EXHIBIT 1.1
BROOKDALE LIVING COMMUNITIES, INC.
(a Delaware corporation)
5,000,000 SHARES
COMMON STOCK
(Par Value $0.01 Per Share)
UNDERWRITING AGREEMENT
----------------------
March __,1997
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Brookdale Living Communities, Inc., a Delaware corporation (the
"Company") confirms its agreement with Friedman, Billings, Xxxxxx & Co., Inc.
("FBR") and the underwriters listed on Schedule A attached hereto (collectively,
the "Underwriters," which term shall also include any underwriter substituted as
provided in Section 9 hereof), for whom FBR is acting as representative and is
hereinafter referred to as the "Representative", subject to the terms and
conditions stated herein, with respect to the sale by the Company to the
Underwriters, acting severally and not jointly, of 5,000,000 shares (the "Firm
Shares") of the Company's Common Stock, par value $0.01 per share (the "Common
Stock"), and with respect to the grant by the Company to the Underwriters of the
option described in Section 2(b) hereof to purchase all or any part of an
additional 750,000 shares of Common Stock (the "Option Shares") to cover
overallotments. The Firm Shares and the Option Shares are collectively
hereinafter called the "Shares." For purposes hereof and of the representations
and warranties contained herein, the operations of the Company are deemed to
include the operations of the senior housing division of The Prime Group, Inc.,
a Delaware corporation and a stockholder of the Company ("Prime"), on and before
the Closing Time.
Prior to the purchase and public offering of the Shares by the
Underwriters, the Company and the Representative, acting on behalf of the
Underwriters, shall enter into an agreement substantially in the form of Exhibit
A hereto (the "Pricing Agreement"). The Pricing Agreement may take the form of
an exchange of any standard form of written telecommunication between the
Company and the Representative and shall specify such applicable information as
is indicated in Exhibit A hereto. The offering of the Shares will be governed
by this Agreement, as supplemented by the Pricing Agreement. From and after the
date of the execution and delivery of the Pricing Agreement, this Agreement
shall be deemed to incorporate the Pricing Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-12259) and a related
preliminary prospectus for the registration of the Shares under the Securities
Act of 1933, as amended (the "1933 Act"), and has filed such amendments thereto
and such amended preliminary prospectuses as may have been required to the date
hereof, and will file such additional amendments thereto and such amended
prospectuses as may hereafter be required. Such registration statement when it
becomes effective (as amended, if applicable) and the prospectus constituting a
part thereof (including in each case the information, if any, deemed to be a
part thereof pursuant to Rule 430A(b) of the rules and regulations under the
1933 Act (the "1933 Act Regulations")), as from time to time amended or
supplemented pursuant to the 1933 Act or otherwise, are hereinafter referred to
as the "Registration Statement" and the "Prospectus," respectively, except that
if any revised prospectus shall be provided to the Underwriters by the Company
for use in connection with the offering of the Shares which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective (whether or not such revised prospectus is required to be
filed by the Company pursuant to Rule 424(b) of the 1933 Act Regulations), the
term "Prospectus" shall refer to such revised prospectus from and after the time
it is first provided to the Underwriters for such use.
The Company understands that the Underwriters propose to make a public
offering of the Shares as soon as the Representative deems advisable after the
Registration Statement becomes effective and the Pricing Agreement has been
executed and delivered.
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PRIME.
l(a) The Company and Prime, jointly and severally, represent and
warrant to, and agree with, each Underwriter as of the date hereof and as of the
date of the Pricing Agreement (such later date being hereinafter referred to as
the "Representation Date") as follows:
(i) At the time the Registration Statement becomes effective and at
the Representation Date, the Registration Statement, as amended or supplemented,
if applicable, will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations 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 statements therein not misleading, and the
Prospectus, at the Representation Date (unless the term "Prospectus" refers to a
prospectus that has been provided to the Underwriters by the Company for use in
connection with the offering of the Shares which differs from the Prospectus on
file at the Commission at the time the Registration Statement becomes effective,
in which case at the time it is first provided to the Underwriters for such use)
and at the Closing Time referred to in Section 2(c) hereof, will comply in all
material respects
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with the requirements of the 1933 Act and the 1933 Act Regulations and will not
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with information contained in the section of the
Prospectus captioned "Underwriting" relating to any Underwriter furnished to the
Company in writing on behalf of such Underwriter through you expressly for use
therein.
