Document:

Exhibit 10.35

 

Contract No. 5600012228

 

AGREEMENT

 

for

 

GENERAL SERVICES

 

between

 

SAN DIEGO GAS & ELECTRIC COMPANY

 

And

 

APPLIANCE RECYCLING CENTERS OF AMERICA - CALIFORNIA, INC.

 

for

 

2004 Statewide Appliance Recycling Program

 

 

TABLE OF CONTENTS

 

	
  ARTICLE

  	
   

  
	
  1.

  	
  SCOPE

  
	
  2.

  	
  COMMENCEMENT
  AND COMPLETION OF SERVICES

  
	
  3.

  	
  REPRESENTATIVES

  
	
  4.

  	
  COMPENSATION

  
	
  5.

  	
  PAYMENT

  
	
  6.

  	
  NOTICES OR DEMANDS

  
	
  7.

  	
  RESPONSIBILITY
  OF CONTRACTOR

  
	
  8.

  	
  INSPECTION

  
	
  9.

  	
  COMPANY RULES

  
	
  10.

  	
  CHANGES

  
	
  11.

  	
  EXCUSABLE DELAYS

  
	
  12.

  	
  SUSPENSION OF
  SERVICES

  
	
  13.

  	
  REPORTS

  
	
  14.

  	
  SUBCONTRACTORS

  
	
  15.

  	
  SUPPLIER DIVERSITY

  
	
  16.

  	
  AUDIT

  
	
  17.

  	
  TAXES

  
	
  18.

  	
  INDEPENDENT
  CONTRACTOR

  
	
  19.

  	
  WARRANTY

  
	
  20.

  	
  INSURANCE

  
	
  21.

  	
  INDEMNITY

  
	
  22.

  	
  ENVIRONMENTAL TERMS

  
	
  23.

  	
  HAZARDOUS
  SUBSTANCE INFORMATION

  
	
  24.

  	
  GOVERNING LAW

  
	
  25.

  	
  COMPLIANCE WITH LAWS

  
	
  26.

  	
  DEFAULT

  
	
  27.

  	
  TERMINATION

  
	
  28.

  	
  LIENS

  
	
  29.

  	
  ASSIGNMENT

  
	
  30.

  	
  NONWAIVER

  
	
  31.

  	
  DISPUTES

  
	
  32.

  	
  CONFIDENTIALITY

  
	
  33.

  	
  GOVERNMENT CONTRACT
  CLAUSES INCORPORATED BY REFERENCE

  
	
  34.

  	
  TIME OF ESSENCE

  
	
  35.

  	
  VALIDITY

  
	
  36.

  	
  SURVIVAL

  
	
  37.

  	
  NO ORAL
  MODIFICATIONS

  
	
  38.

  	
  CAPTIONS

  
	
  39.

  	
  COUNTERPARTS

  
	
  40.

  	
  AUTHORITY

  
	
  41.

  	
  CONSTRUCTION OF
  AGREEMENT

  
	
  42.

  	
  ORDER OF PRECEDENCE

  
	
  43.

  	
  COMPLETE AGREEMENT

  

 

 

GENERAL SERVICES AGREEMENT

 

This
General Services Agreement (“Agreement”) is made effective as of March 1,
2004 (“Effective Date”) between SAN DIEGO GAS
& ELECTRIC COMPANY (“Company”) and APPLIANCE RECYCLING CENTERS OF AMERICA - CALIFORNIA, INC. (“Contractor”).

 

The
Parties hereby agree as follows:

 

1.                                      SCOPE 

 

Contractor
shall perform, at its own proper cost and expense, in the most substantial and
skillful manner, to the satisfaction of Company, the following generally
describe General Services (hereinafter, the “Services”):

 

The
scheduling, pick-up, and recycling of residential refrigerators and freezers.

 

2.                                      COMMENCEMENT AND COMPLETION
OF SERVICES 

 

This
Agreement shall commence as of the Effective Date and shall be in full force
and effect through 12/31/2004, unless terminated earlier in accordance with
Article 27. Contractor agrees to commence and perform the Services in
accordance with the requests of Company Representative. The nature of the
Services is such that timely performance is critical to the orderly progress of
related work and to the operating schedule of Company.

 

3.                                      REPRESENTATIVES 

 

3.1.                             Company Representative: Neil Sybert

 

Company
designates, and Contractor accepts, the individual named above as Company
Representative for all matters relating to Contractor’s performance of Services
under this Agreement. The actions taken by the Company Representative regarding
such performance shall be deemed the acts of Company. Company may at any time
upon written notice to Contractor, pursuant to Article 6 hereof, change
the designated Company Representative.

 

3.2.                            Contractor Representative: Edward Cameron

 

Contractor
designates, and Company accepts, the individual named above as Contractor
Representative for all matters relating to Contractor’s performance of Services
under this Agreement. The actions taken by Contractor Representative shall be
deemed the acts of Contractor.

 

4.                                      COMPENSATION 

 

Contractor
hereby agrees to accept as full compensation for satisfactory performance of
the Services as described in Article 1.  All payments shall be made in
accordance with Article 5.

 

5.                                      PAYMENT

 

5.1.                              Contractor shall invoice Company  on a monthly basis for Services performed
in the previous calendar month, or in accordance with an established milestone
completion schedule. All invoices submitted shall have complete support
documentation of all

 

 

charges
incurred, including any data required to calculate fees or variable rate
charges, plus support documentation for any authorized reimbursable expenses by
category.

 

5.2.                              Company may upon written notice to
Contractor, setoff any amount due from Contractor, whether or not under this
Agreement, against any amount due Contractor or claimed to be due by Contractor
under this Agreement. In addition, Company may withhold from Contractor any
amount sufficient to reimburse Company for any loss, damage, expense or
liability for Contractor’s actual, alleged or reasonably probable failure,
based on factual evidence, to comply with the terms and conditions of this Agreement.

 

5.3.                              Contractor shall submit invoices in duplicate
in a format approved by Company and as set forth in this Article 5 to:

 

Original to: San Diego Gas & Electric Company

Attention: Accounts Payable

PO Box 129007

San Diego, CA 92112-9007

 

Copy to: San Diego Gas & Electric Company

Attention: Neil Sybert

8335 Century Park Court

San Diego, CA 92123-1569

 

5.4.                              Company shall make payment within thirty (30)
days after receipt and approval of an invoice to the following address:

 

Appliance Recycling Centers of
America

7400 Excelsior Blvd

Minneapolis, MN 55426

 

6.                                      NOTICES OR DEMANDS

 

Any
notice, request, demand or other communication required or permitted under this
Agreement, shall be deemed to be properly given by the sender and received by
the addressee if made in writing and (1) if personally delivered; (2) as of
date of signed return receipt after deposit with the U.S. Postal Service by
certified or registered mail, postage prepaid, with a return receipt requested;
or (3) if sent by facsimile with confirmation sent as provided in (2) above.
All correspondence shall reference the contract number specified on the cover
page of this Agreement. Notices shall be addressed as follows to:

 

	
  Company:

  	
  Hal
  Snider

  
	
   

  	
  101
  Ash Street

  
	
   

  	
  San
  Diego, CA 92101-3017

  
	
   

  	
  Facsimile
  No: (619) 699-5177

  
	
   

  	
  Attention:
  Director - Procurement Department

  
	
   

  	
   

  
	
  Contractor:

  	
  Edward
  Cameron

  
	
   

  	
  Appliance
  Recycling Centers of America

  
	
   

  	
  7400
  Excelsior Blvd

  
	
   

  	
  Minneapolis,
  MN 55426

  
	
   

  	
  Facsimile
  No: 952-930-1800

  
	
   

  	
  Attention:
  President & CEO

  

 

 

7.                                      RESPONSIBILITY OF CONTRACTOR

 

Contractor
shall perform the Services in accordance with established professional and
business standards and ethics, and in conformity with each and every term of
this Agreement. Contractor shall remedy any and all deficiencies in its
Services which result from Contractor’s failure to adhere to the Scope of Work.

 

8.                                      INSPECTION 

 

All
Services performed by Contractor shall be subject to the inspection and
approval of Company at all times, but such right of inspection of the Services
shall not relieve Contractor of responsibility for the proper performance of
the Services, nor shall such inspection waive Company’s right to reject the
Services at a later date. Contractor shall provide to Company (or its designee)
access to Contractor’s facility or facilities where the Services are being
performed and sufficient, safe and proper work conditions for such inspection.
Contractor shall furnish to Company such information concerning its operations
or the performance of the Services as Company shall reasonably request.

 

9.                                      COMPANY RULES 

 

9.1.                              Contractor shall conduct its operations in
strict observation of access routes, entrance gates or doors, parking and
temporary storage areas as designated by Company. Under no circumstances shall
any of Contractor’s personnel, vehicles or equipment enter, move or be stored
upon any area not authorized by Company.

 

9.2.                              Contractor shall abide by all Company
Security procedures, rules and regulations, and cooperate with Company Security
personnel whenever on Company premises.

 

10.                               CHANGES 

 

10.1.                        Either Company or Contractor may propose an
amendment (“Amendment”) in the Services by advising the other party in writing.
As soon as practicable, Contractor shall prepare and forward to Company in
writing the proposed changes to the Scope of Work and/or compensation payable
under this Agreement as a result of the proposed Amendment.

 

10.2.                        Should the proposed Amendment be authorized
by Company, Contractor shall perform the Services as changed. All authorized
changes in the Services and the compensation shall be confirmed and directed
through a written Amendment. The compensation shall be negotiated by the
parties in good faith to achieve a commercially reasonable result which include
all costs associated with the deletion or performance of the additional or
changed Services, including the impact on the original Scope of Work,
inefficiencies created by the additional, deleted or changed Services, and
overhead associated with the additional, deleted or changed Services.

 

10.3.                        If any proposed Amendment is rejected by
Company, Contractor shall provide Company Representative with the details of
the estimate of its proposed change. If the parties fail to agree on an
Amendment to this Agreement, Company reserves the option to retain the services
of others to perform such Services.

 

10.4.                        Company may request in writing from time to
time, minor changes or revisions within the existing Scope of Work, if the
changes do not materially affect the cost of providing such Services, without
Company having to process an Amendment and without such changes altering the
compensation payable under this Agreement.

 

 

10.5.                        Contractor shall implement a change in the
Services only after Contractor has received a written Amendment to this Agreement
executed by an authorized representative of Company. All changes shall be
performed under the terms and conditions of this Agreement. Contractor hereby
expressly waives any compensation, reimbursement of expenses and any other
right to receive payment with respect to any proposed Amendment not authorized
by a written Amendment to this Agreement.

 

11.                               EXCUSABLE DELAYS 

 

Contractor
shall notify Company in writing immediately of any delay, or anticipated delay
in Contractor’s performance of this Agreement due to causes or circumstances
beyond the reasonable control of Contractor, and the reason for and anticipated
length of such delay. Company may determine, in its sole judgment, to extend
the date of performance for a period equal to the time lost by reason of the
delay. Contractor shall not be eligible under any circumstances for additional
compensation due to any such extension of time. Any extension to the contract
term pursuant to this Article 11 shall be documented by a written
Amendment to this Agreement signed by both parties. Examples of such possibly
excusable delays are natural calamities, strikes and boycotts, war or civil
unrest or governmental actions, and other events which are commonly deemed
Force Majeure. None of the foregoing, however, shall require Company to grant
any extension.

 

12.                               SUSPENSION OF SERVICES 

 

Company
may, at any time, by written notice, require Contractor to stop all, or any
portion, of the Services for a period of ninety (90) days and any further
period to which the parties mutually agree. Upon receipt of notice, Contractor
shall immediately cease performance under this Agreement. Within ninety (90)
days after a Suspension of Services order is delivered hereunder, Company shall
either (a) cancel the Suspension of Services order, or (b) terminate this
Agreement pursuant to the provisions of Article 27. If the Suspension of
Services order is canceled, Contractor shall be granted a corresponding
adjustment to all time periods and completion dates. Company shall not be liable
for any payments to Contractor for expenses incurred during the Suspension of
Services.

 

13.                               REPORTS 

 

Contractor
shall provide periodic status reports as requested by Company Representative.
The status reports shall make periodic comparisons of the Services rendered to
date against the Scope of Work, including any milestones and costs. Such
reports shall include an explanation of any significant variations, an
identification of any potential or known developments which may impact Company
or the Services, and any corrective actions implemented.

 

14.                               SUBCONTRACTORS 

 

All
subcontractors utilized by Contractor under this Agreement, must be approved in
advance, in writing by Company. Company shall not unreasonably refuse to
approve Contractor’s subcontractors if such subcontractors meet all Company’s
standard requirements. Contractor shall at all times be responsible the acts
and omissions of subcontractors and agents employed directly or indirectly by
Contractor. Contractor shall be responsible for performance of all the
Services, whether performed by Contractor or its subcontractors or agents. This
Agreement shall not give rise any contractual relationship between Company and
any subcontractor or agent of Contractor. Company shall not undertake any
obligation to pay or to be responsible for the payment of any sums to any
subcontractor or

 

 

agent
of Contractor. Upon request of Company, Contractor shall furnish to Company
copies of any executed subcontracts entered into between Contractor and any
subcontractor or agent.

 

Contractor
shall utilize only those COMPANY approved final disposal sites, transporters
and other approved environmental vendors (collectively “Environmental
Subcontractors”) for subcontracted services in furtherance of this Agreement.
COMPANY reserves the right to approve and add additional Environmental
Subcontractors in its sole discretion. Company also reserves the right to
remove existing Environmental Subcontractors in its sole discretion.

 

15.                               SUPPLIER DIVERSITY 

 

It
is the policy of Company to provide maximum opportunity for women, minor and
service disabled veteran business enterprises, hereinafter referred to as DBE
(Diverse Business Enterprises), to participate in the performance of contracts.
Company expects as performance to this Agreement, Contractor to utilize DBE
subcontractors and suppliers and to make good faith efforts to set and attain
goals in parity with Company goals when contracting for work with Company.
Contractor shall submit on a timely basis all documentation required by Company
to report such verified DBE expenditures.

 

16.                               AUDIT 

 

16.1.                        Company reserves the right to designate its
own employee representative(s) or its contracted representative with a
certified public accounting firm, who shall have the right to audit and to
examine any cost, payment, settlement or other supporting documentation from
any Services performed under this Agreement. Any such audit(s) shall be
undertaken by Company or its contracted representative at reasonable times
during normal business hours and in conformance with generally accepted
auditing standards. Contractor agrees to fully cooperate with any such
audit(s).

 

16.2.                        Contractor shall include a similar clause in
its agreements with its subcontractors reserving the right to designate Contractor’s
own employee representative(s), its contracted representative from a certified
public accounting firm, and/or representative(s) from Company, who shall have
the right to audit and to examine any cost, payment, settlement or other
supporting documentation resulting from any item related to the Services.

 

16.3.                        Contractor shall be notified in writing of
any exception taken as a result of an audit of Contractor or a subcontractor.
Contractor shall refund the amount of any exception to Company within ten (10)
days. If Contractor fails to make such payment, Contractor shall pay interest
on any unpaid portion of such payment, accruing monthly, at a rate equal to the
lesser of ten percent (10%) per annum or the maximum lawful rate. Interest
shall be computed from the date of written notification of exception(s) to the
date Contractor reimburses Company in full for any exception(s). In the event
an audit in accordance with this Article 16 discloses an overcharge of
five percent (5%) or greater, then Contractor shall reimburse Company for the
cost for the performance of such audit.

 

16.4.                        Company’s right to audit shall extend for a
period of five (5) years following the date of final payment under this
Agreement. Contractor and each subcontractor shall retain all necessary records
and documentation for the entire length of this audit period.

