EXHIBIT 1.1
EXECUTION COPY
3,000,000
AMERICAN RETIREMENT CORPORATION
COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
January 19, 2006
XXXXXXXXX & COMPANY, INC.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
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 3,000,000 shares (the
"FIRM SHARES") of its common stock, par value $.01 per share, and associated
rights to purchase Series A Junior Preferred Stock (the Company's common stock
and Series A Junior Preferred Stock are hereinafter referred to as the
"SHARES"). In addition, the Company has granted to the Underwriter an option to
purchase up to an additional 450,000 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, in the form
first used by the Underwriter to confirm sales of the Offered Shares or in the
form first made available to the Underwriter by the Company to meet requests of
purchasers pursuant to Rule 173 under the Securities Act, is called the
"PROSPECTUS." As used herein, "FREE WRITING PROSPECTUS" has the meaning set
forth in Rule 405 under the Securities Act, and "TIME OF SALE PROSPECTUS" means
the preliminary prospectus together with the free writing prospectuses, if any,
each identified in
Schedule A hereto, including each "road show" (as defined in Rule 433 under the
Securities Act), if any, related to the offering of the Shares contemplated
hereby that is a "written communication" (as defined in Rule 405 under the Act)
(each such road show, a "ROAD SHOW"). As used herein, the terms "Registration
Statement," "preliminary prospectus," "Time of Sale Prospectus" and Prospectus
shall include the documents, if any, incorporated by reference therein. The
terms "supplement," "amendment," and "amend" as used herein with respect to the
Time of Sale Prospectus or any free writing prospectus shall include all
documents subsequently filed by the Company with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), that are
incorporated by reference therein. 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. All references in this Agreement to the
Registration Statement, a preliminary prospectus, or 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 ("XXXXX") and (ii) the Prospectus shall be deemed
to include the "ELECTRONIC PROSPECTUS" provided for use in connection with the
offering of the Offered Shares as contemplated by Section 3(n) of this
Agreement.
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 XXXXX (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 Time of Sale Prospectus does not, and at the time of each sale
of the Shares in connection with the offering and at the First Closing Date (as
defined in Section 2), the Time of Sale Prospectus, as then amended or
supplemented by the Company, if applicable, will not, contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
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made, 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 three
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 Time of Sale 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 9(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.
The Company is not an "ineligible issuer" in connection with the
offering pursuant to Rules 164, 405 and 433 under the Securities Act. Any free
writing prospectus that the Company is required to file pursuant to Rule 433(d)
under the Securities Act has been, or will be, filed with the Commission in
accordance with the requirements of the Securities Act and the applicable rules
and regulations of the Commission thereunder. Each free writing prospectus that
the Company has filed, or is required to file, pursuant to Rule 433(d) under the
Securities Act or that was prepared by or on behalf of or used or referred to by
the Company complies or will comply in all material respects with the
requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder. Except for the free writing prospectuses, if any,
identified in Schedule A hereto, and electronic road shows, if any, furnished to
you before first use, the Company has not prepared, used or referred to, and
will not, without your prior consent, prepare, use or refer to, any free writing
prospectus.
(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, the Time of Sale Prospectus, and the
Prospectus, as amended or supplemented, in such quantities and at such places as
the Representative has reasonably requested for the Underwriter.
(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 Time of Sale 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
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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
Time of Sale Prospectus, subsequent to the respective dates as of which
information is given in the Time of Sale 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 and Time of Sale 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.
(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 and Time of Sale 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 and Time of Sale Prospectus under the
caption "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
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financial data filed with the Commission as a part of the Registration Statement
and included in either the Prospectus or Time of Sale 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 or organized 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 Time of Sale 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 result in, individually or in the aggregate,
a Material Adverse Change. 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 Time of Sale 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 the subsidiaries listed in Exhibit A
hereto.
(l) Capitalization and Other Capital Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in the Time
of Sale Prospectus under the caption "Capitalization" (other than for subsequent
issuances, if any, pursuant to employee benefit plans described or referred to
in the Time of Sale Prospectus or upon exercise of outstanding options described
or referred to in the Time of Sale Prospectus). The Shares (including the
Offered Shares) conform in all material respects to the description thereof
contained in the Time of Sale 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 Time of Sale
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 Time of Sale Prospectus accurately and fairly presents the
information required to be shown with respect to such plans, arrangements,
options and rights.
