRESENTATIONS AND WARRANTIES........................................................ 3
(a) No Registration Required................................................................. 3
(b) No Integration of Offerings or General Solicitation...................................... 3
(c) Eligibility for Resale under Rule 144A................................................... 3
(d) The Offering Memorandum.................................................................. 4
(e) Incorporated Documents................................................................... 4
(f) The Purchase Agreement................................................................... 4
(g) The Registration Rights Agreement........................................................ 4
(h) The DTC Agreement........................................................................ 4
(i) Authorization of the Securities and the Exchange Securities.............................. 5
(j) Authorization of the Indenture........................................................... 5
(k) Description of the Securities and the Indenture.......................................... 6
(l) No Material Adverse Change............................................................... 6
(m) Independent Accountants.................................................................. 6
(n) Preparation of the Financial Statements.................................................. 6
(o) Compliance with Sarbanes-Oxley Act of 2002............................................... 6
(p) Incorporation and Good Standing of the Company and its Subsidiaries...................... 7
(q) Capitalization and Other Capital Stock Matters........................................... 7
(r) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals
Required................................................................................. 7
(s) No Material Actions or Proceedings....................................................... 8
(t) Intellectual Property Rights............................................................. 9
(u) All Necessary Permits, etc............................................................... 9
(v) Title to Properties...................................................................... 9
(w) Tax Law Compliance....................................................................... 10
(x) Company Not an "Investment Company"...................................................... 10
(y) Insurance................................................................................ 10
(z) No Price Stabilization or Manipulation................................................... 10
(aa) Solvency................................................................................. 11
(bb) No Unlawful Contributions or Other Payments.............................................. 11
(cc) Company's Accounting System.............................................................. 11
(dd) Compliance with Environmental Laws....................................................... 11
(ee) Periodic Review of Costs of Environmental Compliance..................................... 12
(ff) New Senior Secured Credit Facility....................................................... 12
(gg) ERISA Compliance......................................................................... 12
(hh) Regulations.............................................................................. 13
(ii) Temporary Global Security................................................................ 13
(jj) Compliance with Laws..................................................................... 13
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE SECURITIES......................................... 15
(a) The Securities........................................................................... 15
(b) The Closing Date......................................................................... 15
(c) Delivery of the Securities............................................................... 15
(d) Delivery of Offering Memorandum to the Initial Purchasers................................ 15
(e) Initial Purchasers as Qualified Institutional Buyers..................................... 16
SECTION 3. ADDITIONAL COVENANTS.................................................................. 16
(a) Initial Purchasers' Review of Proposed Amendments and Supplements........................ 16
(b) Amendments and Supplements to the Offering Memorandum and Other Securities Act Matters... 16
(c) Copies of the Offering Memorandum........................................................ 17
(d) Blue Sky Compliance...................................................................... 17
(e) Use of Proceeds.......................................................................... 17
(f) No Reportable Transaction................................................................ 17
(g) The Depositary........................................................................... 18
(h) Additional Issuer Information............................................................ 18
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(i) Future Reports to the Initial Purchasers................................................. 18
(j) No Integration........................................................................... 18
(k) Legended Securities...................................................................... 18
(l) PORTAL................................................................................... 18
(m) Future Agreement Not to Offer or Sell Additional Securities.............................. 19
(n) Rating of Securities..................................................................... 19
SECTION 4. PAYMENT OF EXPENSES................................................................... 19
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE INITIAL PURCHASERS............................... 20
(a) Accountants' Comfort Letter.............................................................. 20
(b) No Material Adverse Change or Ratings Agency Change...................................... 20
(c) Opinions of Counsel for the Company and the Guarantors................................... 20
(d) Opinion of Counsel for the Initial Purchasers............................................ 21
(e) Officers' and Managers' Certificates..................................................... 21
(f) Bring-down Comfort Letter................................................................ 21
(g) PORTAL Listing........................................................................... 21
(h) Registration Rights Agreement............................................................ 22
(i) Concurrent Transactions.................................................................. 22
(j) Additional Documents..................................................................... 22
SECTION 6. REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES......................................... 22
SECTION 7. OFFER, SALE AND RESALE PROCEDURES..................................................... 22
SECTION 8. INDEMNIFICATION....................................................................... 23
(a) Indemnification of the Initial Purchasers................................................ 23
(b) Indemnification of the Company, its Directors and Officers............................... 24
(c) Notifications and Other Indemnification Procedures....................................... 25
(d) Settlements.............................................................................. 25
SECTION 9. CONTRIBUTION.......................................................................... 26
SECTION 10. TERMINATION OF THIS AGREEMENT........................................................ 27
SECTION 11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.................................. 27
SECTION 12. NOTICES.............................................................................. 28
SECTION 13. SUCCESSORS........................................................................... 28
SECTION 14. PARTIAL UNENFORCEABILITY............................................................. 29
SECTION 15. GOVERNING LAW PROVISIONS............................................................. 29
(a) Governing Law................................................................... 29
(b) Consent to Jurisdiction......................................................... 29
SECTION 16. DEFAULT OF ONE OR MORE OF THE SEVERAL INITIAL PURCHASERS............................. 29
SECTION 17. GENERAL PROVISIONS................................................................... 30
SCHEDULES, EXHIBITS AND ANNEX
SCHEDULE A - Initial Purchasers
SCHEDULE B - List of Guarantors
SCHEDULE C - List of Subsidiaries
EXHIBIT A - Form of Opinion of Moore & Van Allen, PLLC Regarding the
Company and the Parent
EXHIBIT B - Form of Opinion of Moore & Van Allen, PLLC Regarding
Guarantors Organized under the Laws of North Carolina and
Delaware
EXHIBIT C - Form of Opinion of Snell & Wilmer LLP Regarding Guarantors
Organized under the Laws of Arizona
EXHIBIT D - Form of Opinion of Vice President and General Counsel
EXHIBIT E - Form of Opinion of Special New York counsel to the Company
and the Guarantors
EXHIBIT F - Form of Opinion of Company's Special Regulatory Counsel
EXHIBIT G - Form of Registration Rights Agreement
ANNEX I - Resale Procedures
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PURCHASE AGREEMENT
June 29 2004
Banc of America Securities LLC
Wachovia Capital Markets, LLC
Citigroup Global Markets Inc.
J.P. Morgan Securities Inc.
As Initial Purchasers
c/o BANC OF AMERICA SECURITIES LLC
9 West 57th Street
New York, NY 10019
Ladies and Gentlemen:
Introductory. MedCath Holdings Corp., a Delaware corporation (the
"Company"), proposes to issue and sell to the several Initial Purchasers named
in Schedule A (the "Initial Purchasers"), acting severally and not jointly, the
respective amounts set forth in such Schedule A of $150 million aggregate
principal amount of the Company's 9 7/8% Senior Notes due 2012 (the "Notes").
Banc of America Securities LLC, Wachovia Capital Markets, LLC, Citigroup Global
Markets Inc. and J.P. Morgan Securities Inc. have agreed to act as the several
Initial Purchasers in connection with the offering and sale of the Notes.
The Notes will be issued pursuant to an indenture dated as of July
7, 2004 (the "Indenture"), among the Company, the Guarantors (as defined below)
and U.S. Bank National Association, as trustee (the "Trustee"). Notes issued on
book-entry form will be issued in the name of Cede & Co., as nominee of The
Depository Trust Company (the "Depositary") pursuant to a DTC letter agreement,
to be dated as of the Closing Date (as defined in Section 2 hereof) (the "DTC
Agreement"), among the Company, the Trustee and the Depositary.
The holders of the Notes will be entitled to the benefits of a
registration rights agreement, dated as of July 7, 2004 (the "Registration
Rights Agreement"), among the Company, the Guarantors and the Initial
Purchasers, substantially in the form of Exhibit G attached hereto pursuant to
which the Company and the Guarantors will agree to file a registration statement
with the Securities and Exchange Commission (the "Commission") relating to
another series of debt securities of the Company with terms substantially
identical to the Notes (the "Exchange Notes") under the Securities Act of 1933,
as amended (the "Securities Act," which term, as used herein, includes the rules
and regulations of the Commission promulgated thereunder).
The payment of principal, of premium and Liquidated Damages (as
defined in the Indenture), if any, and interest on the Notes and the Exchange
Notes (as defined below) will be fully and unconditionally guaranteed on a
senior basis, joint and severally, by MedCath Corporation (the "Parent"), the
direct parent company of the Company, and by all of the Company's existing and
future substantially wholly owned domestic subsidiaries (collectively, the
"Guarantors"), pursuant to their guarantees (the "Guarantees"). Each of the
Guarantors as of the date of this Agreement is listed in Schedule B attached
hereto. The Notes and the Guarantees attached thereto are herein collectively
referred to as the "Securities"; and the Exchange Notes
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and the Guarantees attached thereto are herein collectively referred to as the
"Exchange Securities".
The Company understands that the Initial Purchasers propose to make
an offering of the Securities on the terms and in the manner set forth herein
and in the Offering Memorandum (as defined below) and agrees that the Initial
Purchasers may resell, subject to the conditions set forth herein, all or a
portion of the Securities to purchasers (the "Subsequent Purchasers") at any
time after the date of this Agreement. The Securities are to be offered and sold
to or through the Initial Purchasers without being registered with the
Commission under the Securities Act in reliance upon exemptions therefrom. The
terms of the Securities and the Indenture will require that investors that
acquire Securities expressly agree that Securities may only be resold or
otherwise transferred, after the date hereof, if such Securities are registered
for sale under the Securities Act or if an exemption from the registration
requirements of the Securities Act is available (including the exemptions
afforded by Rule 144A ("Rule 144A") or Regulation S ("Regulation S") under the
Securities Act thereunder.
The Company has prepared and delivered to each Initial Purchaser
copies of a Preliminary Offering Memorandum dated June 17, 2004 (the
"Preliminary Offering Memorandum"), and has prepared and will deliver to each
Initial Purchaser, copies of the Offering Memorandum, dated June 29, 2004
describing the terms of the Securities, each for use by such Initial Purchaser
in connection with its solicitation of offers to purchase the Securities. As
used herein, the "Offering Memorandum" shall mean, with respect to any date or
time referred to in this Agreement, the Company's Offering Memorandum, dated
June 29, 2004, including amendments or supplements thereto and any exhibits
thereto and the Incorporated Documents (as defined by Section 1 below), in the
most recent form that has been prepared and delivered by the Company to the
Initial Purchasers in connection with their solicitation of offers to purchase
Securities. Further, any reference to the Preliminary Offering Memorandum or the
Offering Memorandum shall be deemed to refer to and include any Additional
Issuer Information (as defined in Section 3) furnished by the Company to each
Initial Purchaser prior to the completion of the distribution of the Securities
by the Initial Purchasers.
