EXHIBIT 1.1
4,500,000
AMERICAN RETIREMENT CORPORATION
COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
January 20, 2005
▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
INTRODUCTORY. American Retirement Corporation, a Tennessee corporation
(the "COMPANY"), proposes to issue and sell to Jefferies & Company, Inc.
("Jefferies" or the "UNDERWRITER") an aggregate of 4,500,000 shares (the "FIRM
SHARES") of its common stock, par value $.01 per share, and associated rights to
purchase Series A Junior Preferred Stock (the "SHARES"). In addition, the
Company has granted to the Underwriter an option to purchase up to an additional
675,000 Shares (the "OPTIONAL SHARES"), as provided in Section 2. The Firm
Shares and, if and to the extent such option is exercised, the Optional Shares
are collectively called the "OFFERED SHARES." For purposes of this Agreement,
Jefferies is the sole Underwriter and references to "Underwriter" and
"Representative" herein refer to Jefferies as sole Underwriter.
The Company has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") a registration statement on Form S-3 (File No.
333-116410), which contains a form of prospectus to be used in connection with
the public offering and sale of the Offered Shares. Such registration statement,
as amended, including the financial statements, exhibits and schedules thereto,
in the form in which it was declared effective by the Commission under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the "SECURITIES ACT"), including all documents
incorporated or deemed to be incorporated by reference therein and any
information deemed to be a part thereof at the time of effectiveness pursuant to
Rule 430A under the Securities Act or the Securities Exchange Act of 1934 and
the rules and regulations promulgated thereunder (collectively, the "EXCHANGE
ACT"), is called the "REGISTRATION STATEMENT." Such prospectus, including any
final prospectus supplement, in the form first used by the Underwriter to
confirm sales of the Offered Shares, is called the "PROSPECTUS." All references
in this Agreement to (i) the Registration Statement, a preliminary prospectus,
the Prospectus, or any amendments or supplements to any of the foregoing, shall
include any copy thereof filed with the Commission pursuant to its Electronic
Data Gathering, Analysis, and Retrieval system ("▇▇▇▇▇"). All references in this
Agreement to financial statements and schedules and other information that are
"CONTAINED," "INCLUDED" or
"STATED" in the Registration Statement or the Prospectus (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information that is or is deemed to
be incorporated by reference in the Registration Statement or the Prospectus, as
the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement or the Prospectus shall be deemed to
mean and include the filing of any document under the Exchange Act that is or is
deemed to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be.
The Company hereby confirms its agreements with the Underwriter as
follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents, warrants and covenants to the
Underwriter as follows:
(a) Compliance with Registration Requirements. The Registration
Statement has been declared effective by the Commission under the Securities
Act. The Company has complied with all requests of the Commission for additional
or supplemental information. No stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for such purpose have
been instituted or are pending or, to the best knowledge of the Company, are
contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed complied in
all material respects with the Securities Act and, if filed by electronic
transmission pursuant to ▇▇▇▇▇ (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriter for use in connection with the offer and sale of the Offered Shares.
Each of the Registration Statement and any post-effective amendment thereto, at
the time it became effective and at all subsequent times, complied and will
comply in all material respects with the Securities Act and did not and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Prospectus, as amended or supplemented, as of its date and at
all subsequent times, did not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The representations and warranties set forth in the two
immediately preceding sentences do not apply to statements in or omissions from
the Registration Statement or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, made in reliance upon and
in conformity with information relating to the Underwriter furnished to the
Company in writing by the Representative expressly for use therein, it being
understood and agreed that the only such information furnished by the
Representative to the Company consists of the information described in Section
8(b) below. There are no contracts or other documents required to be described
in the Prospectus or to be filed as exhibits to the Registration Statement that
have not been described or filed as required.
(b) Offering Materials Furnished to Underwriter. The Company has
delivered to the Representative one complete manually signed copy of the
Registration Statement and of each consent and certificate of experts filed as a
part thereof, and conformed copies of the Registration Statement (without
exhibits) and preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representative has
reasonably requested for the Underwriter.
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(c) Distribution of Offering Material By the Company. The Company has
not distributed and will not distribute, prior to the later of (i) the
expiration or termination of the option granted to the Underwriter in Section 2
and (ii) the completion of the Underwriter's distribution of the Offered Shares,
any offering material in connection with the offering and sale of the Offered
Shares other than a preliminary prospectus, the Prospectus or the Registration
Statement.
(d) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
the Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
(e) Authorization of the Offered Shares. The Offered Shares to be
purchased by the Underwriter from the Company have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(f) No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights as have been
duly waived.
(g) No Material Adverse Change. Except as otherwise disclosed in the
Prospectus, subsequent to the respective dates as of which information is given
in the Prospectus: (i) there has been no material adverse change, or any
development that could reasonably be expected to result in a material adverse
change, in the condition, financial or otherwise, or in the earnings, business,
operations or prospects, whether or not arising from transactions in the
ordinary course of business, of the Company and its subsidiaries, considered as
one entity (any such change is called a "MATERIAL ADVERSE CHANGE"); (ii) the
Company and its subsidiaries, considered as one entity, have not incurred any
material liability or obligation (including any off-balance sheet obligation),
indirect, direct or contingent, not in the ordinary course of business nor
entered into any material transaction or agreement not in the ordinary course of
business; and (iii) there has been no dividend or distribution of any kind
declared, paid or made by the Company or, except for dividends paid to the
Company or other subsidiaries, any of its subsidiaries on any class of capital
stock or repurchase or redemption by the Company or any of its subsidiaries of
any class of capital stock.
(h) Independent Accountants. KPMG LLP, who have expressed their opinion
with respect to the financial statements (which term as used in this Agreement
includes the related notes thereto) and supporting schedules filed with the
Commission as a part of the Registration Statement and included in the
Prospectus, are (i) independent public or certified public accountants as
required by the Securities Act and the Exchange Act, (ii) to the knowledge of
the Company, in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X and (iii) a
registered public accounting firm as defined by the Public Company Accounting
Oversight Board (the "PCAOB") whose registration has not been suspended or
revoked and who has not requested such registration to be withdrawn.
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(i) Preparation of the Financial Statements. The financial statements
filed with the Commission as a part of the Registration Statement and included
in the Prospectus present fairly the consolidated financial position of the
Company and its subsidiaries as of and at the dates indicated and the results of
their operations and cash flows for the periods specified. The supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein. Such financial statements and supporting
schedules have been prepared in conformity with generally accepted accounting
principles as applied in the United States on a consistent basis throughout the
periods involved, except as may be expressly stated in the related notes
thereto. No other financial statements or supporting schedules are required to
be included in the Registration Statement. The financial data set forth in the
Prospectus under the captions "Summary Financial Information" and
"Capitalization" fairly present the information set forth therein on a basis
consistent with that of the audited financial statements contained in the
Registration Statement. No person who is an employee of the Company or, to the
knowledge of the Company, any other person who has been suspended or barred from
being associated with a registered public accounting firm, or who has failed to
comply with any sanction pursuant to Rule 5300 promulgated by the PCAOB, has
participated in or otherwise aided the preparation of, or audited, the financial
statements, supporting schedules or other financial data filed with the
Commission as a part of the Registration Statement and included in the
Prospectus.
(j) Company's Accounting System. The Company makes and keeps accurate
books and records and maintains a system of accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles 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.