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(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 result in a Material
Adverse Change. The Company's execution, delivery and performance of this
Agreement, consummation of the transactions contemplated hereby and by the Time
of Sale 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 result in, individually or in the aggregate, a Material
Adverse Change. 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 Time of Sale 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.
(o) No Material Actions or Proceedings. Except as otherwise
disclosed in the Time of Sale 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
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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. The Time of Sale Prospectus contains in all material respects
the same description of the matters set forth in the preceding sentence
contained in the Prospectus. 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 result in, individually or in the aggregate, a
Material Adverse Change 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 Time
of Sale 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
Time of Sale 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, improvements, equipment or personal
property by the Company or such subsidiary or (ii) would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Change.
(s) Tax Law Compliance. Except as would not reasonably be expected
to result in a Material Adverse Change, 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
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Offered Shares will not be, an "INVESTMENT COMPANY" within the meaning of the
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. The Time of Sale Prospectus contains in all material
respects the same description of the matters set forth in the preceding sentence
contained in the Prospectus.
(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, as of the
date of the Time of Sale Prospectus and at the First Closing Date and the
applicable Option Closing Date, as the case may be, did not and 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 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
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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 Time of Sale Prospectus; and (iii)
except as disclosed in the Company's Annual Report on Form 10-K/A for the fiscal
year ended December 31, 2004 and Quarterly Reports on Form 10-Q for the quarters
ended June 30, 2005 and March 31, 2005 (the "Exchange Act Reports"), 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, except as disclosed in the Exchange Act
Reports, the Company is not aware of (i) any significant deficiencies or
material weaknesses in the design or operation of internal control over
financial reporting that 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
Time of Sale Prospectus 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.
(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)
9
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 Time of Sale
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 6 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.
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 $26.10 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 Xxxxxxxx & Xxxxxxxx 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 24, 2006 or such
other time and date not later than 1:30 p.m. New York time, on
10
February 7, 2006 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
450,000 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.
(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.
11
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY. The Company further
covenants and agrees with the Underwriter as follows:
(a) Delivery of Registration Statement, Time of Sale Prospectus and
Prospectus. The Company shall furnish to you, without charge, two signed copies
of the Registration Statement (including exhibits thereto) and shall furnish to
you in New York City, without charge, prior to 10:00 a.m. New York City time on
the business day next succeeding the date of this Agreement and during the
period mentioned in Section 3(e) or 3(f) below, as many copies of the Time of
Sale Prospectus, the Prospectus and any supplements and amendments thereto or to
the Registration Statement as you may reasonably request.
(b) Representative's Review of Proposed Amendments and Supplements.
Prior to amending or supplementing the Registration Statement (including any
registration statement filed under Rule 462(b) under the Securities Act), the
Time of Sale Prospectus 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,
and file with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus required to be filed pursuant to
such Rule.
(c) Free Writing Prospectuses. The Company shall furnish to you a
copy of each proposed free writing prospectus to be prepared by or on behalf of,
used by, or referred to by the Company and not use or refer to any proposed free
writing prospectus to which you reasonably object.
(d) Filing of Underwriter Free Writing Prospectuses. The Company
shall not take any action that would result in an Underwriter or the Company
being required to file with the Commission pursuant to Rule 433(d) under the
Securities Act a free writing prospectus prepared by or on behalf of the
Underwriter that the Underwriter otherwise would not have been required to file
thereunder.