(ii) The Registration Statement has become effective or will become
effective prior to execution of the Pricing Agreement and no stop order
suspending the effectiveness of the Registration Statement or any part thereof
has been issued and no proceeding for that purpose has been instituted or, to
the knowledge of the Company, threatened by the Commission or by the state
securities authority of any jurisdiction. No order preventing or suspending the
use of the Prospectus has been issued and no proceeding for that purpose has
been instituted or, to the knowledge of the Company, threatened by the
Commission or by the state securities authority of any jurisdiction.
(iii) Ernst & Young LLP, who have certified the financial statements
and financial statement schedules included in the Registration Statement, are
independent public accountants as required by the 1933 Act and the 1933 Act
Regulations.
(iv) The financial statements (including the notes thereto) included
in the Registration Statement and the Prospectus present fairly the financial
position of the respective entity or entities presented therein at the
respective dates indicated and the results of their operations for the
respective periods specified, and except as otherwise stated in the Registration
Statement, such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis. The
financial statement schedules included in the Registration Statement present
fairly the information required to be stated therein. The financial information
and data included in the Registration Statement and the Prospectus present
fairly the information included therein and have been prepared on a basis
consistent with that of the financial statements included in the Registration
Statement and the Prospectus and the books and records of the respective
entities presented therein. Other than the historical financial statements (and
schedules) included therein, no other historical or pro forma financial
statements (or schedules) are required by the 1933 Act or the 1933 Act
Regulations to be included in the Registration Statement. Except as reflected
or disclosed in the financial statements included in the Registration Statement
or otherwise set forth in the Prospectus, none of the Company or the
Subsidiaries (as hereinafter defined) are subject to any material indebtedness,
obligation, or liability, contingent or otherwise, known to the Company.
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(v) All of the consolidated corporations and partnerships in which the
Company has a direct or indirect ownership interest are listed in Exhibit 21 to
the Registration Statement (collectively, the "Subsidiaries"). The Company's
ownership, leasehold or management interest in each of the facilities listed in
the Prospectus under the caption "Business-Facilities" is owned, leased or
managed by the Company directly or indirectly through one or more such wholly-
owned Subsidiaries.
(vi) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated therein,
(A) there has been no material adverse change in the condition, financial or
otherwise, or in the earnings, assets, or business affairs of the Company and
the Subsidiaries considered as a single enterprise, whether or not arising in
the ordinary course of business, (B) no material casualty loss or material
condemnation or other material adverse event has occurred with respect to any of
the Properties (as the same are defined in the Prospectus), (C) there have been
no acquisitions or other transactions entered into by the Company or any
Subsidiary that are material with respect to such entities, considered as a
single enterprise, or would result in any inaccuracy in the representations
contained in Section l(a)(iv) above, (D) there has been no dividend or
distribution of any kind declared, paid, or made by the Company on any class of
its capital stock, (E) there has been no change in the capital stock of the
Company or any Subsidiary, and (F) there has been no increase in the
indebtedness of the Company or any Subsidiary that is material to such entities,
considered as a single enterprise.
(vii) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with the
corporate power and authority to own its properties, conduct its business as
described in the Prospectus and to enter into and perform its obligations under
this Agreement. The Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws of each
other jurisdiction in which such qualification is required, whether by reason of
the ownership, leasing, or management of any properties or the conduct of any
other business, except where the failure to so qualify would not have a material
adverse effect on the condition, financial or otherwise, or the earnings, assets
or business affairs of the Company and the Subsidiaries (as defined below)
considered as a single enterprise.
(viii) Each Subsidiary that is a corporation (a "Corporate Subsidiary")
has been duly organized, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation and has the corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus, and is duly qualified and is in good
standing as a foreign corporation authorized to do business in each jurisdiction
in which the nature of its business or its ownership or
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leasing of property requires such qualification, except where the failure to be
so qualified would not have a material adverse effect on the condition
(financial or other), business, prospects, properties, net worth or results of
operations of the Company and the Subsidiaries, taken as a whole. All of the
outstanding shares of capital stock of each Corporate Subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable, were issued and
sold in compliance with all applicable federal and state securities laws, were
not issued in violation of or subject to any preemptive or similar rights, and
are owned by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any security interest, claim, lien, encumbrance
or adverse interest of any nature, except (i) for those encumbrances disclosed
in the Prospectus, (ii) for interests or liens held by others as security for
indebtedness of the Company or any Subsidiary disclosed in the Prospectus and
(iii) for transfer restrictions under applicable federal and state securities
and real estate syndication laws.