All references in this Agreement to financial statements and
schedules and other information which is "contained", "included" or "stated" in
the Offering Memorandum (or other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which are incorporated by reference in the Offering Memorandum; and
all references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 (as amended, the "Exchange Act", which term,
as used herein, includes the rules and regulations of the Commission promulgated
thereunder) which is incorporated or deemed to be incorporated by reference in
the Offering Memorandum.
As described in the Offering Memorandum, the net proceeds from the
offering of the Notes will be used, together with borrowings under the New
Senior Secured Credit Facility (as defined in Section 1(ff) hereof) and cash on
hand, to repay outstanding indebtedness and to pay related fees and expenses.
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The Company and the Guarantors hereby confirm their agreement with
the Initial Purchasers as follows:
SECTION 1. Representations and Warranties.
The Company, and each of the Guarantors, jointly and severally,
hereby represent, warrant and covenant to each Initial Purchaser as follows:
(a) No Registration Required.
Subject to compliance by the Initial Purchasers with the
representations and warranties set forth in Section 2 hereof and with the
procedures set forth in Section 7 hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities to the
Initial Purchasers and to each Subsequent Purchaser in the manner
contemplated by this Agreement and the Offering Memorandum to register the
Securities under the Securities Act or, until such time as the
registration statement registering the Exchange Securities is declared
effective by the Commission, to qualify the Indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act," which term,
as used herein, includes the rules and regulations of the Commission
promulgated thereunder).
(b) No Integration of Offerings or General Solicitation.
Neither the Company nor any Guarantor has, directly or indirectly,
solicited any offer to buy or offered to sell, and will not, directly or
indirectly, solicit any offer to buy or offer to sell, in the United
States or to any United States citizen or resident, any security which is
or would be integrated with the sale of the Securities in a manner that
would require the Securities to be registered under the Securities Act.
None of the Company, the Guarantors, their respective affiliates (as
such term is defined in Rule 501 under the Securities Act (each, an
"Affiliate"), or any person acting on their behalf (other than the Initial
Purchasers, as to whom neither the Company nor any Guarantor makes any
representation or warranty) has engaged or will engage, in connection with
the offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502 under the Securities
Act.
With respect to those Securities sold in reliance upon Regulation S:
(i) none of the Company, the Guarantors, their respective Affiliates, or
any person acting on their behalf (other than the Initial Purchasers, as
to whom neither the Company nor any Guarantor makes any representation or
warranty) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S; and (ii) each of the Company, the
Guarantors, and their respective Affiliates and any person acting on their
behalf (other than the Initial Purchasers, as to whom neither the Company
nor any Guarantor makes any representation or warranty) has complied and
will comply with the offering restrictions set forth in Regulation S.
(c) Eligibility for Resale under Rule 144A.
The Securities are eligible for resale pursuant to Rule 144A and
will not be, at the Closing Date, of the same class as securities listed
on a national securities exchange registered under Section 6 of the
Exchange Act or quoted in a U.S. automated interdealer quotation system.
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(d) The Offering Memorandum.
The Offering Memorandum does not and at the Closing Date will not,
include an untrue statement of a 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; provided
that this representation, warranty and agreement shall not apply to
statements in or omissions from the Offering Memorandum made in reliance
upon and in conformity with information furnished to the Company in
writing by any Initial Purchaser expressly for use in the Offering
Memorandum.
Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all the information specified in, and
meeting the requirements of, Rule 144A. Neither the Company nor any
Guarantor has distributed or will distribute, prior to the later of the
Closing Date and the completion of the Initial Purchasers' distribution of
the Securities, any offering material in connection with the offering and
sale of the Securities other than a preliminary Offering Memorandum or the
Offering Memorandum.
(e) Incorporated Documents.
The Offering Memorandum as delivered from time to time shall
incorporate by reference the sections entitled "Securities Ownership of
Certain Beneficial Owners and Management," "Executive Compensation" and
"Certain Transactions" in the Parent's definitive proxy statement on
Schedule 14A filed with the Commission on January 28, 2004. The documents
incorporated or deemed to be incorporated by reference in the Offering
Memorandum at the time they were or hereafter are filed with the
Commission (collectively, the "Incorporated Documents") complied and will
comply in all material respects with the requirements of the Exchange Act.
(f) The Purchase Agreement.
This Agreement has been duly authorized, executed and delivered by,
and is a valid and binding agreement of, the Company and each Guarantor,
enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as
the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights and remedies of creditors or by general equitable principles
thereunder.
(g) The Registration Rights Agreement.
At the Closing Date, the Registration Rights Agreement will be duly
authorized, executed and delivered by, and will be a valid and binding
agreement of, the Company and each Guarantor, enforceable in accordance
with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by
general equitable principles and except as rights to indemnification under
the Registration Rights Agreement may be limited by applicable law.
(h) The DTC Agreement.
At the Closing Date, the DTC Agreement will have been duly
authorized, executed and delivered by, and (assuming the due
authorization, execution and delivery
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thereof by the other parties thereto) will be a valid and binding
agreement of the Company, enforceable in accordance with its terms except
as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights and remedies of creditors or by general equitable principles.
(i) Authorization of the Securities and the Exchange Securities.
(i) The Notes to be purchased by the Initial Purchasers from the
Company are in the form contemplated by the Indenture, have been duly
authorized for issuance and sale pursuant to this Agreement and the
Indenture and, at the Closing Date, will have been duly executed by the
Company and, when authenticated in the manner provided for in the
Indenture and delivered against payment of the purchase price therefor,
will constitute valid and binding agreements of the Company, enforceable
in accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors
or by general equitable principles and will be entitled to the benefits of
the Indenture; (ii) the Exchange Notes have been duly and validly
authorized for issuance by the Company, and when issued and authenticated
in accordance with the terms of the Indenture, the Registration Rights
Agreement and the Exchange Offer (as defined in the Registration Rights
Agreement), will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or affecting
enforcement of the rights and remedies of creditors or by general
principles of equity and will be entitled to the benefits of the
Indenture; and (iii) the Guarantees of the Notes and the Exchange Notes
will, on the Closing Date, be in the respective forms contemplated by the
Indenture, have been duly authorized for issuance and sale pursuant to
this Agreement and the Indenture (x) when the Notes have been issued,
executed and authenticated in accordance with the Indenture and delivered
to and paid for by the Initial Purchasers in accordance with the terms of
this Agreement, the Guarantees of the Notes will constitute valid and
binding obligations of the Guarantors, enforceable in accordance with
their terms, and (y) when the Exchange Notes have been issued, executed
and authenticated in accordance with the terms of the Exchange Offer and
the Indenture, the Guarantees of the Exchange Notes will constitute valid
and binding obligations of the Guarantors, enforceable in accordance with
their terms, except in each of (x) and (y) above, as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles and will be
entitled to the benefits of the Indenture.
(j) Authorization of the Indenture.
The Indenture has been duly authorized by the Company and each
Guarantor and, at the Closing Date, will have been duly executed and
delivered by the Company and each Guarantor and will constitute a valid
and binding agreement of the Company and each Guarantor enforceable
against the Company and each Guarantor in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
or affecting the rights and remedies of creditors or by general equitable
principles.
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(k) Description of the Securities and the Indenture.
The Notes, the Guarantees of the Notes, the Exchange Notes, the
Guarantees of the Exchange Notes and the Indenture conform or will conform
in all material respects to the respective statements relating thereto
contained in the Offering Memorandum.
(l) No Material Adverse Change.
Except as otherwise disclosed in the Offering Memorandum, subsequent
to the respective dates as of which information is given in the Offering
Memorandum: (i) there has been no material adverse change, or any
development that could reasonably be expected to result in a material
adverse change, in the condition, financial or otherwise, or in the
earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries, considered as one entity (any such change is called a
"Material Adverse Change"); (ii) the Company and its subsidiaries,
considered as one entity, have not incurred any material liability or
obligation, indirect, direct or contingent, not in the ordinary course of
business nor entered into any material transaction or agreement not in the
ordinary course of business; and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company or, except
for dividends paid to the Company or other subsidiaries, any of its
subsidiaries on any class of capital stock or repurchase or redemption by
the Company or any of its subsidiaries of any class of capital stock.
(m) Independent Accountants.
Deloitte & Touche LLP (the "Independent Accountants"), who has
expressed its opinion with respect to the financial statements (which term
as used in this Agreement includes the related notes thereto) and
supporting schedules included in the Offering Memorandum are independent
public or certified public accountants within the meaning of Regulation
S-X under the Securities Act and the Exchange Act.
(n) Preparation of the Financial Statements.
The financial statements, together with the related schedules and
notes, included in the Offering Memorandum present fairly the consolidated
financial position of the Parent and its subsidiaries as of and at the
dates indicated and the results of their operations and cash flows for the
periods specified. Such financial statements have been prepared in
conformity with accounting principles generally accepted in the United
States applied on a consistent basis throughout the periods involved,
except as may be expressly stated in the related notes thereto. The
financial data set forth in the Offering Memorandum under the captions
"Offering Memorandum Summary - Summary Consolidated Financial and Other
Data" and "Selected Consolidated Financial and Other Data" fairly present
the information set forth therein on a basis consistent with that of the
audited financial statements contained in the Offering Memorandum.
(o) Compliance with Sarbanes-Oxley Act of 2002.
The Company and its officers and directors are in compliance in all
material respects with applicable provisions of the Sarbanes-Oxley Act of
2002 and the rules and regulations promulgated in connection therewith
that, with respect to the Company, are effective as of the date hereof.
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(p) Incorporation and Good Standing of the Company and its Subsidiaries.