 

17.                               TAXES 

 

17.1.                        Contractor assumes exclusive liability for
and shall pay before delinquency, all federal, state, regional, municipal or
local sales, use, excise and other taxes, charges or contributions imposed on,
or with respect to, or measured by the equipment,

 

 

materials,
labor furnished hereunder, or the wages, salaries or other remunerations paid
to individuals employed in connection with, the performance of the Services.
Provided that the conditions of indemnification as set forth in Article 21
are satisfied, Contractor shall indemnify, defend and hold Company, and its
current and future, direct and indirect parent Company(ies), subsidiaries,
affiliates and their respective directors, officers, shareholders, employees,
agents, representatives, successors and assigns harmless from and against any
claim, liability, penalty, interest and expense arising by reason of
Contractor’s failure to pay such taxes, charges or contributions.

 

17.2.                        Without limiting the generality of this
Article 17, Contractor agrees to treat all individuals performing the
Services under this Agreement as employees of Contractor for purposes of
federal and state income taxes, Social Security and Medicare taxes,
unemployment and disability insurance premiums. No exceptions shall be
permitted under this Article 17 without a written Amendment to this
Agreement prior to any individual performing any required Services under this
Agreement. Contractor agrees that, at any time during the performance of this
Agreement, Company shall have the right to audit Contractor’s compliance with
this provision in accordance with Article 16.

 

17.3.                        To the extent any portion of the Services are
performed in the State of California, either (a) Contractor represents that
Contractor is a California resident and shall provide Company with an original
and a copy of Form 590, Certificate of Residence, in accordance with California
Revenue and Taxation Code Section 18662 and regulations thereunder; or (b)
seven percent (7%) of all compensation payable to Contractor for Services
performed in California shall be withheld in accordance with applicable
California Franchise Tax Board (“FTB”) or successor regulations, unless Company
has been notified in writing by FTB  that withholding is waived or a
lower rate or withholding is authorized.

 

17.4.                        Contractor and Company shall make
commercially reasonable efforts to cooperate with each other to minimize the
tax liability of both parties to the extent legally permissible (and with no
duty to increase either parties tax liability), including separately stating
taxable charges on Contractor’s invoices and supplying resale and exemption
certificates, if applicable, and any other information as reasonably requested.

 

18.                               INDEPENDENT CONTRACTOR 

 

18.1.                        It is agreed that Contractor shall perform
the Services under this Agreement as an independent Contractor and no
principal-agent or employer-employee relationship or joint- venture or
partnership shall be created with Company.

 

18.2.                        Contractor represents to Company that
Contractor and its subcontractors and agents are properly licensed, fully
experienced and qualified to perform the class and type of the Services as
specified in this Agreement, in addition to being properly insured, equipped,
organized, staffed and financed to handle such Services.

 

18.3.                        Contractor shall perform the Services in an
orderly and professional manner in accordance with industry standards.
Contractor shall not employ on the Services any personnel, agent or
subcontractor unskilled in the work assigned.

 

18.4.                        Contractor shall use prudent business
practices in its relationships with subcontractors suppliers and agents.

 

 

18.5.                        Contractor, its subcontractors and agents shall
not engage in any advertising, publicity or other promotional activities which
in any way directly or indirectly refers to this Agreement.

 

19.                               WARRANTY 

 

Contractor
expressly warrants that all the Services performed hereunder shall be in
compliance with the performance standards, drawings, specifications and any
other description of services set forth in the Scope of Work, and the terms and
conditions of this Agreement. Company may reject any Services furnished
hereunder failing to meet such standards, and require Contractor to repeat,
correct or replace such defective Services, at NO charge to Company.

 

20.                               INSURANCE 

 

Insurance
requirements are set forth as follows, but shall not in any way limit the
amount or scope of liability of Contractor under this Agreement. The following
constitutes the minimum insurance and requirements relating thereto:

 

20.1.                        On or before the effective date of this
Agreement, and thereafter during its term, Contractor shall provide Company
with current certificates of insurance, executed by a duly authorized
representative of each insurer, as evidence of all insurance policies required
under this Article 20. No insurance policy may be canceled, materially
revised, or subject to non- renewal without at least thirty (30) days prior
written notice being given to Company. Insurance shall be maintained without
lapse in coverage during the term of this Agreement. Company shall also be
given certified copies of Contractor’s policies of insurance, upon request.

 

20.2.                        Company shall be named as an additional
insured in each general liability policy. Such general liability insurance
shall provide a severability of interest or cross-liability clause.

 

20.3.                        The required policies, and any of
Contractor’s policies providing coverage excess of the required policies, shall
provide that the coverage is primary for all purposes and Contractor shall not
seek any contribution from any insurance or self-insurance maintained by
Company.

 

20.4.                        All required policies of insurance shall be
written by companies having an A.M. Best rating of “A-” or better, or
equivalent.

 

20.5.                        Contractor shall be solely responsible for
any deductible or self-insured retention on insurance required hereunder this
Agreement.

 

20.6.                        At all times during this Agreement, Contractor
shall provide and maintain, at Contractor’s expense, the following types of
insurance:

 

20.6.1.               General Liability Insurance:
Contractor shall maintain an
occurrence form commercial general liability policy or policies, insuring
against liability arising from bodily injury, property damage, personal and
advertising injury, independent Contractors liability, products and completed
operations and contractual liability. Such coverage shall be in an amount of
not less than $1,000,000.00 (One Million Dollars) combined single limit per
occurrence.

 

20.6.2.               Automobile Liability
Insurance: Contractor shall
maintain an automobile liability policy or policies insuring against liability
for damages because of bodily

 

 

injury,
death, or damage to property, (including loss of use thereof), and occurring in
any way related to the use, loading or unloading of any of Contractor’s
automobiles (including owned, non-owned, leased, rented and/or hired vehicles).
Such coverage shall be in an amount of not less than $1,000,000.00 (One Million
Dollars) each accident.

 

20.6.3.               Workers Compensation
Insurance: In accordance
with the laws of the State(s) in which the Services shall be performed,
Contractor shall maintain in force workers compensation insurance for all of
its employees. If applicable, Contractor shall obtain U.S. Longshoremen’s and
Harbor Workers compensation insurance, separately, or as an endorsement to
workers compensation insurance. Contractor shall also maintain employer’s
liability coverage in an amount of not less than $1,000,000.00 (One Million
Dollars) per accident and per employee for disease. In lieu of such insurance,
Contractor may maintain a self-insurance program meeting the requirements of
the State(s) in which the Services shall be performed along with the required
employer’s liability insurance.

 

20.6.4.               Environmental Impairment  Liability Insurance: Contractor
shall maintain a comprehensive environmental impairment liability policy or
policies insuring against liability for environmental activities contemplated
under this Agreement as required by federal, state, regional, municipal and
local laws, but not less than $1,000,000.00 (One Million Dollars) each claim.

 

20.7.                        Each policy of property, general liability
and automobile (including automobile physical damage) insurance maintained by
Contractor shall contain a waiver of subrogation in favor of Company.

 

21.                               INDEMNITY 

 

21.1.                        As between Company and Contractor, Contractor
shall be solely responsible for and Contractor shall indemnify, defend and hold
Company, and its current and future, direct and indirect parent Company(ies),
subsidiaries, affiliates and their respective directors, officers,
shareholders, employees, agents, representatives, successors and assigns
harmless from and against any and all claims, actions, suits, proceedings,
losses, liabilities, penalties, fines, damages, costs or expenses including
without limitation, attorneys fees (including fees and disbursements of
in-house and outside counsel) of any kind whatsoever resulting from (a)
injuries to or death of any and all individuals, including, without limitation,
members of the general public, or any employee, agent, independent Contractor
or consultant or affiliate of either Company or Contractor, arising out of or
connected in any manner with the performance of Services, whether or not the
conduct of Contractor or any subcontractor was tortious and whether or not
Company’s tortious conduct contributed to the injuries or death, (b) damage to,
loss, and/or destruction of property, including, without limitation, to,
property of Company or Contractor arising out of or connected in any manner
with the performance of Services, whether or not the conduct of Contractor or
any subcontractor was tortious and whether or not Company’s tortious conduct
contributed to the property damages, or (c) third party claims of any kind,
whether based upon negligence, strict liability or otherwise, arising out of or
connected in any manner to Contractor’s or any of its subcontractor’s acts or
omissions in breach of this Agreement. This indemnification obligation shall
not apply to the extent that injuries, death, loss, damage or destruction is
caused by either the willful misconduct of Company, its employees, agents or
representatives, or Company’s sole negligence.

 

21.2.                       Contractor shall indemnify, defend and hold
Company, and its current and future, direct and indirect parent Company(ies),
subsidiaries, affiliates and their respective directors, officers,
shareholders, employees, agents, representatives, successors and assigns
harmless from and against any and all claims, actions, suits, proceedings,
losses, liabilities, penalties, fines, damages, costs or expenses including
attorneys fees (including fees and

 

 

disbursements
of in-house and outside counsel) of any kind whatsoever arising from (a) actual
or alleged infringement or misappropriation by Contractor or any subcontractor
of any patent, copyright, trade secret, trademark, service mark, trade name, or
other intellectual property right in connection with the Services, including
without limitation, any deliverable, and (b) Contractor’s violation of any
third party license to use intellectual property in connection with the
Services, including, without limitation, any deliverable.

 

21.3.                        If any claim or action is brought against
Company, then Contractor shall be entitled to participate in, and, unless in
the opinion of counsel for Company a conflict of interest between Company and
Contractor may exist with respect to such claim or action, assume the defense
of such claim or action, with counsel reasonably acceptable to Company. If
Contractor does not assume the defense of Company, or if a conflict precludes
Contractor from assuming the defense, then Contractor shall reimburse Company
on a monthly basis for Company’s defense through separate counsel of Company’s
choice. Even if Contractor assumes the defense of Company with acceptable
counsel, Company, at its sole option and expense, may participate in the
defense with counsel of Company’s own choice without relieving Contractor of
any of its obligations hereunder.

 

21.4.                        Contractor’s obligation to indemnify Company
under this Article 21 shall not be limited in any way by any limitation on
the amount or type of damages, compensation, penalty or benefits payable by or
for Contractor under any statutory scheme, including without limitation, any
Workers Compensation Acts, Disability Benefit Acts or other Employee Benefit
Acts.

 

22.                               ENVIRONMENTAL TERMS 

 

22.1.                        For purposes of this Agreement, the following
terms shall have the following meanings:

 

22.1.1.               The term “Hazardous Material” means any
chemical, substance, material, product, controlled substance, object,
condition, solid or hazardous waste or any combination thereof, which is or may
be hazardous to human health or safety or the environment due to its
radioactivity, ignitability, reactivity, toxicity, or other harmful or
potentially harmful properties or affects. Hazardous Material includes, without
limitation, oil or petroleum and petroleum products, asbestos and any asbestos
containing materials, radon, polychlorinated biphenyls (“PCBs”), urea
formaldehyde insulation, lead paints and coatings, and all of those chemicals,
substances, materials, products, controlled substances, objects, conditions and
waste or any combinations thereof which are currently or become in the future
listed, defined or regulated in any manner by any federal, state, regional,
municipal or local Environmental Law (as that term is defined below).

 

22.1.2.               The term “Environmental Law” means any and
all applicable federal, state, regional, municipal or local law, regulation,
decision of the courts, ordinance, rule, code, order, directive, guideline,
authorization or approval, permit or permit condition, currently existing or as
amended, enacted, issued or adopted in the future which relates in any way to
worker or workplace safety, environmental conditions, environmental quality or
policy, health and/or safety issues or concerns (including product safety).
Environmental Law includes, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 USC,
Section 9601 et seq.), the Resource Conservation and Recovery Act (42 USC,
Section 6901 et seq.), the Carpenter-Presley-Tanner Hazardous Substance
Account Act (California Health & Safety Code, Section 25300 et seq.),
the California Hazardous Waste Control Law (California Health & Safety
Code, Section 25100 et seq.), the Occupational Safety and Health Act (29
USC Sections 651 et seq.), the California Occupational

 

 

Safety
and Health Act (California Labor Code Sections 6300 et seq.), and any
regulations or rules promulgated thereunder.

 

22.1.3.               The term “Governmental Agency” shall mean any
federal, state regional, municipal or local governmental agency or other public
or political body having the jurisdiction, mandate, authority or power to
regulate, implement, coordinate, administer or enforce any Environmental Law.

 

22.2.                        Contractor agrees to use, and agrees that it
shall require each of its subcontractors, if any, to use only personnel who are
qualified and properly trained and who possess every license, permit,
registration, certificate or other approval required by any applicable
Environmental Law or Governmental Agency to enable such personnel to perform
their work involving any part of Contractor’s obligations under this Agreement.

 

22.3.                        Contractor agrees that all materials and
equipment to be supplied or used by Contractor, its subcontractors, if any, in
the performance of its obligations under this Agreement, including, but not
limited to vehicles, loading equipment, and containers, shall be in good
condition and fit for the use(s) for which they are employed by Contractor or
its subcontractor, if any. Such materials and equipment shall at all times be
maintained, inspected and operated as required by applicable Environmental Law.
Contractor further agrees that all licenses, permits, registrations and
certificates or other approvals required by any Environmental Law or
Governmental Agency shall be procured and maintained for such materials and
equipment at all times during the use of the same by Contractor or its
subcontractors, if any, in the performance of any of Contractor’s obligations
under this Agreement.

 

22.4.                        Contractor specifically agrees that in the
performance of its obligations under this Agreement, Contractor shall at all
times fully comply with and cause each of its subcontractors, if any, to fully
comply with all applicable Environmental Laws. Contractor further specifically
agrees that at all times during its performance of the Services, Contractor
shall have and cause its subcontractors, if any, to have and keep in effect all
licenses, permits, registrations, certificates, and approvals required by any
Environmental Law or by any Governmental Agency for the Services undertaken by
Contractor or its subcontractors, if any, in the performance of Contractor’s
obligations under this Agreement.

 

22.5.                        Contractor hereby specifically agrees to
indemnify, defend and hold Company, its current and future, direct and indirect
parent Company(ies), subsidiaries, affiliates and their respective directors,
officers, shareholders, employees, agents, representatives, successors and
assigns (hereinafter, collectively the “Indemnitees”) harmless from and against
any and all claims, actions, suits, proceedings, losses, liabilities,
penalties, fines, damages, demands, causes of action, costs and expenses
including, but not limited to, all reasonable consulting, engineering,
attorneys (in-house and outside counsel) or other professional fees including
disbursements, which Indemnitees, or any of them, may incur or suffer by reason
of:

 

(1)                                  any unauthorized release of a Hazardous
Material,

 

(2)                                  any enforcement or compliance proceeding
commenced by or in the name of any Governmental Agency because of an alleged,
threatened or actual violation of any Environmental Law,

 

(3)                                  any action reasonably necessary to abate,
remediate or prevent a violation or threatened violation of any Environmental
Law, and/or

 

 

(4)                                  any other cause of whatsoever nature,

 

arising
out of or in any way connected with Contractor’s performance of its obligations
under this Agreement and/or Contractor’s willful or negligent acts or omissions
in connection therewith; except to the extent the same were caused by the
negligent or willful misconduct or omissions of the Indemnitees, or any of
them. Contractor’s obligation to indemnify Indemnitees under this
Article 22 shall not be limited in any way by any limitation on the amount
or type of damages, compensation, penalty or benefits payable by or for
Contractor under any statutory scheme, including without limitation, any
Workers Compensation Acts, Disability Benefit Acts or other Employee Benefit
Acts.

