SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
Kindred Healthcare, Inc.
(Name of Issuer)
Common Stock, par value $0.25
(Title of Class of Securities)
494580103
(CUSIP Number)
Peter A. Langerman
Franklin Mutual Advisers, LLC
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
973.912.2042
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
November 14, 2001
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-l(e) 13d-1(f) or 13d-1(g) or (4), check the
following box [ ].
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Franklin Mutual Advisers, LLC
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[ ]
(b)[X]
3. SEC USE ONLY
4. SOURCE OF FUNDS
See Item 3
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7. SOLE VOTING POWER
5,023,181(See Item 5)
8. SHARED VOTING POWER
None (See Item 5)
9. SOLE DISPOSITIVE POWER
5,023,181(See Item 5)
10. SHARED DISPOSITIVE POWER
None (See Item 5)
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,023,181
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
26.0%
14. TYPE OF REPORTING PERSON IA
This Amendment No. 1 relates to the Schedule 13D originally filed on behalf of
Franklin Mutual Advisers, LLC ("FMA") with the Securities and Exchange
Commission on April 30, 2001 (the "Schedule 13D"). Items 5 through 7 of the
Schedule 13D are hereby amended as follows:
Item 5 is replaced in its entirety as follows:
Item 5. Interest in Securities of the Issuer
(a-b) The securities reported on herein are beneficially owned by one or more
open-end investment companies or other managed accounts of FMA. FMA's advisory
contracts with its clients grant to FMA sole voting and investment discretion
over the securities owned by its advisory clients. Therefore, FMA may be deemed
to be, for purposes of Rule 13d-3 under the Act, the beneficial owner of
5,023,181 shares of Common Stock (consisting of 3,062,336 shares of Common
Stock, 560,242 Series A warrants, and 1,400,603 Series B warrants), representing
approximately 26.0% of the outstanding shares of Common Stock.
FMA is an indirect wholly owned subsidiary of Franklin Resources, Inc. ("FRI").
Beneficial ownership by investment advisory subsidiaries and other affiliates of
FRI is being reported in conformity with the guidelines articulated by the SEC
staff in Release No. 34-39538 (January 12, 1998) relating to organizations, such
as FRI, where related entities exercise voting and investment powers over the
securities being reported independently from each other. The voting and
investment powers held by FMA are exercised independently from FRI, and from all
other investment advisor subsidiaries of FRI (FRI, its affiliates and investment
advisor subsidiaries other than FMA are collectively referred to herein as "FRI
affiliates"). Furthermore, FMA and FRI internal policies and procedures
establish informational barriers that prevent the flow between FMA and the FRI
affiliates of information that relates to the voting and investment powers over
the securities owned by their respective advisory clients. Consequently, FMA and
the FRI affiliates are each reporting the securities over which they hold
investment and voting power separately from each other.
Charles B. Johnson and Rupert H. Johnson, Jr. (the "Principal Shareholders")
each own in excess of 10% of the outstanding Common Stock of FRI and are the
principal shareholders of FRI. However, FMA exercises voting and investment
powers on behalf of its advisory clients independently of FRI, the Principal
Shareholders, and their respective affiliates. Consequently, beneficial
ownership of the securities being reported by FMA is not attributed to FRI, the
Principal Shareholders, and their respective affiliates other than FMA. FMA
disclaims any economic interest or beneficial ownership in any of the securities
covered by this statement.
Furthermore, FRI, the Principal Shareholders, and their respective affiliates
including FMA, are of the view that they are not acting as a "group" for
purposes of Section 13(d) under the Act and that they are not otherwise required
to attribute to each other the "beneficial ownership" of securities held by any
of them or by any persons or entities advised by FRI subsidiaries.
(c) There was one transaction in the shares of the Common Stock within the past
sixty days - a sale of 400,000 shares on November 14, 2001 as part of an
underwritten offering by the Issuer at a price of $46.00 per share ($43.70 net
to the selling beneficial owners). The shares sold on behalf of FMA's advisory
clients were sold pursuant to a registration rights agreement between the Issuer
and, among others, FMA, dated as of April 20, 2001 (as amended on August 18,
2001 and August 30, 2001).
(d) No person other than the respective advisory clients of FMA have the right
to receive or the power to direct the receipt of dividends from, or the proceeds
of the sale of the securities being reported herein. Mutual Shares Fund and
Mutual Beacon Fund, each a series of Franklin Mutual Series Fund Inc., an
investment company registered under the Investment Company Act of 1940, have an
in interest in more than five percent of the class of securities being reported
herein.
(e) Not applicable.
Item 6 is replaced in its entirety as follows:
In connection with the underwritten offering of Issuer's common stock referred
to in item 5(c) above, FMA entered into (i) an Underwriting Agreement dated as
of November 7, 2001 with the Issuer and the underwriters identified therein, and
(ii) a Lock-Up Agreement dated as of October 22, 2001 with the Issuer relating
to the shares of the Issuer owned by FMA's advisory clients.
Other than as disclosed above, no persons named in Item 2 herein, nor to the
best of such person's knowledge, no person named in Exhibit A hereto, has any
contract, arrangement, understanding or relationship (legal or otherwise) with
any person with respect to any securities of the Issuer, including, but not
limited to, transfer or voting of any securities, finders' fees, joint ventures,
loan or option arrangements, puts or calls, guarantees of profits, division of
profits or losses, or the giving or withholding of proxies.
Item 7. Materials to be Filed as Exhibits
Exhibit B: Underwriting Agreement among the Issuer, FMA and the underwriters
identified therein dated as of November 7, 2001.
Exhibit C: Lock-Up Agreement between FMA and the Issuer dated as of
October 22, 2001
After reasonable inquiry, and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete, and correct.
November 15, 2001
Franklin Mutual Advisers, LLC
By: Franklin/Templeton Distributors, Inc.
Its Managing Member
/s/Leslie M. Kratter
LESLIE M. KRATTER
Secretary
Exhibit B
3,246,900 Shares
KINDRED HEALTHCARE, INC.
Common Stock
UNDERWRITING AGREEMENT
November 7, 2001
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
UBS Warburg LLC
J.P. Morgan Securities Inc.
Lehman Brothers Inc.
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
Introductory. Kindred Healthcare, Inc., a Delaware corporation ("Company"),
proposes to issue and sell 1,750,000 shares of its common stock, par value $0.25
per share ("Securities"), and the stockholders listed in Schedule A hereto (the
"Selling Stockholders") propose severally and not jointly to sell an aggregate
of 1,496,900 outstanding shares of the Securities (such 3,246,900 shares of
Securities being hereinafter referred to as the "Firm Securities"). The Company
also proposes to sell to the Underwriters, at the option of the Underwriters, an
aggregate of not more than 487,035 additional shares of its Securities (such
487,035 additional shares being hereinafter referred to as the "Optional
Securities"). The Firm Securities and the Optional Securities are herein
collectively called the "Offered Securities." As part of the offering
contemplated by this Agreement, Credit Suisse First Boston Corporation ("CSFBC"
or the "Designated Underwriter") has agreed to reserve out of the Firm
Securities purchased by it under this Agreement, up to 25,000 shares, for sale
to the Company's directors, officers, employees and other parties associated
with the Company (collectively, "Participants"), as set forth in the Prospectus
(as defined herein) under the heading "Underwriting" (the "Directed Share
Program"). The Firm Securities to be sold by the Designated Underwriter pursuant
to the Directed Share Program (the "Directed Shares") will be sold by the
Designated Underwriter pursuant to this Agreement at the public offering price.
Any Directed Shares not subscribed for by the end of the business day on which
this Agreement is executed will be offered to the public by the Underwriters as
set forth in the Prospectus. The Company and the Selling Stockholders hereby
agree with the several Underwriters named in Schedule B hereto ("Underwriters")
as follows: Representations and Warranties of the Company and the Selling
Stockholders. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
A registration statement (No. 333-68838) relating to the Offered
Securities, including a form of prospectus, has been filed with the Securities
and Exchange Commission ("Commission") and either (A) has been declared
effective under the Securities Act of 1933 ("Act") and is not proposed to be
amended or (B) is proposed to be amended by amendment or post-effective
amendment. If such registration statement (the "initial registration statement")
has been declared effective, either (A) an additional registration statement
(the "additional registration statement") relating to the Offered Securities may
have been filed with the Commission pursuant to Rule 462(b) ("Rule 462(b)")
under the Act and, if so filed, has become effective upon filing pursuant to
such Rule and the Offered Securities all have been duly registered under the Act
pursuant to the initial registration statement and, if applicable, the
additional registration statement or (B) such an additional registration
statement is proposed to be filed with the Commission pursuant to Rule 462(b)
and will become effective upon filing pursuant to such Rule and upon such filing
the Offered Securities will all have been duly registered under the Act pursuant
to the initial registration statement and such additional registration
statement. If the Company does not propose to amend the initial registration
statement or if an additional registration statement has been filed and the
Company does not propose to amend it, and if any post-effective amendment to
either such registration statement has been filed with the Commission prior to
the execution and delivery of this Agreement, the most recent amendment (if any)
to each such registration statement has been declared effective by the
Commission or has become effective upon filing pursuant to Rule 462(c) ("Rule
462(c)") under the Act or, in the case of the additional registration statement,
Rule 462(b). For purposes of this Agreement, "Effective Time" with respect to
the initial registration statement or, if filed prior to the execution and
delivery of this Agreement, the additional registration statement means (A) if
the Company has advised the Representatives that it does not propose to amend
such registration statement, the date and time as of which such registration
statement, or the most recent post-effective amendment thereto (if any) filed
prior to the execution and delivery of this Agreement, was declared effective by
the Commission or has become effective upon filing pursuant to Rule 462(c), or
(B) if the Company has advised the Representatives that it proposes to file an
amendment or post-effective amendment to such registration statement, the date
and time as of which such registration statement, as amended by such amendment
or post-effective amendment, as the case may be, is declared effective by the
Commission. If an additional registration statement has not been filed prior to
the execution and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "Effective Time" with respect to
such additional registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule 462(b).
"Effective Date" with respect to the initial registration statement or the
additional registration statement (if any) means the date of the Effective Time
thereof. The initial registration statement, as amended at its Effective Time,
including all material incorporated by reference therein, including all
information contained in the additional registration statement (if any) and
deemed to be a part of the initial registration statement as of the Effective
Time of the additional registration statement pursuant to the General
Instructions of the Form on which it is filed and including all information (if
any) deemed to be a part of the initial registration statement as of its
Effective Time pursuant to Rule 430A(b) ("Rule 430A(b)") under the Act, is
hereinafter referred to as the "Initial Registration Statement." The additional
registration statement, as amended at its Effective Time, including the contents
of the initial registration statement incorporated by reference therein and
including all information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule 430A(b), is
hereinafter referred to as the "Additional Registration Statement." The Initial
Registration Statement and the Additional Registration Statement are hereinafter
referred to collectively as the "Registration Statements" and individually as a
"Registration Statement." The form of prospectus relating to the Offered
Securities, as first filed with the Commission pursuant to and in accordance
with Rule 424(b) ("Rule 424(b)") under the Act or (if no such filing is
required) as included in a Registration Statement, including all material
incorporated by reference in such prospectus, is hereinafter referred to as the
"Prospectus." No document has been or will be prepared or distributed in
reliance on Rule 434 under the Act.
If the Effective Time of the Initial Registration Statement is prior to
the execution and delivery of this Agreement: (A) on the Effective Date of the
Initial Registration Statement, the Initial Registration Statement complied as
to form in all respects to the requirements of the Act and the rules and
regulations of the Commission ("Rules and Regulations") and did not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
(B) on the Effective Date of the Additional Registration Statement (if any),
each Registration Statement complied, or will comply, as to form in all respects
to the requirements of the Act and the Rules and Regulations and did not
include, or will not include, any untrue statement of a material fact and did
not omit, or will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (C) on
the date of this Agreement, the Initial Registration Statement and, if the
Effective Time of the Additional Registration Statement is prior to the
execution and delivery of this Agreement, the Additional Registration Statement
each complies as to form, and at the time of filing of the Prospectus pursuant
to Rule 424(b) or (if no such filing is required) at the Effective Date of the
Additional Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will comply as to form, in all
respects to the requirements of the Act and the Rules and Regulations, and
neither of such documents includes, or will include, any untrue statement of a
material fact or omits, or will omit, to state any material fact required to be
stated therein or necessary to make the statements therein (in the case of the
Prospectus, in the light of the circumstances under which they were made) not
misleading. If the Effective Time of the Initial Registration Statement is
subsequent to the execution and delivery of this Agreement: on the Effective
Date of the Initial Registration Statement, the Initial Registration Statement
and the Prospectus will comply as to form in all respects to the requirements of
the Act and the Rules and Regulations, neither of such documents will include
any untrue statement of a material fact or will omit to state any material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus, in the light of the circumstances under which they
were made) not misleading, and no Additional Registration Statement has been or
will be filed. The two preceding sentences do not apply to statements in or
omissions from a Registration Statement or the Prospectus based upon written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information is that described as such in Section 7(c) hereof.
The documents incorporated or deemed to be incorporated by reference in
the Registration Statements and the Prospectus, at the time they were or
hereafter are filed with the Commission, complied and will comply as to form in
all respects with the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
The Company has been duly organized and is a validly existing
corporation in good standing under the laws of the State of Delaware, with power
and authority (corporate and other) to own, lease and operate its properties and
conduct its business as described in the Prospectus; and the Company is duly
qualified to transact business as a foreign corporation and is in good standing
in all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the failure to
be so qualified or in good standing would not, individually or in the aggregate,
have a material adverse effect on the condition (financial or other), business,
business prospects, properties or results of operations of the Company and its
subsidiaries taken as a whole ("Material Adverse Effect").