Each of the Parent, the Company and its subsidiaries has been duly
incorporated, formed or organized and is validly existing as a
corporation, limited liability company or other organization in good
standing under the laws of the jurisdiction of its incorporation,
formation or organization and has corporate, limited liability company or
other organization power and authority to own, lease and operate its
properties and to conduct its business as described in the Offering
Memorandum and, in the case of the Company and the Guarantors, to enter
into and perform their respective obligations under each of this
Agreement, the Registration Rights Agreement, the Guarantees, the DTC
Agreement (in the case of the Company only), the Securities, the Exchange
Securities, the New Senior Secured Credit Facility (as defined in Section
1(ff) hereof) and the Indenture. Each of the Parent, the Company and each
subsidiary is duly qualified as a foreign corporation, limited liability
company or other organization to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except for such jurisdictions where the failure to so qualify or to be in
good standing would not, individually or in the aggregate, result in a
Material Adverse Change. Except as otherwise disclosed in the Offering
Memorandum, all of the issued and outstanding capital stock or membership
interests of each subsidiary of the Company has been duly authorized and
validly issued, is fully paid and nonassessable and is owned by the
Company, directly or through subsidiaries, and the capital stock or
membership interests of each subsidiary held directly or indirectly by the
Company are owned free and clear of any security interest, mortgage,
pledge, lien, encumbrance or claim. The Parent does not own or control,
directly or indirectly, any corporation, association or other entity other
than the subsidiaries listed in Schedule C hereto.
(q) Capitalization and Other Capital Stock Matters.
At March 31, 2004, on a consolidated basis, after giving pro forma
effect to (i) the issuance and sale of the Securities pursuant hereto,
(ii) entry into the New Senior Secured Credit Facility and (iii) the
application of the net proceeds from the sale of the Securities in the
manner described under the caption "Use of Proceeds" in the Offering
Memorandum, the Company would have an authorized and outstanding
capitalization as set forth under the "As Adjusted" column of the table in
the Offering Memorandum under the caption "Capitalization".
(r) Non-Contravention of Existing Instruments; No Further Authorizations
or Approvals Required.
None of the Parent, the Company or any of its subsidiaries is in
violation of its charter, by-laws or comparable organizational documents,
or is in default (or, with the giving of notice or lapse of time, would be
in default) ("Default") under any indenture, mortgage, loan or credit
agreement, note, contract, franchise, lease or other instrument to which
the Parent, the Company or any of its subsidiaries is a party or by which
it or any of them may be bound, or to which any of the property or assets
of the Parent, the Company or any of its subsidiaries is subject (each, an
"Existing Instrument"), except for such Defaults as would not,
individually or in the aggregate, result in a Material Adverse Change.
7
On the Closing Date neither the Company nor any Guarantor will be in
default under the Registration Rights Agreement, the DTC Agreement (in the
case of the Company only), the Indenture or the New Senior Secured Credit
Facility.
The Company's and each Guarantor's execution, delivery and
performance of this Agreement, the Registration Rights Agreement, the DTC
Agreement (in the case of the Company only), the New Senior Secured Credit
Facility and the Indenture and any other agreements or documents relating
to any of the foregoing, and the issuance and delivery of the Securities
or the Exchange Securities, and consummation of the transactions
contemplated hereby and thereby and by the Offering Memorandum: (i) have
been duly authorized by all necessary corporate action and will not result
in any violation of the provisions of the charter, by-laws or comparable
organizational documents of the Parent, the Company or any subsidiary of
the Company, (ii) will not conflict with or constitute a breach of, or
Default or a Debt Repayment Triggering Event (as defined below) under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Parent, the Company or any of its
subsidiaries pursuant to, or require the consent of any other party to,
any Existing Instrument, except for such conflicts, breaches, Defaults,
liens, charges or encumbrances as would not, individually or in the
aggregate, result in a Material Adverse Change and (iii) will not result
in any violation of any law, administrative regulation or administrative
or court decree applicable to the Parent, the Company or any subsidiary
(including, without limitation, the laws and regulations set forth in
Section 1(jj) hereof). No consent, approval, authorization or other order
of, or registration or filing with, any court or other governmental or
regulatory authority or agency, is required for the Company's or each
Guarantor's execution, delivery and performance of this Agreement, the
Registration Rights Agreement, the DTC Agreement (in the case of the
Company only), the New Senior Secured Credit Facility or the Indenture and
any other agreements or documents relating to any of the foregoing, or the
issuance and delivery of the Securities or the Exchange Securities, or
consummation of the transactions contemplated hereby and thereby and by
the Offering Memorandum, except such as have been obtained or made by the
Company or the Guarantors and are in full force and effect under the
Securities Act, applicable state securities or blue sky laws and except
such as may be required by federal and state securities laws with respect
to the Company's or each Guarantor's obligations under the Registration
Rights Agreement, and subject to compliance by the Initial Purchasers with
the representations and warranties set forth in Section 2(e) hereof and
with the procedures set forth in Section 7 hereof. As used herein, a "Debt
Repayment Triggering Event" means any event or condition which gives, or
with the giving of notice or lapse of time would give, the holder of any
note, debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any
of its subsidiaries.
(s) No Material Actions or Proceedings.
Except as otherwise disclosed in the Offering Memorandum, there are
no legal or governmental actions, suits or proceedings pending or, to the
best of the Company's and each Guarantor's knowledge; (i) threatened
against or affecting the Parent, the Company or any of its subsidiaries;
or (ii) which have as the subject thereof any property owned or leased by,
the Parent, the Company or any of its subsidiaries, where in any such case
it is reasonably expected that such action, suit or proceeding might be
determined adversely to the Parent, the Company or such subsidiary and any
such action, suit or proceeding, if so determined adversely, would
reasonably be expected to
8
result in a Material Adverse Change or adversely affect the consummation
of the transactions contemplated by this Agreement and by the Offering
Memorandum in the "Use of Proceeds" section. No labor dispute with the
employees of the Parent, the Company or any of its subsidiaries, or to the
best of the Company's knowledge without having made any inquiry or
investigation, with the employees of any principal supplier of the Parent,
the Company or any of its subsidiaries that may reasonably be expected to
result in a Material Adverse Change, exists or, to the best of the
Company's and each Guarantor's knowledge, is threatened or imminent.
(t) Intellectual Property Rights.
Except as would not, individually, or in the aggregate result in a
Material Adverse Change, the Parent, the Company and each of its
subsidiaries own or possess sufficient trademarks, trade names, patent
rights, copyrights, licenses, approvals, trade secrets and other similar
rights (collectively, "Intellectual Property Rights") reasonably necessary
to conduct their businesses as now conducted; and the expected expiration
of any of such Intellectual Property Rights would not result in a Material
Adverse Change. None of the Parent, the Company or any of its subsidiaries
has received any notice of infringement or conflict with asserted
Intellectual Property Rights of others, which infringement or conflict, if
the subject of an unfavorable decision, ruling or finding would result in
a Material Adverse Change.
(u) All Necessary Permits, etc.
The Parent, the Company and each of its subsidiaries possess such
valid and current certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies
necessary for and material to the conduct of their respective businesses
(including, without limitation, under the laws and regulations set forth
in Section 1(jj) hereof), and none of the Parent, the Company nor any
subsidiary has received any notice of proceedings relating to the
revocation or modification of, or noncompliance with, any such
certificate, authorization or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, could result in
a Material Adverse Change.
(v) Title to Properties.
The Parent, the Company and each of its subsidiaries has good and
marketable title to all the properties and assets reflected as owned in
the financial statements referred to in Section 1(n) above (or elsewhere
in the Offering Memorandum) that are material to the ordinary conduct of
the business of each of the Parent, the Company and such subsidiaries, in
each case, except as otherwise disclosed in the Offering Memorandum, free
and clear of any security interests, mortgages, liens, encumbrances,
equities, claims and other defects, except such as do not affect the value
of such property, do not interfere with the use made or proposed to be
made of such property by the Parent, the Company or such subsidiary, and
would not otherwise, individually, or in the aggregate, result in a
Material Adverse Change. The real property, improvements, equipment and
personal property held under lease by the Parent, the Company or any
subsidiary are held under valid and enforceable leases, with such
exceptions as do not interfere with the use made or proposed to be made of
such real property, improvements, equipment or personal property by the
Parent, the Company or such subsidiary and would not otherwise,
individually, or in the aggregate, result in a Material Adverse Change.
9
(w) Tax Law Compliance.
(i) The Parent, the Company and its subsidiaries have each filed
(taking into account extensions granted by applicable taxing authority)
all necessary federal, state and foreign income and franchise tax returns
and have paid all taxes required to be paid by any of them and, if due and
payable, any related or similar assessment, fine or penalty levied against
any of them except as may be being contested in good faith and by
appropriate proceedings.
(ii) The Parent, the Company and each of its subsidiaries have made
adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 1(n) above in respect of all federal,
state and foreign income and franchise taxes for all periods as to which
the tax liability of the Parent, the Company or any of its subsidiaries
has not been finally determined.
(iii) None of the Parent, the Company or its subsidiaries intends to
treat the Securities and the transactions related thereto, including the
application of the proceeds therefrom, as a "reportable transaction"
(within the meaning of Treasury Regulation Section 1.6001-4).
(x) Company Not an "Investment Company".
The Company has been advised of the rules and requirements under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
The Company is not, and after receipt of payment for the Securities will
not be, an "investment company" within the meaning of Investment Company
Act and will conduct its business in a manner so that it will not become
subject to the Investment Company Act.
(y) Insurance.
Except as otherwise disclosed in the Offering Memorandum, each of
the Parent, the Company and its subsidiaries are insured by recognized,
financially sound institutions with policies in such amounts and with such
deductibles and covering such risks as are generally deemed adequate and
customary for their businesses including, but not limited to, policies
covering real and personal property owned or leased by the Parent, the
Company and its subsidiaries against theft, damage, destruction, acts of
vandalism, floods and earthquakes. The Company has no reason to believe
that (i) the Parent, it or any of its subsidiaries will not be able to
renew its existing insurance coverage as and when such policies expire; or
(ii) the Parent, it or any of its subsidiaries will not be able to obtain
comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that
would not result in a Material Adverse Change.
(z) No Price Stabilization or Manipulation.
Neither the Company nor any Guarantor has taken nor will take,
directly or indirectly, any action designed to or that might be reasonably
expected to cause or result in stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Securities.
10
(aa) Solvency.
The Company and each Guarantor is, and after giving effect to (i)
the sale of the Securities and application of the proceeds therefrom; and
(ii) any borrowings under the New Senior Secured Credit Facility, will be,
Solvent. As used herein, the term `Solvent" means, with respect to the
Company and each Guarantor on a particular date, that on such date: (i)
the fair market value of its assets is greater than the total amount of
its liabilities (including contingent liabilities); (ii) the present fair
salable value of its assets is greater than the amount that will be
required to pay the probable liabilities on its debts as they become
absolute and mature; (iii) it is able to realize upon its assets and pay
its debts and other liabilities, including contingent obligations, as they
mature; and (iv) it does not have unreasonably small capital to carry on
its business as conducted and as proposed to be conducted.