(ix) Each Subsidiary that is a general partnership or a limited partnership
(a "Partnership Subsidiary") has been duly organized and is existing as a
general partnership or limited partnership, as the case may be, in good standing
under the laws of its jurisdiction of organization and has the power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus, and is duly qualified and is in good standing
(where applicable) as a foreign partnership authorized to do business in each
jurisdiction in which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the condition (financial
or other), business, prospects, properties, net worth or results of operations
of the Company and the Subsidiaries, taken as a whole. All outstanding
partnership interests in the Partnership Subsidiaries were issued and sold in
compliance with the applicable limited partnership agreements of such
Partnership Subsidiaries and all applicable federal and state securities laws,
and the partnership interests therein held directly or indirectly by the Company
are owned free and clear of any security interest, claim, lien, encumbrance or
adverse interest of any nature, except (i) for those encumbrances disclosed in
the Prospectus, (ii) for interests or liens held by others as security for
indebtedness of the Company or any Subsidiary disclosed in the Prospectus, (iii)
to the extent provided in the applicable partnership agreements of such
Partnership Subsidiaries and (iv) for transfer restrictions under applicable
federal and state securities and real estate syndication laws. To the knowledge
of the Company, each partnership agreement pursuant to which the Company or a
Subsidiary holds a partnership interest in a Partnership Subsidiary is in full
force and effect and constitutes the legal, valid and binding agreement of the
parties thereto, enforceable against such parties in accordance with the terms
thereof, except as enforcement thereof may be limited by bankruptcy, insolvency
or other similar laws affecting the enforcement of creditors' rights generally
or by general equitable principles. There has been no material breach of or
default under, and no event which with notice or lapse of time would
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constitute a material breach of or default under, such limited partnership
agreements by the Company or any Subsidiary or, to the Company's knowledge, any
other party to such agreements.
(x) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company conform
in all material respects to all statements relating thereto contained in the
Prospectus. At the Closing Time, excluding the Shares to be issued pursuant
hereto, 2,500,000 shares of Common Stock will be issued and outstanding. All
such shares of Common Stock have been or will be duly and validly authorized and
issued, fully paid and non-assessable, and are not subject to preemptive or
other similar rights, and have been or will be offered and sold in compliance
with all applicable laws (including federal and state securities laws). No
shares of capital stock of the Company are reserved for any purpose except in
connection with the stock option plans of the Company as described in the
Prospectus. Except as described in the Prospectus, there are no outstanding
securities convertible into or exchangeable for any capital stock of the Company
and no outstanding options, rights (preemptive or otherwise) or warrants to
purchase or to subscribe for such shares or any other securities of the Company.
(xi) The Shares to be issued and sold by the Company to the Underwriters
hereunder have been duly and validly authorized for issuance and sale to the
Underwriters, and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth in the Pricing
Agreement, will be duly and validly issued and fully paid and non-assessable and
will be sold free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest. The terms of the Shares conform to all statements
and descriptions related thereto contained in the Prospectus and comply with all
applicable legal requirements. The Shares conform to the provisions of the
Charter. The form of share certificate to be used to evidence the Shares is in
due and proper form and complies with all applicable legal requirements. No
preemptive right, co-sale right, tag along right, registration right, right of
first refusal or other similar right of stockholders exists with respect to any
of the Shares or the issuance and sale thereof, other than those that have been
expressly waived prior to the date hereof and those that will automatically
expire upon the consummation of the transactions contemplated by this Agreement
on the date of Closing. No further consent, approval or authorization of any
stockholder, the Board of Directors of the Company, any court or governmental
agency or body, or others is required for the issuance and sale or transfer of
the Shares except as may be required under the federal securities laws or under
any state or other securities, Blue Sky or real estate syndication laws and
except as may be required to be obtained by the Underwriters. Except as
disclosed in the Prospectus, there are no stockholders agreements or voting
agreements with respect to the Common Stock to which the Company is a party or,
to the knowledge of the Company, between or among
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any of the Company's stockholders, other than those that will automatically
terminate upon the consummation of the transactions contemplated by this
Agreement on the date of Closing.