(e) Amendments to Time of Sale Prospectus. If the Time of Sale
Prospectus is being used to solicit offers to buy the Offered Shares at a time
when the Prospectus is not yet available to prospective purchasers and any event
shall occur or condition exist as a result of which it is necessary to amend or
supplement the Time of Sale Prospectus in order to make the statements therein,
in the light of the circumstances, not misleading, or if any event shall occur
or condition exist as a result of which the Time of Sale Prospectus conflicts
with the information contained in the Registration Statement then on file, or
if, in the opinion of counsel for the Underwriter, it is necessary to amend or
supplement the Time of Sale Prospectus to comply with applicable law, forthwith
to prepare, file with the Commission and furnish, at its own expense, to the
Underwriter and to any dealer upon request, either amendments or supplements to
the Time of Sale Prospectus so that the statements in the Time of Sale
Prospectus as so amended or supplemented will not, in the light of the
circumstances when delivered to a prospective purchaser, be misleading or so
that the Time of Sale Prospectus, as amended or supplemented, will no longer
conflict with the Registration Statement, or so that the Time of Sale
Prospectus, as amended or supplemented, will comply with applicable law.
(f) 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
12
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 or 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. 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. Additionally, the Company agrees that 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.
(g) Amendments and Supplements to the Prospectus and Other
Securities Act Matters. If 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(g).
(h) 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.
(i) 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.
(j) Transfer Agent. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Shares.
13
(k) 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 a period of at least
twelve months beginning with the first fiscal quarter of the Company occurring
after the date of this Agreement, which shall satisfy the provisions of Section
11(a) of the Securities Act and the rules and regulations of the Commission
thereunder.
(l) Periodic Reporting Obligations. 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.
(m) 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.
(n) Company to Provide Copy of the Prospectus in Form That May be
Downloaded from the Internet. The Company shall cause to be prepared and
delivered, at its expense, within one business day from the effective date of
this Agreement, to Jefferies an "electronic Prospectus" to be used in connection
with the offering and sale of the Offered Shares. As used herein, the term
"electronic Prospectus" means a form of the Time of Sale Prospectus, and any
amendment or supplement thereto, that meets each of the following conditions:
(i) it shall be encoded in an electronic format, satisfactory to Jefferies, that
may be transmitted electronically by Jefferies to offerees and purchasers of the
Offered Shares; (ii) it shall disclose the same information as the paper Time of
Sale Prospectus, except to the extent that graphic and image material cannot be
disseminated electronically, in which case such graphic and image material shall
be replaced in the electronic Prospectus with a fair and accurate narrative
description or tabular representation of such material, as appropriate; and
(iii) it shall be in or convertible into a paper format or an electronic format,
satisfactory to Jefferies, that will allow investors to store and have
continuously ready access to the Time of Sale Prospectus at any future time,
without charge to investors (other than any fee charged for subscription to the
Internet as a whole and for on-line time).
(o) Exchange Act Compliance. 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.
(p) 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 (i) Shares but only if the holders of such shares agree in writing not to
sell, offer, dispose of or otherwise transfer any such shares during such
Lock-up Period without the prior written consent of Jefferies (which consent may
be withheld at the sole discretion of Jefferies), (ii) options to purchase
Shares provided such options are not exercisable during the Lock-up Period, or
(ii) Shares upon exercise
14
of outstanding options, pursuant to any stock option, stock bonus or other stock
plan or arrangement described or referred to in the Prospectus.
(q) 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.
(r) 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 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.
(s) 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), the Time of Sale Prospectus, the Prospectus, any free
writing prospectus prepared by or on behalf of, used by, or referred to by the
Company, and each preliminary 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
15
costs and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the Offered Shares,
including, without limitation, expenses associated with the preparation or
dissemination of any electronic roadshow, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered in connection with the road show; (ix) the fees
and expenses associated with listing the Offered Shares on the New York Stock
Exchange and (x) all other fees, costs and expenses referred to in Item 14 of
Part II of the Registration Statement. Except as provided in this Section 4,
Section 7, Section 9 and Section 10 hereof, the Underwriter shall pay its own
expenses, including the fees and disbursements of its counsel.
SECTION 5. COVENANT OF THE UNDERWRITER. The Underwriter covenants with the
Company not to take any action that would result in the Company being required
to file with the Commission under Rule 433(d) a free writing prospectus prepared
by or on behalf of such Underwriter that otherwise would not be required to be
filed by the Company thereunder, but for the action of the Underwriter
SECTION 6. 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
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, Time of Sale Prospectus,
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;
16
(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, Xxxxx & Xxxx PLC, counsel for the Company, dated as of such
Closing Date, the form of which is attached as Exhibit B.