(bb) No Unlawful Contributions or Other Payments.
None of the Parent, the Company or any of its subsidiaries nor, to
the best of the Company's or any Guarantor's knowledge, any employee or
agent of the Parent, the Company or any subsidiary, has made any
contribution or other payment to any official of, or candidate for, any
federal state or foreign office in violation of any law or of the
character necessary to be disclosed in the Offering Memorandum in order to
make the statements therein not misleading in any material respect.
(cc) Company's Accounting System.
Each of the Parent and the Company maintains a system of accounting
controls sufficient to provide reasonable assurances that (i) transactions
are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles as applied in the United States and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(dd) Compliance with Environmental Laws.
Except as would not, individually or in the aggregate, result in a
Material Adverse Change, (i) none of the Parent, the Company or any of its
subsidiaries is in violation of any federal, state, local or foreign law
or regulation relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including
without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum
and petroleum products (collectively, "Materials of Environmental
Concern"), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern (collectively, "Environmental Laws"),
which violation includes, but is not limited to, noncompliance with any
permits or other governmental authorizations required for the operation of
the business of the Parent, the Company or its subsidiaries under
applicable Environmental Laws, or noncompliance with the terms and
conditions thereof, nor has the Parent, the Company or any of its
subsidiaries
11
received any written communication, whether from a governmental authority,
citizens group, employee or otherwise, that alleges that the Parent, the
Company or any of its subsidiaries is in violation of any Environmental
Law; (ii) there is no claim, action or cause of action filed with a court
or governmental authority, no investigation with respect to which the
Company or any Guarantor has received written notice, and no written
notice by any person or entity alleging potential liability for
investigatory costs, cleanup costs, governmental responses costs, natural
resources damages, property damages, personal injuries, attorneys' fees or
penalties arising out of, based on or resulting from the presence, or
release into the environment, of any Material of Environmental Concern at
any location owned, leased or operated by the Parent, the Company or any
of its subsidiaries, now or in the past (collectively, "Environmental
Claims"), pending or, to the best of the Company's or any Guarantor's
knowledge, threatened against the Parent, the Company or any of its
subsidiaries or any person or entity whose liability for any Environmental
Claim the Parent, the Company or any of its subsidiaries has retained or
assumed either contractually or by operation of law; and (iii) to the best
of the Company's or any Guarantor's knowledge, there are no past or
present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission,
discharge, presence or disposal of any Material of Environmental Concern,
that reasonably could result in a violation of any Environmental Law or
form the basis of a potential Environmental Claim against the Parent, the
Company or any of its subsidiaries or against any person or entity whose
liability for any Environmental Claim the Company or any of its
subsidiaries has retained or assumed either contractually or by operation
of law.
(ee) Periodic Review of Costs of Environmental Compliance.
In the ordinary course of its business, the Company and/or the
Parent conducts a periodic review of the effect of Environmental Laws on
the business, operations and properties of the Company and its
subsidiaries, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such review and
the amount of its established reserves, the Company has reasonably
concluded that such associated costs and liabilities would not,
individually or in the aggregate, result in a Material Adverse Change.
(ff) New Senior Secured Credit Facility.
The New Senior Secured Credit Facility (as defined in the Offering
Memorandum) has been duly and validly authorized by the Company and each
of the guarantors thereunder and, when duly executed and delivered by the
Company and each of the guarantors thereunder, will be the valid and
legally binding obligation of the Company, enforceable in accordance with
its terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
or affecting the rights and remedies of creditors or by general equitable
principles.
(gg) ERISA Compliance.
The Parent, the Company and its subsidiaries and any "employee
benefit plan" (as defined under the Employee Retirement Income Security
Act of 1974, as amended,
12
and the regulations and published interpretations thereunder
(collectively, "ERISA")) established or maintained by the Parent, the
Company, its subsidiaries or their "ERISA Affiliates" (as defined below)
are in compliance in all material respects with ERISA. "ERISA Affiliate"
means, with respect to the Parent, the Company or a subsidiary, any member
of any group of organizations described in Section 414, of the Internal
Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Parent, the Company
or such subsidiary is a member. No "reportable event" (as defined under
ERISA) has occurred or is reasonably expected to occur with respect to any
"employee benefit plan" established or maintained by the Parent, the
Company, its subsidiaries or any of their ERISA Affiliates. No "employee
benefit plan" established or maintained by the Parent, the Company, its
subsidiaries or any of their ERISA Affiliates, if such "employee benefit
plan" were terminated, would have any "amount of unfunded benefit
liabilities" (as defined under ERISA). None of the Parent, the Company,
its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur (i) any liability under Title IV of ERISA with
respect to the termination of, or withdrawal from, any "employee benefit
plan"; or (ii) any liability under Sections 412, 4971 or 4975 of the Code;
or (iii) any material liability under Section 490B of the Code. Each
"employee benefit plan" established or maintained by the Parent, the
Company, its subsidiaries or any of their ERISA Affiliates that is
intended to be qualified under Section 401 of the Code is so qualified and
nothing has occurred, whether by action or failure to act, which would
cause the loss of such qualification.
(hh) Regulations.
The Company, the Guarantors and their respective affiliates and all
persons acting on their behalf (other than the Initial Purchasers, as to
whom the Company and the Guarantors make no representation) have complied
with and will comply with the offering restrictions requirements of
Regulation S in connection with the offering of the Securities outside the
United States and, in connection therewith, the Offering Memorandum will
contain the disclosure required by Rule 902 of the Securities Act.
(ii) Temporary Global Security.
The Securities sold in reliance on Regulation S will be represented
upon issuance by a temporary global security that may not be exchanged for
definitive securities until the expiration of the 40-day restricted period
referred to in Rule 903 of the Securities Act and only upon certification
of beneficial ownership of such Securities by non-U.S. persons or U.S.
persons who purchased such Securities in transactions that were exempt
from the registration requirements of the Securities Act.
(jj) Compliance with Laws.
(i) Each of the Parent, the Company and its subsidiaries is in
compliance in all material respects with all international, foreign,
federal, state and local statutes, treaties, rules, guidelines,
regulations, ordinances, codes and administrative or judicial precedents
or authorities, including the interpretation or administration thereof by
any governmental authority charged with the enforcement, interpretation or
administration thereof, and all applicable administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements
with, any governmental authority, in each case whether or not having the
force of law.
13
(ii) Each of the Parent, the Company and its subsidiaries possesses
such permits, licenses, provider numbers, certificates, approvals
(including, without limitation, certificate of need approvals), consents,
orders, certifications (including, without limitation, certification under
the Medicare and Medicaid programs), accreditations (including, without
limitation, accreditation by the Joint Commission on Accreditation of
Healthcare Organizations) and other authorizations (collectively,
"Licenses") issued by, and have made all declarations and filings with,
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct its business as now being conducted and as
described in the Offering Memorandum (including, without limitation,
Licenses as are required (i) under such federal and state healthcare laws
as are applicable to the Parent, the Company and its subsidiaries and (ii)
with respect to those facilities operated by the Parent, the Company and
its subsidiaries that participate in the Medicare and/or Medicaid
programs, to receive reimbursement thereunder), except where the failure
to possess such Licenses or to make such declarations and filings would
not, individually or in the aggregate, result in a Material Adverse
Change; the Parent, the Company and its subsidiaries are in compliance
with the terms and conditions of all such Licenses, except where the
failure so to comply would not, individually or in the aggregate, result
in a Material Adverse Change; all of the Licenses are valid and in full
force and effect, except when the invalidity of such Licenses or the
failure of such Licenses to be in full force and effect would not result
in a Material Adverse Change; and none of the Parent, the Company, or its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Change. All of the hospitals and other
facilities operated by the Parent, the Company and its subsidiaries are
"providers of services" as defined in the Social Security Act and the
regulations promulgated thereunder and are eligible to participate in the
Medicare and Medicaid programs.
(iii) None of the Parent, the Company, or its subsidiaries has
engaged in, nor, to the knowledge of the Parent, the Company, or its
subsidiaries, have any officers, directors, stockholders or employees of
the Parent, the Company, or its subsidiaries (during the course of their
employment or agency) or the hospitals or other facilities operated by the
Parent, the Company, or its subsidiaries engaged in, any activities that
are prohibited by (1) any federal, state or local statute, rule, or
regulation applicable to individuals or entities operating in the
healthcare industry, and (2) other statutes, rules, or regulations
governing federal or state government healthcare programs, except for any
such activities which are specifically described in the Offering
Memorandum or which would not, individually or in the aggregate, result in
a Material Adverse Change. Further, none of the Parent, the Company, or
its subsidiaries nor, to their knowledge, any of their officers,
directors, stockholders or employees, or the hospitals or other facilities
operated by them, is excluded, suspended, debarred or otherwise prohibited
from participating in any federal, state or other government healthcare,
procurement, or non-procurement program or activity.
(iv) To the knowledge of the Parent, the Company, or its
subsidiaries, none of the hospitals or other facilities operated by either
the Parent, the Company, or its subsidiaries has failed to file with
applicable regulatory authorities any statement, report, information or
form required by any applicable law, regulation or order, except where the
failure to file would not, individually or in the aggregate, result in a
Material Adverse Change. All such filings or submissions were in
compliance with applicable laws when filed and no deficiencies have been
asserted by any regulatory commission, agency or authority with respect to
any such filings or submissions, except for any such failures to
14
be in compliance or deficiencies which would not, individually or in the
aggregate, result in a Material Adverse Change.
Any certificate signed by an officer of the Company or any Guarantor
and delivered to the Initial Purchasers or to counsel for the Initial Purchasers
pursuant hereto shall be deemed to be a representation and warranty by the
Company or such Guarantor to the Initial Purchasers as to the matters set forth
therein.
SECTION 2. Purchase, Sale and Delivery of the Securities.
(a) The Securities.
The Company agrees to issue and sell to the Initial Purchasers,
severally and not jointly, all of the Securities upon the terms set forth
herein. On the basis of the representations, warranties and agreements
herein contained, and upon the terms but subject to the conditions herein
set forth, each of the Initial Purchasers agrees, severally and not
jointly, to purchase from the Company the aggregate principal amount of
Securities set forth opposite its name in Schedule A, at a purchase price
of 97.00% of the principal amount thereof, payable on the Closing Date.