Each subsidiary of the Company listed on Schedule C hereto (that
purports to identify each subsidiary of the Company that constitutes a
"significant subsidiary" as such term is defined in Rule 1-02 of Regulation S-X)
that is a corporation (a "Corporate Subsidiary") has been duly organized and is
a validly existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate and
other) to own, lease and operate its properties and conduct its business as
described in the Prospectus, and each Corporate Subsidiary is duly qualified to
transact business as a foreign corporation and is in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified or in good standing would not, individually or in the aggregate, have
a Material Adverse Effect; all of the issued and outstanding capital stock of
each Corporate Subsidiary has been duly authorized and validly issued, is fully
paid and nonassessable, was not issued in violation of or subject to any
preemptive or similar rights and is owned by the Company, directly or through
subsidiaries, free from liens, encumbrances and defects (other than liens
pursuant to the Credit Agreements (as defined below)) and no options, warrants
or other rights to purchase, agreements or other obligations to issue or other
rights to convert or exchange any obligations into shares of capital stock or
other ownership interests in any Corporate Subsidiary are outstanding. As used
in the this Agreement, "Credit Agreements" means (1) that certain $120,000,000
Credit Agreement, dated as of April 20, 2001, among Kindred Healthcare
Operating, Inc., the Company, the lenders party thereto, the Swingline Bank
party thereto, the LC Issuing Banks party thereto, Morgan Guaranty Trust Company
of New York, as Administrative Agent and Collateral Agent, and General Electric
Capital Corporation, as Documentation Agent and Collateral Monitoring Agent, and
(2) that certain Credit Agreement Providing for the Issuance of $300,000,000
Senior Secured Notes due 2008, dated as of April 20, 2001, among Kindred
Healthcare Operating, Inc., the Company, the lenders party thereto and Morgan
Guaranty Trust Company of New York, as Collateral Agent and Administrative
Agent.
Each subsidiary of the Company listed on Schedule C hereto that is a
partnership (including, without limitation, general, limited or limited
liability partnerships) (a "Subsidiary Partnership") has been duly organized and
is a validly existing partnership in good standing under the laws of the
jurisdiction of its organization, with power and authority (partnership and
other) to own, lease and operate its properties and conduct its business as
described in the Prospectus, and each Subsidiary Partnership is duly qualified
to transact business as a foreign partnership and is in good standing in all
other jurisdictions in which its ownership or lease of property or the conduct
of its business requires such qualification, except where the failure to be so
qualified or in good standing would not, individually or in the aggregate, have
a Material Adverse Effect; all of the issued and outstanding general and limited
partnership interests in each Subsidiary Partnership have been validly issued
and, except as set forth on Schedule D hereto (that purports to identify each
Subsidiary Partnership that is not wholly-owned by the Company and the Company's
percentage ownership thereof), are owned by the Company, directly or through
subsidiaries, free from liens, encumbrances and defects (other than liens
pursuant to the Credit Agreements); no options, warrants or other rights to
purchase, agreements or other obligations to issue or rights to convert or
exchange any obligations into partnership or other ownership interests in any
Subsidiary Partnership are outstanding; each partnership agreement pursuant to
which the Company or a subsidiary holds a partnership interest in a Subsidiary
Partnership is in full force and effect and constitutes a valid and legally
binding agreement of the parties thereto, enforceable against such parties in
accordance with the terms thereof, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles; and
there has been no material breach of or default under, and no event which with
notice or lapse of time or both would constitute a material breach of or default
under, any such partnership agreement by the Company or any subsidiary, or to
the Company's knowledge, any other party thereto.
Each subsidiary of the Company listed on Schedule C hereto that is a
limited liability company (a "Subsidiary LLC") has been duly organized and is a
validly existing limited liability company in good standing under the laws of
the jurisdiction of its organization, with power and authority to own, lease and
operate its properties and conduct its business as described in the Prospectus,
and each Subsidiary LLC is duly qualified to transact business as a foreign
limited liability company and is in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect; all of the issued and outstanding membership interests in each
Subsidiary LLC have been validly issued and are owned by the Company, directly
or through subsidiaries, free from liens, encumbrances and defects (other than
liens pursuant to the Credit Agreements); no options, warrants or other rights
to purchase, agreements or other obligations to issue or rights to convert or
exchange any obligations into membership or other ownership interests in any
Subsidiary LLC are outstanding; each operating agreement pursuant to which the
Company or a subsidiary holds a membership interest in a Subsidiary LLC is in
full force and effect and constitutes a valid and legally binding agreement of
the parties thereto, enforceable against such parties in accordance with the
terms thereof, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles; and there has
been no material breach of or default under, and no event which with notice or
lapse of time or both would constitute a material breach of or default under,
any such operating agreement by the Company or any subsidiary, or to the
Company's knowledge, any other party thereto.
The only subsidiaries of the Company are (a) the subsidiaries listed on
Schedule C hereto and (b) certain other subsidiaries which, considered in the
aggregate as a single subsidiary, do not constitute a "significant subsidiary"
as defined in Rule 1-02 of Regulation S-X; each of the long-term acute care
hospitals, general acute care hospitals and nursing centers described in the
Prospectus as owned or leased by the Company is owned or leased and operated by
a subsidiary in which, except as disclosed in Schedule D hereto, the Company
directly or indirectly owns 100% of the outstanding ownership interests; and
except as disclosed in the Prospectus and as provided in the Credit Agreements,
there are no material encumbrances or restrictions on the ability of any
subsidiary (1) to pay any dividends or make any distributions on such Corporate
Subsidiary's capital stock, such Partnership Subsidiary's partnership interests
or such Subsidiary LLC's membership interests or to pay any indebtedness owed to
the Company or any other subsidiary, (2) to make any loans or advances to, or
investments in, the Company or any other subsidiary, or (3) to transfer any of
its property or assets to the Company or any other subsidiary.
The Company has the authorized, issued and outstanding capitalization as
set forth in the Prospectus as of the dates set forth therein; all of the issued
and outstanding shares of capital stock of the Company have been duly authorized
and validly issued, are fully paid and nonassessable and conform to the
description thereof contained in the Prospectus; none of the outstanding shares
of capital stock of the Company was issued in violation of the preemptive or
other similar rights of any security holder of the Company; except as disclosed
in the Prospectus, there are no outstanding (a) securities or obligations of the
Company or any of its subsidiaries convertible into or exchangeable for any
capital stock of the Company, (b) warrants, rights or options to subscribe for
or purchase from the Company or any such subsidiary any such capital stock or
any such convertible or exchangeable securities or obligations, or (c)
obligations of the Company or any such subsidiary to issue any shares of such
capital stock, any such convertible or exchangeable securities or obligations,
or any such warrants, rights or options.
The Offered Securities to be issued and sold by the Company pursuant
hereto have been duly authorized and at the applicable Closing Date (as defined
below), after payment therefor in accordance herewith, will be validly issued,
fully paid and nonassessable; and the issuance and sale of such Offered
Securities by the Company are not subject to the preemptive or other similar
rights of any security holder of the Company.
Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person that would give
rise to a valid claim against the Company or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with this offering.
Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Act with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in the
securities registered pursuant to a Registration Statement or in any securities
being registered pursuant to any other registration statement filed by the
Company under the Act.
No consent, approval, authorization or order of, or registration,
qualification or filing with, any governmental authority, agency or body or any
court is required to be obtained or made by the Company for the consummation of
the transactions contemplated by this Agreement in connection with the sale of
the Offered Securities, except such as have been obtained and made under the Act
and such as may be required under state and foreign securities laws and the
rules of the National Association of Securities Dealers, Inc. ("NASD").
The execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not result in a breach
or violation of any of the terms and provisions of, or constitute a default
under, (a) any statute, any rule, regulation or order of any governmental
authority, agency or body or any court, domestic or foreign, having jurisdiction
over the Company or any subsidiary of the Company or any of their properties, or
(b) any agreement or instrument to which the Company or any such subsidiary is a
party or by which the Company or any such subsidiary is bound or to which any of
the properties of the Company or any such subsidiary is subject, or (c) the
charter, by-laws or other constitutive document of the Company or any such
subsidiary, except, in the case of clause (b) only, for such breaches,
violations or defaults that would not, individually or in the aggregate, have a
Material Adverse Effect.
This Agreement has been duly authorized, executed and delivered by the
Company. Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable
title to all real properties and all other properties and assets owned by them
that, individually or in the aggregate, are material to it or them, in each case
free from liens, encumbrances and defects (other than liens pursuant to the
Credit Agreements); that would materially affect the value thereof or materially
interfere with the use made or to be made thereof by them; and except as
disclosed in the Prospectus, the Company and its subsidiaries hold any leased
real or personal property under valid and enforceable leases with no exceptions
that would materially interfere with the use made or to be made thereof by them.
Neither the Company, nor to the knowledge of the Company, any officers,
directors or stockholders, employees or other agents of the Company or any of
its subsidiaries or the hospitals or nursing centers operated by them, has
engaged in any activities which are prohibited under federal Medicare and
Medicaid statutes (including, but not limited to, 42 U.S.C. 1320a-7 (Program
Exclusion), 1320a-7a (Civil Monetary Penalties), 1320a-7b (the Anti-kickback
Statute), 1395nn and 1396b (the "Stark" law, prohibiting certain
self-referrals)), or any other federal healthcare law (including, but not
limited to, the federal TRICARE statute, 10 U.S.C. 1071 et seq., the Federal
Civil False Claims Act, 31 U.S.C. 3729-32, Federal Criminal False Claims Act, 18
U.S.C. 287, False Statements Relating to Health Care Matters, 18 U.S.C. 1035,
Health Care Fraud, 18 U.S.C. 1347), or the federal Food, Drug & Cosmetics Act,
21 U.S.C. 360aaa, or any regulations promulgated pursuant to such statutes, or
related state or local statutes or regulations or any rules of professional
conduct, including, but not limited to, the following: (i) knowingly and
willfully making or causing to be made a false statement or representation of a
material fact in any applications for any benefit or payment under the Medicare
or Medicaid program or from any third party (where applicable federal or state
law prohibits such payments to third parties); (ii) knowingly and willfully
making or causing to be made any false statement or representation of a material
fact for use in determining rights to any benefit or payment under the Medicare
or Medicaid program or from any third party (where applicable federal or state
law prohibits such payments to third parties); (iii) failing to disclose
knowledge by a claimant of the occurrence of any event affecting the initial or
continued right to any benefit or payment under the Medicare or Medicaid program
or from any third party (where applicable federal or state law prohibits such
payments to third parties) on its own behalf or on behalf of another, with
intent to secure such benefit or payment fraudulently; (iv) knowingly and
willfully offering, paying, soliciting or receiving any remuneration (including
any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in
cash or in kind (a) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare or Medicaid or any third
party (where applicable federal or state law prohibits such payments to third
parties), or (b) in return for purchasing, leasing or ordering or arranging for
or recommending the purchasing, leasing or ordering of any good, facility,
service, or item for which payment may be made in whole or in part by Medicare
or Medicaid or any third party (where applicable federal or state law prohibits
such payments to third parties); (v) knowingly and willfully referring an
individual to a person with which they have ownership or certain other financial
arrangements (where applicable federal law prohibits such referrals); and (vi)
knowingly and willfully violating any enforcement initiative instituted by any
governmental agency (including, without limitation, the Office of the Inspector
General and the Department of Justice), except in each case for any such
activities which are specifically described in the Prospectus or which would
not, individually or in the aggregate, have a Material Adverse Effect.
None of the Company or any of its subsidiaries or any of the facilities
operated by any of them has failed to file with applicable regulatory
authorities any statement, report, information or form required by any
applicable law, regulation or order, except where the failure so to file would
not, individually or in the aggregate, have a Material Adverse Effect. Except as
disclosed in the Prospectus, all such filings or submissions were in compliance
with applicable laws when filed and no deficiencies have been asserted by any
regulatory commission, agency or authority with respect to any such filings or
submissions, except where failure so to comply or the assertion of such a
deficiency would not, individually or in the aggregate, have a Material Adverse
Effect.
The Company and its subsidiaries possess required permits, licenses,
provider numbers, certificates, approvals (including without limitation,
certificate of need approvals), consents, orders, certifications (including,
without limitation, certification under the Medicare and Medicaid programs),
accreditations (including, without limitation, accreditation by the Joint
Commission on Accreditation of Healthcare Organizations) and other
authorizations (collectively, "Governmental Licenses") issued by, and have made
all required declarations and filings with, the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct the business
now operated by them (including, without limitation, Government Licenses as are
required (i) under such federal and state healthcare laws as are applicable to
the Company and its subsidiaries and (ii) with respect to those facilities
operated by the Company or any of its subsidiaries that participate in the
Medicare and/or Medicaid programs, to receive reimbursement thereunder), except
where the failure to possess such Government Licenses or to make such
declarations and filings would not, individually or in the aggregate, have a
Material Adverse Effect; the Company and its subsidiaries are in compliance with
the terms and conditions of all such Governmental Licenses, except where the
failure so to comply would not, individually or in the aggregate, have a
Material Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except where the invalidity of such Governmental Licenses or
the failure of such Governmental Licenses to be in full force and effect would
not, individually or in the aggregate, have a Material Adverse Effect; and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation, suspension or modification of any such
Governmental Licenses or the imposition of any other sanction for violation of
any laws referenced in paragraph (xvii) above that, if the subject of an
unfavorable decision, ruling or finding, would individually or in the aggregate
have a Material Adverse Effect.