(k) Incorporation and Good Standing of the Company and its
Subsidiaries. Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation, partnership or limited
liability company, as applicable, in good standing under the laws of the
jurisdiction of its incorporation or organization and has the power and
authority (corporate or other) to own, lease and operate its properties and to
conduct its business as described in the Prospectus and, in the case of the
Company, to enter into and perform its obligations under this Agreement. Each of
the Company and each subsidiary is duly qualified as a foreign corporation,
partnership or limited liability company, as applicable, to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to be so qualified would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. All of the issued and outstanding capital stock or other equity
or ownership interest of each subsidiary has been duly authorized and validly
issued, is fully paid and nonassessable and, except as set forth in the
Prospectus and set forth on Schedule 1(k) attached hereto, is owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or adverse claim. The Company does
not own or control, directly or indirectly, any corporation, association or
other entity other than (i) the subsidiaries listed in Exhibit 21 to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2003
and (ii) such other entities omitted from Exhibit 21 which, when such omitted
entities are considered in the aggregate as a single subsidiary, would not
constitute a "significant subsidiary" within the meaning of Rule 1-02(w) of
Regulation S-X.
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(l) Capitalization and Other Capital Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Prospectus under the caption "Capitalization" (other than for subsequent
issuances, if any, pursuant to employee benefit plans described or referred to
in the Prospectus or upon exercise of outstanding options described or referred
to in the Prospectus). The Shares (including the Offered Shares) conform in all
material respects to the description thereof contained in the Prospectus. All of
the issued and outstanding Shares have been duly authorized and validly issued,
are fully paid and nonassessable and have been issued in compliance with federal
and state securities laws. None of the outstanding Shares were issued in
violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company. There are no
authorized or outstanding options, warrants, preemptive rights, rights of first
refusal or other rights to purchase, or equity or debt securities convertible
into or exchangeable or exercisable for, any capital stock of the Company or any
of its subsidiaries other than those accurately described in the Prospectus. The
description of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted thereunder, set forth in
the Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights.
(m) Stock Exchange Listing. The Shares are registered pursuant to
Section 12(b) of the Exchange Act and are listed on the New York Stock Exchange,
and the Company has taken no action designed to, or likely to have the effect
of, terminating the registration of the Shares under the Exchange Act or
delisting the Shares from the New York Stock Exchange, nor has the Company
received any notification that the Commission or the New York Stock Exchange is
contemplating terminating such registration or listing.
(n) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or is in default (or,
with the giving of notice or lapse of time, would be in default) ("DEFAULT")
under any indenture, mortgage, loan or credit agreement, note, contract,
franchise, lease or other instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or to which
any of the property or assets of the Company or any of its subsidiaries is
subject (each, an "EXISTING INSTRUMENT"), except for such Defaults as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Change. The Company's execution, delivery and performance of this
Agreement, consummation of the transactions contemplated hereby and by the
Prospectus and the issuance and sale of the Offered Securities (i) have been
duly authorized by all necessary corporate action and will not result in any
violation of the provisions of the charter or by-laws of the Company or any
subsidiary, (ii) will not conflict with or constitute a breach of, or Default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, or require the consent of any other party to, any
Existing Instrument and (iii) will not result in any violation of any law,
administrative regulation or administrative or court decree applicable to the
Company or any subsidiary, except in the case of (ii) and (iii) above, where
such conflict, breach, Default, lien, charge, encumbrance, consent or violation
would not be expected to have, individually or in the aggregate, a Material
Adverse Effect. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory
authority or agency, is required for the Company's execution, delivery and
performance of this Agreement and consummation of the transactions contemplated
hereby and by the Prospectus, except such as have been obtained or made by the
Company and are in full force and effect under the Securities Act, applicable
state securities or blue sky laws.
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(o) No Material Actions or Proceedings. Except as otherwise disclosed
in the Prospectus, there are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company's knowledge, threatened (i)
against or affecting the Company or any of its subsidiaries, (ii) which has as
the subject thereof any officer or director of, or property owned or leased by,
the Company or any of its subsidiaries or (iii) relating to environmental or
discrimination matters, where in any such case there is a reasonable possibility
that such action, suit or proceeding might be determined adversely to the
Company, such subsidiary or such officer or director, and (A) any such action,
suit or proceeding, if so determined adversely, would reasonably be expected to
result in a Material Adverse Change or adversely affect the consummation of the
transactions contemplated by this Agreement or (B) any such action, suit or
proceeding is or would be material in the context of the sale of Shares. No
material labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the best of the Company's knowledge, is threatened or
imminent.
(p) Intellectual Property Rights. The Company and its subsidiaries own
or possess sufficient trademarks, trade names, patent rights, copyrights, domain
names, licenses, approvals, trade secrets and other similar rights
(collectively, "INTELLECTUAL PROPERTY RIGHTS") reasonably necessary to conduct
their businesses as now conducted; and the expected expiration of any of such
Intellectual Property Rights would not result in a Material Adverse Change.
Neither the Company nor any of its subsidiaries has received any notice of
infringement or conflict with asserted Intellectual Property Rights of others.
The Company is not a party to or bound by any options, licenses or agreements
with respect to the Intellectual Property Rights of any other person or entity
that are required to be set forth in the Prospectus and are not described
therein. None of the technology employed by the Company has been obtained or is
being used by the Company in violation of any contractual obligation binding on
the Company or, to the Company's knowledge, any of its officers, directors or
employees or otherwise in violation of the rights of any persons.
(q) All Necessary Permits, etc. (i) The Company and each subsidiary
possess such valid and current certificates, authorizations or permits issued by
the appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct their respective businesses, except where the failure to
possess such valid and current certificates, authorizations or permits would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect and (ii) neither the Company nor any subsidiary has received, or
has any reason to believe that it will receive, any notice of proceedings
relating to the revocation or modification of, or non-compliance with, any such
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could result in a
Material Adverse Change.
(r) Title to Properties. Except as otherwise disclosed in the
Prospectus, the Company and each of its subsidiaries has good and indefeasible
title with respect to all real property and good and valid title to all
properties and other assets (other than real property) reflected as owned in the
financial statements referred to in Section 1(i) above (or elsewhere in the
Prospectus), in each case free and clear of any security interests, mortgages,
liens, encumbrances, equities, adverse claims and other defects, except such as
do not materially and adversely affect the value of such property and do not
materially interfere with the use made or proposed to be made of such property
by the Company or such subsidiary. The real property, improvements, equipment
and personal property held under lease by the Company or any subsidiary are held
under valid and enforceable leases, with such exceptions as (i) are not material
and do not materially interfere with the use made or proposed to be made of such
real property,
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improvements, equipment or personal property by the Company or such subsidiary
or (ii) would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(s) Tax Law Compliance. Except as would not reasonably be expected to
have a Material Adverse Effect, the Company and its consolidated subsidiaries
have filed all necessary federal, state and foreign income and franchise tax
returns or have properly requested extensions thereof and have paid all taxes
required to be paid by any of them and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them except as may be
being contested in good faith and by appropriate proceedings. The Company has
made adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 1(i) above in respect of all federal, state
and foreign income and franchise taxes for all periods as to which the tax
liability of the Company or any of its consolidated subsidiaries has not been
finally determined.