(b) The Closing Date.
Delivery of certificates for the Securities in definitive form to be
purchased by the Initial Purchasers and payment therefor shall be made at
the offices of Moore & Van Allen PLLC, 100 N. Tryon, Suite 4700,
Charlotte, NC 28202 (or such other place as may be agreed to by the
Company and the Initial Purchasers) at 9:00 a.m. New York City time, on
July 7, 2004 or such other time and date as the Initial Purchasers shall
designate by notice to the Company (the time and date of such closing are
called the "Closing Date"). The Company hereby acknowledges that
circumstances under which the Initial Purchasers may provide notice to
postpone the Closing Date as originally scheduled include, but are in no
way limited to, any determination by the Company or the Initial Purchasers
to recirculate to investors copies of an amended or supplemented Offering
Memorandum or a delay as contemplated by the provisions of Section 16
hereof.
(c) Delivery of the Securities.
The Company shall deliver, or cause to be delivered, to Banc of
America Securities LLC for the accounts of the several Initial Purchasers
certificates for the Securities at the Closing Date against the
irrevocable release of a wire transfer of immediately available funds for
the amount of the purchase price therefor. The certificates for the
Securities shall be in such denominations and registered in the name of
Cede & Co., as nominee of the Depository, pursuant to the DTC Agreement,
and shall be made available for inspection on the business day preceding
the Closing Date at a location in New York City, as the Initial Purchasers
may designate. Time shall be of the essence, and delivery at the time and
place specified in this Agreement is a further condition to the
obligations of the Initial Purchasers.
(d) Delivery of Offering Memorandum to the Initial Purchasers.
Not later than 12:00 p.m. on the second business day following the
date of this Agreement, the Company shall deliver or cause to be delivered
copies of the Offering
15
Memorandum in such quantities and at such places as the Initial Purchasers
shall reasonably request.
(e) Initial Purchasers as Qualified Institutional Buyers.
Each Initial Purchaser severally and not jointly represents and
warrants to, and agrees with, the Company that it is a "qualified
institutional buyer" within the meaning of Rule 144A (a "Qualified
Institutional Buyer") and an "accredited investor" within the meaning of
Rule 501 under the Securities Act (an "Accredited Investor").
SECTION 3. Additional Covenants.
The Company and, as applicable, each of the Guarantors, jointly and
severally, further covenant and agree with each Initial Purchaser as follows:
(a) Initial Purchasers' Review of Proposed Amendments and Supplements.
Prior to amending or supplementing the Offering Memorandum
(including any amendment or supplement through incorporation by reference
of any report filed under the Exchange Act), the Company shall furnish to
the Initial Purchasers for review a copy of each such proposed amendment
or supplement, and the Company shall not use any such proposed amendment
or supplement to which the Initial Purchasers reasonably object.
(b) Amendments and Supplements to the Offering Memorandum and Other
Securities Act Matters.
If, prior to the completion of the placement of the Securities by
the Initial Purchasers with the Subsequent Purchasers, any event shall
occur or condition exist as a result of which it is necessary to amend or
supplement the Offering Memorandum in order to make the statements
therein, in the light of the circumstances when the Offering Memorandum is
delivered to a purchaser, not misleading, or if in the opinion of the
Initial Purchasers or counsel for the Initial Purchasers it is otherwise
necessary to amend or supplement the Offering Memorandum to comply with
law, the Company agrees to promptly prepare (subject to Section 3 hereof),
file with the Commission, if necessary and proper, and furnish at its own
expense to the Initial Purchasers, amendments or supplements to the
Offering Memorandum so that the statements in the Offering Memorandum as
so amended or supplemented will not, in the light of the circumstances
when the Offering Memorandum is delivered to a purchaser, be misleading or
so that the Offering Memorandum, as amended or supplemented, will comply
with law.
Following the consummation of the Exchange Offer or the
effectiveness of an applicable shelf registration statement and for so
long as the Securities are outstanding if, in the reasonable judgment of
the Initial Purchasers, the Initial Purchasers or any of their affiliates
(as such term is defined in the rules and regulations under the Securities
Act) are required to deliver a prospectus in connection with sales of, or
market-making activities with respect to, such securities, (A) to
periodically amend the applicable registration statement so that the
information contained therein complies with the requirements of Section
10(a) of the Securities Act, (B) to amend the applicable registration
statement or supplement the related prospectus or the documents
16
incorporated therein when necessary to reflect any material changes in the
information provided therein so that the registration statement and the
prospectus will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances existing as of the date the
prospectus is so delivered, not misleading and (C) to provide the Initial
Purchasers with copies of each amendment or supplement filed and such
other documents as the Initial Purchasers may reasonably request.
The Company and each Guarantor hereby expressly acknowledges that
the indemnification and contribution provisions of Sections 8 and 9 hereof
are specifically applicable and relate to each offering memorandum,
registration statement, prospectus, amendment or supplement referred to in
this Section 3(b).
(c) Copies of the Offering Memorandum.
The Company agrees to furnish the Initial Purchasers, without
charge, as many copies of the Offering Memorandum and any amendments and
supplements thereto as they shall have reasonably requested.
(d) Blue Sky Compliance.
The Company and each Guarantor shall cooperate with the Initial
Purchasers and counsel for the Initial Purchasers to qualify or register
the Securities for sale under (or obtain exemptions from the application
of) the Blue Sky or state securities laws of those jurisdictions
designated by the Initial Purchasers, shall comply with such laws and
shall continue such qualifications, registrations and exemptions in effect
so long as required for the distribution of the Securities. Neither the
Company nor any Guarantor shall be required to qualify as a foreign
corporation or to take any action that would subject it to general service
of process in any such jurisdiction where it is not presently qualified or
where it would be subject to taxation as a foreign corporation. The
Company will advise the Initial Purchasers promptly of the suspension of
the qualification or registration of (or any such exemption relating to)
the Securities for offering, sale or trading in any jurisdiction or any
initiation or threat of any proceeding for any such purpose, and in the
event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to
obtain the withdrawal thereof at the earliest possible moment.
(e) Use of Proceeds.
The Company shall apply the net proceeds from the sale of the
Securities sold by it in the manner described under the caption "Use of
Proceeds" in the Offering Memorandum.
(f) No Reportable Transaction
In the event that any of the Parent, the Company or its subsidiaries
determines to take any action inconsistent with Section 1(w)(iii) of this
Agreement, the Company shall promptly notify the Initial Purchasers.
17
(g) The Depositary.
The Company will cooperate with the Initial Purchasers and use its
best efforts to permit the Securities to be eligible for clearance and
settlement through the facilities of the Depositary.
(h) Additional Issuer Information.
If at any time neither the Company nor the Parent is subject to
Section 13 or 15 of the Exchange Act, for the benefit of holders and
beneficial owners from time to time of Securities, the Company shall
furnish, at its expense, upon request, to holders and beneficial owners of
Securities and prospective purchasers of Securities, information
("Additional Issuer Information") satisfying the requirements of
subsection (d)(4) of Rule 144A. At any time when the Company or the Parent
is subject to the reporting requirements of Section 13 or 15 of the
Exchange Act, the Company covenants that it, or if the Parent is a
Guarantor, the Parent will file the reports required to be filed by it
under the Securities Act and Section 13(a) and 15(d) of the Exchange Act
and the rules and regulations adopted by the Commission thereunder.
(i) Future Reports to the Initial Purchasers.
For so long as any Securities or Exchange Securities remain
outstanding, the Company will furnish to Banc of America Securities LLC:
(i) as soon as practicable after the end of each fiscal year, copies of
the Annual Report of the Company, or if the Parent is a Guarantor, the
Parent, containing the balance sheet of the Company or the Parent, as
applicable, as of the close of such fiscal year and statements of income,
stockholders' equity and cash flows for the year then ended and the
opinion thereon of the Company's, or the Parent's, as applicable,
independent public or certified public accountants; (ii) as soon as
practicable after the filing thereof, copies of each proxy statement,
Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report
on Form 8-K or other report filed by the Company, or the Parent, as
applicable, with the Commission, the Nasdaq Stock Market ("NASD") or any
securities exchange, if any; and (iii) as soon as available, copies of any
report or communication of the Company, or the Parent, as applicable,
mailed generally to holders of its capital stock or debt securities
(including the holders of the Securities).
(j) No Integration.
The Company agrees that it will not and will cause its Affiliates
not to make any offer or sale of securities of the Company of any class
if, as a result of the doctrine of "integration" referred to in Rule 502
under the Securities Act, such offer or sale would render invalid (for the
purpose of (i) the sale of the Securities by the Company to the Initial
Purchasers, (ii) the resale of the Securities by the Initial Purchasers to
Subsequent Purchasers or (iii) the resale of the Securities by such
Subsequent Purchasers to others) the exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof or by
Rule 144A or by Regulation S thereunder or otherwise.
(k) Legended Securities.
Each certificate for a Note will bear the legend contained in
"Notice to Investors" in the Offering Memorandum for the time period and
upon the other terms stated in the Offering Memorandum.
18
(l) PORTAL.
The Company will use its best efforts to cause the Notes to be
eligible for the National Association of Securities Dealers, Inc. PORTAL
market (the "PORTAL market").
(m) Future Agreement Not to Offer or Sell Additional Securities.
During the period of 180 days following the date of the Offering
Memorandum, none of the Company or any Guarantor will, without the prior
written consent of Banc of America Securities LLC (which consent may be
withheld at the sole discretion of Banc of America Securities LLC),
directly or indirectly, sell, offer, contract or grant any option to sell,
pledge, transfer or establish an open "put equivalent position" within the
meaning of Rule 16a-1 under the Exchange Act, or otherwise dispose of or
transfer, or announce the offering of, or file any registration statement
under the Securities Act in respect of, any debt securities of the Company
or any Guarantor substantially similar to the Securities or securities
exchangeable for or convertible into debt securities of the Company or any
Guarantor substantially similar to the Securities (other than as
contemplated by this Agreement and to register the Exchange Securities).
(n) Rating of Securities.
The Company and the Guarantors shall take all reasonable action
necessary to enable Standard & Poor's Rating Services, a division of The
McGraw-Hill, Inc. Companies ("S&P"), and Moody's Investor Services, Inc.