The accounts receivable of the Company and its subsidiaries have been
adjusted to reflect material changes in the reimbursement policies of third
party payors such as Medicare, Medicaid, private insurance companies, health
maintenance organizations, preferred provider organizations, managed care
systems and other third party payors. The accounts receivable, after giving
effect to the allowance for doubtful accounts, relating to such third party
payors do not materially exceed amounts the Company and its subsidiaries are
entitled to receive.
No labor dispute with the employees of the Company or any subsidiary
exists or, to the knowledge of the Company, is imminent that might have a
Material Adverse Effect.
The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and other
intellectual property (collectively, "intellectual property rights") necessary
to conduct the business now operated by them, or presently employed by them, and
have not received any notice of infringement of or conflict with asserted rights
of others with respect to any intellectual property rights that, if determined
adversely to the Company or any of its subsidiaries, would individually or in
the aggregate have a Material Adverse Effect.
Except as disclosed in the Prospectus, neither the Company nor any of
its subsidiaries is in violation of any statute or any rule, regulation,
decision or order of any governmental authority, agency or body or any court,
domestic or foreign, relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively, "environmental
laws"), owns or operates any real property contaminated with any substance that
is subject to any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any claim
relating to any environmental laws, which violation, contamination, liability or
claim would individually or in the aggregate have a Material Adverse Effect; and
the Company is not aware of any pending investigation which might lead to such a
claim.
Except as disclosed in the Prospectus, there are no pending actions,
suits, proceedings or investigations against or affecting the Company (other
than any sealed "qui tam" actions of which the Company has no knowledge), any of
its subsidiaries or any of their respective properties that, if determined
adversely to the Company or any of its subsidiaries, would individually or in
the aggregate have a Material Adverse Effect, or would materially and adversely
affect the ability of the Company to perform its obligations under this
Agreement, or which are otherwise material in the context of the sale of the
Offered Securities; and no such actions, suits, proceedings or investigations
are threatened or, to the Company's knowledge, contemplated.
The accountants who certified the financial statements and supporting
schedules included in each Registration Statement and the Prospectus are
independent public accountants as required by the Act and the Rules and
Regulations.
The financial statements included in each Registration Statement and the
Prospectus present fairly the financial position of the Company and its
consolidated subsidiaries as of the dates shown and their results of operations
and cash flows for the periods shown, and such financial statements have been
prepared in conformity with the generally accepted accounting principles
("GAAP") in the United States applied on a consistent basis; the schedules
included in each Registration Statement present fairly the information required
to be stated therein; and the assumptions used in preparing the pro forma
financial statements included in each Registration Statement and the Prospectus
provide a reasonable basis for presenting the significant effects directly
attributable to the transactions or events described therein, the related pro
forma adjustments give appropriate effect to those assumptions, and the pro
forma columns therein reflect the proper application of those adjustments to the
corresponding historical financial statement amounts.
Except as disclosed in the Prospectus, since the date of the latest audited
financial statements included in the Prospectus, there has been no material
adverse change, nor any development or event involving a prospective material
adverse change, in the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries taken as a whole, and,
except as disclosed in or contemplated by the Prospectus, there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
The Company is not, and upon the issuance and sale of the Offered Securities by
the Company as herein contemplated and the application by the Company of the net
proceeds therefrom as described in the Prospectus will not be, an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act").
There are no contracts or documents that are required to be described in
the Registration Statements or the Prospectus or to be filed as exhibits thereto
which have not been so described or filed as required.
The Company and each of its subsidiaries and each of the facilities
owned, leased or operated by them are insured by Cornerstone Insurance Company
("Cornerstone") and other insurers (each such other insurer being an insurer of
recognized financial responsibility) against such losses and risks and in such
amounts as are prudent and customary in the healthcare industry; neither the
Company nor any of its subsidiaries or any of the facilities owned, leased or
operated by them has been refused any material insurance coverage sought or
applied for since January 1, 1999; and the Company has no reason to believe that
it, any of its subsidiaries or any of the facilities owned, leased or operated
by it or any of its subsidiaries will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain coverage
consistent with such coverage in all material respects from insurers with
comparable financial strength and claims paying ability ratings as may be
necessary to continue its operations.
Since December 31, 2000, (a) Cornerstone has not sustained any material
loss or material interference with its business from any action, notice, order
or decree from an insurance regulatory authority and (b) except as described in
the Prospectus, there has been (1) no material adverse change in case reserves
or losses or loss expense of Cornerstone and (2) no material adverse change, nor
any development or event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of operations of
Cornerstone, in either case whether or not arising in the ordinary course of
business.
The Company and its subsidiaries have timely filed all federal, state, local and
foreign tax returns that are required to be filed or has duly requested
extensions thereof and all such tax returns are true, correct and complete,
except to the extent that any failure to file or request for extension, or any
incorrectness, would not, individually or in the aggregate, have a Material
Adverse Effect. The Company and its subsidiaries have timely paid all taxes
shown as due on such filed tax returns (including any related assessments, fines
or penalties), except to the extent that any such taxes are being contested in
good faith and by appropriate proceedings, or to the extent that any failure to
pay would not, individually or in the aggregate, have a Material Adverse Effect;
and adequate charges, accruals and reserves have been provided for in the
financial statements in accordance with GAAP in respect of all federal, state,
local and foreign taxes for all periods as to which the tax liability of the
Company and its subsidiaries has not been fully determined or remains open to
examination by applicable taxing authorities except for taxes incurred after the
date of the financial statements.
Neither the Company nor any of its subsidiaries or, to the best of the Company's
knowledge, any of their respective directors, officers or affiliates has taken
or will take, directly or indirectly, any action designed to, or that could
reasonably be expected to, cause or result in stabilization or manipulation of
the price of the Securities in violation of Regulation M under the Securities
Exchange Act of 1934, as amended ("Exchange Act").
All of the Participants to whom any Directed Shares will be offered are
domiciled in, and residents of, the United States.
The Company has not offered, or caused the Underwriters to offer, any
Offered Securities to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business with the
Company or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.
Each Selling Stockholder severally and not jointly represents and warrants to,
and agrees with, the several Underwriters and the QIU that:
The Offered Securities to be sold by such Selling Stockholder pursuant
to this Agreement are certificated securities in registered form and are not
held in any securities account or by or through any securities intermediary
within the meaning of the Uniform Commercial Code as in effect in the State of
New York ("NYUCC"). Such Selling Stockholder has, and at the relevant Closing
Date will have, full right, power and authority to enter into this Agreement and
to hold, sell, transfer and deliver the Offered Securities to be sold by such
Selling Stockholder pursuant to this Agreement; and upon the Underwriters'
acquiring possession of such Offered Securities (or an agent's acquiring
possession of such Offered Securities on the Underwriters' behalf) and paying
the purchase price therefor as herein contemplated, the Underwriters will
acquire their respective interests in such Offered Securities (including,
without limitation, all rights that such Selling Stockholder had or has the
power to transfer in such Offered Securities) free of any adverse claim.
Certificates for all of the Offered Securities to be sold by such Selling
Stockholder pursuant to this Agreement, in suitable form for transfer by
delivery or accompanied by duly executed instruments of transfer or assignment
in blank, with signatures guaranteed, have been placed in custody with the
Custodian under the Power of Attorney and the related Custody Agreement (each as
defined below) with irrevocable conditional instructions to deliver such Offered
Securities to the Underwriters pursuant to this Agreement.
If the Effective Time of the Initial Registration Statement is prior to
the execution and delivery of this Agreement: (A) on the Effective Date of the
Initial Registration Statement, the Initial Registration Statement did not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, (B) on the Effective Date of the Additional Registration
Statement (if any), each Registration Statement did not include, or will not
include, any untrue statement of a material fact and did not omit, or will not
omit, to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and (C) on the date of this
Agreement, the Initial Registration Statement and, if the Effective Time of the
Additional Registration Statement is prior to the execution and delivery of this
Agreement, the Additional Registration Statement does not include and at the
time of filing of the Prospectus pursuant to Rule 424(b) or (if no such filing
is required) at the Effective Date of the Additional Registration Statement in
which the Prospectus is included, each Registration Statement and the Prospectus
will not include, any untrue statement of a material fact or omits, or will
omit, to state any material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading. If the Effective Time
of the Initial Registration Statement is subsequent to the execution and
delivery of this Agreement: on the Effective Date of the Initial Registration
Statement, neither the Initial Registration Statement nor the Prospectus will
include any untrue statement of a material fact or will omit to state any
material fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in the light of the circumstances under
which they were made) not misleading. In respect of each Selling Stockholder,
the first two sentences of this clause (ii) apply only to the extent that any
statements in or omissions from a Registration Statement or the Prospectus are
based on and in conformity with written information furnished to the Company by
such Selling Stockholder (in its capacity as a Selling Stockholder) specifically
for use therein, it being understood and agreed that the only such information
is that described in Section 7(b).
Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between such Selling Stockholder and any person
that would give rise to a valid claim against such Selling Stockholder, the
Company or any Underwriter for a brokerage commission, finder's fee or other
like payment in connection with this offering.
No consent, approval, authorization or order of, or registration,
qualification or filing with, any domestic governmental authority, agency or
body or any domestic court is required to be obtained or made by such Selling
Stockholder for the consummation of the transactions contemplated by the Custody
Agreement or this Agreement in connection with the sale of the Offered
Securities to be sold by such Selling Stockholder, except such as have been
obtained and made under the Act and such as may be required under state and
foreign securities laws and the rules of the NASD.
The execution, delivery and performance of the Custody Agreement and
this Agreement by such Selling Stockholder and the sale of the Offered
Securities to be sold by such Selling Stockholder pursuant hereto will not
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, (a) any statute, any rule, regulation or order of
any domestic governmental authority, agency or body or any domestic court having
jurisdiction over such Selling Stockholder or any of its properties, (b) any
agreement or instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder is bound or to which any of the properties of such
Selling Stockholder is subject or (c) any charter, by-laws or other constitutive
document of such Selling Stockholder, except, in the case of clause (b) only,
for such beaches, violations or defaults that would not materially adversely
affect the ability of such Selling Stockholder to perform its obligations under
this Agreement or the Custody Agreement or to consummate the transactions
contemplated hereby or thereby.
The Power of Attorney and related Custody Agreement with respect to such
Selling Stockholder have been duly authorized, executed and delivered by such
Selling Stockholder and constitute valid and binding obligations of such Selling
Stockholder enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
This Agreement has been duly authorized, executed and delivered by such
Selling Stockholder.
Such Selling Stockholder has not taken and will not take, directly or
indirectly, any action designed to, or that could reasonably be expected to,
cause or result in stabilization or manipulation of the price of the Securities
in violation of Regulation M under the Exchange Act. Purchase, Sale and Delivery
of Offered Securities. On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company and each Selling Stockholder agree, severally and not
jointly, to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company and each Selling Stockholder, at a
purchase price of $43.70 per share, that number of Firm Securities (rounded up
or down, as determined by CSFBC in its discretion, in order to avoid fractions)
obtained by multiplying 1,750,000 Firm Securities in the case of the Company and
the number of Firm Securities set forth opposite the name of such Selling
Stockholder in Schedule A hereto, in the case of a Selling Stockholder, in each
case by a fraction the numerator of which is the number of Firm Securities set
forth opposite the name of such Underwriter in Schedule B hereto and the
denominator of which is the total number of Firm Securities. Certificates in
negotiable form for the Offered Securities to be sold by the Selling
Stockholders hereunder have been placed in custody, for delivery under this
Agreement, under Custody Agreements made with National City Bank, as custodian
("Custodian"). Each Selling Stockholder agrees that the shares represented by
the certificates held in custody for the Selling Stockholders under such Custody
Agreements are subject to the interests of the Underwriters hereunder, that the
arrangements made by the Selling Stockholders for such custody are to that
extent irrevocable, and that the obligations of the Selling Stockholders
hereunder shall not be terminated by operation of law, whether by the death of
any individual Selling Stockholder or the occurrence of any other event, or in
the case of a trust, by the death of any trustee or trustees or the termination
of such trust. If any individual Selling Stockholder or any such trustee or
trustees should die, or if any other such event should occur, or if any of such
trusts should terminate, before the delivery of the Offered Securities
hereunder, certificates for such Offered Securities shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as if
such death or other event or termination had not occurred, regardless of whether
or not the Custodian shall have received notice of such death or other event or
termination.
The Company and the Custodian will deliver the Firm Securities to CSFBC for the
accounts of the Underwriters, against payment of the purchase price in Federal
(same day) funds by wire transfer to an account at banks reasonably acceptable
to CSFBC drawn to the order of the Company in the case of 1,750,000 shares of
Firm Securities and to the Custodian in the case of 1,496,000 shares of Firm
Securities, at the office of Shearman & Sterling, 599 Lexington Avenue, New
York, N.Y. 10022, at 9:00 A.M., New York time, on November 14, or at such other
time not later than seven full business days thereafter as CSFBC and the Company
shall determine, such time being herein referred to as the "First Closing Date."
For purposes of Rule 15c6-1 under the Exchange Act, the First Closing Date (if
later than the otherwise applicable settlement date) shall be the settlement
date for payment of funds and delivery of securities for all the Offered
Securities sold pursuant to the offering. The certificates for the Firm
Securities so to be delivered will be in definitive form, in such denominations
and registered in such names as CSFBC requests and will be made available for
checking and packaging at the above office of Shearman & Sterling at least 24
hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company and the Selling
Stockholders from time to time not more than 30 days subsequent to the date of
the Prospectus, the Underwriters may purchase all or less than all of the
Optional Securities at the purchase price per share to be paid for the Firm
Securities. The Company agrees to sell to the Underwriters the number of
Optional Securities specified in such notice and the Underwriters agree,
severally and not jointly, to purchase such Optional Securities. Such Optional
Securities shall be purchased from the Company for the account of each
Underwriter in the same proportion as the number of Firm Securities set forth
opposite such Underwriter's name bears to the total number of Firm Securities
(subject to adjustment by CSFBC to eliminate fractions) and may be purchased by
the Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Securities. No Optional Securities shall be
sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC to the Company and the Selling Stockholders.