(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 Xxxxxxxx & Xxxxxxxx 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 6, 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
17
(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 6(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 6, 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 C 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 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 6 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 7, Section 9 and
Section 10 shall at all times be effective and shall survive such termination.
SECTION 7. REIMBURSEMENT OF UNDERWRITER'S EXPENSES. If this Agreement is
terminated by the Representative pursuant to Section 6, Section 9, Section
12(iv) or Section 12(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 8. [INTENTIONALLY OMITTED].
SECTION 9. 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
18
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 9(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, the Time of Sale Prospectus, any free writing prospectus
that the Company has filed, or is required to file, pursuant to Rule 433(d) of
the Securities Act, 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, the Time of Sale Prospectus, any free
writing prospectus that the Company has filed, or is required to file, pursuant
to Rule 433(d) of the Securities Act, or the Prospectus (or any amendment or
supplement thereto), it being understood and agreed that the only such
information furnished by the Representative to the Company consists of the
information described in subsection (b) below; provided further, that with
respect to the preliminary prospectus only and not any free writing prospectus
or any other writing or instrument, 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 a copy of the Time of Sale Prospectus or the
Prospectus (in each case, 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 Time of Sale Prospectus or the
Prospectus (in each case, as so amended or supplemented), as applicable, would
have cured the defect giving rise to such loss, claim, damage, liability or
expense, unless such failure is the result of noncompliance by the Company with
Section 3 hereof. The indemnity agreement set forth in this Section 9(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
19
statement of a material fact contained in the Registration Statement, any
preliminary prospectus, the Time of Sale Prospectus, any free writing prospectus
that the Company has filed, or is required to file, pursuant to Rule 433(d) of
the Securities Act 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 Time of Sale Prospectus, any free writing prospectus that the
Company has filed, or is required to file, pursuant to Rule 433(d) of the
Securities Act, 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, the Time of Sale Prospectus, any free
writing prospectus that the Company has filed, or is required to file, pursuant
to Rule 433(d) of the Securities Act, or the Prospectus (or any amendment or
supplement thereto) are the statements set forth as the third, twelfth,
thirteenth, fourteenth and fifteenth, paragraphs under the caption
"Underwriting" in the Prospectus. The indemnity agreement set forth in this
Section 9(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 9 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 9, 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 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 9 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
20
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 9 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
9(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 10. CONTRIBUTION. If the indemnification provided for in Section 9
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 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.
21
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 9(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 9(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 10; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 9(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 10 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 10.
Notwithstanding the provisions of this Section 10, 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 10, 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 11. [INTENTIONALLY OMITTED].
SECTION 12. 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 limited by the Commission or by the
NYSE, or trading in securities generally on either the Nasdaq Stock Market or
the NYSE 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 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 Time of Sale
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 12 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 7 hereof, (b) any Underwriter to the Company, or (c) of any party hereto to
any other party except that the
22
provisions of Section 9 and Section 10 shall at all times be effective and shall
survive such termination.
SECTION 13. 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 14. 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:
Jefferies & Company, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 0000000
Attention: General Counsel
with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx
If to the Company:
American Retirement Corporation
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: W.E. Sheriff
with a copy to:
Bass, Xxxxx & Xxxx PLC
000 Xxxxxxxxx Xxxxxx
XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: T. Xxxxxx Xxxxx
Any party hereto may change the address for receipt of communications by
giving written notice to the others.
SECTION 15. 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 9 and Section 10,
and in each case their respective successors, and no other person will have any
right or obligation hereunder. The term
23
"SUCCESSORS" shall not include any purchaser of the Offered Shares as such from
the Underwriter merely by reason of such purchase.
SECTION 16. 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 17. 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 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, 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 18. GENERAL PROVISIONS. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
The 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 9 and the contribution provisions of
Section 10, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 9 and 10 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.
24
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/ W.E. Sheriff
--------------------------------
Name: W.E. Sheriff
Title: Chairman & CEO
The foregoing Underwriting Agreement is hereby confirmed and
accepted by Jefferies in New York, New York as of the date first above written.