(t) Company Not an "Investment Company." The Company has been advised
of the rules and requirements under the Investment Company Act of 1940, as
amended (the "INVESTMENT COMPANY ACT"). The Company is not, and after receipt of
payment for the Offered Shares will not be, an "INVESTMENT COMPANY" within the
meaning of Investment Company Act and will conduct its business in a manner so
that it will not become subject to the Investment Company Act.
(u) Insurance. Each of the Company and its subsidiaries are insured by
recognized, financially sound and reputable institutions with policies in such
amounts and with such deductibles and covering such risks as are generally
deemed adequate and customary for their businesses including, but not limited
to, policies covering real and personal property owned or leased by the Company
and its subsidiaries against theft, damage, destruction, acts of vandalism and
earthquakes. The Company has no reason to believe that it or any subsidiary will
not be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now conducted and
at a cost that would not result in a Material Adverse Change.
(v) No Price Stabilization or Manipulation; Compliance with
Regulation M. The Company has not taken, directly or indirectly, any action
designed to or that might be reasonably expected to cause or result in
stabilization or manipulation of the price of the Shares or any other "REFERENCE
SECURITY" (as defined in Rule 100 of Regulation M under the 1934 Act
("REGULATION M")) whether to facilitate the sale or resale of the Offered Shares
or otherwise, and has taken no action which would directly or indirectly violate
Regulation M.
(w) Related Party Transactions. There are no business relationships or
related-party transactions involving the Company or any subsidiary or any other
person required to be described in the Prospectus that have not been described
as required.
(x) Exchange Act Compliance. The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or hereafter
are filed with the Commission, complied and will comply in all material respects
with the requirements of the Exchange Act, and, when read together with the
other information in the Prospectus, at the time the Registration Statement and
any amendments thereto become effective and at the First Closing Date and the
applicable Option Closing Date, as the case may be, will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the fact required to be stated therein or
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necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(y) No Unlawful Contributions or Other Payments. Neither the Company
nor any of its subsidiaries nor, to the best of the Company's knowledge, any
employee or agent of the Company or any subsidiary, has made any contribution or
other payment to any official of, or candidate for, any federal, state or
foreign office in violation of any law or of the character required to be
disclosed in the Prospectus.
(z) Disclosure Controls and Procedures; Deficiencies in or Changes to
Internal Control Over Financial Reporting. The Company has established and
maintains disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)), which (i) are designed to ensure that material
information relating to the Company, including its consolidated subsidiaries, is
made known to the Company's principal executive officer and its principal
financial officer by others within those entities, particularly during the
periods in which the periodic reports required under the Exchange Act are being
prepared; (ii) have been evaluated for effectiveness as of the end of the period
covered by the Company's most recent annual or quarterly report with the
Commission which precedes the date of the Prospectus; and (iii) are effective in
all material respects to perform the functions for which they were established.
Based on the most recent evaluation of its disclosure controls and procedures,
as of the date hereof, the Company is not aware of (i) any significant
deficiencies or material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect
the registrant's ability to record, process, summarize and report financial
information or (ii) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company's internal control
over financial reporting. The Company is not aware of any change in its internal
control over financial reporting that has occurred during its most recent fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.
(aa) Compliance with Environmental Laws. Except as described in the
Registration Statement and except as would not, singly or in the aggregate,
result in a Material Adverse Change, (i) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign statute,
law, rule, regulation, ordinance, code, policy or rule of common law or any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, "HAZARDOUS MATERIALS") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "ENVIRONMENTAL LAWS"), (ii) the Company and
its subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (iii) there are no pending or, to the knowledge of the Company,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (iv) to the knowledge of the Company,
there are no events or circumstances that might reasonably be expected to form
the basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against or
affecting the Company or any of its subsidiaries relating to Hazardous Materials
or any Environmental Laws.
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(bb) [Intentionally Omitted].
(cc) ERISA Compliance. The Company and its subsidiaries and any
"EMPLOYEE BENEFIT PLAN" (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or maintained by
the Company, its subsidiaries or their "ERISA AFFILIATES" (as defined below) are
in compliance in all material respects with ERISA. "ERISA AFFILIATE" means, with
respect to the Company or a subsidiary, any member of any group of organizations
described in Sections 414(b),(c),(m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder
(the "CODE") of which the Company or such subsidiary is a member. No "REPORTABLE
EVENT" (as defined under ERISA) has occurred or is reasonably expected to occur
with respect to any "EMPLOYEE BENEFIT PLAN" established or maintained by the
Company, its subsidiaries or any of their ERISA Affiliates. No "EMPLOYEE BENEFIT
PLAN" established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates, if such "EMPLOYEE BENEFIT PLAN" were terminated, would have
any "AMOUNT OF UNFUNDED BENEFIT LIABILITIES" (as defined under ERISA). Neither
the Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "EMPLOYEE BENEFIT PLAN" or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "EMPLOYEE BENEFIT PLAN"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code is
so qualified and, to the knowledge of the Company, nothing has occurred, whether
by action or failure to act, which would cause the loss of such qualification.
(dd) Brokers. Except as otherwise disclosed in the Prospectus, there is
no broker, finder or other party that is entitled to receive from the Company
any brokerage or finder's fee or other fee or commission as a result of any
transactions contemplated by this Agreement.
(ee) No Outstanding Loans or Other Extensions of Credit. Neither the
Company nor any of its subsidiaries has extended or maintained credit, arranged
for the extension of credit, or renewed any extension of credit, in the form of
a personal loan, to or for any director or executive officer (or equivalent
thereof) of the Company and/or such subsidiary except for such extensions of
credit as are (i) expressly permitted by Section 13(k) of the Exchange Act or
(ii) fully repaid, discharged, forgiven or otherwise no longer outstanding or
owing in any way on the date of this Agreement.
(ff) Compliance with Laws. The Company has not been advised, and has no
reason to believe, that it and each of its subsidiaries are not conducting
business in compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business, except where failure to be so
in compliance would not result in a Material Adverse Change.
The Company acknowledges that the Underwriter and, for purposes of the
opinions to be delivered pursuant to Section 5 hereof, counsel to the Company
and counsel to the Underwriter, will rely upon the accuracy and truthfulness of
the foregoing representations and hereby consents to such reliance.
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SECTION 2. PURCHASE, SALE AND DELIVERY OF THE OFFERED SHARES.
(a) The Firm Shares. The Company agrees to issue and sell to the
Underwriter the Firm Shares upon the terms herein set forth. On the basis of the
representations, warranties and agreements herein contained, and upon the terms
but subject to the conditions herein set forth, the Underwriter agrees to
purchase from the Company the Firm Shares. The purchase price per Firm Share to
be paid by the Underwriter to the Company shall be $9.89 per share.
(b) The First Closing Date. Delivery of certificates for the Firm
Shares to be purchased by the Underwriter and payment therefor shall be made at
the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, 1290 Avenue of the Americas, New York,
New York , 10104-0050 (or such other place as may be agreed to by the Company
and the Representative) at 9:00 a.m. New York time, on January 26, 2005 or such
other time and date not later than 1:30 p.m. New York time, on February 10, 2005
as the Representative shall designate by notice to the Company (the time and
date of such closing are called the "FIRST CLOSING DATE"). The Company hereby
acknowledges that circumstances under which the Representative may provide
notice to postpone the First Closing Date as originally scheduled include, but
are in no way limited to, any determination by the Company or the Representative
to recirculate to the public copies of an amended or supplemented Prospectus.