(xii) None of the Company or any Subsidiary is in violation of its
charter, by-laws, certificate of limited partnership, partnership agreement, or
other organizational document, as applicable. None of the Company or any
Subsidiary is in default in the performance or observance of any obligation,
agreement, covenant, or condition contained in any material contract, indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which the Company or any Subsidiary is, or at the Closing Time
will be, a party or by which the Company or any Subsidiary is, or at the Closing
Time will be, bound or to which any of the property or assets of the Company or
any Subsidiary is, or at the Closing Time will be, subject, except where a
default thereunder would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, assets, or business affairs of the
Company and the Subsidiaries, considered as a single enterprise. For purposes
of this paragraph the phrase "material contract, indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument" shall mean any
contract, indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument that is required to be filed as an exhibit to a registration
statement on Form S-1 pursuant to Section 601(b) of Regulation S-K. Neither
the Company nor any of the Subsidiaries is in material violation of any order,
writ, injunction, judgment or decree of any court, government or governmental
agency or body, domestic or foreign, having jurisdiction over the Company or any
of the Subsidiaries or over any of their respective property.
(xiii) Except as described in the Prospectus, the Company or all
Subsidiaries have operated and currently operate their business in conformity
with all applicable laws, rules and regulations of each jurisdiction in which it
is conducting business, except where the failure to be so in compliance would
not have a material adverse effect on the condition (financial or other),
business, prospects, properties, net worth or results of operations of the
Company and the Subsidiaries, taken as a whole. The operations of the Company
and its subsidiaries with respect to any real property currently leased or owned
or by any means controlled by the Company or any Subsidiary are in material
compliance with all federal, state and local laws, ordinances, rules and
regulations relating to occupational health and safety and the environment. The
Company and each of the Subsidiaries operates its business as described in the
Prospectus and has such permits, licenses, franchises and authorizations of
governmental or regulatory authorities ("permits"), including, without
limitation, under any applicable Environmental Laws and any applicable state
laws to furnish assisted living services as described under the heading
"Services" beginning on page 29 of the Prospectus, as are necessary to own,
lease and operate its respective properties and to conduct its business in the
manner described in the Prospec-
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tus; the Company and each of the Subsidiaries has fulfilled and performed all of
its material obligations with respect to such permits and no event has occurred
which allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of the rights of
the holder of any such permit; and, except as described in the Prospectus, such
permits contain no restrictions that are materially burdensome to the Company or
any of the Subsidiaries. The Company and the Subsidiaries are not aware of any
existing or imminent matter which could reasonably be expected to adversely
impact their operations or business prospects other than as disclosed in the
Prospectus.
(xiv) This Agreement has been duly authorized, executed, and delivered by
the Company and Prime, and, assuming due authorization, execution, and delivery
by the Underwriters, is a valid and binding agreement of the Company and Prime,
enforceable against the Company and Prime, in accordance with its terms; and at
the Representation Date, the Pricing Agreement will have been duly authorized,
executed, and delivered by the Company and, assuming due authorization,
execution, and delivery by the Representative, will be a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms; provided that the enforceability of the foregoing agreements may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity; provided further that the
indemnification provisions of this Agreement may be unenforceable under general
principles of equity or public policy.
(xv) The issuance and sale of the Firm Shares and the Option Shares by the
Company, the performance by the Company, Prime and the Subsidiaries of their
respective obligations under this Agreement, the Pricing Agreement, and the
consummation of the transactions herein and therein contemplated, including the
application of the net proceeds from the sale of the Firm Shares and the Option
Shares as described in the Prospectus will not (A) conflict with or result in a
breach or violation of any of the terms or provisions of, constitute a default
under, or result in the acceleration of the maturity of any indebtedness under,
any material contact, indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which the Company or any Subsidiary is
a party or by which the Company or any Subsidiary is bound or to which any of
the property or assets of the Company or any Subsidiary is subject, (B) result
in any violation of the provisions of the, certificate of incorporation or by-
laws or other organizational documents, as the case may be, of the Company or
any Subsidiary, or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any
Subsidiary or any of their respective properties, or (C) result in the loss of
tax-exempt status of any tax-exempt bonds described in the Prospectus. For
purposes of this paragraph the phrase "material contract, indenture, mort-
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gage, deed of trust, loan agreement or other material agreement or instrument"
shall mean any contract, indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument that is required to be filed as an exhibit to a
registration statement on Form S-1 pursuant to Section 601(b) of Regulation S-K.