("Moody's") to provide their respective credit ratings to the Securities
at or prior to the time of their initial issuance.
SECTION 4. Payment of Expenses.
The Company and the Guarantors jointly and severally agree to pay
all costs, fees and expenses incurred in connection with the performance of
their obligations hereunder and in connection with the transactions contemplated
hereby, including without limitation; (i) all expenses incident to the issuance
and delivery of the Securities (including all printing and engraving costs);
(ii) all necessary issue, transfer and other stamp taxes in connection with the
issuance and sale of the Securities to the Initial Purchasers; (iii) all fees
and expenses of the Company's and the Guarantors' counsel, independent public or
certified public accountants and other advisors; (iv) all costs and expenses
incurred in connection with the preparation, printing. filing, shipping and
distribution of each preliminary Offering Memorandum and the Offering Memorandum
(including financial statements and exhibits), and all amendments and
supplements thereto, this Agreement, the Registration Rights Agreement, the
Indenture, the DTC Agreement, the New Senior Secured Credit Facility and the
Notes and the Guarantees; (v) all filing fees, attorneys' fees and expenses
incurred by the Company, the Guarantors or the Initial Purchasers in connection
with qualifying or registering (or obtaining exemptions from the qualification
or registration of all or any part of the Securities for offer and sale under
the Blue Sky laws and, if requested by the Initial Purchasers, preparing and
printing a "Blue Sky Survey" or memorandum, and any supplements thereto,
advising the Initial Purchasers of such qualifications, registrations and
exemptions, (vi) the fees and expenses of the Trustee, including the fees and
disbursements of counsel for the Trustee in connection with the Indenture, the
Securities and the Exchange Securities, (vii) any fees payable in connection
with the rating of the Securities or the Exchange Securities with the ratings
agencies and the listing of the Securities with the PORTAL market; (viii) any
filing fees incident to, and any reasonable fees and disbursements of counsel to
the Initial Purchasers in connection with the review by the National Association
of Securities Dealers, Inc., if any, of the terms of the sale of the Securities
or the
19
Exchange Securities, (ix) all fees and expenses (including reasonable fees and
expenses of counsel) of the Company and the Guarantors in connection with
approval of the Securities by DTC for "book-entry" transfer; and (x) the
performance by the Company and the Guarantors of their respective other
obligations under this Agreement. Except as provided in this Section 4, Section
6, Section 8 and Section 9 hereof, the Initial Purchasers shall pay their own
expenses, including the fees and disbursements of their counsel.
SECTION 5. Conditions of the Obligations of the Initial Purchasers.
The obligations of the several Initial Purchasers to purchase and
pay for the Securities as provided herein on the Closing Date shall be subject
to the accuracy of the representations and warranties on the part of the Company
and the Guarantors set forth in Section 1 hereof as of the date hereof and as of
the Closing Date as though then made and to the timely performance by the
Company and the Guarantors of their covenants and other obligations hereunder,
and to each of the following additional conditions:
(a) Accountants' Comfort Letter.
On the date hereof, the Initial Purchasers shall have received from
the Independent Accountants a letter dated the date hereof addressed to
the Initial Purchasers, in form and substance satisfactory to the Initial
Purchasers, containing statements and information of the type ordinarily
included in accountant's "comfort letters" to the Initial Purchasers,
delivered according to Statement of Auditing Standards Nos. 72 and 76 (or
any successor bulletins), with respect to the audited and unaudited
financial statements and certain financial information contained in the
Offering Memorandum.
(b) No Material Adverse Change or Ratings Agency Change.
For the period from and after the date of this Agreement and prior
to the Closing Date:
(i) in the judgment of the Initial Purchasers there shall not have
occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any securities of the Company or
any of its subsidiaries by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436 under the
Securities Act.
(c) Opinions of Counsel for the Company and the Guarantors.
On the Closing Date, the Initial Purchasers shall have received the
favorable opinion of each of (i) Moore & Van Allen PLLC, counsel for the
Company dated as of such Closing Date, the form of which is attached as
Exhibit A, (ii) Moore & Van Allen, PLLC, counsel for the Guarantors
organized under the laws of North Carolina and Delaware dated as of such
Closing Date, the form of which is attached as Exhibit B, (iii) Snell &
Wilmer, LLP, counsel for the Guarantors organized under the laws of
Arizona dated as of such Closing Date, the form of which is attached as
Exhibit C, (iv) Phillip D. Song, Vice President and General Counsel for
the Company and the Guarantors dated as
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of the such Closing Date, the form of which is attached as Exhibit D, (v)
Winston & Strawn LLP, special New York counsel for the Company and the
Guarantors dated as of such Closing Date, the form of which is attached as
Exhibit E, and (vi) Reed Smith LLP, special regulatory counsel to the
Company dated as of such Closing Date, the form of which is attached as
Exhibit F.
(d) Opinion of Counsel for the Initial Purchasers.
On the Closing Date, the Initial Purchasers shall have received the
favorable opinion of Shearman & Sterling LLP, counsel for the Initial
Purchasers, dated as of such Closing Date, with respect to such matters as
may be reasonably requested by the Initial Purchasers.
(e) Officers' and Managers' Certificates.
On the Closing Date, the Initial Purchasers shall have received a
written certificate executed by (A) the Chairman of the Board, Chief
Executive Officer or President and the Chief Financial Officer or Chief
Accounting Officer of each of the Parent, the Company and MedCath
Incorporated; (B) the President and Vice President of each Guarantor
organized as a corporation (other than the Parent and MedCath
Incorporated); and (C) all of the managers of each Guarantor organized as
a limited liability company, in each of (A), (B) and (C) above, dated as
of the Closing Date, to the effect set forth in subsection (b)(ii) of this
Section 5, and further to the effect that:
(i) for the period from and after the date of this Agreement and
prior to the Closing Date there has not occurred any Material Adverse
Change;
(ii) the representations, warranties and covenants of the Company
and the Guarantors set forth in Section 1 of this Agreement are true and
correct with the same force and effect as though expressly made on and as
of the Closing Date; and
(iii) the Company and the Guarantors have each complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date.
(f) Bring-down Comfort Letter.
On the Closing Date, the Initial Purchasers shall have received from
each of the Independent Accountants, a letter dated such date, in form and
substance satisfactory to the Initial Purchasers, to the effect that they
reaffirm the statements made in the letter furnished by them pursuant to
subsection (a) of this Section 5, except that the specified date referred
to therein for the carrying out of procedures shall be no more than three
business days prior to the Closing Date.
(g) PORTAL Listing.
At the Closing Date, the Notes shall have been designated for
trading on the PORTAL market.
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(h) Registration Rights Agreement.
The Company and each of the Guarantors shall have entered into the
Registration Rights Agreement and the Initial Purchasers shall have
received executed counterparts thereof.
(i) Concurrent Transactions.
On or before the closing of the transaction contemplated by this
Agreement, the Company shall have executed the agreement for the New
Senior Secured Credit Facility in the form described in the Offering
Memorandum and all of the conditions to borrowing thereunder shall have
been satisfied in accordance with the terms thereunder.
(j) Additional Documents.
On or before the Closing Date, the Initial Purchasers and counsel
for the Initial Purchasers shall have received such information, documents
and opinions as they may reasonably require for the purposes of enabling
them to pass upon the issuance and sale of the Securities as contemplated
herein, or in order to evidence the accuracy of any of the representations
and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when
and as required to be satisfied, this Agreement may be terminated by the Initial
Purchasers by notice to the Company at any time on or prior to the Closing Date,
which termination shall be without liability on the part of any party to any
other party, except that Section 4, Section 6, Section 8 and Section 9 shall at
all times be effective and shall survive such termination.
SECTION 6. Reimbursement of Initial Purchasers' Expenses.
If this Agreement is terminated by the Initial Purchasers pursuant
to Section 5, or if the sale to the Initial Purchasers of the Securities on the
Closing Date is not consummated because of any refusal, inability or failure on
the part of the Company or any Guarantor to perform any agreement herein or to
comply with any provision hereof, the Company and the Guarantors jointly and
severally agree to reimburse the Initial Purchasers upon demand for all
out-of-pocket expenses that shall have been reasonably incurred by the Initial
Purchasers in connection with the proposed purchase and the offering and sale of
the Securities, including but not limited to fees and disbursements of counsel,
printing expenses, travel expenses, postage, facsimile and telephone charges.
SECTION 7. Offer, Sale and Resale Procedures.
The Initial Purchasers, on the one hand, and the Company and each of
the Guarantors, on the other hand, hereby establish and agree to observe the
following procedures in connection with the offer and sale of the Securities:
(i) Offers and sales of the Securities will be made only by the
Initial Purchasers or their Affiliates qualified to do so in the
jurisdictions in which such offers or sales are made and only upon the
terms and conditions set forth in this Agreement and in the Offering
Memorandum. Each such offer or sale shall only be made to (A) persons whom
the offeror or seller reasonably believes to be qualified institutional
buyers (as defined in Rule 144A under the Securities Act), or (B) non-U.S.
persons outside the
22
United States to whom the offeror or seller reasonably believes offers and
sales of Securities may be made in reliance upon regulations under the
Securities Act, upon the terms and conditions set forth in Annex I hereto,
which Annex I is hereby expressly made a part hereof.
(ii) The Securities will be offered by approaching prospective
Subsequent Purchasers on an individual basis. No general solicitation or
general advertising (within the meaning of Rule 502 under the Securities
Act) will be used in the United States in connection with the offering of
the Securities.
(iii) Upon original issuance by the Company, and until such time as
the same is no longer required under the applicable requirements of the
Securities Act, the Securities (and all securities issued in exchange
therefor or in substitution thereof, other than the Exchange Securities)
shall bear the legend set forth in the Offering Memorandum under the
caption "Notice to Investors":
Following the sale of the Securities by the Initial Purchasers to Subsequent
Purchasers pursuant to the terms hereof, the Initial Purchasers shall not be
liable or responsible to the Company for any losses, damages or liabilities
suffered or incurred by the Company, including any losses, damages or
liabilities under the Securities Act, arising from or relating to any resale or
transfer of any Security.
SECTION 8. Indemnification.
(a) Indemnification of the Initial Purchasers.