JEFFERIES & COMPANY, INC.
By: /s/ Xxxxxxxxx Xxxxxxx-Xxxxx
--------------------------------
Name: Xxxxxxxxx Xxxxxxx-Xxxxx
Title: Managing Director
25
EXHIBIT A
SUBSIDIARIES OF AMERICAN RETIREMENT CORPORATION
1. Alabama Somerby, LLC, a Delaware limited liability company
2. ARC Air Force Village, L.P., a Tennessee limited partnership
3. ARC Aurora, LLC, a Tennessee limited liability company
4. ARC Bahia Oaks, Inc., a Tennessee corporation
5. ARC Bay Pines, Inc., a Tennessee corporation
6. ARC Boca Raton, Inc., a Tennessee corporation
7. ARC Boynton Beach, LLC, a Tennessee limited liability company
8. ARC Bradenton HC, Inc., a Tennessee corporation
9. ARC Bradenton Management, Inc., a Tennessee corporation
10. ARC Bradenton RC, Inc., a Tennessee corporation
11. ARC Brandywine GP, LLC, a Tennessee limited liability company
12. ARC Brandywine, L.P., a Delaware limited partnership
13. ARC Brookmont Terrace, Inc., a Tennessee corporation
14. ARC Carriage Club of Jacksonville, Inc., a Tennessee corporation
15. ARC Castle Hills, L.P., a Tennessee limited partnership
16. ARC Charlotte, Inc., a Tennessee corporation
17. ARC Cleveland Heights, LLC, a Tennessee limited liability company
18. ARC Cleveland Park, LLC, a Tennessee limited liability company
19. ARC Coconut Creek, LLC, a Tennessee limited liability company
20. ARC Coconut Creek Management, Inc., a Tennessee corporation
21. ARC Corpus Christi, LLC, a Tennessee limited liability company
22. ARC Countryside, LLC, a Tennessee limited liability company
23. ARC Creative Marketing, LLC, a Tennessee limited liability company
24. ARC Cypress Station, L.P., a Tennessee limited partnership
25. ARC Xxxxx Xxxx, LLC, a Tennessee limited liability company
26. ARC Delray Beach, LLC, a Tennessee limited liability company
27. ARC Denver Monaco, LLC, a Delaware limited liability company
28. ARC Epic Holding Company, inc., a Tennessee corporation
29. ARC Flint, Inc., a Tennessee corporation
30. ARC Fort Austin Properties, LLC, a Tennessee limited liability company
31. ARC Freedom, LLC, a Tennessee limited liability company
32. ARC Freedom Square Management, Inc., a Tennessee corporation
33. ARC Galleria Xxxxx, Inc., a Tennessee corporation
34. ARC Greenwood Village, Inc., a Tennessee corporation
35. ARC Hampton Post Oak, Inc., a Tennessee corporation
36. ARC HDV, LLC, a Tennessee limited liability company
37. ARC Heritage Club, Inc., a Tennessee corporation
38. ARC Holland, Inc., a Tennessee corporation
39. ARC Holland Real Estate Holdings, LLC, a Delaware limited liability
company
40. ARC Xxxxxx Court, LLC, a Tennessee limited liability company
41. ARC Xxxxxx Court Management, Inc., a Tennessee corporation
42. ARC Homewood Corpus Christi, L.P., a Tennessee limited partnership
A-1
43. ARC Homewood Victoria, Inc., a Tennessee corporation
44. ARC Houston Therapy GP, LLC, a Tennessee limited liability company
45. ARC Imperial Plaza, Inc., a Tennessee corporation
46. ARC Imperial Services, Inc., a Tennessee corporation
47. ARC LaBarc Real Estate Holdings, LLC, a Delaware limited liability company
48. ARC Lady Lake, Inc., a Tennessee corporation
49. ARC Lake Seminole Square Real Estate Holdings, LLC, a Delaware limited
liability company
50. ARC Lakeway, L.P., a Tennessee limited partnership
51. ARC Lakeway II, L.P., a Tennessee limited partnership
52. ARC Lakewood, LLC, a Tennessee limited liability company
53. ARC LifeMed, Inc., a Tennessee corporation
54. ARC Xxxxx, LLC, a Tennessee limited liability company
55. ARCLP-Charlotte, LLC, a Tennessee limited liability company
56. ARC LP Holdings, LLC, a Tennessee limited liability company
57. A.R.C. Management Corporation, a Tennessee corporation
58. ARC Management, LLC, a Tennessee limited liability company
59. ARC Minnetonka, LLC, a Delaware limited liability company
60. ARC Naples, LLC, a Tennessee limited liability company