 

22.6.
In the event of any release of a Hazardous Material, Contractor shall perform
the following actions:

 

(1)                                  Take all reasonable steps necessary to stop
and contain said release

 

(2)                                  Make any report of such release as required
under Environmental Law

 

(3)                                  Clean up such release as required by
Governmental Agency

 

Contractor
shall immediately notify Company Representative of the following information
upon the occurrence of any release of Hazardous Material in connection with the
performance of the Services:

 

(1)                                  A description of the release

 

(2)                                  The identification of the Hazardous Material
and the volume released.

 

(3)                                  Death of any person

 

(4)                                  Property damage

 

(5)                                  Any communication from any Governmental
Agency that alleges that Contractor is not acting in compliance with
Environmental Law.

 

(6)                                  Any communication from any Governmental
Agency that affects any permits or licenses necessary to perform the Services.

 

Contractor
shall promptly submit within 36 hours to Company Representative a written
report, in a format as required by Company, describing in detail any event of
any release of a Hazardous Material of which shall include the following
information:

 

(1)                                  Name and address of Contractor and, if
applicable, any subcontractor(s) or agent(s) involved.

 

(2)                                  Name and address of Contractor’s commercial
and environmental liability insurance carrier.

 

(3)                                  Name and address of any injured or deceased
persons, if applicable.

 

(4)                                  Name and address of any property damage, if
applicable.

 

 

(5)                                  A detailed description of the release
including the identification of the Hazardous Material, the date and time of
the release, the volume released, and the nature of the any environmental
contamination.

 

(6)                                  A determination of whether any of Company’s
personnel, equipment, tools or materials were involved.

 

(7)                                  A detailed description of all reports made to
any Governmental Agency, and a description of the actions taken to respond to
the release.

 

22.7.                        Contractor shall NOT (a) transport any
of Hazardous Material of which Company is the generator for purposes of
treatment, storage, recycling and/or disposal; or (b) conduct any treatment,
storage, recycling and/or disposal of any Hazardous Material of which Company
is the generator, unless specifically authorized by Company to perform such
activities under this Agreement. If Contractor is authorized by Company to
perform such activities under this Agreement, then the following terms and
conditions shall also apply:

 

22.7.1.               Contractor shall not transport any Hazardous
Material of which Company is the generator to any treatment, storage, recycling
and/or disposal facility (hereinafter called “TSDF”) not authorized by Company
in writing. Moreover, notwithstanding the fact that Company has identified an
authorized TSDF, Contractor agrees that before Contractor transports any
Hazardous Material to any such TSDF, Contractor shall confirm that such TSDF
has, as of the date of each shipment, procured and maintained in effect all
licenses, permits, registrations, certificates or other authorizations required
by any Environmental Law or Governmental Agency, for such TSDF to lawfully
receive, handle, transport, store, treat, recycle, incinerate, dispose of, or
otherwise manage or use such Hazardous Material as authorized by Company.
Contractor shall not transport any Hazardous Material of which Company is the
generator to any TSDF which is unable or fails to provide such confirmation,
and immediately provide written notification of such condition to Company.
Further, notwithstanding that Company has identified an authorized TSDF,
Company reserves the right at any time, at Company’s sole discretion, to cancel
its authorization of any such TSDF upon written notification to Contractor.

 

22.7.2.               Subject to the obligations of Contractor
described in this Agreement, Company shall, when required by applicable
Environmental Law, provide Contractor with a complete and executed Hazardous
Waste Manifest or other shipping documentation for any Hazardous Material of
which Company is the generator to be transported for treatment, storage, recycling
and/or disposal under this Agreement. Contractor’s transportation, recycling,
treatment, storage, and/or disposal of any such Hazardous Material in
accordance with this Agreement shall be fully documented by Contractor
utilizing, among other things, the Hazardous Waste Manifest tracking system or
other records as required by Environmental Law, copies of which documentation
shall be promptly provided to Company.

 

23.                               HAZARDOUS SUBSTANCE
INFORMATION

 

Contractor
shall provide the following to Company for each material which Contractor
furnishes to a Company facility, at any time, for use in fulfilling its
obligations under this Agreement: (a) a completed Material Safety Data Sheet
(MSDS) for each material which contains a hazardous
material as defined by California Health and Safety Code
Section 25501(o); and (b) a written statement for each such material that
is a Mixture or Trade Name Product which contains a Toxic Chemical subject to the reporting requirements of
Section 313 or EPCRA (40 CFR Section 372 et seq.) including: (1) the
name and associated CAS (Chemical Abstract Services Registry) number of the Toxic Chemical; (2) the specific
concentration at which each such Toxic
Chemical is present in each such Mixture or Trade Name Product; and

 

 

(3)
the weight of each such Toxic Chemical in
each such Mixture or Trade Name Product. Contractor shall indemnify, defend and
hold Company, and its current and future, direct and indirect parent
Company(ies), subsidiaries, affiliates and their respective directors,
officers, shareholders, employees, agents, representatives, successors and
assigns harmless from and against any and all claims, actions, suits,
proceedings, losses, liabilities, penalties, fines, damages, administrative
actions, judgments, costs or expenses including expert witness, consulting and
attorneys fees (including fees and disbursements of in-house and outside
counsel) that Company may suffer as a result of Contractor’s failure to comply
with these requirements.

 

24.                               GOVERNING LAW 

 

The
formation, interpretation and performance of this Agreement shall be governed
by and enforced under the laws of the State of California, without reference to
principles of conflicts of laws.

 

25.                               COMPLIANCE WITH LAWS

 

Contractor
and its subcontractors at all times during performance of the Services shall
comply with and observe, all applicable federal, state, regional, municipal and
local laws, ordinances, rules, codes, regulations, executive orders, all
applicable employment, safety and environmental orders and all orders or
decrees of administrative agencies, courts or other legally constituted
authorities having jurisdiction or authority over Contractor, Company or the
Services.

 

26.                               DEFAUL T 

 

Contractor
agrees that if (a) Contractor abandons the Services, or (b) Contractor shall
become bankrupt or insolvent, or shall assign this Agreement, or sublet any
part thereof, without the express prior written authorization of Company, or
(c) Contractor, in the sole opinion of Company Representative, violates any of
the provisions of this Agreement, or (d) Contractor executes this Agreement in
bad faith, or (e) Contractor, in the sole opinion of the Company Representative
is not performing the Services in accordance with the terms of this Agreement,
Company may notify Contractor, pursuant to Article 6, to discontinue all
or any part of the Services and Contractor shall thereupon discontinue the
Services or such parts thereof. Company shall thereupon have the right to
continue and complete the Services or any part thereof, by contract or
otherwise, and Contractor shall be liable to Company for any and all loss,
penalties, fines, excess cost and consequential, special, incidental and
indirect damages incurred by Company in completing the Services caused by
Contractor’s failure to execute the requirements of this Agreement. The
remedies herein shall be inclusive and additional to any other rights or
remedies in law or equity, and no action by Company shall constitute a waiver
of any such other rights or remedies. If it is determined for any reason by a
tribunal of competent jurisdiction that Contractor was not in default, the
parties rights and obligations shall be the same as if notice of termination
had been issued pursuant to Article 27.

 

27.                               TERMINATION 

 

It
is also expressly agreed that Company shall have the right to terminate this
Agreement, or any part thereof, at any time for its sole convenience upon two
(2) business days written notice, pursuant to Article 6, to Contractor.
Contractor shall fully justify and document to Company in writing any
termination charges claimed by Contractor (which shall not exceed 110% of the
reasonable and actual cost of direct labor, materials and overhead). In no
event shall Contractor be entitled to payment for any Services which has not
been authorized by Company, or is not yet performed, or any anticipated profits
for any Services that have not been authorized or performed. Any payment of
termination charges shall occur within thirty (30) days

 

 

of
receipt of Contractor’s written submittal of charges and justification to
Company’s satisfaction. Company shall have the right to review and verify by
independent audit, any termination charges claimed by Contractor prior to
payment.

 

28.                               LIENS 

 

Without
limiting the generality of Article 21, Contractor shall indemnify, defend,
and hold Company, and its current and future, direct and indirect parent
Company(ies), subsidiaries, affiliates and their respective directors,
officers, shareholders, employees, agents, representatives, successors and
assigns harmless from and against any mechanics lien or stop notice claim
against Company by Contractor, subcontractors, employees or agents pertaining
to the Services specified in this Agreement.

 

29.                               ASSIGNMENT

 

29.1.                        Contractor shall give personal attention to
the execution of the Services herein provided for, and shall not permit this
Agreement to be assigned voluntarily, involuntarily or by operation of law; nor
employ any subcontractor for the execution of the same or any part thereof,
without the express prior written authorization of Company. No such written
authorization, however, shall be construed as discharging or releasing
Contractor in the performance of the Services or the fulfillment of any
obligation specified in this Agreement. 
Contractor shall remain jointly and severally liable with any permitted
assignee for any failure to comply with all applicable obligations hereunder
this Agreement.

 

29.2.                        Company may assign in whole or in part its
rights and obligations under this Agreement at any time without the consent of
Contractor.

 

30.                               NONWAIVER 

 

The
failure of Company to insist upon or enforce, in any instance, strict
performance by Contractor of any of the terms or conditions of this Agreement,
or to exercise any rights herein conferred shall not be construed as a waiver
or relinquishment to any extent of its right to assert, or rely upon any such
terms or rights on any future occasion. No waiver shall be valid unless stated
in writing as set forth in Article 6.

 

31.                               DISPUTES 

 

31.1                           Any dispute that cannot be resolved between
Contractor Representative and Company Representative shall be referred to
Company Manager - Service Contracting and an officer of Contractor for
resolution. If Company and Contractor cannot reach an agreement within a reasonable
period of time, Company and Contractor shall have the right to pursue
litigation as provided for herein.

 

31.2.                        In the event of any litigation to enforce or
interpret any terms of this Agreement, unless the parties agree in writing
otherwise, such action shall be brought in any Superior Court of California
having jurisdiction (or, if the federal courts have exclusive jurisdiction over
the subject matter of the dispute, in the U.S. District Court for the Southern
District of California), and the parties hereby submit to the exclusive
jurisdiction of said court.

 

31.3.                        In any action in litigation to enforce or
interpret any of the terms of this Agreement, the prevailing party shall be
entitled to recover from the unsuccessful party all costs, expenses, (including
expert testimony) and reasonable attorneys fees (including fees and
disbursements of in-house and outside counsel) incurred therein by the
prevailing party.

 

 

31.4.                        In no event shall the litigation of any
controversy or the settlement thereof delay the performance of this Agreement.

 

32.                               CONFIDENTIALITY 

 

32.1.                        For purposes of this Agreement, the term
“Confidential Information” means proprietary information concerning the
business, operations and assets of Company, its parent Company(ies),
subsidiaries and/or affiliates, including, without limitation, the terms and
conditions of this Agreement or any related agreement, information or materials
prepared in connection with the performance of Services under this Agreement,
or any related subsequent agreement, designs, drawings, specifications,
techniques, models, data, documentation, source code, object code, diagrams,
flow charts, research, development, processes, procedures, know-how,
manufacturing, development or marketing techniques and materials, development
or marketing timetables, strategies and development plans, customer, supplier
or personnel names and other information related to customers, suppliers or
personnel, pricing policies and financial information, and other information of
a similar nature, whether or not reduced to writing or other tangible form, and
any other trade secrets. Confidential Information shall not include (a)
information known to Contractor prior to obtaining the same from Company; (b)
information in the public domain at the time of disclosure by Contractor; (c)
information obtained by Contractor from a third party who did not receive same,
directly or indirectly, from Company; or (d) information approved for release
by express prior written consent of an authorized officer of Company.

 

32.2.                        Contractor hereby agrees that it shall use
the Confidential Information solely for the purpose of performing Services
under this Agreement and not in any way detrimental to Company, its parent
Company(ies), subsidiaries and/or affiliates. Neither Contractor nor its
directors, officers, employees, agents or representatives shall use the
Confidential Information for their own benefit. Contractor agrees to use the
higher of the same degree of care Contractor uses with respect to its own
proprietary or confidential information, which in any event shall result in a
reasonable standard of care to prevent unauthorized use or disclosure of the
Confidential Information. Except as otherwise provided herein, Contractor shall
keep confidential and not disclose the Confidential Information. Contractor
shall cause each of its directors, officers, employees, agents,
representatives, subcontractors and suppliers to become familiar with, and
abide by, the terms of this Agreement.

 

32.3.                        Notwithstanding the provisions of this
Article 33, Contractor may disclose any of the Confidential Information in
the event, but only to the extent, that, based upon advice of counsel,
Contractor is required to do so by the disclosure requirements of any law,
rule, regulation or any order, decree, subpoena or ruling or other similar
process of any court, governmental agency or regulatory authority. Prior to
making or permitting any such disclosure, Contractor shall provide Company with
prompt written notice of any such requirement so that Company (with
Contractor’s assistance if requested by Company) may seek a protective order or
other appropriate remedy.

 

32.4.                        Subject to Article 33.3, Contractor
shall not, without the prior written consent of Company, disclose to any third
party the fact that such Confidential Information has been made available to
Contractor.

 

32.5.                        At any time upon the request of Company,
Contractor shall promptly deliver to Company or destroy if so directed by
Company (with such destruction to be certified to Company) all documents (and
all copies thereof, however stored) furnished to or prepared by Contractor that
contain Confidential Information and all other documents in Contractor’s
possession that contain or that are based on or derived from Confidential
Information.

 

 

32.6.                        Notwithstanding the return or destruction of
all or any part of the Confidential Information, the confidentiality provisions
set forth in this Agreement shall nevertheless remain in full force and effect
with respect to specific Confidential Information until the date that is five
(5) years after the date of disclosure of such Confidential Information.

 

32.7.                        The parties acknowledge that the Confidential
Information is valuable and unique, and that damages would be an inadequate
remedy for breach of this Agreement and the obligations of Contractor are
specifically enforceable. Accordingly, the parties agree that in the event of a
breach or threatened breach of this Agreement by Contractor, Company, its
parent Company(ies), subsidiaries and/or affiliates, who shall be third party
beneficiaries of this Agreement, shall be entitled to seek an injunction
preventing such breach, without the necessity of proving damages or posting any
bond. Any such relief shall be in addition to, and not in lieu of, monetary
damages or any other legal or equitable remedy available to Company, its direct
and indirect parent Company(ies), subsidiaries or affiliates.

 

33.                               GOVERNMENT CONTRACT CLAUSES INCORPORATED BY REFERENCE 

 

Without
limiting the generality of any other Article of this Agreement, Contractor
shall comply with all applicable requirements set forth in the Federal
Acquisition Regulations (or any successor thereto) in effect on the date of
this Agreement, which are incorporated herein reference, with the same force
and effect as if they were given in full text. The terms and conditions thereof
shall be controlling over any conflicting terms and conditions set forth in
this Agreement or any written Amendment hereto.

 

34.                               TIME OF ESSENCE

 

Time
is expressly agreed to be of the essence of this Agreement and each, every and
all of the terms, conditions and provisions herein.

 

35.                               VALIDITY 

 

The
invalidity, in whole or in part, of any provisions hereof shall not affect the
validity of any other provisions hereof.

 

36.                               SURVIVAL 

 

The
obligations imposed on Contractor and Contractor’s employees by and pursuant to
each Article which, by its terms contains subject matter which relates to
time periods subsequent to the term of this Agreement (including without
limitation Articles 16, 17, 19, 20, 21 22, 23, 24, 25, 28, 31 and 33), shall
survive termination of this Agreement.

 

37.                               NO ORAL MODIFICATIONS 

 

No
modification of any provisions of this Agreement shall be valid unless in
writing and signed by duly authorized representatives of both parties. Company
Representative is not the duly authorized representative for Amendments to this
Agreement. Representatives of both parties internally authorized to execute
such documents pursuant to its corporate policies shall sign any Amendments to
this Agreement.