(c) The Optional Shares; Option Closing Date. In addition, on the basis
of the representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, the Company hereby grants
an option to the Underwriter to purchase up to an aggregate of 675,000 Optional
Shares from the Company at the purchase price per share to be paid by the
Underwriter for the Firm Shares. The option granted hereunder is for use by the
Underwriter solely in covering any over-allotments in connection with the sale
and distribution of the Firm Shares. The option granted hereunder may be
exercised at any time and from time to time in whole or in part upon notice by
the Representative to the Company, which notice may be given at any time within
30 days from the date of this Agreement. Such notice shall set forth (i) the
aggregate number of Optional Shares as to which the Underwriter is exercising
the option, (ii) the names and denominations in which the certificates for the
Optional Shares are to be registered and (iii) the time, date and place at which
such certificates will be delivered (which time and date may be simultaneous
with, but not earlier than, the First Closing Date; and in such case the term
"FIRST CLOSING Date" shall refer to the time and date of delivery of
certificates for the Firm Shares and such Optional Shares). Such time and date
of delivery, if subsequent to the First Closing Date, is called an "OPTION
CLOSING DATE" and shall be determined by the Representative and shall not be
earlier than three nor later than five full business days after delivery of such
notice of exercise. The Representative may cancel the option at any time prior
to its expiration by giving written notice of such cancellation to the Company.
(d) Public Offering of the Offered Shares. The Representative hereby
advises the Company that the Underwriter intends to offer for sale to the
public, initially on the terms set forth in the Prospectus, the Offered Shares
as soon after this Agreement has been executed as the Representative, in its
sole judgment, has determined is advisable and practicable.
(e) Payment for the Offered Shares. Payment for the Offered Shares
shall be made at the First Closing Date (and, if applicable, at each Option
Closing Date) by wire transfer of immediately available funds to the order of
the Company.
10
(f) Delivery of the Offered Shares. The Company shall deliver, or cause
to be delivered, to the Representative for the accounts of the Underwriter
certificates for the Firm Shares at the First Closing Date, against the
irrevocable release of a wire transfer of immediately available funds for the
amount of the purchase price therefor. The Company shall also deliver, or cause
to be delivered, to the Representative for the accounts of the Underwriter,
certificates for the Optional Shares the Underwriter has agreed to purchase at
the First Closing Date or an Option Closing Date, as the case may be, against
the irrevocable release of a wire transfer of immediately available funds for
the amount of the purchase price therefor. The certificates for the Offered
Shares shall be in definitive form and registered in such names and
denominations as the Representative shall have requested at least two full
business days prior to the First Closing Date (or the applicable Option Closing
Date, as the case may be) and shall be made available for inspection on the
business day preceding the First Closing Date (or the applicable Option Closing
Date, as the case may be) at a location in New York City as the Representative
may designate. Time shall be of the essence, and delivery at the time and place
specified in this Agreement is a further condition to the obligations of the
Underwriter.
(g) Delivery of Prospectus to the Underwriter. Not later than 12:00
p.m. on the second business day following the date the Offered Shares are first
released by the Underwriter for sale to the public, the Company shall deliver or
cause to be delivered, copies of the Prospectus in such quantities and at such
places as the Representative shall reasonably request.
(h) Discretionary Payment. The Company may, in its sole discretion, pay
to the Underwriter additional compensation in respect of the Offering of up to
$260,000 not later than the 35th day following the date hereof.
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY. The Company further
covenants and agrees with the Underwriter as follows:
(a) Representative's Review of Proposed Amendments and Supplements.
During the period beginning on the date hereof and ending on the later of the
First Closing Date or such date, as in the opinion of counsel for the
Underwriter, the Prospectus is no longer required by law to be delivered in
connection with sales by an Underwriter or dealer (the "PROSPECTUS DELIVERY
PERIOD"), prior to amending or supplementing the Registration Statement or the
Prospectus (including any amendment or supplement through incorporation by
reference of any report filed under the Exchange Act), the Company shall furnish
to the Representative for review a copy of each such proposed amendment or
supplement, and the Company shall not file any such proposed amendment or
supplement without the Representative's consent (which shall not be unreasonably
withheld or delayed).
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Representative in writing (i) of the receipt
of any comments of, or requests for additional or supplemental information from,
the Commission, (ii) of the time and date of any filing of any post-effective
amendment to the Registration Statement or any amendment or supplement to any
preliminary prospectus or the Prospectus relating to the offering contemplated
hereby, (iii) of the time and date that any post-effective amendment to the
Registration Statement becomes effective and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto or of any order preventing or
suspending the use of any preliminary prospectus or the Prospectus. If the
Commission shall enter any such stop order at any time, the Company will use its
reasonable best efforts to obtain the lifting of such order at the earliest
possible moment.
11
During the Prospectus Delivery Period, the Company shall promptly advise the
Representative in writing of any proceedings to remove, suspend or terminate
from listing or quotation the Shares from any securities exchange upon which it
is listed for trading or included or designated for quotation, or of the
threatening or initiation of any proceedings for any of such purposes.
Additionally, the Company agrees that, during the Prospectus Delivery Period, it
shall comply with the provisions of Rules 424(b) and 430A, as applicable, under
the Securities Act and will use its reasonable efforts to confirm that any
filings made by the Company under such Rule 424(b) were received in a timely
manner by the Commission.
(c) Amendments and Supplements to the Prospectus and Other Securities
Act Matters. If, during the Prospectus Delivery Period, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if in the opinion of the Representative or counsel for the Underwriter it is
otherwise necessary to amend or supplement the Prospectus to comply with law,
the Company agrees to promptly prepare (subject to Section 3(a) hereof), file
with the Commission and furnish at its own expense to the Underwriter and to
dealers, amendments or supplements to the Prospectus so that the statements in
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with law.
Neither the Representative's consent to, or delivery of, any such amendment or
supplement shall constitute a waiver of any of the Company's obligations under
this Section 3(c).
(d) Copies of any Amendments and Supplements to the Prospectus. The
Company agrees to furnish the Representative, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any amendments
and supplements thereto (including any documents incorporated or deemed
incorporated by reference therein) as the Representative may reasonably request.
(e) Blue Sky Compliance. The Company shall cooperate with the
Representative and counsel for the Underwriter to qualify or register the
Offered Shares for sale under (or obtain exemptions from the application of) the
state securities or blue sky laws or Canadian provincial securities laws of
those jurisdictions designated by the Representative, shall comply with such
laws and shall continue such qualifications, registrations and exemptions in
effect so long as required for the distribution of the Offered Shares. The
Company shall not be required to qualify as a foreign corporation or to take any
action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be subject to
taxation as a foreign corporation. The Company will advise the Representative
promptly of the suspension of the qualification or registration of (or any such
exemption relating to) the Offered Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain the
withdrawal thereof at the earliest possible moment.
(f) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Offered Shares sold by it in the manner described under the caption
"Use of Proceeds" in the Prospectus.
(g) Transfer Agent. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Shares.
12
(h) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representative an
earnings statement (which need not be audited) covering the twelve-month period
ending June 30, 2005 that satisfies the provisions of Section 11(a) of the
Securities Act.
(i) Periodic Reporting Obligations. During the Prospectus Delivery
Period the Company shall file, on a timely basis, with the Commission and the
New York Stock Exchange all reports and documents required to be filed under the
Exchange Act.