61. ARC Northwest Hills, L.P., a Tennessee limited partnership
62. ARC Oakhurst, Inc., a Tennessee corporation
63. ARC Overland Park, LLC, a Delaware limited liability company
64. ARC Parklane, Inc., a Tennessee corporation
65. ARC Park Regency, Inc., a Tennessee corporation
66. ARC Partners II, Inc., a Tennessee corporation
67. ARC Pearland, L.P., a Tennessee limited partnership
68. ARC Pecan Park, L.P., a Tennessee limited partnership
69. ARC Pecan Park/Xxxxxxx, Inc., a Tennessee corporation
70. ARC Peoria, LLC, a Tennessee limited liability company
71. ARC Peoria II, Inc., a Tennessee corporation
72. ARC Pharmacy Services, LLC, a Tennessee limited liability company
73. ARCPI Holdings, Inc., a Delaware corporation
74. ARC Pinegate, L.P., a Tennessee limited partnership
75. ARC Post Oak, L.P., a Tennessee limited partnership
76. ARC Richmond Heights, LLC, a Tennessee limited liability company
77. ARC Richmond Place, Inc., a Delaware corporation
78. ARC Rossmoor, Inc., a Tennessee corporation
79. ARC Roswell, LLC, a Delaware limited liability company
80. ARC Santa Catalina, Inc., a Tennessee corporation
81. ARC SCC, Inc., a Tennessee corporation
82. ARC Scottsdale, LLC, a Tennessee limited liability company
83. ARC Shadowlake, L.P., a Tennessee limited partnership
84. ARC Shavano, L.P., a Tennessee limited partnership
85. ARC Shavano Park, Inc., a Tennessee corporation
86. ARC Somerby Holdings, Inc., a Tennessee corporation
A-2
87. ARC Spring Shadow, L.P., a Tennessee limited partnership
88. ARC Sun City Center, Inc., a Tennessee corporation
89. ARC Sun City Center Real Estate Holdings, LLC, a Delaware limited
liability company
90. ARC Sun City Golf Course, Inc., a Tennessee corporation
91. ARC Sun City West, LLC, a Delaware limited liability company
92. ARC Tanglewood GP, LLC, a Delaware limited liability company
93. ARC Tanglewood, L.P., a Delaware limited partnership
94. ARC Tarpon Springs, Inc., a Tennessee corporation
95. ARC Tennessee GP, Inc., a Tennessee corporation
96. ARC Therapy Services, LLC, a Tennessee limited liability company
97. ARC Tucson, LLC, a Delaware limited liability company
98. ARC Vegas, LLC, a Delaware limited liability company
99. ARC Victoria, L.P., a Tennessee limited partnership
100. ARC Villages, LLC, a Delaware limited liability company
101. ARC Villages IL, LLC, a Delaware limited liability company
102. ARC Westlake Village, Inc., a Tennessee corporation
103. ARC Xxxxxxxx Hills, L.P., a Tennessee limited partnership
104. ARC Willowbrook, L.P., a Tennessee limited partnership
105. ARC Wilora Assisted Living, LLC, a Tennessee limited liability company
106. ARC Wilora Lake, Inc., a Tennessee corporation
107. Denver Xxxxx XX, LLC, a Delaware limited liability company
108. Flint Michigan Retirement Housing L.L.C., a Michigan limited liability
company
109. Fort Austin Limited Partnership, a Texas limited partnership
110. Freedom Group-Lake Seminole Square, Inc., a Tennessee corporation
111. Freedom Group-Naples Management Company, Inc., a Tennessee corporation
112. Freedom Village of Bradenton, LLC, a Delaware limited liability company
113. Freedom Village of Holland, Michigan, a Michigan general partnership
114. Freedom Village of Sun City Center, Ltd., a Florida limited partnership
115. Homewood at Brookmont Terrace, LLC, a Tennessee limited liability company
116. LaBarc, L.P., a Tennessee limited partnership
117. Lake Seminole Square Management Company, Inc., a Tennessee corporation
118. LifeMed, LLC, a Delaware limited liability company
119. Plaza Professional Pharmacy, Inc., a Virginia corporation
120. Senior Houston Therapy, L.P., a Texas limited partnership
121. SHP-ARC II, LLC, a Delaware limited liability company
122. TabSafe Medical Services, Inc., a Georgia corporation
123. TabSafe Medical Services, LLC, a Delaware limited liability company