 

38.                               CAPTIONS 

 

The
captions in this Agreement are for convenience and reference only and the words
contained therein shall in no way be held to explain, modify, amplify or aid in
the interpretation, construction or meaning of the provisions of this
Agreement.

 

 

39.                               COUNTERPARTS 

 

This
Agreement may be executed in counterparts which, taken together, constitute a
single instrument.

 

40.                               AUTHORITY 

 

Each
individual executing this Agreement on behalf of Company and Contractor
represents and warrants that he or she is duly authorized to execute and
deliver this Agreement on behalf of said party, and that this Agreement is
binding upon said party in accordance with its terms and conditions.

 

41.                               CONSTRUCTION OF AGREEMENT

 

Both
parties have participated in the negotiating and drafting of this Agreement.
Therefore, the terms and conditions of this Agreement shall not be construed
against either party as the drafting party.

 

42.                               ORDER OF PRECEDENCE 

 

In
the event of conflicting provisions between any of the documents comprising
this Agreement, the provisions shall govern in the following priority order:

 

(1)                                  Duly Executed Amendments (most recent has
priority)

(2)                                  The General Conditions of this Agreement

(3)                                  The Special Conditions of this Agreement

 

43.                               COMPLETE AGREEMENT

 

This Agreement constitutes the complete and entire Agreement between
the parties and supersedes any previous communications, representations or
agreements, whether oral or written, with respect to the subject matter hereof.
There are no additions to, or deletions from, or changes in, any of the
provisions hereof, and no understandings, representations or agreements
concerning any of the same, which are not expressed herein, unless
stated below. THE PARTIES HEREBY AGREE THAT NO TRADE USAGE, PRIOR COURSE OF
DEALING OR COURSE OF PERFORMANCE UNDER THIS AGREEMENT SHALL BE A PART OF THIS
AGREEMENT OR SHALL BE USED IN THE INTERPRETATION OR CONSTRUCTION OF THIS
AGREEMENT.

 

IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above:

 

	
  SAN DIEGO GAS & ELECTRIC

  	
   

  	
  APPLIANCE RECYCLING CENTERS OF

  
	
  COMPANY

  	
   

  	
  AMERICA -
  CALIFORNIA, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/Margot
  Kyd

  	
   

  	
  By:

  	
  /s/Edward
  R. Cameron

  
	
  Name:

  	
  MARGOT
  KYD

  	
   

  	
  Name:

  	
  Edward
  R. (Jack) Cameron

  	
   

  
	
  Title:

  	
  SVP
  Business Solutions

  	
   

  	
  Title:

  	
  Pres.
  & CEO

  	
   

  
	
  Date:

  	
  3/12/2004

  	
   

  	
  Date:

  	
  4/10/04Exhibit 10.1

 

OMEGA
HEALTHCARE INVESTORS, INC.

 

$200,000,000

 

7% Senior Notes due
2014

 

PURCHASE AGREEMENT

 

March 15, 2004

 

DEUTSCHE BANK SECURITIES INC.

UBS SECURITIES LLC

BANC OF AMERICA SECURITIES LLC

c/o                               Deutsche
Bank Securities Inc.

60 Wall Street

New York, New York  10005

 

Ladies and Gentlemen:

 

Omega Healthcare Investors, Inc., a Maryland
corporation (the “Company”), and the Company’s subsidiaries listed on
the signature pages hereto (the “Subsidiary Guarantors”), hereby confirm
their agreement with you (the “Initial Purchasers”), as set forth below.

 

Section 1.                                            The
Securities.  Subject to the terms
and conditions herein contained, the Company proposes to issue and sell to the
Initial Purchasers $200,000,000 aggregate principal amount of its 7% Senior
Notes due 2014 (the “Notes”). 
The Notes will be unconditionally guaranteed (the “Guarantees”)
on a senior basis by the Subsidiary Guarantors.  The Notes and the Guarantees are collectively referred to herein
as the “Securities.”  The
Securities are to be issued under an indenture (the “Indenture”) to be
dated as of March 22, 2004 by
and among the Company, the Subsidiary Guarantors and U.S. Bank National
Association, as Trustee (the “Trustee”).

 

The Securities will be offered and sold to
the Initial Purchasers without being registered under the Securities Act of
1933, as amended (the “Act”), in reliance on exemptions therefrom.

 

In connection with the sale of the
Securities, the Company has prepared a preliminary offering memorandum dated March 5, 2004 (the “Preliminary
Memorandum”) and a final offering memorandum dated March 15, 2004 (the “Final Memorandum”; the
Preliminary Memorandum and the Final Memorandum each herein being referred to
as a “Memorandum”) setting forth or including a description of the terms
of the Securities, the terms of the offering of the Securities, a description
of the Company and any material developments relating to the Company occurring
after the date of the most recent historical financial statements included

 

 

therein. 
Any reference herein to the Preliminary Memorandum or the Final Memorandum
shall be deemed to refer to and include the documents incorporated by reference
therein.

 

The Initial Purchasers and their direct and
indirect transferees of the Securities will be entitled to the benefits of the
Registration Rights Agreement, substantially in the form attached hereto as Exhibit A
(the “Registration Rights Agreement”), pursuant to which the Company and
the Subsidiary Guarantors have agreed, among other things, to use their best
efforts to file a registration statement (the “Registration Statement”)
with the Securities and Exchange Commission (the “Commission”)
registering the Securities or the Exchange Notes (as defined in the
Registration Rights Agreement) under the Act.

 

Concurrently with the purchase and sale of
the Securities, the Company is entering into a senior secured revolving credit
facility in an aggregate committed amount of $125 million (the “Senior
Credit Facility”).  The Senior
Credit Facility will be guaranteed on a senior basis by each of the Guarantors
and will be secured by a lien on certain of the assets of the Company and
certain of the Subsidiaries.  The Senior
Credit Facility will be governed by an agreement dated as of the Closing Date
by among the Company, the Guarantors, the lenders party thereto and Bank of
America, N.A., as administrative agent (together with the related documents
thereto, including, without limitation, any guarantee agreements and security
documents, the “Senior Credit Agreement”).

 

Section 2.                                            Representations
and Warranties. The Company represents and warrants to and agrees with the
Initial Purchasers with respect to itself and jointly with each Subsidiary
Guarantor with respect to such Subsidiary Guarantor and each of the Subsidiary
Guarantors represents and warrants to, severally with respect to itself, and
agrees with the Initial Purchasers as follows:

 

(a)                                  Neither the
Preliminary Memorandum as of the date thereof nor the Final Memorandum nor any
amendment or supplement thereto as of the date thereof and at all times
subsequent thereto up to the Closing Date (as defined in Section 3 below)
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this Section 2(a) do
not apply to (i) statements or omissions made in reliance upon and in conformity
with information relating to the Initial Purchasers furnished to the Company in
writing by the Initial Purchasers expressly for use in the Final Memorandum and
(ii) statements or omissions made in the Preliminary Memorandum that are
subsequently corrected in the Final Memorandum or any amendment or supplement
thereto.

 

(b)                                 Each document, if any,
filed or to be filed pursuant to the Exchange Act and incorporated by reference
in either the Preliminary Memorandum or the Final Memorandum (or any amendment
or supplement thereto) complied or will comply

 

2

 

when so filed in all material respects with
the Exchange Act and the applicable rules and regulations thereunder.

 

(c)                                  As of the date of
this Agreement, the Company has an authorized and outstanding capitalization as
set forth in the section of the Final Memorandum entitled “Capitalization”
(subject to the issuance of shares of Common Stock upon exercise of stock
options and warrants disclosed as outstanding in the Final Memorandum and the
grant of options under existing stock option plans described in the Final
Memorandum).  All of the issued and
outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable, have been issued in
compliance with all federal and state securities laws and were not issued in
violation of any preemptive right, resale right, right of first refusal or similar
right.

 

(d)                                 The Company has been
duly organized and is validly existing as a corporation in good standing under
the laws of the State of Maryland, with full corporate power and authority to
acquire, own, lease and operate its properties, and to lease the same to
others, and to conduct its business as described in the Final Memorandum, to
execute and deliver this Agreement and to issue, sell and deliver the Notes as
contemplated herein.  The Company is in
compliance in all respects with the laws, orders, rules, regulations and directives
issued or administered by such jurisdictions, except where the failure to be in
compliance would not, individually or in the aggregate, either (i) have a material
adverse effect on the business, properties, financial condition, results of
operation or prospects of the Company and the Subsidiaries (as hereinafter
defined) taken as a whole or (ii) prevent consummation of the transactions
contemplated hereby (the occurrence of such effect or such prevention described
in the foregoing clauses (i) and (ii) being herein referred to as a “Material
Adverse Effect”).

 

(e)                                  The Company is duly
qualified to do business as a foreign entity and is in good standing in each
jurisdiction where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure to be so
qualified and in good standing would not, individually or in the aggregate,
have a Material Adverse Effect.

 

(f)                                    The Company has no
subsidiaries (as defined under the Act) other than those listed in Schedule 2 annexed hereto (collectively,
the “Subsidiaries”).  On the
Closing Date, each Subsidiary will issue its guarantee of the Notes; the
Company owns, directly or indirectly, all of the issued and outstanding capital
stock of each of the Subsidiaries; other than the capital stock of the Subsidiaries,
the Company does not own, directly or indirectly, any shares of stock or any
other equity or long-term debt securities of any corporation or have any equity
interest in any firm, partnership, joint venture, association or other
entity.  Complete and correct copies of
the articles of incorporation and the bylaws of the Company and all amendments
thereto have

 

3

 

been delivered to you, and no changes therein
or to the articles of incorporation and the bylaws of the Subsidiaries will be
made on or after the date hereof or on or before the Closing Date.  Each Subsidiary has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with full corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Final Memorandum.  Each
Subsidiary is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified and in good standing would not,
individually or in the aggregate, have a Material Adverse Effect.  Each Subsidiary is in compliance in all
respects with the laws, orders, rules, regulations and directives issued or
administered by such jurisdictions, except where the failure to be in
compliance would not, individually or in the aggregate, have a Material Adverse
Effect.  All of the outstanding shares
of capital stock of each of the Subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable and are owned by the Company
subject to no security interest, other material encumbrance or adverse claims
other than security interests, as disclosed in the Final Memorandum, granted
under the Company’s current senior credit facility.  No options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any obligation into
shares of capital stock or ownership interests in the Subsidiaries are
outstanding.  The Company has no
“significant subsidiary,” as that term is defined in Rule 1-02(w) of Regulation
S-X under the Act, other than those listed in Exhibit 21 to the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2003.

 

(g)                                 The Company has all
requisite corporate power and authority to execute, deliver and perform each of
its obligations under the Notes, the Exchange Notes (as defined in the
Registration Rights Agreement) and the Private Exchange Notes (as defined in
the Registration Rights Agreement).  The
Notes, when issued, will be in the form contemplated by the Indenture.  The Notes, the Exchange Notes and the
Private Exchange Notes have each been duly and validly authorized by the
Company and, when executed by the Company and authenticated by the Trustee in
accordance with the provisions of the Indenture and, in the case of the Notes,
when delivered to and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, will constitute valid and legally binding obligations
of the Company, in each case entitled to the benefits of the Indenture, and
enforceable against the Company in accordance with their terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors’ rights generally and
(ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought.

 

4

 

(h)                                 Each of the Subsidiary
Guarantors has all requisite power and authority to execute, deliver and
perform each of its obligations under the Guarantees and the guarantees of the
Exchange Notes and the Private Exchange Notes. 
The Guarantees, and the guarantees of the Exchange Notes, when issued,
will be in the form contemplated by the Indenture.  The Guarantees have been duly and validly authorized by each of
the Subsidiary Guarantors and, when the Guarantees are executed by each of the
Subsidiary Guarantors and the Notes are authenticated by the Trustee in
accordance with the provisions of the Indenture, will have been duly executed,
issued and delivered and will constitute valid and legally binding obligations
of the Subsidiary Guarantors, and the guarantees of the Exchange Notes and the
Private Exchange Notes, if any, have been duly and validly authorized by each
of the Subsidiary Guarantors and, when the guarantees of the Exchange Notes and
the Private Exchange Notes, if any, are executed by each of the Subsidiary
Guarantors and the Exchange Notes and the Private Exchange Notes, if any, are
authenticated by the Trustee in accordance with the provisions of the Indenture
and issued in exchange for the guarantees of the Notes in accordance with the
Indenture, will constitute valid and binding obligations of such Subsidiary
Guarantor, in each case entitled to the benefits of the Indenture and enforceable
against such Subsidiary Guarantor in accordance with their terms, subject to
(i) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors’ rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought.

 

(i)                                     The Company and
each of the Subsidiary Guarantors has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Indenture.  The Indenture meets the
requirements for qualification under the Trust Indenture Act of 1939, as
amended (the “TIA”).  The
Indenture has been duly and validly authorized by the Company and each of the
Subsidiary Guarantors and, when executed and delivered by the Company and each
of the Subsidiary Guarantors (assuming the due authorization, execution and
delivery by the Trustee), will constitute a valid and legally binding agreement
of the Company and each of the Subsidiary Guarantors, enforceable against the
Company and each of the Subsidiary Guarantors in accordance with its terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors’ rights generally and
(ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought.

 

(j)                                     The Company and
each of the Subsidiary Guarantors has all requisite corporate power and
authority to execute, deliver and perform its obligations under the Registration
Rights Agreement.  The Registration
Rights Agreement has been duly and validly authorized by the Company and each
of the Subsidiary Guarantors and, when executed and delivered by the Company
and each of the Subsidiary Guarantors

 

5

 

(assuming the due authorization, execution
and delivery by the Initial Purchasers), will constitute a valid and legally
binding agreement of the Company enforceable against the Company and each of
the Subsidiary Guarantors in accordance with its terms, except that
(A) the enforcement thereof may be subject to (i) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors’ rights generally and
(ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought and (B) any rights to
indemnity or contribution thereunder may be limited by federal and state
securities laws and public policy considerations.

 

(k)                                  The Company and each
of the Subsidiary Guarantors has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.  This Agreement and the consummation by the Company and each of
the Subsidiary Guarantors of the transactions contemplated hereby have been
duly authorized by the Company and each of the Subsidiary Guarantors.  This Agreement has been duly and validly
executed and delivered by the Company and each of the Subsidiary Guarantors.

 

(l)                                     Neither the
Company nor any of the Subsidiaries is in breach or violation of or in default
under (nor has any event occurred which with notice, lapse of time or both
would result in any breach or violation of, constitute a default under or give
the holder of any indebtedness (or a person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a part of
such indebtedness under) its (i) respective charter or bylaws, (ii) any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
evidence of indebtedness, or any license, lease, contract or other agreement or
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound or
affected or (iii) any federal, state, local or foreign law, regulation or rule,
including, without limitation, the rules and regulations of the New York Stock
Exchange (the “NYSE”), or any decree, judgment or order applicable to
the Company or any of the Subsidiaries or any of their respective properties,
except in the case of clauses (ii) and (iii) above, for such breaches,
violations or defaults as would not, individually or in the aggregate, have a
Material Adverse Effect.  The execution,
delivery and performance of this Agreement, the issuance and sale of the
Securities and the consummation of the transactions contemplated hereby (A)
will neither conflict with, result in any breach or violation of or constitute
a default under (nor constitute any event which with notice, lapse of time or
both would result in any breach or violation of or constitute a default under
or give the holder of any indebtedness (or a person acting on such holder’s
behalf) the right to require the repurchase, redemption or repayment of all or
a part of such indebtedness under) (1) the charter or bylaws of the Company or
any of the Subsidiaries, (2) any indenture, mortgage, deed of trust, bank loan
or credit agreement or other evidence of indebtedness, or any license, lease,
contract

 

6

 

or other agreement or instrument to which the
Company or any of the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound or affected, or (3) any federal, state
or local law, regulation or rule, including the rules and regulations of the
NYSE or any decree, judgment or order applicable to the Company or any of the
Subsidiaries, except in the case of clause (2) above, for such breaches,
violations or defaults as would not, individually or in the aggregate, have a
Material Adverse Effect, nor (B) result in the creation or imposition of any
lien, charge, claim or encumbrance upon any of the properties (real and
personal (including, without limitation, mortgage loans and unsecured loans)) described
in the Final Memorandum as being owned or leased by the Company or any of the
Subsidiaries (the “Properties”).