Each time for the delivery of and payment for the Optional Securities, being
herein referred to as an "Optional Closing Date," which may be the First Closing
Date (the First Closing Date and each Optional Closing Date, if any, being
sometimes referred to as a "Closing Date"), shall be determined by CSFBC but
shall be not later than five full business days after written notice of election
to purchase Optional Securities is given. The Company will deliver the Optional
Securities being purchased on each Optional Closing Date to the Representatives
for the accounts of the several Underwriters, against payment of the purchase
price therefor in Federal (same day) funds by official bank check or checks or
wire transfer to an account at a bank acceptable to CSFBC drawn to the order of
the Company, at the above office of Shearman & Sterling. The certificates for
the Optional Securities being purchased on each Optional Closing Date will be in
definitive form, in such denominations and registered in such names as CSFBC
requests upon reasonable notice prior to such Optional Closing Date and will be
made available for checking and packaging at the above office of Shearman &
Sterling at a reasonable time in advance of such Optional Closing Date. Offering
by Underwriters. It is understood that the several Underwriters propose to offer
the Offered Securities for sale to the public as set forth in the Prospectus.
Certain Agreements of the Company and the Selling Stockholders. The Company
(with respect to paragraphs 5(a) through 5(l) below) and each Selling
Stockholder (with respect only to paragraph 5(i) below) agree with the several
Underwriters that:
If the Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement, the Company will file the Prospectus
with the Commission pursuant to and in accordance with subparagraph (1) (or, if
applicable and if consented to by CSFBC (which consent shall not be unreasonably
withheld), subparagraph 4)) of Rule 424(b) not later than the earlier of (A) the
second business day following the execution and delivery of this Agreement or
(B) the fifteenth business day after the Effective Date of the Initial
Registration Statement. The Company will advise CSFBC promptly of any such
filing pursuant to Rule 424(b). If the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this Agreement
and an additional registration statement is necessary to register a portion of
the Offered Securities under the Act but the Effective Time thereof has not
occurred as of such execution and delivery, the Company will file the additional
registration statement or, if filed, will file a post- effective amendment
thereto with the Commission pursuant to and in accordance with Rule 462(b) on or
prior to 10:00 P.M., New York time, on the date of this Agreement or, if
earlier, on or prior to the time the Prospectus is printed and distributed to
any Underwriter, or will make such filing at such later date as shall have been
consented to by CSFBC.
The Company will advise CSFBC promptly of any proposal to amend or supplement
the initial or any additional registration statement as filed or the related
prospectus or the Initial Registration Statement, the Additional Registration
Statement (if any) or the Prospectus and will not effect such amendment or
supplementation without CSFBC's consent (which consent shall not be unreasonably
withheld); and the Company will also advise CSFBC promptly of the effectiveness
of each Registration Statement (if its Effective Time is subsequent to the
execution and delivery of this Agreement) and of any amendment of or supplement
to a Registration Statement or the Prospectus and of the institution by the
Commission of any stop order proceedings in respect of a Registration Statement
and will use its reasonable best efforts to prevent the issuance of any such
stop order and to obtain as soon as possible its lifting, if issued.
If, at any time when a prospectus relating to the Offered Securities is
required to be delivered under the Act in connection with sales by any
Underwriter or dealer, any event occurs as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Prospectus to comply
with the Act, the Company will promptly notify CSFBC of such event and will
promptly prepare and file with the Commission, at its own expense, an amendment
or supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither CSFBC's consent to, nor the
Underwriters' delivery of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 6.
Not later than the Availability Date (as defined below), the Company will make
generally available to its security holders an earnings statement covering a
period of at least 12 months beginning after the Effective Date of the Initial
Registration Statement (or, if later, the Effective Date of the Additional
Registration Statement) which will satisfy the provisions of Section 11(a) of
the Act. For the purpose of the preceding sentence, "Availability Date" means
the 45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth fiscal
quarter is the last quarter of the Company's fiscal year, "Availability Date"
means the 90th day after the end of such fourth fiscal quarter.
The Company will furnish to the Representatives copies of each Registration
Statement (one of which will be signed and will include all exhibits), each
related preliminary prospectus, and, so long as a prospectus relating to the
Offered Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, the Prospectus and all amendments and
supplements to such documents, in each case in such quantities as CSFBC
requests. The Prospectus shall be so furnished on or prior to 3:00 P.M., New
York time, on the business day following the later of the execution and delivery
of this Agreement or the Effective Time of the Initial Registration Statement.
All other such documents shall be so furnished as soon as available. The Company
will pay the expenses of printing and distributing to the Underwriters all such
documents.
The Company will arrange for the qualification of the Offered Securities for
sale under the laws of such jurisdictions as CSFBC designates and will continue
such qualifications in effect so long as required for the distribution, provided
that the Company shall not be required to (a) qualify generally to do business
in any jurisdiction where it is not then so qualified, (b) take any action which
would subject it to taxation or general service of process in any such
jurisdiction where it is not then so subject or (c) make any change in its
charter or by-laws that the board of directors of the Company determines in good
faith to be contrary to the best interests of the Company and its stockholders.
During the period of three years hereafter, the Company will furnish to the
Representatives and, upon request, to each of the other Underwriters, as soon as
practicable after the end of each fiscal year, a copy of its annual report to
stockholders for such year; and the Company will furnish during such period to
the Representatives (i) as soon as available, a copy of each report and any
definitive proxy statement of the Company filed with the Commission under the
Exchange Act or mailed to stockholders, and (ii) from time to time, such other
public information concerning the Company as CSFBC may reasonably request. For a
period of 90 days after the Effective Date, the Company will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly, or
file with the Commission a registration statement under the Act (other than any
amendment to the Registration Statement on Form S-3 (File No. 333-69646) of the
Company which was filed with the Commission on September 19, 2001 or related
prospectus or prospectus supplement) relating to, any additional shares of its
Securities or securities convertible into or exchangeable or exercisable for any
shares of its Securities, or publicly disclose the intention to make any such
offer, sale, pledge, disposition or filing, without the prior written consent of
CSFBC, except issuances of Securities pursuant to the conversion or exchange of
convertible or exchangeable securities or the exercise of warrants or options,
in each case outstanding on the date hereof, grants of employee stock options
pursuant to the terms of a plan in effect on the date hereof, or issuances of
Securities pursuant to the exercise of such options.
The Company agrees with the several Underwriters that the Company will pay all
expenses incident to the performance of the obligations of the Company under
this Agreement, for the filing fees of the Commission relating to the Offered
Securities, for any filing fees and other expenses (including fees and
disbursements of counsel) in connection with qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC designates and
the printing of memoranda relating thereto, for the filing fee and other
expenses (including fees and disbursements of counsel) incident to the review by
the NASD of the underwriting terms and arrangements relating to the sale of the
Offered Securities, for any fees associated with the quotation of the Securities
on The Nasdaq National Market, for any travel expenses of the Company's officers
and employees and any other expenses of the Company in connection with attending
or hosting meetings with prospective purchasers of the Offered Securities for
expenses incurred in distributing preliminary prospectuses and the Prospectus
(including any amendments and supplements thereto) to the Underwriters. Each
Selling Stockholder agrees with the several Underwriters that such Selling
Stockholder will pay all expenses incident to the performance of the obligations
of such Selling Stockholder under the Agreement and for any transfer taxes on
the sale by such Selling Stockholder of Offered Securities to the Underwriters.
As between the Company and the Selling Stockholders that are party to the
Registration Rights Agreement (described below), the expenses set forth in this
paragraph (i) shall be paid according to the provisions of Section 7 of the
Registration Rights Agreement, dated as of April 20, 2001, as amended, by and
among the Company and the persons identified on Schedule 1 thereto. The Company
will use its best efforts to cause the Custodian to deliver to CSFBC, attention:
Transactions Advisory Group, on the Closing Date a letter stating that they will
deliver to each Selling Stockholder a United States Treasury Department Form
1099 (or other applicable form or statement specified by the United States
Treasury Department regulations in lieu thereof) on or before January 31 of the
year following the date of this Agreement.
In connection with the Directed Share Program, the Company will ensure that the
Directed Shares will be restricted to the extent required by the NASD or the
NASD rules from sale, transfer, assignment, pledge or hypothecation for a period
of three months following the date of the effectiveness of the Registration
Statement. The Designated Underwriter will notify the Company as to which
Participants will need to be so restricted. The Company will direct the transfer
agent to place stop transfer restrictions upon such securities for such period
of time.
The Company will pay all fees and disbursements of counsel incurred by the
Underwriters in connection with the Directed Share Program and stamp duties,
similar taxes or duties or other taxes, if any, incurred by the Underwriters in
connection with the Directed Share Program.
Conditions of the Obligations of the Underwriters. The obligations of the
several Underwriters to purchase and pay for the Firm Securities on the First
Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein, to
the accuracy of the written statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder and to the following
additional conditions precedent:
The Representatives shall have received a letter, dated the date of delivery
thereof (which, if the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, shall be on or prior to
the date of this Agreement or, if the Effective Time of the Initial Registration
Statement is subsequent to the execution and delivery of this Agreement, shall
be at or prior to the time of filing of the amendment or post-effective
amendment to the registration statement to be filed shortly prior to such
Effective Time), of PricewaterhouseCoopers LLP confirming that they are
independent public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating to the effect that:
in their opinion the financial statements and schedules and summary of earnings
examined by them and included in the Registration Statements comply as to form
in all material respects with the applicable accounting requirements of the Act
and the related published Rules and Regulations; they have performed the
procedures specified by the American Institute of Certified Public Accountants
for a review of interim financial information as described in Statement of
Auditing Standards No. 71, Interim Financial Information, on the unaudited
financial statements included in the Registration Statements; on the basis of
the review referred to in clause (ii) above, a reading of the latest available
interim financial statements of the Company, inquiries of officials of the
Company who have responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them to
believe that:
(A) the unaudited financial statements included in the Registration Statements
do not comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and Regulations or any
material modifications should be made to such unaudited financial statements for
them to be in conformity with generally accepted accounting principles; (B) the
unaudited consolidated revenues, operating income, net income and net income per
share amounts for the three-month period ended September 30, 2001 included in
the Prospectus do not agree with the amounts set forth in the unaudited
consolidated financial statements for those same periods or were not determined
on a basis substantially consistent with that of the corresponding amounts in
the audited statements of income; (C) at the date of the latest available
balance sheet read by such accountants, or at a subsequent specified date not
more than three business days prior to the date of this Agreement, there was any
change in the capital stock, any increase in current liabilities, long-term debt
or professional liability risks, or any decreases in consolidated net assets or
stockholders' equity of the Company and its consolidated subsidiaries, as
compared with amounts shown on the latest balance sheet included in the
Prospectus; or (D) for the period from the closing date of the latest income
statement included in the Prospectus to the closing date of the latest available
income statement read by such accountants, or to a specified date not more than
three business days prior to the date of this Agreement, there were any
decreases, as compared with the corresponding period of the previous year, in
consolidated revenues or in the total or per share amounts of consolidated
income from operations before extraordinary items or of net income; except in
all cases set forth in clauses (C) and (D) above for changes, increases or
decreases that the Prospectus discloses have occurred or may occur or which are
described in such letter; they have read the unaudited pro forma condensed
financial statements included in the Registration Statements, inquired of
officials of the Company who have responsibility for financial and accounting
matters about the basis for their determination of the pro forma adjustments and
whether such unaudited pro forma condensed financial statements comply as to
form in all material respects with the applicable accounting requirements of
rule 11-02 of Regulation S-X and proved the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in such
unaudited pro forma condensed consolidated financial statements; nothing came to
their attention as a result of the procedures referred to in clause (iv) above
that caused them to believe that the unaudited pro forma condensed consolidated
financial statements included in the Registration Statements do not comply as to
form in all material respects with the applicable accounting requirements of
rule 11-02 of Regulation S-X and that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements; and they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained in
the Registration Statements (in each case to the extent that such dollar
amounts, percentages and other financial information are derived from the
general accounting records of the Company and its subsidiaries subject to the
internal controls of the Company's accounting system or are derived directly
from such records by analysis or computation) with the results obtained from
inquiries, a reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts, percentages and
other financial information to be in agreement with such results, except as
otherwise specified in such letter. For purposes of this subsection, (i) if the
Effective Time of the Initial Registration Statements is subsequent to the
execution and delivery of this Agreement, "Registration Statements" shall mean
the initial registration statement as proposed to be amended by the amendment or
post-effective amendment to be filed shortly prior to its Effective Time, (ii)
if the Effective Time of the Initial Registration Statements is prior to the
execution and delivery of this Agreement but the Effective Time of the
Additional Registration Statement is subsequent to such execution and delivery,
"Registration Statements" shall mean the Initial Registration Statement and the
additional registration statement as proposed to be filed or as proposed to be
amended by the post-effective amendment to be filed shortly prior to its
Effective Time, and (iii) "Prospectus" shall mean the prospectus included in the
Registration Statements. All financial statements and schedules included in
material incorporated by reference into the Prospectus shall be deemed included
in the Registration Statements for purposes of this subsection. The
Representatives shall have received a letter, dated the date of delivery thereof
(which, if the Effective Time of the Initial Registration Statement is prior to
the execution and delivery of this Agreement, shall be on or prior to the date
of this Agreement or, if the Effective Time of the Initial Registration
Statement is subsequent to the execution and delivery of this Agreement, shall
be at or prior to the time of filing of the amendment or post-effective
amendment to the registration statement to be filed shortly prior to such
Effective Time), of Ernst & Young LLP confirming that they are independent
public accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating to the effect that: in their
opinion the financial statements and schedules examined by them and included in
the Registration Statements comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations; they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained in
the Registration Statements (in each case to the extent that such dollar
amounts, percentages and other financial information are derived from the
general accounting records of the Company and its subsidiaries subject to the
internal controls of the Company's accounting system or are derived directly
from such records by analysis or computation) with the results obtained from
inquiries, a reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts, percentages and
other financial information to be in agreement with such results, except as
otherwise specified in such letter. For purposes of this subsection, (i) if the
Effective Time of the Initial Registration Statements is subsequent to the
execution and delivery of this Agreement, "Registration Statements" shall mean
the initial registration statement as proposed to be amended by the amendment or
post-effective amendment to be filed shortly prior to its Effective Time, (ii)
if the Effective Time of the Initial Registration Statements is prior to the
execution and delivery of this Agreement but the Effective Time of the
Additional Registration Statement is subsequent to such execution and delivery,
"Registration Statements" shall mean the Initial Registration Statement and the
additional registration statement as proposed to be filed or as proposed to be
amended by the post-effective amendment to be filed shortly prior to its
Effective Time, and (iii) "Prospectus" shall mean the prospectus included in the
Registration Statements. All financial statements and schedules included in
material incorporated by reference into the Prospectus shall be deemed included
in the Registration Statements for purposes of this subsection.