(j) Listing. The Company will use its best efforts to list, subject to
notice of issuance, the Offered Shares on the New York Stock Exchange and to
maintain the listing of the Shares on the New York Stock Exchange.
(k) [Intentionally Omitted].
(l) Exchange Act Compliance. During the Prospectus Delivery Period, the
Company will file all documents required to be filed with the Commission
pursuant to Section 13, 14 or 15 of the Exchange Act in the manner and within
the time periods required by the Exchange Act.
(m) Agreement Not to Offer or Sell Additional Shares. During the period
commencing on the date hereof and ending on the 90th day following the date of
the Prospectus (the "LOCK-UP PERIOD"), the Company will not, without the prior
written consent of Jefferies (which consent may be withheld at the sole
discretion of Jefferies), directly or indirectly, sell, offer, contract or grant
any option to sell, pledge, transfer or establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Exchange Act, or
otherwise dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any Shares,
options or warrants to acquire Shares or securities exchangeable or exercisable
for or convertible into Shares (other than as contemplated by this Agreement
with respect to the Offered Shares); provided, however, that the Company may
issue shares of its Shares or options to purchase its Shares, or Shares upon
exercise of options, pursuant to any stock option, stock bonus or other stock
plan or arrangement described or referred to in the Prospectus, but only if the
holders of such shares, options, or shares issued upon exercise of such options,
agree in writing not to sell, offer, dispose of or otherwise transfer any such
shares or options during such Lock-up Period without the prior written consent
of Jefferies (which consent may be withheld at the sole discretion of
Jefferies).
(n) Investment Limitation. The Company shall not invest, or otherwise
use the proceeds received by the Company from its sale of the Offered Shares in
such a manner as would require the Company or any of its subsidiaries to
register as an investment company under the Investment Company Act.
(o) No Stabilization or Manipulation; Compliance with Regulation M. The
Company will not take, directly or indirectly, any action designed to or that
might be reasonably expected to cause or result in stabilization or manipulation
of the price of the Shares or any other reference security, whether to
facilitate the sale or resale of the Offered Shares or otherwise, and the
Company will, and will use commercially reasonable efforts to cause each of its
affiliates to, comply with all applicable provisions of Regulation M in
connection with the Offered Shares. If the limitations of Rule 102 of
Regulation M ("RULE 102") do not apply with respect to the Offered Shares or any
other reference security pursuant to any exception set forth in Section (d) of
Rule 102, then promptly upon notice from the Representative (or, if later, at
the time stated in
13
the notice), the Company will, and will use commercially reasonable efforts to
cause each of its affiliates to, comply with Rule 102 as though such exception
were not available but the other provisions of Rule 102 (as interpreted by the
Commission) did apply.
(p) Existing Lock-Up Agreement. During the Lock-up Period, the Company
will enforce all existing agreements between the Company and any of its security
holders that prohibit the sale, transfer, assignment, pledge or hypothecation of
any of the Company's securities in connection with the public offering
contemplated by this Agreement.
Jefferies may, in its sole discretion, waive in writing the performance
by the Company of any one or more of the foregoing covenants or extend the time
for their performance.
SECTION 4. PAYMENT OF EXPENSES. The Company agrees to pay all costs,
fees and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the issuance and delivery of the
Offered Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Shares, (iii) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
of the Offered Shares to the Underwriter, (iv) all fees and expenses of the
Company's counsel, independent public or certified public accountants and other
advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, attorneys' fees and expenses (provided such attorneys' fees shall not
exceed $2,500) incurred by the Company or the Underwriter in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Offered Shares for offer and sale under
the state securities or blue sky laws or the provincial securities laws of
Canada, and, if requested by the Representative, preparing and printing a "BLUE
SKY SURVEY" or memorandum, and any supplements thereto, advising the Underwriter
of such qualifications, registrations and exemptions, (vii) the filing fees
incident to, and the reasonable fees and expenses of counsel for the Underwriter
in connection with, the NASD's review and approval of the Underwriter's
participation in the offering and distribution of the Offered Shares, (viii) the
fees and expenses associated with listing the Offered Shares on the New York
Stock Exchange, (ix) all other fees, costs and expenses referred to in Item 14
of Part II of the Registration Statement, (xi) the costs and expenses of the
Company relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering of the Offered Shares to
prospective investors and the Underwriter's sales forces, including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants, which consultants are engaged
with the consent of the Company in connection with the road show presentations,
travel, lodging and other expenses incurred by the officers of the Company and
any such consultants, and the cost of any aircraft chartered in connection with
the road show, and (xii) all of the fees and other expenses due and payable to
▇▇▇▇▇ & Steers Capital Advisors, LLC. Except as provided in this Section 4,
Section 6, Section 8 and Section 9 hereof, the Underwriter shall pay its own
expenses, including the fees and disbursements of its counsel.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITER. The
obligations of the Underwriter to purchase and pay for the Offered Shares as
provided herein on the First Closing Date and, with respect to the Optional
Shares, each Option Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company set forth in Section 1
hereof as of the date hereof and as of the First Closing Date as though then
14
made and, with respect to the Optional Shares, as of each Option Closing Date as
though then made, to the timely performance by the Company of its covenants and
other obligations hereunder, and to each of the following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the Representative
shall have received from KPMG LLP, independent public or certified public
accountants for the Company, (i) a letter dated the date hereof addressed to the
Underwriter, in form and substance satisfactory to the Representative,
containing statements and information of the type ordinarily included in
accountant's "comfort letters" to underwriters, delivered according to Statement
of Auditing Standards No. 72 (or any successor bulletin), with respect to the
audited and unaudited financial statements and certain financial information
contained in the Registration Statement and the Prospectus, and (ii) confirming
that they are (A) independent public or certified public accountants as required
by the Securities Act and the Exchange Act and (B) in compliance with the
applicable requirements relating to the qualification of accountants under Rule
2-01 of Regulation S-X.
(b) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD. For the period from and after effectiveness of this
Agreement and prior to the First Closing Date and, with respect to the Optional
Shares, each Option Closing Date:
(i) the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A under the
Securities Act) in the manner and within the time period required by
Rule 424(b) under the Securities Act; or the Company shall have filed a
post-effective amendment to the Registration Statement containing the
information required by such Rule 430A, and such post-effective
amendment shall have become effective;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment to the
Registration Statement, shall be in effect and no proceedings for such
purpose shall have been instituted or threatened by the Commission; and
(iii) the NASD shall have raised no objection to the fairness
and reasonableness of the underwriting terms and arrangements.
(c) No Material Adverse Change or Ratings Agency Change. For the period
from and after the date of this Agreement and prior to the First Closing Date
and, with respect to the Optional Shares, each Option Closing Date:
(i) in the judgment of the Representative there shall not have
occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any securities
of the Company or any of its subsidiaries by any "nationally recognized
statistical rating organization" as such term is defined for purposes
of Rule 436(g)(2) under the Securities Act.
(d) Opinion of Counsel for the Company. On each of the First Closing
Date and each Option Closing Date the Representative shall have received the
opinion of Bass, ▇▇▇▇▇
15
& ▇▇▇▇ PLC, counsel for the Company, dated as of such Closing Date, the form of
which is attached as Exhibit A.