 

(m)                               No approval,
authorization, consent or order of or filing with any federal, state, local or
foreign governmental or regulatory commission, board, body, authority or
agency, or of or with the NYSE, or approval of the stockholders of the Company,
is required in connection with the issuance and sale of the Securities or the
consummation by the Company or any of the Subsidiary Guarantors of the
transactions contemplated hereby other than which has been effected and any
necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Securities are being offered by the Initial
Purchasers.

 

(n)                                 Except as expressly
set forth in the Final Memorandum, (i) no person has the right,
contractual or otherwise, to cause the Company to issue or sell to it any
shares of common stock of the Company or shares of any other capital stock or
other equity interests of the Company and (ii) no person has any
preemptive rights, resale rights, rights of first refusal or other rights to
purchase any shares of common stock of the Company or shares of any other
capital stock of or other equity interests in the Company and (iii) no
person has the right to act as an initial purchaser or as a financial advisor
to the Company in connection with the offer and sale of the Securities, whether
as a result of the sale of the Securities as contemplated thereby or otherwise.

 

(o)                                 Each of the Company
and the Subsidiaries (and, to the Company’s knowledge, each operator, lessee or
sublessee of any Property or portion thereof) (i) has all necessary licenses,
authorizations, consents and approvals, (ii) has made all necessary filings
required under any federal, state, local or foreign law, regulation or rule,
and (iii) has obtained all necessary licenses, authorizations, consents and
approvals from other persons, in order to acquire and own, lease or sublease,
lease to others and conduct its respective business as described in the Final
Memorandum, except in the case of clauses (i), (ii) and (iii) above, where the
failure to have such items, make such filings or obtain such items would not,
individually or in the aggregate, have a Material Adverse Effect.  Neither the Company nor any of the
Subsidiaries (nor, to the knowledge of the Company or any of the Subsidiary
Guarantors, any such operator, lessee or sublessee) is in violation of, or in
default under, or has received notice of any

 

7

 

proceedings relating to revocation or
modification of, any such license, authorization, consent or approval or any
federal, state, local or foreign law, regulation or rule or any decree, order
or judgment applicable to the Company or any of the Subsidiaries, except where
such violation, default, revocation or modification would not, individually or
in the aggregate, have a Material Adverse Effect.

 

(p)                                 All legal or
governmental proceedings, affiliate transactions, off-balance sheet
transactions (including, without limitation, transactions related to, and the
existence of, “variable interest entities” within the meaning of Financial
Accounting Standards Board Interpretation No. 46), contracts, licenses, agreements,
leases or documents of a character required to be described in a Registration
Statement on Form S-3 filed by the Company or to be filed as an exhibit to such
a Registration Statement or any Incorporated Document have been so described or
filed as required.

 

(q)                                 There are no actions,
suits, claims, investigations or proceedings pending or, to the knowledge of
the Company or any of the Subsidiary Guarantors, threatened or contemplated to
which the Company or any of the Subsidiaries or any of their respective
directors or officers (or, to the Company’s knowledge, any person from whom the
Company or any Subsidiary acquired any of the Properties (each, a “seller”),
or any lessee, sublessee or operator of any Property or any portion thereof) is
or would be a party, or of which any of the respective properties or assets of
the Company and the Subsidiaries, or any Property, is or would be subject at
law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or agency, except
any such action, suit, claim, investigation or proceeding which would not
result in a judgment, decree or order having, individually or in the aggregate,
a Material Adverse Effect.

 

(r)                                    Ernst & Young
LLP, whose report on the consolidated financial statements of the Company and
the Subsidiaries is incorporated by reference in the Final Memorandum, are
independent public accountants as required by the Act and by Rule 3600T of the
Public Company Accounting Oversight Board.

 

(s)                                  The financial
statements of the Company and the Subsidiaries included or incorporated by
reference in the Final Memorandum, together with the related notes, present
fairly the consolidated financial position of the Company and the Subsidiaries
as of the dates indicated and the consolidated results of operations and cash
flows of the Company and the Subsidiaries for the periods specified and have
been prepared in compliance with the requirements of the Act and the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and in conformity
with generally accepted accounting principles applied on a consistent basis
during the periods involved.   Any pro
forma financial statements or data included or incorporated by reference in the
Final Memorandum comply with the requirements of Regulation S-X of the Act and
the pro forma adjustments have been properly applied to the historical amounts
in

 

8

 

the compilation of those statements and
data.  The other financial and
statistical data set forth or incorporated by reference in the Final Memorandum
are accurately presented in all material respects and prepared on a basis
consistent with the financial statements and books and records of the
Company.  There are no financial
statements (historical or pro forma) that are required to be included or
incorporated by reference in the Final Memorandum (including, without
limitation, as required by Rules 3-12 or 3-05 or Article 11 of Regulation S-X
under the Act) that are not included as required.  The Company and the Subsidiaries do not have any material
liabilities or obligations, direct or contingent (including any off-balance
sheet obligations or any “variable interest entities” within the meaning of
Financial Accounting Standards Board Interpretation No. 46), not disclosed
in the Final Memorandum.  Other than
with respect to the financial data under the caption “Selected Pro Forma
Financial Data” in the section of the Final Memorandum captioned “Summary-Summary
Historical Financial Data,” all disclosures included in the Final Memorandum
regarding “non-GAAP financial measures” (as such term is defined by the rules
and regulations of the Commission) comply in all material respects with
Regulation G of the Exchange Act and Item 10 of Regulation S-K under the
Act, to the extent applicable (as if such provisions were applicable to the
Final Memorandum).

 

(t)                                    Subsequent to the
respective dates as of which information is given in the Final Memorandum,
there has not been (i) any material adverse change, or any development which could have a reasonable
possibility of giving rise to a prospective material adverse change, in
the business, properties, management, financial condition or results of operations
of the Company and the Subsidiaries taken as a whole, (ii) any transaction
which is material to the Company and the Subsidiaries taken as a whole, (iii)
any obligation, direct or contingent (including any off-balance sheet
obligations), incurred by the Company or any Subsidiary, which is material to
the Company and the Subsidiaries taken as a whole, (iv) any change in the
capital stock (except as the result of the exercise of rights by directors and
employees under the Company’s stock incentive plans described in the Final Memorandum)
or outstanding indebtedness of the Company or any Subsidiary (except up to
$500,000 in the aggregate of indebtedness incurred in the ordinary course of
business) or (v) any dividend or distribution of any kind declared, paid or
made on the capital stock of the Company or any Subsidiary.

 

(u)                                 Neither the Company
nor any Subsidiary is and, after giving effect to the offering and sale of the
Securities, neither of them will be an “investment company” or an entity
“controlled” by an “investment company,” as such terms are defined in the
Investment Company Act of 1940, as amended (the “Investment Company Act”).

 

(v)                                 None of the Company,
the Subsidiaries or any agent acting on their behalf, other than the Initial
Purchasers, has taken or will take any action that might cause this Agreement
or the sale of the Notes to violate Regulation T, U or X of the

 

9

 

Board of Governors of the Federal Reserve System,
in each case as in effect, or as the same may hereafter be in effect, on the
Closing Date.

 

(w)                               The Company, and each of
the Subsidiaries, has insurable title, and, in the case of real property, in
fee simple, to the Properties, free and clear of all liens, claims, mortgages,
deeds of trust, restrictions, security interests and other encumbrances or
defects (“Property Encumbrances”), except for (x) the leasehold
interests of lessees in the Properties of the Company and the Subsidiaries held
under lease (the “Leases”) and (y) any other Property Encumbrances that
would not, individually or in the aggregate, have a Material Adverse
Effect.  All Property Encumbrances on or
affecting the Properties which are required to be disclosed in the Final
Memorandum are disclosed therein as required.

 

(x)                                   Each of the Leases pertaining
to the Properties has been duly authorized by the Company or a Subsidiary, as
applicable, and is a valid, subsisting and enforceable agreement of the Company
or such Subsidiary, as applicable, and, to the knowledge of the Company, each
other party thereto, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting creditors’ rights generally or general equitable
principles.

 

(y)                                 No person other than
the Company or a Subsidiary has an option or right of first refusal to purchase
all or part of any Property owned by the Company or any interest therein, and
to the Company’s knowledge no such right exists with respect to any Property
that the Company leases (as lessee), except for such options or rights of first
refusal which, if refused, will not individually or in the aggregate have a
Material Adverse Effect.

 

(z)                                   To the knowledge of
the Company or any of the Subsidiary Guarantors, except as disclosed in the
Final Memorandum, no lessee of any portion of any of the Properties is in
default under its respective lease, and there is no event which, with notice,
lapse of time or both, would constitute a default under any such lease, except
such defaults that would not, individually or in the aggregate, have a Material
Adverse Effect.

 

(aa)                            To the knowledge of the
Company or any of the Subsidiary Guarantors, except as disclosed in the Final
Memorandum, no borrower of a mortgage loan from the Company is in default under
its respective mortgage loan, and there is no event which, with notice, lapse
of time or both, would constitute a default under any such mortgage loan,
except such defaults that would not, individually or in the aggregate, have a Material
Adverse Effect.

 

(bb)                          The Company and the
Subsidiaries own, or have obtained valid and enforceable licenses for, or other
rights to use, the inventions, patent applications, patents,

 

10

 

trademarks (both registered and
unregistered), trade names, service names, copyrights, trade secrets and other
proprietary information described in the Final Memorandum as being owned or
licensed by them or which are necessary for the conduct of their respective
businesses, except where the failure to own, license or have such rights would
not, individually or in the aggregate, have a Material Adverse Effect.

 

(cc)                            Neither the Company nor any
of the Subsidiaries is engaged in any unfair labor practice, except as would
not, individually or in the aggregate, have a Material Adverse Effect.  There has been no violation of any federal,
state or local law relating to discrimination in the hiring, promotion or pay
of employees, any applicable wage or hour laws or any provision of the Employee
Retirement Income Security Act of 1974 (“ERISA”) or the rules and
regulations promulgated thereunder concerning the employees of the Company or
any of the Subsidiaries, except as would not, individually or in the aggregate,
have a Material Adverse Effect.

 

(dd)                          The Company and the
Subsidiaries and their properties, assets and operations (and, to the knowledge
of the Company or any of the Subsidiary Guarantors, each operator or lessee of
any Property or portion thereof) are in compliance with, and hold all permits,
authorizations and approvals required under, Environmental Laws (as defined below),
except to the extent that failure to so comply or to hold such permits,
authorizations or approvals would not, individually or in the aggregate, have a
Material Adverse Effect.  There are no
past, present or, to the knowledge of the Company or any of the Subsidiary
Guarantors, reasonably anticipated future events, conditions, circumstances,
activities, practices, actions, omissions or plans that could reasonably be
expected to give rise to any material costs or liabilities to the Company or
any Subsidiary under, or to interfere with or prevent compliance by the Company
or any Subsidiary with, Environmental Laws, except as would not, individually
or in the aggregate, have a Material Adverse Effect.  Except as would not, individually or in the aggregate, have a
Material Adverse Effect, neither the Company nor any of the Subsidiaries, nor,
to the knowledge of the Company or any of the Subsidiary Guarantors, any seller,
lessee, sublessee or operator of any Property or portion thereof or any
previous owner thereof, (i) is the subject of any investigation, (ii) has
received any notice or claim, (iii) is a party to or affected by any pending or
threatened action, suit or proceeding, (iv) is bound by any judgment, decree or
order or (v) has entered into any agreement, in each case relating to any
alleged violation of any Environmental Law or any actual or alleged release or
threatened release or cleanup at any location of any Hazardous Materials (as
defined below).  Neither the Company nor
any of the Subsidiaries, nor, to the knowledge of the Company or any of the
Subsidiary Guarantors, any seller, lessee, sublessee or operator of any
Property or portion thereof or any previous owner thereof, has received from
any governmental authority notice of any violation, concerning the Properties,
of any municipal, state or federal law, rule or regulation or of any
Environmental Law, except for such violations as have heretofore been cured and
except for such violations as would not, individually or in the aggregate,

 

11

 

have a Material Adverse Effect.  As used herein, “Environmental Law”
means any federal, state or local law, statute, ordinance, rule, regulation,
order, decree, judgment, injunction, permit, license, authorization or other
binding requirement, or common law, relating to health, safety or the
protection, cleanup or restoration of the environment or natural resources,
including those relating to the distribution, processing, generation,
treatment, storage, disposal, transportation, other handling or release or
threatened release of Hazardous Materials, and “Hazardous Materials”
means any material (including, without limitation, pollutants, contaminants,
hazardous or toxic substances or wastes) that is regulated by or may give rise
to liability under any Environmental Law.

 

(ee)                            The Company and the
Subsidiaries have (A) all licenses, certificates, permits, authorizations,
approvals, franchises and other rights from, and have made all declarations and
filings with, all applicable authorities, all self-regulatory authorities and
all courts and other tribunals (each, an “Authorization”) necessary to
engage in the business conducted by them in the manner described in the Final
Memorandum, except as would not, individually or in the aggregate, have a
Material Adverse Effect, and (B) no reason to believe that any
governmental body or agency, domestic or foreign, is considering limiting,
suspending or revoking any such Authorization, except where any such
limitations, suspensions or revocations would not, individually or in the
aggregate, have a Material Adverse Effect. 
All such Authorizations are valid and in full force and effect and the
Company and the Subsidiaries are in compliance with the terms and conditions of
all such Authorizations and with the rules and regulations of the regulatory
authorities having jurisdiction with respect to such Authorizations, except for
any invalidity, failure to be in full force and effect or noncompliance with
any Authorization that would not, individually or in the aggregate, have a
Material Adverse Effect.

 

(ff)                                Neither the Company nor
any of the Subsidiaries, nor, to the knowledge of the Company or any of the
Subsidiary Guarantors, any seller, lessee, sublessee or operator of any
Property or portion thereof, has received from any governmental authority any
written notice of any condemnation of, or zoning change affecting, the
Properties or any portion thereof, and the Company does not know of any such
condemnation or zoning change which is threatened, except for such
condemnations or zoning changes that, if consummated, would not, individually
or in the aggregate, have a Material Adverse Effect.  Each of the Properties, and the current and intended use and
occupancy thereof, complies with all applicable zoning laws, ordinances and
regulations, except where such failure does and will not, individually or in
the aggregate, have a Material Adverse Effect.

 

(gg)                          All tax returns required to
be filed by the Company or any of the Subsidiaries have been timely filed, and
all taxes and other assessments of a similar nature (whether imposed directly
or through withholding) including any interest, additions to

 

12

 

tax or penalties applicable thereto due or
claimed to be due from such entities have been timely paid, other than those
being contested in good faith and for which adequate reserves have been provide
and which would not, individually or in the aggregate, have a Material Adverse
Effect.  To the knowledge of the Company
or any of the Subsidiary Guarantors, there is no tax deficiency which has been
asserted against the Company or any Subsidiary, except any tax deficiency which
would not, individually or in the aggregate, have a Material Adverse Effect.