124. TabSafe Prescription Services, LLC, a Georgia limited liability company
125. Trinity Towers Limited Partnership, a Tennessee limited partnership
A-3
EXHIBIT B
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, Xxxxx
Xxxxxxxx, Xxxx, Xxxxxxxx, Xxxxx Xxxxxxxx, Xxxxx 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 such 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 Time of Sale
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. The Time of
Sale Prospectus 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 Common Stock of the Company is in due and proper form and complies
with all applicable requirements of the Company's Charter and Bylaws and the
TBCA.
A-4
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 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 that 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 "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-5
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.
11. The Registration Statement and the Prospectus (except for the
financial statements, schedules and other financial data included therein, as to
which we express no opinion) appear on their face to be appropriately responsive
in all material respects to the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder, and, nothing has
come to our attention that causes us to believe that (i) the Registration
Statement or the prospectus included therein at the time the Registration
Statement 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 data included therein, as to which we express no
opinion), (ii) the Time of Sale Prospectus as of the date of the Underwriting
Agreement or as amended or supplemented, if applicable, as of the Closing Date
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order 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
data included therein, as to which we express no opinion) or (iii) the
Prospectus as of its date or as amended or supplemented, if applicable, as of
the Closing Date 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 data included therein, as to which we express no
opinion).
A-6
EXHIBIT C
January __, 2006
Xxxxxxxxx & Company, Inc.
000 Xxxxxxx Xxxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
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 underwriter. The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company. The
undersigned acknowledges that you 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
supplement 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
intestate 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.
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
B-1
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 A
FREE WRITING PROSPECTUSES
None.
1
SCHEDULE 1(k)
1. American Retirement Corporation owns 49% of TabSafe Medical Services, Inc.
which owns 99% of TabSafe Medical Services, LLC and 100% of TabSafe
Prescription Services, LLC.
2. American Retirement Corporation owns 1% of TabSafe Medical Services, LLC.
3. ARCPI Holdings, Inc. owns 10% of ARC Holland Real Estate Holdings, LLC.
4. ARCPI Holdings, Inc. owns 10% of ARC Sun City Center Real Estate Holdings,
LLC.
5. ARCPI Holdings, Inc. owns 10% of ARC LaBarc Real Estate Holdings, LLC.
6. ARC Sun City Center, Inc. owns 61.35% of LaBarc, L.P.
7. ARC Epic Holding Company, Inc. owns 20% of SHP -- ARC II, LLC which owns
100% of ARC Sun City West, LLC; ARC Roswell, LLC; ARC Vegas, LLC; ARC
Tucson, LLC; ARC Overland Park, LLC; ARC Minnetonka, LLC; ARC Denver
Monaco, LLC; ARC Tanglewood GP, LLC and ARC Tanglewood, L.P.
8. ARC Flint, Inc. owns 37.5% of Flint Michigan Retirement Housing, LLC.
9. ARC LifeMed, Inc. owns 33.33% of LifeMed LLC.
10. ARC Bradenton RC, Inc. owns 10% of Freedom Village of Bradenton, LLC.
11. ARC Xxxxx, LLC owns 20% of Denver Xxxxx XX, LLC.
2