If the Effective Time of the Initial Registration Statement is not prior to the
execution and delivery of this Agreement, such Effective Time shall have
occurred not later than 10:00 P.M., New York time, on the date of this Agreement
or such later date as shall have been consented to by CSFBC. If the Effective
Time of the Additional Registration Statement (if any) is not prior to the
execution and delivery of this Agreement, such Effective Time shall have
occurred not later than 10:00 P.M., New York time, on the date of this Agreement
or, if earlier, the time the Prospectus is printed and distributed to any
Underwriter, or shall have occurred at such later date as shall have been
consented to by CSFBC. If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, the
Prospectus shall have been filed with the Commission in accordance with the
Rules and Regulations and Section 5(a) of this Agreement. Prior to such Closing
Date, no stop order suspending the effectiveness of a Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of any Selling Stockholder, the Company or the
Representatives, shall be contemplated by the Commission.
Subsequent to the execution and delivery of this Agreement, there shall not
have occurred (i) any change, or any development or event involving a
prospective change, in the condition (financial or other), business, properties
or results of operations of the Company and its subsidiaries taken as one
enterprise which, in the judgment of a majority in interest of the
Representatives, is material and adverse and makes it impractical or inadvisable
to proceed with completion of the public offering or the sale of and payment for
the Offered Securities; (ii) any downgrading in the rating of any debt
securities of the Company by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act), or any
public announcement that any such organization has under surveillance or review
its rating of any debt securities of the Company (other than an announcement
with positive implications of a possible upgrading, and no implication of a
possible downgrading, of such rating); (iii) any change in U.S. or international
financial, political or economic conditions as would, in the judgment of a
majority in interest of the Representatives, be likely to prejudice materially
the success of the proposed issue, sale or distribution of the Offered
Securities, whether in the primary market or in respect of dealings in the
secondary market; (iv) any material suspension or material limitation of trading
in securities generally on the New York Stock Exchange, or any setting of
minimum prices for trading on such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter market; (v)
any material disruption in securities settlement or clearance services in the
United States; (vi) any banking moratorium declared by U.S. Federal or New York
authorities; or (vii) any outbreak or escalation of hostilities which the United
States, any declaration of war by Congress or any other national or
international calamity or emergency if, in the judgment of a majority in
interest of the Representatives, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and payment for
the Offered Securities.
The Representatives shall have received an opinion, dated such Closing Date, of
Cleary, Gottlieb, Steen & Hamilton, counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters, to the
effect that:
the Company is validly existing as a corporation in good standing under
the laws of the State of Delaware, with corporate power to own and lease its
properties and conduct its business as described in the Prospectus;
the Company has the authorized, issued and outstanding capitalization as
set forth in the Prospectus as of the dates set forth therein; all of the issued
and outstanding shares of capital stock of the Company have been duly authorized
and validly issued, are fully paid and nonassessable and conform to the
description thereof contained in the Prospectus (but we express no opinion with
respect to any options or shares issued with respect to the Company's stock
option plans); none of the outstanding shares of capital stock of the Company
was issued in violation of the preemptive rights of any security holder of the
Company arising under the amended and restated certificate of incorporation or
amended and restated by- laws of the Company or the laws of the State of
Delaware;
the Offered Securities to be issued and sold by the Company pursuant
hereto have been duly authorized by all necessary corporate action of the
Company and at such Closing Date, after payment therefor in accordance herewith,
will be validly issued, fully paid and nonassessable; and the holders of
outstanding shares of capital stock of the Company are not entitled to any
preemptive rights to subscribe for the Offered Securities under the amended and
restated certificate of incorporation or amended and restated by-laws of the
Company or the laws of the State of Delaware;
no consent, approval, authorization, or registration or qualification of
or with any governmental body, agency or court of the United States, the State
of Delaware or the State of New York is required (other than under any Health
Care Laws) to be obtained or made by the Company for the issuance and sale of
the Offered Securities to the Underwriters pursuant to this Agreement or the
performance by the Company of its obligations under this Agreement, except such
as have been obtained or effected under the Act and the Exchange Act (but we
express no opinion as to any consent, approval, authorization, registration or
qualification that may be required under state securities or Blue Sky laws);
the issuance and sale of the Offered Securities to the Underwriters
pursuant to this Agreement and the performance by the Company of its obligations
under this Agreement do not result in a breach or violation of any of the terms
and provisions of, or constitute a default under, (a) any United States federal
or New York state law, rule or regulation (other than any Health Care Laws) or
the Delaware General Corporation Law, (b) any judgment, decree or order of any
governmental body, agency or court that is identified in an attached officer's
certificate of the Company as applicable to the Company or any subsidiary of the
Company or any of their properties, (c) any agreement or instrument to which the
Company or any such subsidiary is a party or by which the Company or any such
subsidiary is bound or to which any of the properties of the Company or any such
subsidiary is subject that is filed as an exhibit to a Registration Statement,
or (d) the amended and restated certificate of incorporation or amended and
restated by-laws of the Company;
based solely on a telephonic confirmation from a representative of the
Commission, such counsel confirms that the Initial Registration Statement is
effective under the Act, and the Additional Registration Statement (if any) is
effective under the Act; the Prospectus either was filed with the Commission
pursuant to the subparagraph of Rule 424(b) specified in such opinion on the
date specified therein or was included in the Initial Registration Statement or
the Additional Registration Statement (as the case may be), and, to the best of
the knowledge of such counsel, no stop order with respect to a Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are, to the best of the knowledge of such counsel, threatened by
the Commission; each Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective effective or issue
dates, appeared on their face to be appropriately responsive in all material
respects to the requirements of the Act and the Rules and Regulations other than
Regulation S-T under the Act and the documents incorporated in each Registration
Statement and the Prospectus, as of the respective dates of their filing with
the Commission, appeared on their face to be appropriately responsive in all
material respects to the requirements of the Exchange Act and the Rules and
Regulations of the Commission thereunder; such counsel have no reason to believe
that (1) a Registration Statement or any amendment thereto, as of its effective
date, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (2) the Prospectus or any amendment or supplement
thereto, as of its issue date or as of such Closing Date, contained an untrue
statement of a material fact or omitted 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; and such counsel do not know of any legal
or governmental proceedings or investigations to which the Company is a party or
the subject that are currently pending before any adjudicative tribunal or that
have been threatened by a written communication manifesting an intention to
initiate such proceedings or investigations received by the management of the
Company or by such counsel that are required to be described in a Registration
Statement or the Prospectus which are not disclosed; it being understood that
such counsel need express no opinion as to the financial statements and
schedules or other financial data contained in the Registration Statements or
the Prospectus (or the documents incorporated by reference therein);
the execution and delivery of this Agreement have been duly authorized
by all necessary corporate action of the Company and this Agreement has been
duly executed and delivered by the Company; the form of certificate used to
evidence the Securities complies in all material respects with all applicable
statutory requirements, with any applicable requirements of the amended and
restated certificate of incorporation and amended and restated by-laws of the
Company and with all applicable Nasdaq requirements, in each case as in effect
on such Closing Date; the statements set forth (A) in the Prospectus under
"Business-Our Reorganization," "Business-Master Lease Agreements,"
"Business-Corporate Integrity Agreement," "Description of Capital Stock" and
"Shares Eligible for Future Sale," insofar as such statements purport to
summarize certain legal matters, documents or proceedings referred to therein,
or the Company's charter or by-laws provide a fair summary of such matters,
documents or proceedings or the Company's charter or by-laws; the statements set
forth in the Prospectus under the caption "United States Federal Income Tax
Considerations For Non-United States Holders," insofar as such statements
purport to summarize certain federal income tax laws of the United States,
constitute a fair summary of the principal U.S. federal income tax consequences
of an investment in the Offered Securities by non-United States Holders as
defined in the Prospectus; and the Company is not, and upon the issuance and
sale of the Offered Securities by the Company as contemplated herein and the
application by the Company of the net proceeds therefrom as described in the
Prospectus will not be, an "investment company," within the meaning of the
Investment Company Act;
The Representatives shall have received an opinion, dated such Closing Date, of
M. Suzanne Riedman, Esq., Senior Vice President and General Counsel of the
Company, in form and substance satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters, to the effect that:
the Company is duly qualified to transact business as a foreign
corporation and is in good standing in all jurisdictions in which its ownership
or lease of property or the conduct of its business requires such qualification,
except where the failure to be so qualified or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect;
each subsidiary identified on Schedule E hereto (that purports to
identify each subsidiary operating in any state where all of the Company's
subsidiaries so operating in such state, considered in the aggregate as a single
subsidiary, would constitute a "significant subsidiary" as defined in Rule 1-02
of Regulation S-X) (each a "Material Subsidiary") has been duly incorporated or
organized and is validly existing as a corporation or other entity in good
standing under the laws of the jurisdiction of its incorporation or
organization, with power and authority (corporate or other) to own, lease and
operate its properties and conduct its business as described in the Prospectus,
and each Material Subsidiary is duly qualified to transact business as a foreign
corporation or other entity and is in good standing in all other jurisdictions
in which its ownership or lease of property or the conduct of its business
requires such qualification, except where the failure to be so qualified or in
good standing would not, individually or in the aggregate, have a Material
Adverse Effect; all of the issued and outstanding capital stock of each Material
Subsidiary that is a corporation has been duly authorized and validly issued, is
fully paid and nonassessable, was not issued in violation of or subject to any
preemptive or similar rights and is owned by the Company, directly or through
subsidiaries, free from liens, encumbrances and defects (other than liens
pursuant to the Credit Agreements); and all of the partnership, membership or
other ownership interests of each Material Subsidiary that is not a corporation
have been validly issued and, except as set forth on Schedule D hereto, are
owned by the Company, directly or through subsidiaries, free from liens,
encumbrances and defects (other than liens pursuant to the Credit Agreements);
except as disclosed in the Prospectus and as provided in the Credit
Agreements, there are no material encumbrances or restrictions on the ability of
any subsidiary of the Company (A) to pay any dividends or make any distributions
on such subsidiary's capital stock or partnership, membership or other ownership
interests or to pay any indebtedness owed to the Company or any other
subsidiary, (B) to make any loans or advances to, or investments in, the Company
or any other subsidiary, or (iii) to transfer any of its property or assets to
the Company or any other subsidiary;
no consent, approval, authorization or order of, or registration,
qualification or filing with, any governmental agency or body or any court is
required under any Health Care Laws to be obtained or made by the Company for
the consummation of the transactions contemplated by this Agreement in
connection with the sale of the Offered Securities, except such as have been
obtained and made and such required filings and notices furnished by the Company
in connection with the participation of the Company's facilities in the Medicare
program and other U.S. federal programs (the "Medicare Filings and Notices") as
are not yet required to be made;
the execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not result in a breach
or violation of any of the terms and provisions of, or constitute a default
under, (a) any Health Care Laws, (b) any agreement or instrument to which the
Company or any such subsidiary is a party or by which the Company or any such
subsidiary is bound or to which any of the properties of the Company or any such
subsidiary is subject, or (c) the charter, by-laws or other constitutive
document of the Company or any such subsidiary, except, in the case of clause
(b) only, for such breaches, violations or defaults that would not, individually
or in the aggregate, have a Material Adverse Effect;
such counsel has no reason to believe that (1) any part of a
Registration Statement or any amendment thereto, as of its effective date,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or (2) the Prospectus or any amendment or supplement
thereto, as of its issue date or as of such Closing Date, contained any untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; the descriptions in the Registration
Statements and Prospectus of statutes and regulations (including any Health Care
Laws), legal and governmental proceedings and investigations and contracts and
other documents are accurate and fairly present the information required to be
shown; and such counsel does not know of any legal or governmental proceedings
or investigations required to be described in a Registration Statement or the
Prospectus which are not described as required or of any contracts or documents
of a character required to be described in a Registration Statement or the
Prospectus or to be filed as exhibits to a Registration Statement which are not
described and filed as required; it being understood that such counsel need
express no opinion as to the financial statements and schedules or other
financial data contained in the Registration Statements or the Prospectus;
the statements set forth in (A) the Prospectus under "Risk
Factors-Changes in the reimbursement rates or methods of payment from
third-party payors, including the Medicare and Medicaid programs, or the
implementation of other measures to reduce reimbursement for our services could
result in a substantial reduction in our revenues and operating margins," "Risk
Factors-Significant legal actions, particularly in the State of Florida, could
subject us to increased operating costs and substantial uninsured liabilities,
which could materially and adversely affect our liquidity, financial condition
and results of operations," "Risk Factors-We conduct business in a heavily
regulated industry, and changes in regulations or violations of regulations may
result in increased costs or sanctions that reduce our revenues and
profitability," "Management's Discussion and Analysis of Financial Condition and
Results of Operations- Regulatory Changes," "Business-Government Regulation,"
"Business-Legal Proceedings," and "Business-Environmental Matters," and (B) in
the 2000 Form 10-K/A under "Business-Government Regulation," and "Legal
Proceedings," to the extent that it constitutes matters of law, summaries of
legal matters, documents or proceedings referred to therein or legal
conclusions, has been reviewed by such counsel and is correct in all material
respects; neither the Company nor any of its subsidiaries is in violation of its
charter, by-laws or other constitutive document or of any Health Care Laws,
except for such violations of Health Care Laws that would not, individually or
in the aggregate, have a Material Adverse Effect; and no default by the Company
or any of its subsidiaries exists in the due performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in a Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to a Registration
Statement, except for such defaults that would not, individually or in the
aggregate, have a Material Adverse Effect;
the Company and its subsidiaries possess all required Governmental
Licenses issued by, and have made all required declarations and filings with,
the appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them (including, without
limitation, Government Licenses as are required (i) under such federal and state
healthcare laws as are applicable to the Company and its subsidiaries and (ii)
with respect to those facilities operated by the Company or any of its
subsidiaries that participate in the Medicare and/or Medicaid programs, to
receive reimbursement thereunder), except where the failure to possess such
Government Licenses or to make such declarations and filings would not,
individually or in the aggregate, have a Material Adverse Effect; the Company
and its subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
individually or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not, individually or in the
aggregate, have a Material Adverse Effect; and, to the best of such counsel's
knowledge after due inquiry, neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation, suspension or
modification of any such Governmental Licenses or the imposition of any other
sanction for violation of any Health Care Law that, if the subject of an
unfavorable decision, ruling or finding, would individually or in the aggregate
have a Material Adverse Effect;
the Company is in compliance with the terms and conditions of its
Corporate Integrity Agreement with the Office of the Inspector General of the
U.S. Department of Health and Human Services, except where the failure so to
comply would not, individually or in the aggregate, have a Material Adverse
Effect; and
except as disclosed in the Prospectus, there are no contracts,
agreements or understandings known to such counsel between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company owned or to be owned by such person or to require the Company to include
such securities in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act.