 

(hh)                          There is no strike, labor
dispute, slowdown or work stoppage with the employees of the Company or any of
the Subsidiaries that is pending or, to the knowledge of the Company or any of
the Subsidiary Guarantors, threatened.

 

(ii)                                  Each of the Company
and the Subsidiaries is insured by insurers of recognized financial
responsibility against such losses and risks and in such amount as the Company
reasonably deems to be adequate and as are customary in the business in which
they are engaged, except as described in the Final Memorandum.  Except as would not, individually or in the
aggregate, have a Material Adverse Effect, all policies of insurance insuring
the Company and the Subsidiaries or any of their businesses, assets, employees,
officers, directors and trustees are in full force and effect, and the Company
and the Subsidiaries are in compliance with the terms of such policies in all
material respects.  Except as would not,
individually or in the aggregate, have a Material Adverse Effect, there are no
claims by the Company or any of the Subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or defending
under a reservation of rights clause.

 

(jj)                                  Neither the Company
nor any of the Subsidiaries has sustained since the date of the last audited
financial statements included or incorporated by reference in the Final
Memorandum any loss or interference with its respective business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree, except
for such loss or interference as would not, individually or in the aggregate,
have a Material Adverse Effect.

 

(kk)                            Neither the Company nor any
Subsidiary has sent or received any communication regarding termination of, or
intent not to renew, any of the leases, contracts or agreements referred to or
described in, or filed as an exhibit to, any Incorporated Document, and no such
termination or non-renewal has been threatened by the Company or any Subsidiary
or, to the knowledge of the Company or any Subsidiary Guarantor after due
inquiry, any other party to any such contract or agreement, except for such
termination or non-renewal as would not, individually or in the aggregate, have
a Material Adverse Effect.

 

(ll)                                  The Company, and each
of the Subsidiaries, maintains a system of internal accounting controls
sufficient to provide reasonable assurance that

 

13

 

(i) transactions are executed in
accordance with management’s general or specific authorization,
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.

 

(mm)                      The Company has established and
maintains and evaluates “disclosure controls and procedures” (as such term is
defined in Rule 13a-15 and 15d-15 under the Exchange Act) and “internal control
over financial reporting” (as such term is defined in Rule 13a-15 and 15d-15
under the Exchange Act); such disclosure controls and procedures are designed
to ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to the Company’s Chief Executive
Officer and its Chief Financial Officer by others within those entities, and
such disclosure controls and procedures are effective to perform the functions
for which they were established; the Company’s auditors and the Audit Committee
of the Board of Directors of the Company have been advised of:  (i) any significant deficiencies in the
design or operation of internal controls which could adversely affect the Company’s
ability to record, process, summarize, and report financial data; and (ii) any
fraud, whether or not material, that involves management or other employees who
have a role in the Company’s internal controls.  Any material weaknesses in internal controls have been identified
for the Company’s auditors.  Since the
date of the most recent evaluation of such disclosure controls and procedures,
there have been no significant changes in internal controls or in other factors
that could significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material weaknesses; the
principal executive officers (or their equivalents) and principal financial
officers (or their equivalents) of the Company have made all certifications
required by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”)
and any related rules and regulations promulgated by the Commission, and the
statements contained in any such certification are complete and correct.  The Company and the Subsidiaries are in
compliance in all material respects with all applicable effective provisions of
the Sarbanes-Oxley Act and the rules and regulations of the Commission and the
NYSE promulgated thereunder.

 

(nn)                          This Agreement, the
Securities, the Indenture and the Registration Rights Agreement will conform in
all material respects to the descriptions thereof in the Final Memorandum.

 

(oo)                          No holder of securities of
the Company or any Subsidiary will be entitled to have such securities
registered under the registration statements required to be filed by the
Company pursuant to the Registration Rights Agreement other than as expressly
permitted thereby.

 

14

 

(pp)                          Immediately after the
consummation of the transactions contemplated by this Agreement, the fair value
and present fair saleable value of the assets of each of the Company and the
Subsidiaries (each on a consolidated basis) will exceed the sum of its stated
liabilities and identified contingent liabilities; none of the Company or the
Subsidiaries (each on a consolidated basis) is, nor will any of the Company or
the Subsidiaries (each on a consolidated basis) be, after giving effect to the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated hereby, (a) left with unreasonably small
capital with which to carry on its business as it is proposed to be conducted,
(b) unable to pay its debts (contingent or otherwise) as they mature or
(c) otherwise insolvent.

 

(qq)                          None of the Company, the
Subsidiaries or any of their respective Affiliates (as defined in
Rule 501(b) of Regulation D under the Act) has directly, or through any
agent, (i) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of any “security” (as defined in the Act) that is or
could be integrated with the sale of the Notes in a manner that would require
the registration under the Act of the Notes or (ii) engaged in any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the Securities
or in any manner involving a public offering within the meaning of
Section 4(2) of the Act.  Assuming
the accuracy of the representations and warranties of the Initial Purchasers in
Section 8 hereof, it is not necessary in connection with the offer, sale
and delivery of the Securities to the Initial Purchasers in the manner
contemplated by this Agreement to register any of the Notes under the Act or to
qualify the Indenture under the TIA.

 

(rr)                                No securities of the
Company or any Subsidiary are of the same class (within the meaning of
Rule 144A under the Act) as the Securities and listed on a national securities
exchange registered under Section 6 of the Exchange Act, or quoted in a
U.S. automated inter-dealer quotation system.

 

(ss)                            None of the Company, the
Subsidiaries, any of their respective Affiliates or any person acting on its or
their behalf (other than the Initial Purchasers) has engaged in any directed
selling efforts (as that term is defined in Regulation S under the Act (“Regulation S”))
with respect to the Securities.  The
Company, the Subsidiaries and their respective Affiliates and any person acting
on its or their behalf (other than the Initial Purchasers) have complied with
the offering restrictions requirement of Regulation S.

 

(tt)                                The Company has
provided you true, correct and complete copies of all documentation pertaining
to any extension of credit in the form of a personal loan made, directly or
indirectly, by the Company or any Subsidiary to any director or executive
officer of the Company, or to any family member or affiliate of any director or
executive officer of the Company.  On or
after July 30, 2002, the Company has not,

 

15

 

directly or indirectly, including through any
Subsidiary:  (i) extended credit,
arranged to extend credit, or renewed any extension of credit, in the form of a
personal loan, to or for any director or executive officer of the Company, or
to or for any family member or affiliate of any director or executive officer
of the Company; or (ii) made any material modification, including any renewal
thereof, to any term of any personal loan to any director or executive officer
of the Company, or any family member or affiliate of any director or executive
officer, which loan was outstanding on July 30, 2002.

 

(uu)                          All statistical or
market-related data included or incorporated by reference in the Final
Memorandum are based on or derived from sources that the Company believes to be
reliable and accurate in all material respects, and the Company has obtained
the written consent to the use of such data from such sources to the extent required.

 

(vv)                          Neither the Company nor any
of the Subsidiaries nor, to the knowledge of the Company and each of the
Subsidiary Guarantors, any employee or agent of the Company or any Subsidiary
has made any payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation, which payment,
receipt or retention of funds is of a character required to be disclosed in the
Final Memorandum or any document incorporated by reference therein.

 

(ww)                      Except pursuant to this
Agreement, neither the Company nor any of the Subsidiaries has incurred any
liability for any finder’s or broker’s fee or agent’s commission in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby or by the Final Memorandum.

 

(xx)                              From and including the
Company’s taxable year ended 1992, the Company has continuously met, currently
meets, and as of the time of purchase or additional time of purchase, as the
case may be, will meet, the requirements for, and its proposed methods of
operations as described in the Final Memorandum will permit the Company to
continue to meet the requirements for, qualification and taxation as a real
estate investment trust (“REIT”) under the Internal Revenue Code of 1986
(the “Code”).  All statements in
the Final Memorandum regarding the Company’s qualification as a REIT are true,
complete and correct in all material respects.

 

(yy)                          Neither the Company nor any
of the Subsidiaries nor any of their respective directors, officers, affiliates
or controlling persons has taken, directly or indirectly, any action designed,
or which has constituted or might reasonably be expected to cause or result in,
under the Exchange Act or otherwise, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities.

 

(zz)                              Any
certificate signed by any officer of the Company or any Subsidiary Guarantor
and delivered to any Initial Purchaser or to counsel for the Initial Purchasers
shall

 

16

 

be deemed a
joint and several representation and warranty by the Company and each of the
Subsidiary Guarantors to each Initial Purchaser as to the matters covered
thereby.

 

Section 3.                                            Purchase,
Sale and Delivery of the Notes.  On
the basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, the Company
and the Subsidiary Guarantors agree to issue and sell to the Initial
Purchasers, and the Initial Purchasers, acting severally and not jointly, agree
to purchase the Securities in the respective amounts set forth on Schedule 1
hereto from the Company and the Subsidiary Guarantors at 97.55% of their principal
amount.  One or more certificates in
definitive form for the Securities that the Initial Purchasers have agreed to
purchase hereunder, and in such denomination or denominations and registered in
such name or names as the Initial Purchasers request upon notice to the Company
of at least 48 hours prior to the Closing Date, shall be delivered by or on
behalf of the Company and the Subsidiary Guarantors to the Initial Purchasers,
against payment by or on behalf of the Initial Purchasers of the purchase price
therefor by wire transfer (same day funds), to such account or accounts as the
Company shall specify in writing prior to the Closing Date, or by such means as
the parties hereto shall agree prior to the Closing Date.  Such delivery of and payment for the
Securities shall be made at the offices of Cahill Gordon & Reindel llp, 80 Pine
Street, New York, New York at 10:00 A.M., New York time, on March 22,
2004, or at such other place, time or date as the Initial Purchasers, on the
one hand, and the Company, on the other hand, may agree upon, such time and
date of delivery against payment being herein referred to as the “Closing
Date.”  The Company and the
Subsidiary Guarantors will make such certificate or certificates for the
Securities available for checking and packaging by the Initial Purchasers at
the offices of Deutsche Bank Securities Inc. in New York, New York, or at such
other place as Deutsche Bank Securities Inc. may designate, at least 24 hours
prior to the Closing Date.

 

Section 4.                                            Offering
by the Initial Purchasers.  The
Initial Purchasers propose to make an offering of the Securities at the price
and upon the terms set forth in the Final Memorandum as soon as practicable
after this Agreement is entered into and as in the judgment of the Initial Purchasers
is advisable.

 

Section 5.                                            Covenants
of the Company.  Each of the Company
and the Subsidiary Guarantors, as the case may be, jointly and severally,
covenants and agrees with the Initial Purchasers as follows:

 

(a)                                  The Company will not
amend or supplement the Final Memorandum or any amendment or supplement thereto
of which the Initial Purchasers shall not previously have been advised and
furnished a copy for a reasonable period of time prior to the proposed
amendment or supplement and as to which the Initial Purchasers shall not have
given their consent (which consent shall not be unreasonably withheld).  The Company will promptly, upon the
reasonable request of the Initial Purchasers or counsel for the Initial
Purchasers, make any amendments or supplements to the Preliminary

 

17

 

Memorandum or the Final Memorandum that may
be necessary or advisable in connection with the resale of the Securities by
the Initial Purchasers.

 

(b)                                 The Company and each
of the Subsidiary Guarantors will cooperate with the Initial Purchasers, to
arrange for the qualification of the Securities for offering and sale under the
securities or “Blue Sky” laws of which jurisdictions as the Initial Purchasers
may designate and will continue such qualifications in effect for as long as
may be necessary to complete the resale of the Securities; provided, however,
that in connection therewith, neither the Company nor any Subsidiary Guarantor
shall be required to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction or subject itself to taxation
in excess of a nominal dollar amount in any such jurisdiction where it is not
then so subject.

 

(c)                                  If, at any time prior
to the completion of the distribution by the Initial Purchasers of the
Securities or the Private Exchange Notes, any event occurs or information
becomes known as a result of which the Final Memorandum as then amended or
supplemented would include any untrue statement of a material fact, or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if for any
other reason it is necessary at any time to amend or supplement the Final Memorandum
to comply with applicable law, the Company will promptly notify the Initial
Purchasers thereof and will prepare, at the expense of the Company, an
amendment or supplement to the Final Memorandum that corrects such statement or
omission or effects such compliance.

 

(d)                                 The Company will,
without charge, provide to the Initial Purchasers and to counsel for the
Initial Purchasers as many copies of the Preliminary Memorandum and the Final
Memorandum or any amendment or supplement thereto as the Initial Purchasers may
reasonably request.

 

(e)                                  The Company will
apply the net proceeds from the sale of the Notes as set forth under “Use of
Proceeds” in the Final Memorandum.

 

(f)                                    For so long as any
of the Securities remain outstanding, the Company will furnish to the Initial
Purchasers copies of all reports and other communications (financial or otherwise)
furnished by the Company to the Trustee or to the holders of the Securities
and, as soon as available, copies of any reports or financial statements
furnished to or filed by the Company with the Commission or any national
securities exchange on which any class of securities of the Company may be
listed; provided that the foregoing obligation will not apply to any reports or
other communication made available on the SEC’s EDGAR database.

 

(g)                                 Prior to the Closing
Date, the Company will furnish to the Initial Purchasers, as soon as they have
been prepared, a copy of any unaudited interim consolidated financial
statements of the Company and the Subsidiaries for any period subsequent

 

18

 

to the period covered by the most recent
financial statements appearing in the Final Memorandum.

 

(h)                                 None of the Company,
the Subsidiary Guarantors or any of their Affiliates will sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any “security”
(as defined in the Act) that could be integrated with the sale of the
Securities in a manner which would require the registration under the Act of
the Securities.

 

(i)                                     The Company and
the Subsidiary Guarantors will not, and will not permit any of the other
Subsidiaries to, engage in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) in
connection with the offering of the Securities or in any manner involving a
public offering within the meaning of Section 4(2) of the Act.

 

(j)                                     For so long as any
of the Securities remain outstanding, the Company will make available at its
expense, upon request, to any holder of such Securities and any prospective
purchasers thereof the information specified in Rule 144A(d)(4) under the
Act, unless the Company is then subject to Section 13 or 15(d) of the
Exchange Act.

 

(k)                                  The Company will use
its best efforts to (i) permit the Securities to be designated as
PORTAL-eligible securities in accordance with the rules and regulations adopted
by the National Association of Securities Dealers, Inc. (“NASD”)
relating to trading in the NASD’s Portal Market (the “Portal Market”)
and (ii) permit the Securities to be eligible for clearance and settlement
through The Depository Trust Company.

 

(l)                                     In connection with
Securities offered and sold in an off shore transaction (as defined in
Regulation S) the Company will not register any transfer of such Notes not made
in accordance with the provisions of Regulation S and will not, except in
accordance with the provisions of Regulation S, if applicable, issue any such
Notes in the form of definitive securities.

 

(m)                               None of the Company, the
Subsidiary Guarantors or any of their Affiliates will engage in any directed
selling efforts (as that term is defined in Regulation S) with respect to the
Securities.

 

(n)                                 For a period of two
years (calculated in accordance with paragraph (d) of Rule 144 under
the Act) following the date of original issuance of the Securities none of the
Company, the Subsidiary Guarantors or any of their respective Affiliates will
re-sell any such Securities which are restricted securities (as such term is
defined under Rule 144(a)(3) under the Act).