(e) Opinion of Counsel for the Underwriter. On each of the First
Closing Date and each Option Closing Date the Representative shall have received
the opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriter, in form and
substance satisfactory to the Underwriter, dated as of such Closing Date.
(f) Officers' Certificate. On each of the First Closing Date and each
Option Closing Date the Representative shall have received a written certificate
executed by the Chairman of the Board, Chief Executive Officer or President of
the Company and the Chief Financial Officer or Chief Accounting Officer of the
Company, dated as of such Closing Date, to the effect set forth in subsections
(b)(ii) and (c)(ii) of this Section 5, and further to the effect that:
(i) for the period from and after the date of this Agreement
and prior to such Closing Date, there has not occurred any Material
Adverse Change;
(ii) the representations, warranties and covenants of the
Company set forth in Section 1 of this Agreement are true and correct
in all material respects (except for any such representation or
warranty that is by its terms qualified by materiality, which
representation shall be true and correct) with the same force and
effect as though expressly made on and as of such Closing Date;
(iii) the Company has complied with all the agreements
hereunder and satisfied all the conditions on its part to be performed
or satisfied hereunder at or prior to such Closing Date; and
(iv) the letter from the Company, dated the date hereof and
addressed to the Underwriter, regarding the comfort letter delivered by
KPMG pursuant to Section 5(a), is true and correct with the same force
and effect as though expressly made on and as of such Closing Date.
(g) Bring-down Comfort Letter. On each of the First Closing Date and
each Option Closing Date the Representative shall have received from KPMG LLP,
independent public or certified public accountants for the Company, a letter
dated such date, in form and substance satisfactory to the Representative, to
the effect that they reaffirm the statements made in the letter furnished by
them pursuant to subsection (a) of this Section 5, except that the specified
date referred to therein for the carrying out of procedures shall be no more
than three business days prior to the First Closing Date or the applicable
Option Closing Date, as the case may be.
(h) Lock-Up Agreement from Certain Securityholders of the Company. On
or prior to the date hereof, the Company shall have furnished to the
Representative an agreement in the form of Exhibit B hereto from each director
and executive officer, and such agreement shall be in full force and effect on
each of the First Closing Date and each Option Closing Date.
(i) Additional Documents. On or before each of the First Closing Date
and each Option Closing Date, the Representative and counsel for the Underwriter
shall have received such information, documents and opinions as they may
reasonably require for the purposes of enabling them to pass upon the issuance
and sale of the Offered Shares as contemplated herein, or
16
in order to evidence the accuracy of any of the representations and warranties,
or the satisfaction of any of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when
and as required to be satisfied, this Agreement may be terminated by the
Representative by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Optional Shares, at any time prior to the
applicable Option Closing Date, which termination shall be without liability on
the part of any party to any other party, except that Section 4, Section 6,
Section 8 and Section 9 shall at all times be effective and shall survive such
termination.
SECTION 6. REIMBURSEMENT OF UNDERWRITER'S EXPENSES. If this Agreement
is terminated by the Representative pursuant to Section 5, Section 7, Section
11(iv) or Section 11(v), or if the sale to the Underwriter of the Offered Shares
on the First Closing Date is not consummated because of any refusal, inability
or failure on the part of the Company to perform any agreement herein or to
comply with any provision hereof, the Company agrees to reimburse the
Underwriter upon demand for all out-of-pocket expenses that shall have been
reasonably incurred by the Underwriter in connection with the proposed purchase
and the offering and sale of the Offered Shares, including but not limited to
fees and disbursements of counsel, printing expenses, travel expenses, postage,
facsimile and telephone charges.
SECTION 7. [INTENTIONALLY OMITTED].
SECTION 8. INDEMNIFICATION.
(a) Indemnification of the Underwriter. The Company agrees to indemnify
and hold harmless the Underwriter, its officers and employees, and each person,
if any, who controls the Underwriter within the meaning of the Securities Act
and the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which the Underwriter or such controlling person may become
subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation if such settlement is effected in accordance with
Section 8(d) of the Agreement), insofar as such loss, claim, damage, liability
or expense (or actions in respect thereof as contemplated below) arises out of
or is based (i) upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof pursuant to Rule 430A
under the Securities Act, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading; or (ii) upon any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and to reimburse the Underwriter and each such controlling person
for any and all expenses (including the fees and disbursements of counsel chosen
by Jefferies) as such expenses are reasonably incurred by the Underwriter or
such controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the foregoing indemnity agreement shall not
apply to any loss, claim, damage, liability or expense to the extent, but only
to the extent, arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by the
Representative expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), it being
understood and agreed that the only such information furnished by
17
the Representative to the Company consists of the information described in
subsection (b) below; provided, further, that with respect to any preliminary
prospectus, the foregoing indemnity agreement shall not inure to the benefit of
the Underwriter from whom the person asserting any loss, claim, damage,
liability or expense purchased Offered Shares, or any person controlling the
Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of the Underwriter to
such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Offered Shares to such person, and if
the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or expense. The indemnity
agreement set forth in this Section 8(a) shall be in addition to any liabilities
that the Company may otherwise have.
(b) Indemnification of the Company, its Directors and Officers. The
Underwriter agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act, against any loss, claim, damage, liability or expense,
as incurred, to which the Company, or any such director, officer or controlling
person may become subject, under the Securities Act, the Exchange Act, or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Underwriter), insofar as such loss, claim, damage,
liability or expense (or actions in respect thereof as contemplated below)
arises out of or is based upon any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), or arises
out of or is based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any preliminary prospectus, the
Prospectus (or any amendment or supplement thereto), in reliance upon and in
conformity with written information furnished to the Company by the
Representative expressly for use therein; and to reimburse the Company, or any
such director, officer or controlling person for any legal and other expense
reasonably incurred by the Company, or any such director, officer or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. The Company
hereby acknowledges that the only information that the Underwriter has furnished
to the Company expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) are the
statements set forth as the third, thirteenth, fourteenth, fifteenth and
sixteenth paragraphs under the caption "Underwriting" in the Prospectus. The
indemnity agreement set forth in this Section 8(b) shall be in addition to any
liabilities that the Underwriter may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for indemnification, except to the extent
that the indemnifying party shall have been materially prejudiced by such
failure. In case any such action is brought against any indemnified party and
such indemnified party seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to
18
participate in, and, to the extent that it shall elect, jointly with all other
indemnifying parties similarly notified, by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that a conflict may
arise between the positions of the indemnifying party and the indemnified party
in conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of such indemnifying party's election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of more than
one separate counsel (together with local counsel), approved by the indemnifying
party, representing the indemnified parties who are parties to such action) or
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by Section
8(c) hereof, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes (i) an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act, by
or on behalf of any indemnified party.
SECTION 9. CONTRIBUTION. If the indemnification provided for in Section
8 is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party, as
incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, on the one hand, and the Underwriter,
on the other hand, from the offering of
19
the Offered Shares pursuant to this Agreement or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and the
Underwriter, on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative benefits received
by the Company, on the one hand, and the Underwriter, on the other hand, in
connection with the offering of the Offered Shares pursuant to this Agreement
shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the Offered Shares pursuant to this Agreement
(before deducting expenses) received by the Company, and the total underwriting
discount and other compensation received by the Underwriter in connection with
the offering, in each case as set forth on the front cover page of the
Prospectus bear to the aggregate initial public offering price of the Offered
Shares as set forth on such cover. The relative fault of the Company, on the one
hand, and the Underwriter, on the other hand, shall be determined by reference
to, among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company, on the one hand, or the Underwriter, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriter were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, the Underwriter shall
not be required to contribute any amount in excess of the underwriting
commissions received by the Underwriter in connection with the Offered Shares
underwritten by it and distributed to the public. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9, each officer and
employee of the Underwriter and each person, if any, who controls the
Underwriter within the meaning of the Securities Act and the Exchange Act shall
have the same rights to contribution as the Underwriter, and each director of
the Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company with the meaning of the
Securities Act and the Exchange Act shall have the same rights to contribution
as the Company.