For purposes of this opinion, the term "Health Care Laws" shall mean those
statutes, rules and regulations, judgments, decrees or orders specifically
regulating health care providers, as such, of the type owned and operated by the
Company and its subsidiaries as described under the headings "Risk
Factors-Changes in the reimbursement rates or methods of payment from third-
party payors, including the Medicare and Medicaid programs, or the
implementation of other measures to reduce reimbursement for our services could
result in a substantial reduction in our revenues and operating margins," "Risk
Factors-Significant legal actions, particularly in the State of Florida, could
subject us to increased operating costs and substantial uninsured liabilities,
which could materially and adversely affect our liquidity, financial condition
and results of operations," "Risk Factors-We conduct business in a heavily
regulated industry, and changes in regulations or violations of regulations may
result in increased costs or sanctions that reduce our revenues and
profitability," "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Regulatory Changes," "Business-Government Regulation,"
"Business- Legal Proceedings," and "Business-Environmental Matters" in the
Prospectus, including without limitation, (a) health care licensure, permit and
certificate of need requirements, (b) Title XVIII, XIX and XXI of the Social
Security Act, (c) the Anti-Kickback Amendments (as defined in the Prospectus)
and the regulations promulgated thereunder, (d) the Stark Laws (as defined in
the Prospectus) and the regulations promulgated thereunder, (e) the False Claims
Act, (f) Title II of the Health Insurance Portability and Accountability Act of
1996, (g) Title IV of the Balanced Budget Act of 1997, (h) any initiatives under
Operation Restore Trust and (i) state statutes, rules and regulations concerning
matters similar to (b) through (h) above, but specifically excluding statutes,
ordinances, administrative decisions, rules and regulations of counties, towns
or municipalities.
The Representatives shall have received an opinion, dated such Closing Date, of
each Selling Stockholder's counsel set forth opposite its name on Schedule A
hereto, in form and substance satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters, to the effect that:
such Selling Stockholder has full right, power and authority to sell,
transfer and deliver the Offered Securities to be sold by such Selling
Stockholder on such Closing Date pursuant to this Agreement. Assuming that (i)
the certificate or certificates representing such Offered Securities have been
effectively indorsed in blank in accordance with NYUCC Article 8 and (ii)
neither the Underwriters, nor the agents acquiring possession of such Offered
Securities on their behalf, have notice of any adverse claim to such Offered
Securities, then upon the Underwriters' acquiring possession of such certificate
or certificates for such Offered Securities (or the agent's acquiring possession
of such certificate or certificates for such Offered Securities on the
Underwriters' behalf) and paying the purchase price therefor pursuant to this
Agreement, each Underwriter will be a "protected purchaser" of such Offered
Securities to be purchased by it (within the meaning of Section 8-303 of the
NYUCC) and will acquire its interest in such Offered Securities (including,
without limitation, all rights that such Selling Stockholder had or has the
power to transfer in such Offered Securities) free of any adverse claim.
no consent, approval, authorization or order of, or registration,
qualification or filing with, any United States federal or New York state
governmental authority, agency or body or any United States federal or New York
state court is required to be obtained or made by such Selling Stockholder for
the consummation of the transactions contemplated by the Custody Agreement or
this Agreement in connection with the sale of the Offered Securities to be sold
by such Selling Stockholder, except such as have been obtained and made under
the Act and such as may be required under state or foreign securities laws and
the rules of the NASD;
the execution, delivery and performance of the Custody Agreement and
this Agreement by such Selling Stockholder and the consummation by such Selling
Stockholder of the transactions therein and herein contemplated will not result
in a breach or violation of any of the terms and provisions of, or constitute a
default under, (a) any United States federal or New York state law, rule or
regulation, (b) any judgment, decree or order of any governmental authority,
agency or body or any court having jurisdiction over such Selling Stockholder or
any of its properties that is identified in an attached officer's certificate of
such Selling Stockholder as applicable to such Selling Stockholder's investment
in the Offered Securities or consummation of the transactions contemplated in
this Agreement and the Custody Agreement, (c) any agreement or instrument to
which such Selling Stockholder is a party or by which such Selling Stockholder
is bound or to which any of its properties is subject that is identified in an
attached officer's certificate of such selling Stockholder as applicable to such
Selling Stockholder's investment in the Offered Securities or consummation of
the transactions contemplated in this Agreement and the Custody Agreement or (d)
the charter, by-laws or other constitutive document of such Selling Stockholder,
except, in the case of clauses (b) and (c) only, for such breaches, violations
or defaults that would not materially adversely affect the ability of such
Selling Stockholder to perform its obligations under this Agreement or the
Custody Agreement or to consummate the transactions contemplated hereby or
thereby;
the Power of Attorney and related Custody Agreement with respect to such
Selling Stockholder have been duly authorized, executed and delivered by such
Selling Stockholder and constitute valid and binding obligations of such Selling
Stockholder enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles; and
this Agreement has been duly authorized, executed and delivered by such
Selling Stockholder. The Representatives shall have received from Shearman &
Sterling, counsel for the Underwriters, such opinion or opinions, dated such
Closing Date, with respect to the incorporation of the Company, the validity of
the Offered Securities delivered by the Company on such Closing Date, the
Registration Statements, the Prospectus and other related matters as the
Representatives may require, and the Selling Stockholders and the Company shall
have furnished to such counsel such documents as they request for purposes of
enabling them to pass upon such matters.
The Representatives shall have received an opinion, dated the Closing Date, of
McDermott, Will & Emery, special counsel to the Underwriters, in form and
substance satisfactory to the Representatives, to the effect that:
the statements set forth in (A) the Prospectus under "Risk Factors -
Changes in the reimbursement rates or methods of payment from third-party
payors, including the Medicare and Medicaid programs or, the implementation of
other measures to reduce reimbursement for our services could result in a
substantial reduction in our revenues and operating margins," Risk Factors - We
conduct business in a heavily regulated industry, and changes in regulations or
violations of regulations may result in increased costs or sanctions that reduce
our revenues and profitability," and "Business - Government Regulation," to the
extent that such statements purport to summarize statutes, rules and regulations
constituting Health Care Laws have been reviewed by such counsel and those
statements provide an accurate and fair summary of such statutes, rules and
regulations; provided that with respect to the foregoing opinion, the Company
shall have furnished to McDermott, Will & Emery, such documents as they request
for purpose of enabling them to pass upon such matters; and
although such counsel has undertaken no investigation to verify
independently the accuracy, completeness or fairness or the statements contained
in the Prospectus (except as stated in paragraph (i) above), no facts have come
to such counsel's attention that lead them to believe that, as of the Effective
Date or on the date hereof, the statements contained in the above referenced
portions of the Prospectus summarizing the statutes, rules and regulations
constituting Health Care Laws contained or contain any untrue statements of a
material fact or omitted or omit to state a material fact required to be stated
therein or necessary to make such statements, in the light of the circumstances
under which they were made, not misleading.
The Representatives shall have received a certificate, dated such Closing Date,
of the President or any Vice President and a principal financial or accounting
officer of the Company in which such officers shall state that, to the best of
their knowledge after reasonable investigation: the representations and
warranties of the Company in this Agreement are true and correct; the Company
has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to such Closing Date; no stop order
suspending the effectiveness of any Registration Statement has been issued and
no proceedings for that purpose have been instituted or are contemplated by the
Commission; the Additional Registration Statement (if any) satisfying the
requirements of subparagraphs (1) and (3) of Rule 462(b) was filed pursuant to
Rule 462(b), including payment of the applicable filing fee in accordance with
Rule 111(a) or (b) under the Act, prior to the time the Prospectus was printed
and distributed to any Underwriter; and, subsequent to the date of the most
recent financial statements in the Prospectus, there has been no material
adverse change, nor any development or event involving a prospective material
adverse change, in the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries taken as a whole
except as set forth in or contemplated by the Prospectus or as described in such
certificate.
The Representatives shall have received a letter, dated such Closing Date, from
PricewaterhouseCoopers LLP which meets the requirements of subsection (a) of
this Section, except that the specified date referred to in such subsection will
be a date not more than three days prior to such Closing Date for the purposes
of this subsection.
The Representatives shall have received a letter, dated such Closing Date, from
Ernst & Young LLP which meets the requirements of subsection (b) of this
Section. On or prior to the date on which the Company first furnishes to the
Underwriters a preliminary prospectus for use in connection with the offering of
the Offered Securities, the Representatives shall have received a lockup letter,
in form and substance satisfactory to the Representatives, from each Selling
Stockholder and from each executive officer and director of the Company who is
not a Selling Stockholder. On or prior to the date of this Agreement, the NASD
shall have confirmed that it has not raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements. On or
prior to the date of this Agreement, the Securities shall have been approved for
quotation on The Nasdaq National Market, subject only to notice of issuance.
The Selling Stockholders and the Company will furnish the Representatives with
such conformed copies of such opinions, certificates, letters and documents as
the Representatives reasonably request. CSFBC may in its sole discretion waive
on behalf of the Underwriters compliance with any conditions to the obligations
of the Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise. Indemnification and Contribution.
The Company will indemnify and hold harmless each Underwriter, its partners,
directors and officers and each person, if any, who controls such Underwriter
within the meaning of Section 15 of the Act, against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are 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 (in the case of
the Prospectus, in the light of the circumstances under which they were made)
not misleading, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
in or omission or alleged omission from any of such documents in reliance upon
and in conformity with written information furnished to the Company by any
Underwriter through the Representatives specifically for use therein, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in subsection (c)
below; and provided, further, that with respect to any untrue statement or
alleged untrue statement in or omission or alleged omission from any preliminary
prospectus, which statement or omission was corrected in the Prospectus, the
indemnity agreement contained in this Section 7(a) shall not inure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims, damages or liabilities purchased the Offered Securities concerned, to
the extent that a prospectus relating to such Offered Securities was required to
be delivered by such Underwriter under the Act in connection with such purchase
and any such loss, claim, damage or liability of such Underwriter results from
the fact that there was not sent or given to such person, at or prior to the
written confirmation of the sale of such Offered Securities to such person, a
copy of the Prospectus if the Company had previously furnished copies thereof to
such Underwriter. The Company agrees to indemnify and hold harmless the
Designated Underwriter and each person, if any, who controls the Designated
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (the "Designated Entities"), from and against any
and all losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) (i) caused by any untrue statement or
alleged untrue statement of a material fact contained in any material prepared
by or with the consent of the Company for distribution to Participants in
connection with the Directed Share Program or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) caused by the
failure of any Participant to pay for and accept delivery of Directed Shares
that the participant agreed to purchase; or (iii) related to, arising out of, or
in connection with the Directed Share Program, other than losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the bad faith or gross negligence of
the Designated Entities.