 

19

 

Section 6.                                            Expenses.  The Company and the Subsidiary Guarantors,
jointly and severally, agree to pay all costs and expenses incident to the
performance of their obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to (i) the printing, word processing or other production of
documents with respect to the transactions contemplated hereby, including any
costs of printing the Preliminary Memorandum and the Final Memorandum and any
amendment or supplement thereto, and any “Blue Sky” memoranda, (ii) all
arrangements relating to the delivery to the Initial Purchasers of copies of
the foregoing documents, (iii) the fees and disbursements of the counsel,
the accountants and any other experts or advisors retained by the Company,
(iv) preparation (including printing), issuance and delivery to the
Initial Purchasers of the Securities, (v) the qualification of the
Securities under state securities and “Blue Sky” laws, including filing fees
and fees and disbursements of counsel for the Initial Purchasers relating
thereto, (vi) expenses in connection with the “roadshow” and any other
meetings with prospective investors in the Securities, (vii) fees and
expenses of the Trustee, including fees and expenses of counsel,
(viii) all expenses and listing fees incurred in connection with the application
for quotation of the Securities on the PORTAL Market and (ix) any fees
charged by investment rating agencies for the rating of the Securities.  If the sale of the Securities provided for
herein is not consummated because any condition to the obligations of the Initial
Purchasers set forth in Section 7 hereof is not satisfied, because this
Agreement is terminated or because of any failure, refusal or inability on the
part of the Company or the Subsidiary Guarantors to perform all obligations and
satisfy all conditions on their part to be performed or satisfied hereunder
(other than solely by reason of a default by the Initial Purchasers of their
obligations hereunder after all conditions hereunder have been satisfied in
accordance herewith), the Company and the Subsidiary Guarantors agree to
promptly reimburse the Initial Purchasers upon demand for all reasonable and
documented out-of-pocket expenses (including the fees, disbursements and
charges of Cahill Gordon & Reindel llp, counsel for the Initial Purchasers), that
shall have been incurred by the Initial Purchasers in connection with the
proposed purchase and sale of the Securities.

 

Section 7.                                            Conditions
of the Initial Purchasers’ Obligations. 
The obligation of the Initial Purchasers to purchase and pay for the
Securities shall, in their sole discretion, be subject to the satisfaction or
waiver of the following conditions on or prior to the Closing Date:

 

(a)                                  On the Closing Date,
the Initial Purchasers shall have received the opinions, dated as of the
Closing Date and addressed to the Initial Purchasers, of (i) Powell, Goldstein,
Frazer & Murphy LLP, counsel for the Company and certain of the Subsidiary
Guarantors, in form and substance satisfactory to counsel for the Initial
Purchasers, as set forth in Exhibit B-1 and Exhibit B-2
hereto and (ii) local counsel for certain of the Subsidiary Guarantors, in
form and substance satisfactory to counsel for the Initial Purchasers, as set
forth in Exhibit C hereto. 
Such counsel may also state that, insofar as such opinion involves
factual matters, they have relied, to the extent

 

20

 

they deem proper, upon certificates of
officers of the Company and the Subsidiary Guarantors and certificates of
public officials, copies of which shall have been provided to the Initial Purchasers.

 

(b)                                 On the Closing Date,
the Initial Purchasers shall have received the opinion, in form and substance
satisfactory to the Initial Purchasers, dated as of the Closing Date and
addressed to the Initial Purchasers, of Cahill Gordon & Reindel llp, counsel for the Initial
Purchasers, with respect to certain legal matters relating to this Agreement
and such other related matters as the Initial Purchasers may reasonably
require.  Such counsel may also state
that, insofar as such opinion involves factual matters, they have relied, to
the extent they deem proper, upon certificates of officers of the Company and
the Subsidiary Guarantors and certificates of public officials, copies of which
shall have been provided to the Initial Purchasers.

 

(c)                                  The Initial
Purchasers shall have received from the Independent Accountants a comfort
letter or letters dated the date hereof and the Closing Date, in form and substance
satisfactory to counsel for the Initial Purchasers.

 

(d)                                 The representations
and warranties of the Company and the Subsidiary Guarantors contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date; the statements of
the Company’s and the Subsidiary Guarantors’ officers made pursuant to any
certificate delivered in accordance with the provisions hereof shall be true
and correct on and as of the date made and on and as of the Closing Date; the
Company and the Subsidiary Guarantors shall have performed all covenants and
agreements and satisfied all conditions on their part to be performed or
satisfied hereunder at or prior to the Closing Date; and, except as described
in the Final Memorandum (exclusive of any amendment or supplement thereto after
the date hereof), subsequent to the date of the most recent financial
statements in such Final Memorandum, there shall have been no event or
development, and no information shall have become known, that, individually or
in the aggregate, has or would be reasonably likely to have a Material Adverse
Effect.

 

(e)                                  The sale of the
Securities hereunder shall not be enjoined (temporarily or permanently) on the
Closing Date.

 

(f)                                    Subsequent to the
date of the most recent financial statements in the Final Memorandum (exclusive
of any amendment or supplement thereto after the date hereof), none of the
Company or any of the Subsidiaries shall have sustained any loss or
interference with respect to its business or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any strike, labor dispute, slow down or work stoppage or from any legal or
governmental proceeding, order or decree, which loss or interference,
individually or in the aggregate, has or would be reasonably likely to have a
Material Adverse Effect.

 

21

 

(g)                                 The Initial Purchasers
shall have received certificates of the Company and each of the Subsidiary
Guarantors, dated the Closing Date, signed on behalf of the Company or the
applicable Subsidiary Guarantor by its Chairman of the Board, President or any
Vice President and the Chief Financial Officer, to the effect that

 

(i)                  the
representations and warranties of the Company or the applicable Subsidiary
Guarantor contained in this Agreement are true and correct on and as of the
date hereof and on and as of the Closing Date, and the Company or the
applicable Subsidiary Guarantor has performed all covenants and agreements and
satisfied all conditions on its part to be performed or satisfied hereunder at
or prior to the Closing Date;

 

(ii)               at
the Closing Date, since the date hereof or since the date of the most recent
financial statements in the Final Memorandum (exclusive of any amendment or
supplement thereto after the date hereof), no event or development has occurred,
and no information has become known to the Company or such Subsidiary
Guarantor, that, individually or in the aggregate, has or would be reasonably
likely to have a Material Adverse Effect; and

 

(iii)            the
sale of the Securities hereunder has not been enjoined (temporarily or
permanently).

 

(h)                                 On the Closing Date,
the Initial Purchasers shall have received the Registration Rights Agreement
executed by the Company and the Subsidiary Guarantors and such agreement shall
be in full force and effect.

 

(i)                                     On the Closing
Date, the Initial Purchasers shall have received the Indenture executed by the
Company, each of the Subsidiary Guarantors and the Trustee and such agreement
shall be in full force and effect.

 

(j)                                     On the Closing
Date, the Company and the Subsidiary Guarantors shall have delivered to the
Initial Purchasers a fully executed copy of the Senior Credit Agreement, in
form and substance satisfactory to counsel for the Initial Purchasers, and such
agreement shall be in full force and effect.

 

(k)                                  The Securities shall
be eligible for clearance and settlement through The Depository Trust Company.

 

(l)                                     The Securities
shall be designated PORTAL-eligible securities in accordance with the rules and
regulations of the NASD.

 

On or before the Closing Date, the Initial
Purchasers and counsel for the Initial Purchasers shall have received such
further documents, opinions, certificates, letters and schedules or instruments
relating to the business, corporate, legal and financial affairs of the

 

22

 

Company and the Subsidiaries as they shall
have heretofore reasonably requested from the Company.

 

All such documents, opinions, certificates,
letters, schedules or instruments delivered pursuant to this Agreement will
comply with the provisions hereof only if they are reasonably satisfactory in
all material respects to the Initial Purchasers and counsel for the Initial
Purchasers.  The Company and the
Subsidiary Guarantors shall furnish to the Initial Purchasers such conformed
copies of such documents, opinions, certificates, letters, schedules and
instruments in such quantities as the Initial Purchasers shall reasonably
request.

 

Section 8.                                            Offering
of Securities; Restrictions on Transfer. 
(a)  Each of the Initial Purchasers agrees with the Company
and the Subsidiary Guarantors that (i) it has not and will not solicit
offers for, or offer or sell, the Securities by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Act; and (ii) it has and will solicit offers
for the Securities only from, and will offer the Securities only to,
(A) in the case of offers inside the United States, persons whom the
Initial Purchasers reasonably believe to be QIBs or, if any such person is
buying for one or more institutional accounts for which such person is acting
as fiduciary or agent, only when such person has represented to the Initial
Purchasers that each such account is a QIB, to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A, and, in each
case, in transactions under Rule 144A and (B) in the case of offers
outside the United States, to persons other than U.S. persons (“non-U.S.
purchasers,” which term shall include dealers or other professional
fiduciaries in the United States acting on a discretionary basis for non-U.S.
beneficial owners (other than an estate or trust)); provided, however,
that, in the case of this clause (B), in purchasing such Securities such
persons are deemed to have represented and agreed as provided under the caption
“Notice to Investors” contained in the Final Memorandum (or, if the Final
Memorandum is not in existence, in the most recent Memorandum).

 

(b)                                 Each
of the Initial Purchasers represents and warrants (as to itself only) with
respect to offers and sales outside the United States that (i) it has and
will comply with all applicable laws and regulations in each jurisdiction in
which it acquires, offers, sells or delivers Notes or has in its possession or
distributes any Memorandum or any such other material, in all cases at its own
expense, (ii) the Notes have not been and will not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except in accordance with Regulation S under the Act or pursuant to an
exemption from the registration requirements of the Act and (iii) it has offered
the Notes and will offer and sell the Notes (A) as part of its
distribution at any time and (B) otherwise until 40 days after the later
of the commencement of the offering and the Closing Date, only in accordance
with Rule 903 of Regulation S and, accordingly, neither it nor any persons
acting on its behalf have engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the Notes, and any
such persons have complied and will comply with the offering restrictions
requirement of Regulation S.

 

23

 

Terms used in this Section 8 and not
defined in this Agreement have the meanings given to them in Regulation S.

 

Section 9.                                            Indemnification
and Contribution. 
(a)  The Company and the Subsidiary Guarantors, jointly and
severally, agree to indemnify and hold harmless each Initial Purchaser and each
person, if any, who controls any Initial Purchaser within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any
losses, claims, damages or liabilities to which any Initial Purchaser or such
controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as any such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon the following:

 

(i)                  any
untrue statement or alleged untrue statement made by the Company or any
Subsidiary Guarantor in Section 2 hereof;

 

(ii)               any
untrue statement or alleged untrue statement of any material fact contained in
any Memorandum or any amendment or supplement thereto; or

 

(iii)            the
omission or alleged omission to state, in any Memorandum or any amendment or
supplement thereto, a material fact required to be stated therein or necessary
to make the statements therein not misleading;

 

and will reimburse, as incurred, the Initial
Purchasers and each such controlling person for any reasonable legal or other
documented expenses incurred by the Initial Purchasers or such controlling
person in connection with investigating, defending against or appearing as a
third-party witness in connection with any such loss, claim, damage, liability
or action; provided,
however,
the Company and the Subsidiary Guarantors 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 any untrue statement or alleged untrue statement or omission or
alleged omission made in any Memorandum or any amendment or supplement thereto
in reliance upon and in conformity with written information concerning the
Initial Purchasers furnished to the Company by the Initial Purchasers through
Deutsche Bank Securities Inc. specifically for use therein; provided
further, however, that the Company and the
Subsidiary Guarantors will not be liable to any Initial Purchaser or any person
controlling such Initial Purchaser with respect to any such untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Memorandum that is corrected in the Final Memorandum (or any amendment or supplement
thereto) if the person asserting any such loss, claim, damage or liability
purchased Securities from such Initial Purchaser but was not sent or given a
copy of the Final Memorandum (as amended or supplemented) in any case where
such delivery of the Final Memorandum (as amended or supplemented) was required
by the Act, unless such failure to deliver the Final Memorandum (as amended or
supplemented) was a result of noncompliance by the Company with Section 5
hereof.  The indemnity provided for in
this Section 9 will be in addition to any liability that the Company and
the Subsidiary Guarantors may otherwise have to the indemnified parties.  The Company and the Subsidiary Guarantors
shall not be liable under

 

24

 

this Section 9 for any settlement of any
claim or action effected without their prior written consent, which shall not
be unreasonably withheld.

 

(b)                                 Each
Initial Purchaser, severally and not jointly, agrees to indemnify and hold
harmless the Company and the Subsidiary Guarantors, their respective directors,
their respective officers and each person, if any, who controls the Company and
the Subsidiary Guarantors within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act against any losses, claims, damages or
liabilities to which the Company and the Subsidiary Guarantors or any such
director, officer or controlling person may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in any Memorandum or any amendment or supplement thereto, or
(ii) the omission or the alleged omission to state therein a material fact
required to be stated in any Memorandum or any amendment or supplement thereto,
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 concerning such Initial Purchaser,
furnished to the Company by the Initial Purchasers through Deutsche Bank Securities
Inc. specifically for use therein; and subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any reasonable
legal or other documented expenses incurred by the Company and the Subsidiary
Guarantors or any such director, officer or controlling person in connection
with investigating or defending against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action in respect
thereof.  The indemnity provided for in
this Section 9 will be in addition to any liability that the Initial
Purchasers may otherwise have to the indemnified parties.  The Initial Purchasers shall not be liable
under this Section 9 for any settlement of any claim or action effected
without their consent, which shall not be unreasonably withheld.

 

(c)                                  Promptly
after receipt by an indemnified party under this Section 9 of notice of
the commencement of any action for which such indemnified party is entitled to
indemnification under this Section 9, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
this Section 9, notify the indemnifying party of the commencement thereof
in writing; but the omission to so notify the indemnifying party (i) will
not relieve it from any liability under paragraph (a) or (b) above unless
and to the extent such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraphs (a) and
(b) above.  In case any such action is
brought against any indemnified party and it notifies the 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 reasonably satisfactory to such indemnified party; provided, however,
that if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of

 

25

 

interest, (ii) the defendants in any
such action include both the indemnified party and the indemnifying party and
the indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it and/or other indemnified parties that
are different from or additional to those available to the indemnifying party
or (iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after receipt by the indemnifying party of notice of the
institution of such action, then, in each such case, the indemnifying party
shall not have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties.  After
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not be liable to
such indemnified party under this Section 9 for any legal or other
expenses, other than reasonable costs of investigation, subsequently incurred
by such indemnified party in connection with the defense thereof, unless
(i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in addition
to local counsel) in any one action or separate but substantially similar
actions in the same jurisdiction arising out of the same general allegations or
circumstances, designated by the Initial Purchasers in the case of
paragraph (a) of this Section 9 or the Company and the Subsidiary
Guarantors in the case of paragraph (b) of this Section 9,
representing the indemnified parties under such paragraph (a) or
paragraph (b), as the case may be, who are parties to such action or
actions) or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party.  All fees and
expenses reimbursed pursuant to this paragraph (c) shall be reimbursed as
they are incurred.  After such notice
from the indemnifying party to such indemnified party, the indemnifying party
will not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the prior written consent of the
indemnifying party (which consent shall not be unreasonably withheld), unless
such indemnified party waived in writing its rights under this Section 9,
in which case the indemnified party may effect such a settlement without such
consent.  No indemnifying party shall,
without the prior written consent of the indemnified party, effect any settlement
or compromise of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party, or indemnity could have been
sought hereunder by any indemnified party, unless such settlement
(A) includes an unconditional written release of the indemnified party, in
form and substance reasonably satisfactory to the indemnified party, from all
liability on claims that are the subject matter of such proceeding and
(B) does not include any statement as to an admission of fault,
culpability or failure to act by or on behalf of any indemnified party.