Each of the Company and the Guarantors, jointly and severally,
agrees 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 Section 15 of the Securities
Act or Section 20 of the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which such Initial Purchaser or such
controlling person may become subject, under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if
such settlement is effected with the written consent of the Company),
insofar as such loss, claim, damage, liability or expense (or actions in
respect thereof as contemplated below) arises out of or is based: (i) upon
any untrue statement or alleged untrue statement of a material fact
contained in the Preliminary Offering Memorandum or the Offering
Memorandum (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of 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 (ii) in whole or in part upon any inaccuracy
in the representations and warranties of the Company or any Guarantor
contained herein; or (iii) in whole or in part upon any failure of the
Company or any Guarantor to perform its obligations hereunder or under
law; or (iv) upon any act or failure to act or any alleged Act or failure
to act by any Initial Purchaser in connection with, or relating in any
manner to, the offering contemplated hereby, and which is included as part
of or referred to in any loss, claim, damage, liability or action arising
out of or based upon any matter covered by clauses (i), (ii) or (iii)
above, provided that the Company shall not be liable under this clause
(iv) to the extent that a court of competent jurisdiction shall have
determined by a final judgment 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 Initial Purchaser through its gross
negligence or willful misconduct and to reimburse
23
each Initial Purchaser and each such controlling person for any and all
expenses (including the fees and disbursements of counsel chosen by Banc
of America Securities LLC) as such expenses are reasonably incurred by
such Initial Purchaser or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of
or based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Initial Purchasers expressly
for use in any Preliminary Offering Memorandum or the Offering Memorandum
(or any amendment or supplement thereto). The indemnity agreement set
forth in this Section 8 shall be in addition to any liabilities that the
Company or the Guarantors may otherwise have.
(b) Indemnification of the Company, its Directors and Officers.
Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Guarantors and each of their
directors and each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act, against any loss,
claim, damage, liability or expense, as incurred, to which the Company or
the Guarantors or any such director, or controlling person may become
subject under the Securities Act, the Exchange Act, or other federal or
state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected
with the written consent of such Initial Purchaser), insofar as such loss,
claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged
untrue statement of a material fact contained in any Preliminary Offering
Memorandum or the Offering Memorandum (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any
Preliminary Offering Memorandum or the Offering Memorandum (or any
amendment or supplement thereto), in reliance upon and in conformity with
written information furnished to the Company by the Initial Purchasers
expressly for use therein; and to reimburse the Company, the Guarantors or
any such director or controlling person for any legal and other expenses
reasonably incurred by the Company, the Guarantors, or any such director
or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action. The Company and the Guarantors hereby acknowledge that
the only information that the Initial Purchasers have furnished to the
Company expressly for use in any Preliminary Offering Memorandum or the
Offering Memorandum (or any amendment or supplement thereto) are the
statements set forth in the third paragraph on page ii of the Offering
Memorandum concerning stabilization by the Initial Purchasers and in the
third sentence of the seventh paragraph and the ninth paragraph under the
caption "Plan of Distribution" in the Offering Memorandum; and the Initial
Purchasers confirm that such statements are correct. The indemnity
agreement set forth in this Section 8 shall be in addition to any
liabilities that each Initial Purchaser may otherwise have.
24
(c) Notifications and Other Indemnification Procedures.
Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any
indemnified party for contribution or otherwise than under the indemnity
agreement contained in this Section 8 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action
is brought against any indemnified party and such indemnified party seeks
or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in and, to the extent that it shall
elect, jointly with all other indemnifying parties similarly notified, by
written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that a conflict may arise between the
positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal
defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties.
Upon receipt of notice from the indemnifying party to such indemnified
party of such indemnifying party's election so to assume the defense of
such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with
the proviso to the next preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of more
than one separate counsel (together with local counsel), approved by the
indemnifying party (Banc of America Securities LLC in the case of Section
8 and Section 9), representing the indemnified parties who are parties to
such action) or (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action,
in each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying party.
(d) Settlements.
The indemnifying party under this Section 8 shall not be liable for
any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified
party against any loss, claim, damage, liability or expense by reason of
such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by Section 8 hereof, the indemnifying party agrees that (i)
it shall be liable for any settlement of any proceeding effected without
its written consent if such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request; and
(ii) such indemnifying party shall not have reimbursed the indemnified
party in
25
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement, compromise or consent to the
entry of judgment in any pending or threatened action, suitor proceeding
in respect of which any indemnified party is or could have been a party
and indemnity was or could have been sought hereunder by such indemnified
party, unless such settlement, compromise or consent includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such action, suitor proceeding.
SECTION 9. Contribution.
If the indemnification provided for in Section 8 is for any reason
held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to
therein (1) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantors on the one hand, and the
Initial Purchasers, on the other hand, from the offering of the Securities
pursuant to this Agreement; 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 hand, in connection with the statements or
omissions or inaccuracies in the representations and warranties herein which
resulted in such losses, claims, damages, liabilities or expenses, 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 hand, in connection with the offering of the Securities pursuant to
this Agreement shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the Securities pursuant to this
Agreement (before deducting expenses) received by the Company or the Guarantors,
and the total discount received by the Initial Purchasers bear to the aggregate
initial offering price of the Securities. The relative fault of the Company and
the Guarantors, on the one hand, and the Initial Purchasers, on the other hand,
shall be determined by reference to, among other things, whether any such untrue
or alleged untrue statement of a material factor omission or alleged omission to
state a material fact or any such inaccurate or alleged inaccurate
representation or warranty relates to information supplied by the Company or the
Guarantors, on the one hand, or the Initial Purchasers, on the other hand, and
the parties' relative intent, knowledge, access to information and opportunity
to corrector prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.
The Company, the Guarantors and the Initial Purchasers agree that it
would not be just and equitable if contribution pursuant to this Section 9 were
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 which does
not take account of the equitable considerations referred to in this Section 9.
26
Notwithstanding the provisions of this Section 9, no Initial
Purchaser shall be required to contribute any amount in excess of the discount
received by such Initial Purchaser's in connection with the Securities
distributed by it. 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 Initial Purchasers' obligations to contribute pursuant to
this Section 9 are several, and not joint, in proportion to their respective
commitments as set forth opposite their names in Schedule A.
For purposes of this Section 9, each director, officer and employee
of an Initial Purchaser and each person, if any, who controls an Initial
Purchaser within the meaning of the Securities Act and the Exchange Act shall
have the same rights to contribution as such Initial Purchaser, and each
director of the Company or any Guarantor, and each person, if any, who controls
the Company or any Guarantor within the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as the Company or any
Guarantor.
SECTION 10. Termination of this Agreement.
Prior to the Closing Date, this Agreement may be terminated by the
Initial Purchasers by notice given to the Company if at any time: (i) trading or
quotation in any of the Company's or any Guarantor's securities shall have been
suspended or limited by the Commission or by the Nasdaq Stock Market, or trading
in securities generally on either the Nasdaq Stock Market or the New York Stock
Exchange shall have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock exchanges by the
Commission or the NASD; (ii) a general banking moratorium shall have been
declared by any of federal, New York, North Carolina or Delaware authorities;
(iii) there shall have occurred any outbreak or escalation of national or
international hostilities or any crisis or calamity, or any change in the United
States or international financial markets, or any substantial change or
development involving a prospective substantial change in United States' or
international political, financial or economic conditions, as in the judgment of
the Initial Purchasers is material and adverse and makes it impracticable to
market the Securities in the manner and on the terms described in the Offering
Memorandum or to enforce contracts for the sale of securities; (iv) in the
judgment of the Initial Purchasers there shall have occurred any Material
Adverse Change; or (v) the Company or any Guarantor shall have sustained a loss
by strike, the, flood, earthquake, accident or other calamity of such character
as in the judgment of the Initial Purchasers may interfere materially with the
conduct of the business and operations of the Company regardless of whether or
not such loss shall have been insured.
Any termination pursuant to this Section 10 shall be without
liability on the part of (a) the Company or any Guarantor to any Initial
Purchaser except that the Company and the Guarantors shall be obligated to
reimburse the expenses of the Initial Purchasers pursuant to Sections 4 and 6
hereof, (b) any Initial Purchaser to the Company or any Guarantor, or (c) any
party hereto to any other party except that the provisions of Section 8 and
Section 9 shall at all times be effective and shall survive such termination.
SECTION 11. Representations and Indemnities to Survive Delivery.
The respective indemnities, agreements, representations, warranties
and other statements of the Company and the Guarantors, of their respective
officers and of the several Initial Purchasers set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Initial Purchaser or the Company or
the Guarantors or any of its or their partners, officers or directors or any
controlling
27
person, as the case may be, and will survive delivery of and payment
for the Securities sold hereunder and any termination of this Agreement.
SECTION 12. Notices.
All communications hereunder shall be in writing and shall be
mailed, hand delivered or telecopied and confirmed to the parties hereto as
follows:
If to the Initial Purchasers:
Banc of America Securities LLC
9 West 57th Street, 6th Floor
New York, NY 10019
Facsimile: (212) 847-6441
Attention: High Yield Capital Markets
with a copy to:
Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022
Facsimile: (212) 848-7179
Attention: Marwan Elaraby, Esq.
If to the Company or the Guarantors:
MedCath Corporation
10720 Sikes Place
Suite 300
Charlotte, NC 28277
Facsimile: (704) 705-5035
Attention: J. Arthur Parker
with a copy to:
Moore & Van Allen PLLC
100 N. Tryon, Suite 4700
Charlotte, NC 28202
Facsimile: (704) 331-1159
Attention: Hal A. Levinson, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 13. Successors.
This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Initial Purchasers pursuant to Section
16 hereof, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 8 and Section 9, and in each case
their respective successors, and no other person will have any
28
right or obligation hereunder. The term "successors" shall not include any
purchaser of the Securities as such from any of the Initial Purchasers merely by
reason of such purchase.
SECTION 14. Partial Unenforceability.
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
SECTION 15. Governing Law Provisions.
(a) Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SUCH STATE.
(b) Consent to Jurisdiction.
Any legal suit, action or proceeding arising out of or based upon
this Agreement or the transactions contemplated hereby ("Related
Proceedings") may be instituted in the federal courts of the United States
of America located in the City and County of New York or the courts of the
State of New York in each case located in the City and County of New York
(collectively, the "Specified Courts"), and each party irrevocably submits
to the non-exclusive jurisdiction (except for proceedings instituted in
regard to the enforcement of a judgment of any such court (a "Related
Judgment"), as to which such jurisdiction is non-exclusive) of such courts
in any such suit, action or proceeding. Service of any process, summons,
notice or document by mail to such party's address set forth above shall
be effective service of process for any suit, action or other proceeding
brought in any such court. The parties irrevocably and unconditionally
waive any objection to the laying of venue of any suit, action or other
proceeding in the Specified Courts and irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such
suit, action or other proceeding brought in any such court has been
brought in an inconvenient forum.