Each Selling Stockholder will severally and not jointly indemnify and hold
harmless each Underwriter, its partners, directors and officers and each person
who controls such Underwriter within the meaning of Section 15 of the Act,
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are 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 reliance upon and in conformity with written information
furnished to the Company by such Selling Stockholder (in its capacity as a
Selling Stockholder) specifically for use therein, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Selling Stockholder
consists of the information pertaining to such Selling Stockholder included in
the Prospectus under the caption "Principal and Selling Stockholders," and;
provided, however, that with respect to any untrue statement or alleged untrue
statement in or omission or alleged omission from any preliminary prospectus,
which statement or omission was corrected in the Prospectus, the indemnity
agreement contained in this Section 7(b) shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased the Offered Securities concerned, to the extent that a
prospectus relating to such Offered Securities was required to be delivered by
such Underwriter under the Act in connection with such purchase and any such
loss, claim, damage or liability of such Underwriter results from the fact that
there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Offered Securities to such person, a copy of
the Prospectus if the Company had previously furnished copies thereof to such
Underwriter. The liability under this subsection of each Selling Stockholder
shall be limited to an amount equal to the aggregate gross proceeds (net of
underwriting discounts and commissions but before deducting expenses) to such
Selling Stockholder from the sale of the Offered Securities sold by such Selling
Stockholder hereunder.
Each Underwriter will severally and not jointly indemnify and hold harmless the
Company, its directors, each officer of the Company who signed a Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Act, and each Selling Stockholder, against any losses,
claims, damages or liabilities to which the Company or such Selling Stockholder
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
(in the case of the Prospectus, in the light of the circumstances under which
they were made) 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 reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Company and each Selling Stockholder
in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by any Underwriter consists of
(i) the following information in the Prospectus furnished on behalf of each
Underwriter: the concession and reallowance figures appearing in the fourth
paragraph under the caption "Underwriting," and the information contained in the
fourteenth and fifteenth paragraphs under the caption "Underwriting;" and (ii)
the following information in the Prospectus furnished on behalf of Goldman,
Sachs & Co.: the third sentence appearing in the last paragraph under the
caption "Underwriting," and (iii) the following information in the Prospectus
furnished on behalf of J.P. Morgan Securities Inc.: the fourth, fifth and sixth
sentences appearing in the last paragraph under the caption "Underwriting."
Promptly after receipt by an indemnified party under this Section or Section 9
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
subsection (a), (b) or (c) above or Section 9, notify the indemnifying party 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 otherwise than under subsection (a), (b) or (c) above or Section 9. In
case any such action is brought against any indemnified party and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section or Section 9, as the
case may be, for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action and (ii) does not include a statement as to, or an admission of,
fault, culpability or a failure to act by or on behalf of an indemnified party.
If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a), (b) or
(c) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other from the offering of the Offered Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Stockholders on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Stockholders bear to
the total underwriting discounts and commissions received by the Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, the Selling Stockholders (in their capacity as Selling
Stockholders) or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (e).
Notwithstanding the provisions of this subsection (e), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Offered Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(e) to contribute are several in proportion to their respective underwriting
obligations and not joint. Notwithstanding anything in this subsection (e) to
the contrary, the liability under this subsection (e) of each Selling
Stockholder shall be limited to an amount equal to the aggregate gross proceeds
(net of underwriting discounts and commissions but before deducting expenses) to
such Selling Stockholder from the sale of the Offered Securities sold by such
Selling Stockholder hereunder.
The obligations of the Company and any Selling Stockholder under this Section or
Section 9 shall be in addition to any liability which the Company and such
Selling Stockholders may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter or the QIU
(as hereinafter defined) within the meaning of the Act; and the obligations of
the Underwriters under this Section shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each director of the Company, to each officer of the
Company who has signed a Registration Statement and to each person, if any, who
controls the Company or such Selling Stockholder within the meaning of the Act.
Default of Underwriters. If any Underwriter or Underwriters default in their
obligations to purchase Offered Securities hereunder on either the First or any
Optional Closing Date and the aggregate number of shares of Offered Securities
that such defaulting Underwriter or Underwriters agreed but failed to purchase
does not exceed 10% of the total number of shares of Offered Securities that the
Underwriters are obligated to purchase on such Closing Date, CSFBC may make
arrangements satisfactory to the Company and the Selling Stockholders for the
purchase of such Offered Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of shares of
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBC, the Company and the Selling Stockholders for the purchase of such Offered
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Stockholders, except as
provided in Section 10 (provided that if such default occurs with respect to
Optional Securities after the First Closing Date, this Agreement will not
terminate as to the Firm Securities or any Optional Securities purchased prior
to such termination). As used in this Agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
Qualified Independent Underwriter. The Company hereby confirms that at its
request CSFBC has without compensation acted as "qualified independent
underwriter" (in such capacity, the "QIU") within the meaning of Rule 2710 of
the Conduct Rules of the National Association of Securities Dealers, Inc. in
connection with the offering of the Offered Securities. The Company and the
Selling Stockholders will severally and not jointly indemnify and hold harmless
the QIU against any losses, claims, damages or liabilities, joint or several, to
which the QIU may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon the QIU's acting (or alleged failure to act) as such
"qualified independent underwriter" and will reimburse the QIU for any legal or
other expenses reasonably incurred by the QIU in connection with investigating
or defending any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that any Selling Stockholder shall only be
subject to liability under this Section to the extent such liability arises out
of or is based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or upon
an omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, made
in reliance upon and in conformity with written information furnished to the
Company by such Selling Stockholder (in its capacity as a Selling Stockholder)
specifically for use therein.
Survival of Certain Representations and Obligations. The respective indemnities,
agreements, representations, warranties and other statements of the Selling
Stockholders, of the Company or its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, any Selling Stockholder, the Company or
any of their respective representatives, officers or directors or any
controlling person, and will survive delivery of and payment for the Offered
Securities. If this Agreement is terminated pursuant to Section 8 or if for any
reason the purchase of the Offered Securities by the Underwriters is not
consummated, the Company and the Selling Stockholders shall remain responsible
for the expenses to be paid or reimbursed by them respectively pursuant to
Section 5 and the respective obligations of the Company, the Selling
Stockholders, and the Underwriters pursuant to Section 7 and the obligations of
the Company and the Selling Stockholders pursuant to Section 9 shall remain in
effect, and if any Offered Securities have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section 5
shall also remain in effect. If the purchase of the Offered Securities by the
Underwriters is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 8 or the occurrence of any
event specified in clause (iii), (iv), (v), (vi) or (vii) of Section 6(d), the
Company will reimburse the Underwriters for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the Offered Securities.
Notices. All communications hereunder will be in writing and, if sent to the
Underwriters, will be mailed, delivered or telegraphed and confirmed to the
Representatives, c/o Credit Suisse First Boston Corporation, Eleven Madison
Avenue, New York, N.Y. 10010-3629, Attention: Transactions Advisory Group, or,
if sent to the Company, will be mailed, delivered or telegraphed and confirmed
to it at Kindred Healthcare, Inc., 680 South Fourth Street, Louisville, Kentucky
40202-2412, Attention: General Counsel, or, if sent to any Selling Stockholder,
will be mailed, delivered or telegraphed and confirmed to such Selling
Stockholder at the address set forth below its name on the signature page to
hereto; provided, however, that any notice to an Underwriter pursuant to Section
7 will be mailed, delivered or telegraphed and confirmed to such Underwriter.
Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective personal representatives and successors and
the officers and directors and controlling persons referred to in Section 7, and
no other person will have any right or obligation hereunder. Representation. The
Representatives will act for the several Underwriters in connection with the
transactions contemplated by this Agreement, and any action under this Agreement
taken by the Representatives or by CSFBC will be binding upon all the
Underwriters. The Attorney-in-Fact appointed by each Selling Stockholder will
act for such Selling Stockholder in connection with such transactions, and any
action under or in respect of this Agreement taken by such Attorney-in-Fact will
be binding upon such Selling Stockholder.
Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same Agreement. Applicable Law. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
New York, without regard to principles of conflicts of laws.
The Company and each Selling Stockholder hereby submit to the non-exclusive
jurisdiction of the Federal and state courts in the Borough of Manhattan in The
City of New York in any suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
[The remainder of this page is intentionally left blank]
If the foregoing is in accordance with the Representatives' understanding of our
agreement, kindly sign and return to the Company one of the counterparts hereof,
whereupon it will become a binding agreement among the Selling Stockholders, the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
Kindred Healthcare, Inc.
By /s/ Edward L. Kuntz
Name Edward L. Kuntz
Title CEO
Selling Stockholders
By /s/ Edward L. Kuntz
Name Edward L. Kuntz
Title...........................................................
For himself and as Authorized Signatory for
each of the Selling Stockholders named
herein.
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
UBS Warburg LLC
J.P. Morgan Securities Inc.
Lehman Brothers Inc.
Acting on behalf of themselves and as the Representatives of the several
Underwriters.
By Credit Suisse First Boston Corporation
By.....................................................
Managing Director
SCHEDULE A
Counsel
Selling Stockholder
Number of Firm Securities to be Sold
Fried, Frank, Harris, Shriver & Jacobson
Goldman, Sachs & Co.
250,000
Kaye Scholer LLP
Van Kampen Prime Rate Income Trust
86,100
Kaye Scholer LLP
Van Kampen Senior Income Trust
44,000
Kaye Scholer LLP
Van Kampen Senior Floating Fund
4,900
Ken Maiman
Appaloosa Investment Limited Partnership I
266,500
Ken Maiman
Palomino Fund Ltd.
233,500
Richard L. Smith
Morgan Guaranty Trust Co. of New York
59,500
Bradley Takahashi
Mutual Beacon Fund
89,299
Bradley Takahashi
Mutual Beacon Fund (Canada)
1,994
Bradley Takahashi
Mutual Discovery Securities Fund
3,754
Bradley Takahashi
Mutual Shares Fund
155,805
Bradley Takahashi
Mutual Shares Discovery Fund
61,063
Bradley Takahashi
Mutual Shares Securities Fund
9,170
Bradley Takahashi
Mutual Qualified Fund
78,915
Willkie Farr & Gallagher
Ventas Realty, Limited Partnership
83,300
Wyatt, Tarrant & Combs, LLP
William M. Altman
3,900
Wyatt, Tarrant & Combs, LLP
Frank J. Battafarano
3,000
Wyatt, Tarrant & Combs, LLP
Richard E. Chapman
7,500
Wyatt, Tarrant & Combs, LLP
Rodrick J. Cowgill, Jr.
1,200
Wyatt, Tarrant & Combs, LLP
Donald D. Finney
10,000
Wyatt, Tarrant & Combs, LLP
James H. Gillenwater, Jr.
2,500
Wyatt, Tarrant & Combs, LLP
Dennis J. Hansen
1,000
Wyatt, Tarrant & Combs, LLP
Edward L. Kuntz
10,000
Wyatt, Tarrant & Combs, LLP
Richard A. Lechleiter
6,500
Wyatt, Tarrant & Combs, LLP
Ruth A. Lusk
1,500
Wyatt, Tarrant & Combs, LLP
Katherine J. Markham
1,800
Wyatt, Tarrant & Combs, LLP
Mark A. McCullough
400
Wyatt, Tarrant & Combs, LLP
Steven L. Monaghan
1,500
Wyatt, Tarrant & Combs, LLP
Susan E. Moss
700
Wyatt, Tarrant & Combs, LLP
Sean R. Muldoon
2,000
Wyatt, Tarrant & Combs, LLP
M. Suzanne Riedman
2,300
Wyatt, Tarrant & Combs, LLP
Robert E. Schmidt
2,500
Wyatt, Tarrant & Combs, LLP
Richard A. Schweinhart
7,500
Wyatt, Tarrant & Combs, LLP
T. Terry Tackett
3,300
Total....................................................
1,496,000
SCHEDULE B
Underwriter
Number of Firm Securities to be Purchased
Credit Suisse First Boston Corporation
1,101,415
Goldman, Sachs & Co.
1,101,415
UBS Warburg LLC
472,035
J.P. Morgan Securities Inc.
314,690
Lehman Brothers Inc.
157,345
Legg Mason Wood Walker, Incorporated
25,000
Raymond James & Associates, Inc.
25,000
Stephens Inc.
25,000
Thomas Weisel Partners LLC
25,000
Total
3,246,900
SCHEDULE C
List of Company's Significant Subsidiaries
Kindred Healthcare Operating, Inc.
Kindred Hospitals East, L.L.C.
Kindred Hospitals West, L.L.C.
Kindred Nursing Centers East, L.L.C.
Kindred Nursing Centers West, L.L.C.
Kindred Rehab Services, Inc.
Kindred Systems, Inc.
Kindred Hospitals Limited Partnership
Kindred Nursing Centers Limited Partnership
SCHEDULE D
List of Partnerships Not Wholly-Owned
Name % of Ownership
None
Schedule E
List of Material Subsidiaries
No.
Name
State of Organization
1.
Advanced Infusion Systems, Inc.
CA
2.
American X-Rays, Inc.
LA
3.
C.P.C. of Louisiana, Inc.
LA
4.
Caribbean Behavioral Health Systems, Inc.
NV
5.
Community Behavioral Health System, Inc.
LA
6.
Community Psychiatric Centers of Arkansas, Inc.
AR
7.
Community Psychiatric Centers of California
CA
8.
Community Psychiatric Centers of Florida, Inc.
FL
9.
Community Psychiatric Centers of Idaho, Inc.
ID
10.
Community Psychiatric Centers of Indiana, Inc.
IN
11.
Community Psychiatric Centers of Kansas, Inc.
KS
12.
Community Psychiatric Centers of Mississippi, Inc.
MS
13.
Community Psychiatric Centers of Missouri, Inc.
MO
14.
Community Psychiatric Centers of North Carolina, Inc.
NC
15.
Community Psychiatric Centers of Oklahoma, Inc.
OK
16.