SECTION 10. [INTENTIONALLY OMITTED].
SECTION 11. TERMINATION OF THIS AGREEMENT. Prior to the First Closing
Date this Agreement may be terminated by the Representative by notice given to
the Company if at any time (i) trading or quotation in any of the Company's
securities shall have been suspended or
20
limited by the Commission or by the NYSE, or trading in securities generally on
either the Nasdaq Stock Market or the New York Stock Exchange shall have been
suspended or limited, or minimum or maximum prices shall have been generally
established on any of such stock exchanges by the Commission or the NASD; (ii) a
general banking moratorium shall have been declared by any of federal, New York,
Delaware or California authorities; (iii) there shall have occurred any outbreak
or escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial markets,
or any substantial change or development involving a prospective substantial
change in United States' or international political, financial or economic
conditions, as in the judgment of the Representative is material and adverse and
makes it impracticable to market the Offered Shares in the manner and on the
terms described in the Prospectus or to enforce contracts for the sale of
securities; (iv) in the judgment of the Representative there shall have occurred
any Material Adverse Change; or (v) the Company shall have sustained a loss by
strike, fire, flood, earthquake, accident or other calamity of such character as
in the judgment of the Representative may interfere materially with the conduct
of the business and operations of the Company regardless of whether or not such
loss shall have been insured. Any termination pursuant to this Section 11 shall
be without liability on the part of (a) the Company to the Underwriter, except
that the Company shall be obligated to reimburse the expenses of the Underwriter
pursuant to Sections 4 and 6 hereof, (b) any Underwriter to the Company, or (c)
of any party hereto to any other party except that the provisions of Section 8
and Section 9 shall at all times be effective and shall survive such
termination.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the Underwriter set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Underwriter or the
Company or any of its or their partners, officers or directors or any
controlling person as the case may be, and will survive delivery of and payment
for the Offered Shares sold hereunder and any termination of this Agreement.
SECTION 13. NOTICES. All communications hereunder shall be in writing
and shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Representative:
▇▇▇▇▇▇▇▇▇ & Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇▇▇▇▇
Attention: General Counsel
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
If to the Company:
American Retirement Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
21
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: W.E. Sheriff
with a copy to:
Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
AmSouth Center, Suite 27000
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: T. ▇▇▇▇▇▇ ▇▇▇▇▇
Any party hereto may change the address for receipt of communications
by giving written notice to the others.
SECTION 14. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto and to the benefit of the employees, officers
and directors and controlling persons referred to in Section 8 and Section 9,
and in each case their respective successors, and no other person will have any
right or obligation hereunder. The term "SUCCESSORS" shall not include any
purchaser of the Offered Shares as such from the Underwriter merely by reason of
such purchase.
SECTION 15. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 16. GOVERNING LAW PROVISIONS. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed in such state. Any legal suit,
action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby ("RELATED PROCEEDINGS") may be instituted in
the federal courts of the United States of America located in the Borough of
Manhattan in the City of New York or the courts of the State of New York in each
case located in the Borough of Manhattan in the City of New York (collectively,
the "SPECIFIED COURTS"), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the enforcement of
a judgment of any such court (a "RELATED JUDGMENT"), as to which such
jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party's address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.
SECTION 17. GENERAL PROVISIONS. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the
22
same instrument. This Agreement may not be amended or modified unless in writing
by all of the parties hereto, and no condition herein (express or implied) may
be waived unless waived in writing by each party whom the condition is meant to
benefit. The Table of Contents and the Section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any preliminary
prospectus and the Prospectus (and any amendments and supplements thereto), as
required by the Securities Act and the Exchange Act.
23
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
AMERICAN RETIREMENT CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: EVP, Finance
The foregoing Underwriting Agreement is hereby confirmed and accepted
by Jefferies in New York, New York as of the date first above written.
▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇
Title: Managing Director
24
EXHIBIT A
1. The Company is a corporation, duly organized, validly existing and
in good standing under the laws of the State of Tennessee. The Company has the
corporate power and corporate authority to own, lease, license and use its
properties and carry on its business as described in the Prospectus and to enter
into and perform its obligations under the Underwriting Agreement.
2. The Company is validly existing, in good standing and qualified as a
foreign corporation to transact business in which it is engaged in the following
jurisdictions: Arizona, Colorado, Florida, Georgia, Illinois, Kentucky,
Michigan, Ohio, South Carolina, Texas and Virginia.
3. Each subsidiary of the Company listed on Annex 1 attached hereto is
a corporation, partnership, limited partnership or limited liability company,
duly organized (to the extent applicable), validly existing and, to the extent
applicable, in good standing under the laws of its jurisdiction of organization.
Each subsidiary of the Company has the corporate (or other) power and corporate
(or other) authority to own, lease, license and use its properties and carry on
its business as presently conducted or as described in the Prospectus.
4. All of the issued and outstanding capital stock or other equity or
ownership interests of each subsidiary of the Company listed on Annex 1 attached
hereto have been duly authorized and validly issued, are fully paid and
non-assessable. Except as set forth in the Prospectus or as indicated on Annex I
attached hereto, all of the outstanding shares of capital stock or other equity
or ownership interests of such subsidiaries were owned of record or beneficially
on that date by the Company, directly or through subsidiaries.
5. The capital stock of the Company conforms in all material respects
to the description thereof contained in the Registration Statement and the
Prospectus; all of the issued and outstanding shares of Common Stock have been
duly authorized and validly issued by the Company, are fully paid and
nonassessable, and are free from any preemptive, subscription or other similar
rights provided for by the Tennessee Business Corporation Act (the "TBCA") or by
the Company's Charter or Bylaws or, to our knowledge, any other preemptive or
subscription rights; the Company has duly authorized the issuance and sale of
the Shares; the Shares, when issued by the Company and paid for in accordance
with the terms of the Underwriting Agreement, will be validly issued, fully paid
and nonassessable, and will conform in all material respects to the description
thereof contained in the Registration Statement and Prospectus and will not be
subject to any preemptive, subscription or other similar rights provided for by
the TBCA or by the Company's Charter or Bylaws or, to our knowledge, any other
preemptive or subscription rights; and the Shares have been duly authorized for
listing on the NYSE. The form of certificate used to evidence the Shares is in
due and proper form and complies with all applicable requirements of the
Company's Charter and Bylaws and the TBCA.
A-1
6. The Underwriting Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been duly executed and
delivered by the Company.