 

(d)                                 In
circumstances in which the indemnity agreement provided for in the preceding
paragraphs of this Section 9 is unavailable to, or insufficient to hold
harmless, an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect

 

26

 

thereof) referred to herein, each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or
(ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but also the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions
or alleged statements or omissions that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof).  The relative benefits received by the
Company and the Subsidiary Guarantors on the one hand and any Initial Purchaser
on the other shall be deemed to be in the same proportion as the total proceeds
from the offering (before deducting expenses) received by the Company bear to
the total discounts and commissions received by such Initial Purchaser.  The relative fault of the parties 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 and the
Subsidiary Guarantors on the one hand, or such Initial Purchaser on the other,
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission or alleged statement or
omission, and any other equitable considerations appropriate in the
circumstances.  The Company, the
Subsidiary Guarantors and the Initial Purchasers agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the first sentence of this
paragraph (d).  Notwithstanding any
other provision of this paragraph (d), no Initial Purchaser shall be
obligated to make contributions hereunder that in the aggregate exceed the
total discounts, commissions and other compensation received by such Initial
Purchaser under this Agreement, less the aggregate amount of any damages that
such Initial Purchaser has otherwise been required to pay by reason of the
untrue or alleged untrue statements or the omissions or alleged omissions to
state a material fact, and 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.  For purposes of this
paragraph (d), each person, if any, who controls an Initial Purchaser
within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Initial
Purchasers, and each director of the Company and the Subsidiary Guarantors,
each officer of the Company and the Subsidiary Guarantors and each person, if
any, who controls the Company and the Subsidiary Guarantors within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Company.

 

Section 10.                                      Survival
Clause.  The respective representations,
warranties, agreements, covenants, indemnities and other statements of the
Company and the Subsidiary Guarantors, their officers and the Initial
Purchasers set forth in this Agreement or made by or on behalf of them pursuant
to this Agreement shall remain in full force and effect, regardless

 

27

 

of (i) any investigation made by or on
behalf of the Company and the Subsidiary Guarantors, any of their officers or
directors, the Initial Purchasers or any controlling person referred to in
Section 9 hereof and (ii) delivery of and payment for the
Securities.  The respective agreements,
covenants, indemnities and other statements set forth in Sections 6, 9, 10
and 15 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.

 

Section 11.                                      Termination.  (a) 
This Agreement may be terminated in the sole discretion of the Initial
Purchasers by notice to the Company and the Subsidiary Guarantors given prior
to the Closing Date in the event that the Company and the Subsidiary Guarantors
shall have failed, refused or been unable to perform all obligations and
satisfy all conditions on their part to be performed or satisfied hereunder at
or prior thereto or, if at or prior to the Closing Date:

 

(i)                                     any
of the Company or the Subsidiaries shall have sustained any loss or
interference with respect to its businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any strike, labor dispute, slow down or work stoppage or any legal or
governmental proceeding, which loss or interference, in the sole judgment of
the Initial Purchasers, has had or has a Material Adverse Effect, or there
shall have been, in the sole judgment of the Initial Purchasers, any event or
development that, individually or in the aggregate, has or could be reasonably
likely to have a Material Adverse Effect (including without limitation a change
in control of the Company or the Subsidiaries), except as described in the
Final Memorandum (exclusive of any amendment or supplement thereto);

 

(ii)                                  trading
in securities of the Company generally on the NYSE, American Stock Exchange or
the NASDAQ National Market shall have been suspended or materially limited or
minimum or maximum prices shall have been established on any such exchange or
market;

 

(iii)                               a
banking moratorium shall have been declared by New York or United States
authorities or a material disruption in commercial banking or securities
settlement or clearance services in the United States;

 

(iv)                              there
shall have been (A) an outbreak or escalation of hostilities between the
United States and any foreign power, (B) an outbreak or escalation of any
other insurrection or armed conflict involving the United States or any other
national or international calamity or emergency or (C) any material change
in the financial markets of the United States which, in the case of (A), (B) or
(C) above and in the sole judgment of the Initial Purchasers, makes it
impracticable or inadvisable to proceed with the offering or the delivery of
the Securities as contemplated by the Final Memorandum; or

 

28

 

(v)                                 any
securities of the Company shall have been downgraded by any nationally
recognized statistical rating organization or any such organization shall have
publicly announced that it has under surveillance or review, or has changed its
outlook with respect to, its ratings of any securities of the Company (other
than an announcement with positive implications of a possible upgrading).

 

(b)                                 Termination of this
Agreement pursuant to this Section 11 shall be without liability of any
party to any other party except as provided in Section 10 hereof.

 

Section 12.                                      Information
Supplied by the Initial Purchasers. 
The statements set forth in the last paragraph on the front cover page
and in the first and third sentences of the third paragraph and the third
sentence of the fifth paragraph under the heading “Private Placement” in the
Final Memorandum (to the extent such statements relate to the Initial
Purchasers) constitute the only information furnished by the Initial Purchasers
to the Company for the purposes of Sections 2(a) and 9 hereof.

 

Section 13.                                      Notices.  All communications hereunder shall be in
writing and, if sent to the Initial Purchasers, shall be mailed or delivered to
(i) Deutsche Bank Securities Inc., 60 Wall Street, New York, New York
10005, Attention:  Corporate Finance Department;
if sent to the Company, shall be mailed or delivered to the Company at 9690
Deereco Road, Suite 100, Timonium, Maryland 21093,
Attention:  Robert O. Stephenson; with a copy to Powell, Goldstein,
Frazer & Murphy LLP, Sixteenth Floor, 191 Peachtree Street, N.E., Atlanta,
Georgia 30303, Attention:  Richard H. Miller.

 

All such notices and communications shall be
deemed to have been duly given:  when
delivered by hand, if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; and one business day after
being timely delivered to a next-day air courier.

 

Section 14.                                      Successors.  This Agreement shall inure to the benefit of
and be binding upon the Initial Purchasers, the Company, the Subsidiary
Guarantors and their respective successors and legal representatives, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provisions herein
contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person except that (i) the indemnities of the
Company and the Subsidiary Guarantors contained in Section 9 of this Agreement
shall also be for the benefit of any person or persons who control the Initial
Purchasers within the meaning of Section 15 of the Act or Section 20
of the Exchange Act and (ii) the indemnities of the Initial Purchasers
contained in Section 9 of this Agreement shall also be for the benefit of
the directors of the Company and the Subsidiary Guarantors, their officers and
any person or persons who control the Company and the Subsidiary Guarantors
within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act.  No purchaser

 

29

 

of Securities from the Initial Purchasers
will be deemed a successor because of such purchase.

 

Section 15.                                      APPLICABLE
LAW.  THE VALIDITY AND
INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN,
WITHOUT GIVING EFFECT TO ANY PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.

 

Section 16.                                      Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

30

 

If the foregoing correctly sets forth our
understanding, please indicate your acceptance thereof in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement between the Company, the Subsidiary Guarantors and the Initial
Purchasers.

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OMEGA
  HEALTHCARE INVESTORS, INC.,

  
	
   

  	
  as Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert O. Stephenson

  	
   

  
	
   

  	
   

  	
  Name: Robert O. Stephenson

  
	
   

  	
   

  	
  Title:
    Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BAYSIDE ALABAMA
  HEALTHCARE

  SECOND, INC.

  
	
   

  	
  BAYSIDE ARIZONA
  HEALTHCARE

  ASSOCIATES, INC.

  
	
   

  	
  BAYSIDE ARIZONA
  HEALTHCARE

  SECOND, INC.

  
	
   

  	
  BAYSIDE COLORADO
  HEALTHCARE

  ASSOCIATES, INC.

  
	
   

  	
  BAYSIDE COLORADO
  HEALTHCARE

  SECOND, INC.

  
	
   

  	
  OHI
  (CONNECTICUT), INC.

  
	
   

  	
  BAYSIDE STREET
  II, INC.

  
	
   

  	
  OHI ASSET (CA),
  LLC

  
	
   

  	
  OHI ASSET (FL) TARPON
  SPRINGS,

  PINELLAS PARK & GAINESVILLE, LLC

  
	
   

  	
  OHI ASSET (FL),
  LLC

  
	
   

  	
  OHI ASSET (ID),
  LLC

  
	
   

  	
  OHI ASSET (IN),
  LLC

  
	
   

  	
  OHI ASSET (LA),
  LLC

  
	
   

  	
  as Subsidiary Guarantors

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Robert O. Stephenson

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert O. Stephenson

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer and

  Treasurer

  
					

 

 

	
   

  	
  OHI ASSET
  (MI/NC), LLC

  
	
   

  	
  OHI ASSET (MO),
  LLC

  
	
   

  	
  OHI ASSET (OH),
  LLC

  
	
   

  	
  OHI ASSET (TX),
  LLC

  
	
   

  	
  OHI ASSET II
  (CA), LLC

  
	
   

  	
  OHI ASSET, LLC

  
	
   

  	
  OMEGA
  ACQUISITION FACILITY I, LLC

  
	
   

  	
  OHI (FLORIDA),
  INC.

  
	
   

  	
  OHI SUNSHINE,
  INC.

  
	
   

  	
  LONG TERM CARE
  ASSOCIATES –

  ILLINOIS, INC.

  
	
   

  	
  OHI (ILLINOIS),
  INC.

  
	
   

  	
  SKILLED NURSING
  - HERRIN, INC.

  
	
   

  	
  SKILLED NURSING
  - PARIS, INC.

  
	
   

  	
  BAYSIDE INDIANA
  HEALTHCARE

  ASSOCIATES, INC.

  
	
   

  	
  LONG TERM CARE
  ASSOCIATES –

  INDIANA, INC.

  
	
   

  	
  OHI (INDIANA),
  INC.

  
	
   

  	
  SKILLED NURSING
  - GASTON, INC.

  
	
   

  	
  OHI (IOWA), INC.

  
	
   

  	
  OHI (KANSAS),
  INC.

  
	
   

  	
  OMEGA (KANSAS),
  INC.

  
	
   

  	
  NRS VENTURES,
  LLC

  
	
   

  	
  OS LEASING
  COMPANY

  
	
   

  	
  STERLING
  ACQUISITION CORP.

  
	
   

  	
  STERLING
  ACQUISITION CORP. II

  
	
   

  	
  ARIZONA LESSOR -
  INFINIA, INC.

  
	
   

  	
  BAYSIDE STREET,
  INC.

  
	
   

  	
  COLORADO LESSOR
  - CONIFER, INC.

  
	
   

  	
  DELTA INVESTORS
  I, LLC

  
	
   

  	
  DELTA INVESTORS
  II, LLC

  
	
   

  	
  FLORIDA LESSOR -
  CRYSTAL SPRINGS,

  INC.

  
	
   

  	
  as Subsidiary
  Guarantors

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert O. Stephenson

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert O. Stephenson

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer and

  Treasurer

  
					

 

 

	
   

  	
  FLORIDA LESSOR -
  EMERALD, INC.

  
	
   

  	
  FLORIDA LESSOR -
  FIVE FACILITIES, INC.

  
	
   

  	
  FLORIDA LESSOR -
  LAKELAND, INC.

  
	
   

  	
  FLORIDA LESSOR -
  MEADOWVIEW, INC.

  
	
   

  	
  FLORIDA LESSOR -
  WEST PALM BEACH

  AND SOUTHPOINT, INC.

  
	
   

  	
  GEORGIA LESSOR -

  BONTERRA/PARKVIEW, INC.

  
	
   

  	
  INDIANA LESSOR -
  JEFFERSONVILLE,

  INC.

  
	
   

  	
  INDIANA LESSOR -
  WELLINGTON

  MANOR, INC.

  
	
   

  	
  JEFFERSON CLARK,
  INC.

  
	
   

  	
  OHI LESSOR
  WATERFORD &

  CRESTWOOD, INC.

  
	
   

  	
  OHI OF KENTUCKY,
  INC.

  
	
   

  	
  OHI OF TEXAS,
  INC.

  
	
   

  	
  OMEGA TRS I,
  INC.

  
	
   

  	
  TEXAS LESSOR -
  STONEGATE GP, INC.

  
	
   

  	
  TEXAS LESSOR -
  STONEGATE LIMITED,

  INC.

  
	
   

  	
  TEXAS LESSOR -
  STONEGATE, L.P.

  
	
   

  	
  TEXAS LESSOR -
  TREEMONT, INC.

  
	
   

  	
  WASHINGTON
  LESSOR - SILVERDALE,

  INC.

  
	
   

  	
  OHIMA, INC.

  
	
   

  	
  LONG TERM CARE –
  MICHIGAN, INC.

  
	
   

  	
  LONG TERM CARE –
  NORTH CAROLINA,

  INC.

  
	
   

  	
  OHI (CLEMMONS),
  INC.

  
	
   

  	
  OHI
  (GREENSBORO), INC.

  
	
   

  	
  SKILLED NURSING
  - HICKSVILLE, INC.

  
	
   

  	
  CENTER
  HEALTHCARE ASSOCIATES, INC.

  
	
   

  	
  CHERRY STREET -
  SKILLED NURSING,

  INC.

  
	
   

  	
  as Subsidiary
  Guarantors

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert O. Stephenson

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert O. Stephenson

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer and

  Treasurer

  
					

 

 

	
   

  	
  DALLAS SKILLED
  NURSING, INC.

  
	
   

  	
  HERITAGE
  TEXARKANA HEALTHCARE

  ASSOCIATES, INC.

  
	
   

  	
  LAKE PARK
  SKILLED NURSING, INC.

  
	
   

  	
  LONG TERM CARE
  ASSOCIATES - TEXAS,

  INC.

  
	
   

  	
  PARKVIEW -
  SKILLED NURSING, INC.

  
	
   

  	
  PINE TEXARKANA
  HEALTHCARE

  ASSOCIATES, INC.

  
	
   

  	
  REUNION
  TEXARKANA HEALTHCARE

  ASSOCIATES, INC.

  
	
   

  	
  SAN AUGUSTINE
  HEALTHCARE

  ASSOCIATES, INC.

  
	
   

  	
  SOUTH ATHENS
  HEALTHCARE

  ASSOCIATES, INC.

  
	
   

  	
  WAXAHACHIE
  HEALTHCARE

  ASSOCIATES, INC.

  
	
   

  	
  WEST ATHENS
  HEALTHCARE

  ASSOCIATES, INC.

  
	
   

  	
  CARE HOLDINGS,
  INC.

  
	
   

  	
  as Subsidiary
  Guarantors

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert O. Stephenson

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert O. Stephenson

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer and

  Treasurer

  
					

 

 

The foregoing Agreement is hereby confirmed

and accepted as of the date first above written.

 

	
  DEUTSCHE BANK SECURITIES INC.

  
	
   

  	
   

  
	
  By:

  	
    /s/

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  
	
   

  
	
  By:

  	
    /s/

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  
	
   

  
	
  UBS SECURITIES LLC

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Michael F. Newcomb II

  	
   

  
	
   

  	
  Name: Michael F. Newcomb II

  
	
   

  	
  Title: Executive Director, High Yield
  Capital Markets

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John C. Duggan

  	
   

  
	
   

  	
  Name: John C. Duggan

  
	
   

  	
  Title: Executive Director, High Yield
  Capital Markets

  
	
   

  
	
   

  
	
  BANC OF AMERICA SECURITIES LLC

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Bruce
  Thompson

  	
   

  
	
   

  	
  Name: Bruce
  Thompson

  
	
   

  	
  Title: Managing Director

  

 

 

SCHEDULE 1

 

	
  Initial Purchasers

  	
   

  	
  Principal Amount of Notes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Deutsche Bank Securities Inc.

  	
   

  	
  $

  	
  80,000,000

  	
   

  
	
  UBS Securities LLC.

  	
   

  	
  $

  	
  80,000,000

  	
   

  
	
  Banc of America Securities LLC

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  Total

  	
   

  	
  $

  	
  200,000,000

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}]]