Community Psychiatric Centers of Utah, Inc.
UT
17.
Community Psychiatric Centers Properties Incorporated
CA
18.
Community Psychiatric Centers Properties of Oklahoma, Inc.
OK
19.
Community Psychiatric Centers Properties of Texas, Inc.
TX
20.
Community Psychiatric Centers Properties of Utah, Inc.
UT
21.
Cornerstone Insurance Company
CI
22.
Courtland Gardens Health Center, Inc.
CT
23.
CPC Investment Corp.
CA
24.
CPC Managed Care Health Services, Inc.
DE
25.
CPC of Georgia, Inc.
GA
26.
CPC Properties of Arkansas, Inc.
AR
27.
CPC Properties of Illinois, Inc.
IL
28.
CPC Properties of Indiana, Inc.
IN
29.
CPC Properties of Kansas, Inc.
KS
30.
CPC Properties of Louisiana, Inc.
LA
31.
CPC Properties of Mississippi, Inc.
MS
32.
CPC Properties of Missouri, Inc.
MO
33.
CPC Properties of North Carolina, Inc.
NC
34.
First Rehab, Inc.
DE
35.
Florida Hospital Properties, Inc.
FL
36.
Health Care Holdings, Inc.
DE
37.
Health Care Technology, Inc.
DE
38.
Helian ASC of Northridge, Inc.
CA
39.
Helian Health Group, Inc.
DE
40.
Helian Recovery Corporation
CA
41.
Homestead Health Center, Inc.
CT
42.
Horizon Healthcare Services, Inc.
GA
43.
Interamericana Health Care Group
NV
44.
J. B. Thomas Hospital, Inc.
MA
45.
Kindred Acute Pulmonary East, Inc.
DE
46.
Kindred Acute Pulmonary West, Inc.
DE
47.
Kindred Facility Services, Inc.
(f/k/a Vencor Facility Services, Inc.)
DE
48.
Kindred Healthcare Operating, Inc.
(f/k/a Vencor Operating, Inc.)
DE
49.
Kindred Healthcare Services, Inc.
(f/k/a Vencare, Inc.)
DE
50.
Kindred Healthcare, Inc.
(f/k/a Vencor, Inc.)
DE
51.
Kindred Holdings, L.L.C.
(f/k/a Vencor Holdings, L.L.C.)
DE
52.
Kindred Home Care Services, Inc.
(f/k/a Vencor Home Care Services, Inc.)
DE
53.
Kindred Hospice, Inc.
(f/k/a Vencor Hospice, Inc.)
KY
54.
Kindred Hospitals East, L.L.C.
(f/k/a Vencor Hospitals East, L.L.C.)
DE
55.
Kindred Hospitals West, L.L.C.
(f/k/a Vencor Hospitals West, L.L.C.)
DE
56.
Kindred Insurance Holdings, Inc.
(f/k/a Vencor Insurance Holdings, Inc.)
DE
57.
Kindred Investment Company
(f/k/a Vencor Investment Company)
DE
58.
Kindred Nevada, L.L.C.
(f/k/a Vencor Nevada, L.L.C.)
DE
59.
Kindred Nursing Centers Central, L.L.C.
(f/k/a Vencor Nursing Centers Central, L.L.C.)
DE
60.
Kindred Nursing Centers East, L.L.C.
(f/k/a Vencor Nursing Centers East, L.L.C.)
DE
61.
Kindred Nursing Centers North, L.L.C.
(f/k/a Vencor Nursing Centers North, L.L.C.)
DE
62.
Kindred Nursing Centers South, L.L.C.
(f/k/a Vencor Nursing Centers South, L.L.C.)
DE
63.
Kindred Nursing Centers West, L.L.C.
(f/k/a Vencor Nursing Centers West, L.L.C.)
DE
64.
Kindred Pediatric Care, Inc.
(f/k/a Vencor Pediatric Care, Inc.)
DE
65.
Kindred Provider Network, Inc.
(f/k/a Vencor Provider Network, Inc.)
DE
66.
Kindred Rehab Services, Inc.
(f/k/a Vencare Rehab Services, Inc.)
DE
67.
Kindred Systems, Inc.
(f/k/a Ventech Systems, Inc.)
DE
68.
Lafayette Health Care Center, Inc.
GA
69.
MedAssure, L.L.C.
KY
70.
MedEquities, Inc.
CA
71.
Medisave of Tennessee, Inc.
DE
72.
Medisave Pharmacies, Inc.
DE
73.
Old Orchard Hospital, Inc.
IL
74.
Palo Alto Surgecenter Corporation
CA
75.
Peachtree-Parkwood Hospital, Inc.
GA
76.
PersonaCare Living Center of Clearwater, Inc.
DE
77.
PersonaCare of Bradenton, Inc.
DE
78.
PersonaCare of Clearwater, Inc.
DE
79.
PersonaCare of Connecticut, Inc.
CT
80.
PersonaCare of Georgia, Inc.
DE
81.
PersonaCare of Huntsville, Inc.
DE
82.
PersonaCare of Little Rock, Inc.
DE
83.
PersonaCare of Ohio, Inc.
DE
84.
PersonaCare of Owensboro, Inc.
DE
85.
PersonaCare of Pennsylvania, Inc.
DE
86.
PersonaCare of Pompano East, Inc.
DE
87.
PersonaCare of Pompano West, Inc.
DE
88.
PersonaCare of Reading, Inc.
DE
89.
PersonaCare of San Antonio, Inc.
DE
90.
PersonaCare of San Pedro, Inc.
DE
91.
PersonaCare of Shreveport, Inc.
DE
92.
PersonaCare of St. Petersburg, Inc.
DE
93.
PersonaCare of Warner Robins, Inc.
DE
94.
PersonaCare of Wisconsin, Inc.
DE
95.
PersonaCare Properties, Inc.
GA
96.
PersonaCare, Inc.
DE
97.
ProData Systems, Inc.
AL
98.
Recovery Inns of America, Inc.
CA
99.
Respiratory Care Services, Inc.
DE
100.
Stamford Health Facilities, Inc.
CT
101.
THC - Chicago, Inc.
IL
102.
THC - Hollywood, Inc.
FL
103.
THC - Houston, Inc.
TX
104.
THC - Minneapolis, Inc.
MN
105.
THC - North Shore, Inc.
IL
106.
THC - Orange County, Inc.
CA
107.
THC - San Diego, Inc.
CA
108.
THC - Seattle, Inc.
WA
109.
TheraTx Health Services, Inc.
DE
110.
TheraTx Healthcare Management, Inc.
DE
111.
TheraTx Management Services, Inc.
CA
112.
TheraTx Medical Supplies, Inc.
DE
113.
TheraTx Rehabilitation Services, Inc.
DE
114.
TheraTx Staffing, Inc.
IL
115.
Transitional Hospitals Corporation
NV
116.
Transitional Hospitals Corporation
DE
117.
Transitional Hospitals Corporation of Indiana, Inc.
IN
118.
Transitional Hospitals Corporation of Louisiana, Inc.
LA
119.
Transitional Hospitals Corporation of Michigan, Inc.
MI
120.
Transitional Hospitals Corporation of Nevada, Inc.
NV
121.
Transitional Hospitals Corporation of New Mexico, Inc.
NM
122.
Transitional Hospitals Corporation of Tampa, Inc.
FL
123.
Transitional Hospitals Corporation of Texas, Inc.
TX
124.
Transitional Hospitals Corporation of Wisconsin, Inc.
WI
125.
Tucker Nursing Center, Inc.
GA
126.
Tunstall Enterprises, Inc.
GA
127.
VC - OIA, Inc.
AZ
128.
VC - TOHC, Inc.
AZ
129.
VC - WM, Inc.
FL
130.
California Respiratory Care Partnership
CA
131.
Foothill Nursing Company Partnership
CA
132.
Fox Hill Village Partnership
MA
133.
Hillhaven-MSC Partnership
CA
134.
Kindred Acute Pulmonary Limited Partnership
DE
135.
Kindred Home Care and Hospice Indiana Partnership
(f/k/a Vencor Home Care and Hospice Indiana Partnership)
IN
136.
Kindred Hospitals Limited Partnership
(f/k/a Vencor Hospitals Limited Partnership)
DE
137.
Kindred Nursing Centers Central Limited Partnership
(f/k/a Vencor Nursing Centers Central Limited Partnership)
DE
138.
Kindred Nursing Centers Limited Partnership
(f/k/a Vencor Nursing Centers Limited Partnership)
DE
139. o
Northridge Surgery Center Development, Ltd.
CA
140.
Northridge Surgery Center, Ltd.
CA
141.
Pharmaceutical Infusion Therapy
CA
142.
Recovery Inn of Menlo Park, L.P.
CA
143.
Starr Farm Partnership
VT
144.
Visiting Nurse Advanced Infusion Systems - Anaheim
CA
145.
Visiting Nurse Advanced Infusion Systems - Colton
CA
146.
Visiting Nurse Advanced Infusion Systems - Newbury Park
CA
Exhibit C
Kindred Healthcare, Inc.
Lock-Up Agreement
October 22, 2001
Kindred Healthcare, Inc.
680 South Fourth Street
Louisville, Kentucky 40202-2412
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
J.P. Morgan Securities Inc.
UBS Warburg LLC
Lehman Brothers Inc.
As Representatives of the several
Underwriters to be named in the
Underwriting Agreement
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Dear Sirs:
As an inducement to the Underwriters to execute the Underwriting Agreement,
pursuant to which an offering will be made that is intended to result in an
orderly market for the Common Stock (the "Securities") of Kindred Healthcare,
Inc. and any successor (by merger or otherwise) thereto (the "Company"), the
undersigned hereby agrees that from the date hereof and until 90 days after the
date of the final prospectus used to sell the Securities (the "Public Offering
Date") pursuant to the Underwriting Agreement, to which you are or expect to
become parties, the undersigned will not (1) offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any shares of Securities
or securities convertible into or exchangeable or exercisable for any shares of
Securities, whether now owned or hereafter acquired by the undersigned or with
respect to which the undersigned has or hereafter acquires the power of
disposition, or (2) enter into a transaction which would have the same effect,
or enter into any swap, hedge or other arrangement that transfers, in whole or
in part, any of the economic consequences of ownership of the Securities,
whether any such aforementioned transaction is to be settled by delivery of the
Securities or such other securities, in cash or otherwise, or (3) publicly
disclose the intention to make any such offer, sale, pledge or disposition, or
to enter into any such transaction, swap, hedge or other arrangement, without,
in the case of each of clauses (1), (2) and (3), the prior written consent of
Credit Suisse First Boston Corporation. In addition, the undersigned agrees
that, without the prior written consent of Credit Suisse First Boston
Corporation, it will not, during the period commencing on the date hereof and
ending 90 days after the Public Offering Date, make any demand for or exercise
any right with respect to, the registration of any Securities or any security
convertible into or exercisable or exchangeable for the Securities.
The Company represents and warrants to the undersigned that each officer,
director and person named as a selling securityholder in the final prospectus
has entered into an agreement with the Company and the Underwriters with
substantially similar terms, containing no material differences from the terms
of this agreement. In the event any of the shares held by any officers or
directors or 1% or greater securityholders of the Company (each a "Released
Stockholder") are released from such lock-up restrictions, Credit Suisse First
Boston Corporation will release the undersigned with respect to the percentage
of the Securities held by the undersigned equal to (a) the aggregate number of
Securities released from such lock-up restrictions (other than releases pursuant
to this paragraph or a similar paragraph in lock-up agreements with other
holders) divided by (b) the aggregate number of Securities of the Released
Stockholder subject to the lock- up restrictions as of the Public Offering Date.
Any Securities received upon exercise of options granted to the undersigned will
also be subject to this Agreement. The restrictions in the preceding paragraph
shall not apply to (i) gifts and transfers by will or intestacy or (ii)
transfers to (A) the undersigned's members, partners, affiliates or immediate
family or (B) a trust, the beneficiaries of which are the undersigned and/or
members of the undersigned's immediate family; provided that (x) the donee or
transferee agrees in writing to be bound by the foregoing restrictions in the
same manner as they apply to the undersigned and (y) if the donor or transferor
is a reporting person subject to Section 16(A) of the Securities Exchange Act of
1934 (the "Exchange Act"), any gifts or transfers made in accordance with this
sentence shall not require such person to, and such person shall not
voluntarily, file a report of such transaction on Form 4 under the Exchange Act.
The term "immediate family" shall mean spouse, lineal descendants, father,
mother, brother or sister of the transferor and father, mother, brother or
sister of the transferor's spouse. Further, the restrictions in the preceding
paragraph shall not apply to (1) transactions relating to shares of Securities
or other securities acquired in open market transactions after the completion of
the public offering and (2) the distribution by Ventas, Inc. ("Ventas") or The
Ventas Stockholder Trust (the "Ventas Trust") of up to 350,000 shares of such
Securities to Ventas stockholders on or after December 24, 2001, the resale by
such stockholders of the shares so distributed and any public disclosure by
Ventas of the Ventas entities' intention to effect such distribution.
In furtherance of the foregoing, the Company and its transfer agent and
registrar are hereby authorized to decline to make any transfer of shares of
Securities if such transfer would constitute a violation or breach of this
Agreement.
This Agreement shall be binding on the undersigned and the successors, heirs,
personal representatives and assigns of the undersigned. This Agreement shall
lapse and become null and void if the Public Offering Date shall not have
occurred on or before November 30, 2001.
Very truly yours,
FRANKLIN MUTUAL ADVISERS, LLC
By: /S/
Name:
Title:
Agreed to:
KINDRED HEALTHCARE, INC.
By: ______________/S/_________
Name:
Title:
Formerly TheraTx, Inc.