7. The execution and delivery by the Company of the Underwriting
Agreement and the performance by the Company of its obligations thereunder
(other than performance by the Company of its obligations under the
indemnification section of the Underwriting Agreement, as to which no opinion is
rendered) (i) do not violate any of the provisions of the Company's Charter or
Bylaws; (ii) do not result in any breach of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon, any property or assets of the Company or any
of its subsidiaries, or any Existing Instrument which is filed or incorporated
by reference as an exhibit to the Registration Statement (or any document
incorporated by reference therein); or (iii) will not result in any violation of
any statute, rule or, to our knowledge, regulation or decree of any governmental
body of the State of Tennessee or the United States applicable to the Company.
8. No consent, approval, authorization or other action by or filing
with any federal or Tennessee governmental authority is required for the
execution and delivery by the Company of the Underwriting Agreement (other than
as may be required by the Commission or NASD or under state securities or blue
sky laws) or, if required, the requisite consent, approval or authorization has
been obtained, the requisite action has been taken or the requisite filing has
been made.
9. The Registration Statement is effective under the Securities Act;
any required filing of the Prospectus pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b); and, to our
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or are threatened or contemplated; the Registration
Statement and the Prospectus, including any document incorporated by reference
therein (except for the financial statements, schedules and other financial and
statistical data derived therefrom, included or incorporated by reference
therein, as to which we express no opinion), complied as to form in all material
respects with the requirements of the Securities Act and the Exchange Act; the
descriptions contained and summarized in the Registration Statement and the
Prospectus of Existing Instruments are accurate in all material respects; to our
knowledge, there are no Existing Instruments which are required by the
Securities Act to be described in the Registration Statement or the Prospectus
or to be filed as exhibits to the Registration Statement which are not described
or filed as required by the Securities Act; to our knowledge, there is not
pending or threatened against the Company any action, suit, or proceeding before
or by any governmental body of a character required to be disclosed in the
Registration Statement or the Prospectus which is not so disclosed therein; and
the statements in the Prospectus set forth under the headings "The Company -
Recent Events," "Description of Capital Stock," and "Underwriting," insofar as
such statements constitute a summary of the legal matters, documents or
proceedings referred to therein, provide an accurate summary of such legal
matters, documents and proceedings in all material respects.
A-2
10. The Company is not (after giving effect to the sale of the Shares)
an "investment company," as such term is defined in the Investment Company Act.
The limitations inherent in the independent verification of factual
matters and the character of determinations involved in the registration process
are such that we have not verified and, except as to the description in the
Registration Statement and the Prospectus of statutes, regulations, legal
proceedings, and contracts and other instruments as limited in this opinion, we
are not passing upon and do not assume any responsibility for, the accuracy,
completeness, or fairness of the statements contained in the Registration
Statement or Prospectus. However, we participated in the preparation of the
Registration Statement and the Prospectus during the course of which, among
other things, we examined various documents and other papers and participated in
conferences with representatives of the Company, with representatives of the
Company's independent public accountants, and with your representatives and your
counsel, at which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed. On the basis of the information
that was developed in the course of our above-described participation,
considered in the light of our understanding of the applicable law and the
experience we have gained through our practice thereunder, we have no reason to
believe that the Registration Statement at the time it became effective
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading (other than the financial statements, schedules and other
financial or statistical data derived therefrom, included or required to be
included in the Registration Statement or the Prospectus, as to which we express
no opinion) or that the Prospectus as of its date or on the date hereof
contained or contains any untrue statement of a material fact or omitted or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (other than the financial statements, schedules and other
financial or statistical data derived therefrom, included or required to be
included in the Registration Statement or the Prospectus, as to which we express
no opinion).
A-3
EXHIBIT B
January __, 2005
Jefferies & Company, Inc.
As Representative of the Several Underwriters
c/o Jefferies & Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
RE: American Retirement Corporation (the "COMPANY")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of the
Company ("SHARES") or securities convertible into or exchangeable or exercisable
for Shares. The Company proposes to carry out a public offering of shares of
common stock, par value $.01 per share, of the Company (the "OFFERING") for
which you will act as the representative of the underwriters. The undersigned
recognizes that the Offering will be of benefit to the undersigned and will
benefit the Company. The undersigned acknowledges that you and the other
underwriters are relying on the representations and agreements of the
undersigned contained in this letter in carrying out the Offering and in
entering into underwriting arrangements with the Company with respect to the
Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, (and will cause any spouse or immediate family member of
the spouse or the undersigned living in the undersigned's household not to),
without the prior written consent of Jefferies & Company, Inc. (which consent
may be withheld in its sole discretion), directly or indirectly, sell, offer,
contract or grant any option to sell (including without limitation any short
sale), pledge, transfer, establish an open "put equivalent position" within the
meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended,
or otherwise dispose of any Shares, options or warrants to acquire Shares, or
securities exchangeable or exercisable for or convertible into Shares currently
or hereafter owned either of record or beneficially (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended) by the undersigned (or
such spouse or family member), or publicly announce an intention to do any of
the foregoing, for a period commencing on the date hereof and continuing through
the close of trading on the date 90 days after the date of the final prospectus
relating to the Offering. The foregoing sentence shall not apply to (i)
transactions relating to Shares or other securities acquired in open market
transactions after completion of the Offering, (ii) exercise of stock options
for the purchase of common stock granted by the Company pursuant to the
Company's benefit plans or (iii) the transfer of any or all of the Shares owned
by the undersigned, either during his lifetime or on death, by gift, will or
interstate succession to the immediate family of the undersigned or to a trust
the beneficiaries of which are exclusively the undersigned and/or a member or
members of his immediate family; provided, however, that in any such case it
shall be a condition to such transfer that the transferee executes and delivers
to Jefferies & Company, Inc. an agreement stating that the transferee is
receiving and holding the Shares subject to the provisions of this letter
agreement, and there shall be no further transfer of such Shares except in
accordance with this letter. The undersigned also agrees and consents to the
entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of Shares or securities convertible into or
exchangeable or exercisable for Shares held by the undersigned except in
compliance with the foregoing restrictions.
B-1
Furthermore, the undersigned agrees that if (i) the Company issues an earnings
release or material news or a material event relating to the Company occurs
during the last 17 days of the lock-up period, or (ii) prior to the expiration
of the lock-up period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the lock-up
period, the restrictions imposed by this letter agreement shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event.
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of any Shares owned
either of record or beneficially by the undersigned, including any rights to
receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
-------------------------------------------
Printed Name of Holder
By:
---------------------------------------
Signature
-------------------------------------------
Printed Name of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
B-2
SCHEDULE 1(k)
1. ARC Sun City Center, Inc. owns 61.35% of LaBarc, L.P.
2. ARCPI Holdings, Inc. owns 10% of ARC Holland Real Estate Holdings, LLC.
3. ARCPI Holdings, Inc. owns 10% of ARC Sun City Center Real Estate Holdings,
LLC.
4. ARCPI Holdings, Inc. owns 10% of ARC LaBarc Real Estate Holdings, LLC.
5. ARCPI Holdings, Inc. owns 94% of ARC Lake Seminole Square Real Estate
Holdings, LLC.
6. ARCPI Holdings, Inc. owns 90% of ARC Brandywine Real Estate Holdings, LLC.
7. ARC Flint, Inc. owns 37.5% of Flint Michigan Retirement Housing, LLC.
8. ARC Lady Lake, Inc. owns 50% of Assisted Care of the Villages.
9. ARC LifeMed, Inc. owns 33% of LifeMed LLC.
10. ARC Somerby Holdings, Inc. owns 50% of Alabama Somerby, LLC.
1