SECTION 16. Default of One or More of the Several Initial Purchasers.
If any one or more of the several Initial Purchasers shall fail or
refuse to purchase Securities that it or they have agreed to purchase hereunder
on the Closing Date, and the aggregate number of Securities which such
defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused
to purchase does not exceed 10% of the aggregate number of the Securities to be
purchased on such date, the other Initial Purchasers shall be obligated,
severally, in the proportions that the number of Securities set forth opposite
their respective names on Schedule A bears to the aggregate number of Securities
set forth opposite the names of all such non-defaulting Initial Purchasers, or
in such other proportions as may be specified by the Initial Purchasers with the
consent of the non-defaulting Initial Purchasers, to purchase the Securities
which such defaulting Initial Purchaser or Initial Purchasers agreed but failed
or refused to purchase on such date. If any one or more of the Initial
Purchasers shall fail or refuse to purchase Securities and the aggregate number
of Securities with respect to which such default occurs exceeds 10% of the
aggregate number of Securities to be purchased on the Closing Date, and
29
arrangements satisfactory to the Initial Purchasers and the Company for the
purchase of such Securities are not made within 48 hours after such default,
this Agreement shall terminate without liability of any party to any other party
except that the provisions of Section 4, Section 6, Section 8 and Section 9
shall at all times be effective and shall survive such termination. In any such
case either the Initial Purchasers or the Company shall have the right to
postpone the Closing Date, as the case may be, but in no event for longer than
seven days in order that the required changes, if any, to the Offering
Memorandum or any other documents or arrangements may be effected.
As used in this Agreement, the term "Initial Purchaser" shall be
deemed to include any person substituted for a defaulting Initial Purchaser
under this Section 16. Any action taken under this Section 16 shall not relieve
any defaulting Initial Purchaser from liability in respect of any default of
such Initial Purchaser under this Agreement.
SECTION 17. General Provisions.
This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof. This Agreement may be executed in two or more counterparts, each
one of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement may not be
amended or modified unless in writing by all of the parties hereto, and no
condition herein (express or implied) may be waived unless waived in writing by
each party whom the condition is meant to benefit. The Table of Contents and the
section headings herein are for the convenience of the parties only and shall
not affect the construction or interpretation of this Agreement.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
30
Very truly yours,
MEDCATH CORPORATION
MEDCATH HOLDINGS CORP.
By: /s/ John T. Casey
-----------------------------------------
Name: John T. Casey
Title: President
Purchase Agreement MedCath
AHH MANAGEMENT, INC.
AUSTIN MOB, INC.
DTO MANAGEMENT, INC.
HHBF, INC.
HARLINGEN HOSPITAL MANAGEMENT, INC.
HARLINGEN PARTNERSHIP HOLDINGS, INC.
HOSPITAL MANAGEMENT IV, INC.
LAFAYETTE HOSPITAL MANAGEMENT, INC.
LOUISIANA HOSPITAL MANAGEMENT, INC.
MEDCATH OF ARKANSAS, INC.
MEDCATH CARDIOLOGY CONSULTING &
MANAGEMENT, INC.
MEDCATH INCORPORATED
MEDCATH OF TEXAS, INC.
MILWAUKEE HOSPITAL MANAGEMENT, INC.
NM HOSPITAL MANAGEMENT, INC.
SAN ANTONIO HOLDINGS, INC.
SAN ANTONIO HOSPITAL MANAGEMENT, INC.
SIOUX FALLS HOSPITAL MANAGEMENT, INC.
SOUTHERN ARIZONA HEART, INC.
VENTURE HOLDINGS, INC.
By: /s/ John T. Casey
---------------------------------
Name: John T. Casey
Title: President
Purchase Agreement MedCath
INTERIM DIAGNOSTICS SOLUTIONS, LLC
MEDCATH DIAGNOSTICS, LLC
MEDCATH FINANCE COMPANY, LLC
MEDCATH NUCLEAR SERVICES, LLC
METUCHEN NUCLEAR MANAGEMENT, LLC
By:/s/ John T. Casey
-----------------------------------------
Name: John T. Casey
Title: Manager
By: /s/ James E. Harris
-----------------------------------------
Name: James E. Harris
Title: Manager
HEART RESEARCH CENTERS
INTERNATIONAL, LLC
By: MEDCATH DIAGNOSTICS, LLC
By: /s/ John T. Casey
------------------------------------------
Name: John T. Casey
Title: Manager
By: /s/ James E. Harris
-------------------------------------------
Name: James E. Harris
Title: Manager
Purchase Agreement MedCath
The foregoing Purchase Agreement is hereby confirmed and accepted by
the Initial Purchasers as of the date first above written.
BANC OF AMERICA SECURITIES LLC
WACHOVIA CAPITAL MARKETS, LLC
CITIGROUP GLOBAL MARKETS INC.
J.P. MORGAN SECURITIES INC.
By: Banc of America Securities LLC
By: /s/ Bruce Thompson
-----------------------------
Name: Bruce Thompson
Title: Managing Director
Purchase Agreement
SCHEDULE A
Aggregate Principal
Initial Purchasers Amount of Notes to
- ------------------ be Purchased
--------------------
Banc of America Securities LLC................................ $ 57,000,000
Wachovia Capital Markets, LLC................................. 43,500,000
Citigroup Global Markets Inc.................................. 30,000,000
J.F. Morgan Securities Inc.................................... 19,500,000
Total..................................... $150,000,000
SCHEDULE B
List of Guarantors
GUARANTOR JURISDICTION OF INCORPORATION LOCAL COUNSEL
--------- ----------------------------- -------------
AHH Management, Inc. North Carolina Moore & Van Allen PLLC
Austin MOB, Inc. North Carolina Moore & Van Allen PLLC
DTO Management, Inc. North Carolina Moore & Van Allen PLLC
HHBF, Inc. North Carolina Moore & Van Allen PLLC
Harlingen Hospital Management, Inc. North Carolina Moore & Van Allen PLLC
Harlingen Partnership Holdings, Inc. Arizona Snell & Wilmer LLP
Heart Research Centers International, LLC North Carolina Moore & Van Allen PLLC
Hospital Management IV, Inc. North Carolina Moore & Van Allen PLLC
Interim Diagnostic Solutions, LLC Delaware Moore & Van Allen PLLC
Lafayette Hospital Management, Inc. North Carolina Moore & Van Allen PLLC
Louisiana Hospital Management, Inc. North Carolina Moore & Van Allen PLLC
MedCath of Arkansas, Inc. North Carolina Moore & Van Allen PLLC
MedCath Cardiology Consulting & Management, Inc. Arizona Snell & Wilmer LLP
MedCath Corporation Delaware Moore & Van Allen PLLC
MedCath Diagnostics, LLC North Carolina Moore & Van Allen PLLC
MedCath Finance Company LLC North Carolina Moore & Van Allen PLLC
MedCath Incorporated North Carolina Moore & Van Allen PLLC
MedCath Nuclear Services, LLC North Carolina Moore & Van Allen PLLC
MedCath of Texas, Inc. North Carolina Moore & Van Allen PLLC
Metuchen Nuclear Management, LLC Delaware Moore & Van Allen PLLC
Milwaukee Hospital Management, Inc. North Carolina Moore & Van Allen PLLC
NM Hospital Management, Inc. North Carolina Moore & Van Allen PLLC
San Antonio Holdings, Inc. Arizona Snell & Wilmer LLP
San Antonio Hospital Management, Inc. North Carolina Moore & Van Allen PLLC
Sioux Falls Hospital Management, Inc. North Carolina Moore & Van Allen PLLC
Southern Arizona Heart, Inc. North Carolina Moore & Van Allen PLLC
Venture Holdings, Inc. Arizona Snell & Wilmer LLP
SCHEDULE C
List of Subsidiaries
MHI, Inc.
MedCath Intermediate Holdings, Inc.
MedCath Incorporated
ANN Management, Inc.
Arizona Heart Hospital, LLC
Austin MOB, Inc.
Blue Ridge Cardiology Services, LLC
Caldwell Cardiology Services, LLC
Cape Cod Cardiology Services, LLC
Center for Cardiac Sleep Medicine, LLC
Central Park Medical Office Building, L.P.
Colorado Springs Cardiology Services, LLC
DTO Management, Inc.
Gaston Cardiology Services, LLC
Greensboro Heart Center, LLC
Harlingen Hospital Management, Inc.
Harlingen Medical Center, L.P.
Harlingen Partnership Holdings, Inc.
Heart Hospital IV, L.P.
Heart Hospital of BK, LLC
Heart Hospital of DTO, LLC
Heart Hospital of Lafayette, LLC
Heart Hospital of New Mexico, LLC
Heart Hospital of San Antonio, LP
Heart Hospital of South Dakota, LLC
Heart Research Centers International, LLC
Heart South Imaging II, LLC
HHBF,Inc.
H&S Land Company, LLC
Hospital Management IV, Inc.
Hospital Pharmacy of Bakersfield, Inc.
Interim Diagnostic Solutions, LLC
Lafayette Hospital Management, Inc.
Louisiana Hospital Management, Inc.
Louisiana Heart Hospital, LLC
MedCath Cardiology Consulting & Management, Inc.
MedCath Diagnostics, LLC
MedCath Finance Company, Inc.
MedCath Management of Ohio, Inc.
MedCath of Arkansas, Inc.
MedCath of Little Rock, LLC
MedCath of McAllen, L.P.
MedCath of New Jersey Cardiac Testing Centers, LP
MedCath of Texas, Inc.
MedCath of Tucson, LLC
MedCath Nuclear Services, LLC
Metuchen Nuclear Management, LLC
Milwaukee Hospital Management, Inc.
NM Hospital Management, Inc.
San Antonio Holdings, Inc.
San Antonio Hospital Management, Inc.
Sioux Falls Hospital Management, Inc.
Slidell-Covington Heart Center, LLC
Southern Arizona Heart, Inc.
Sun City Cardiac Center Associates
The Heart Hospital of Milwaukee, LLC
Venture Holdings, Inc.
Wilmington Heart Center, LLC
WMS Management Inc.