(xvi) Except to the extent obtained prior to the Closing Time, no consent,
approval, authorization, order, registration or qualification of or with any
court or governmental agency or body or any other person is required for the
issue and sale of the Shares or the consummation by the Company and the
Subsidiaries of the transactions contemplated by this Agreement and the Pricing
Agreement except the registration under the 1933 Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as may be
required under state or foreign securities or Blue Sky laws in connection with
the purchase and distribution of the Shares by the Underwriters.
(xvii) Other than as set forth or contemplated in the Prospectus, there
are no legal or governmental proceedings pending to which the Company or any
Subsidiary is a party or of which any property of, or that will be conveyed at
or prior the Closing Time to, the Company or any Subsidiary is the subject
which, (i) are required to be set forth in the Registration Statement or (ii) if
determined adversely to the Company or any Subsidiary, would individually or in
the aggregate be reasonably expected to have a material adverse effect on the
consolidated financial position, stockholders' equity or results of operations
of the Company and the Subsidiaries, and, to the best knowledge of the Company,
no such proceedings are threatened or contemplated by governmental authorities
or threatened by others.
(xviii) The Company and the Subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned by them, as described in the Prospectus, in each case free and
clear of all liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially adversely affect the value of such
property and do not materially adversely interfere with the use made and
proposed to be made of such property by the Company and the Subsidiaries; and
any real property and buildings described in the Prospectus as being held under
lease by the Company or any Subsidiary are held by it under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
materially adversely interfere with the use made and proposed to be made of such
property and buildings by the Company and the Subsidiaries.
(xix) The agreements to which the Company or any of the Subsidiaries is a
party described in the Registration Statement and Prospectus are valid
agreements, enforceable by the Company and the Subsidiaries (as applicable),
except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, xxxx-
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torium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles and, to the Company's knowledge,
the other contracting party or parties thereto are not in material breach or
material default under any of such agreements.
(xx) Except as disclosed in the Prospectus, there are no consensual
encumbrances or restrictions on the ability of any Subsidiary (i) to pay any
dividends or make any distributions on such Corporate Subsidiary's capital stock
or such Partnership Subsidiary's partnership interests or to pay any
indebtedness owed to the Company or any other Subsidiary, (ii) to make any loans
or advances to, or investments in, the Company or any other Subsidiary, or (iii)
to transfer any of its properties or assets to the Company or any other
Subsidiary.
(xxi) The Company and the Subsidiaries maintain insurance with insurers of
recognized financial responsibility of the types and in the amounts generally
deemed adequate for their respective businesses and consistent with insurance
coverage maintained by similar companies in similar businesses, including, but
not limited to, insurance covering real and personal property owned or leased by
the Company or its subsidiaries against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
(xxii) Neither the Company nor any of the Subsidiaries is, or after giving
effect to the issuance and sale of the Shares by the Company (i) an "investment
company" or a company "controlled" by an "Investment company" within the meaning
of the Investment Company Act of 1940, as amended (the "Investment Company
Act"), or (ii) a "holding company" or a "subsidiary company" of a "registered
holding company," as defined in the Public Utility Holding Company Act of 1938,
as amended.
(xxiii) Except as set forth in the Prospectus, no holder of any securities
of the Company has any rights to require the Company to register any securities
of the Company under the 1933 Act.
(xxiv) Other than this Agreement and the Pricing Agreement, the Company is
not a party to any contract, agreement or understanding with any person that
would give rise to a valid claim against the Company for a brokerage commission,
finder's fee or like payment in connection with the sale of the Shares.
(xxv) The Shares have been authorized for inclusion in the Nasdaq National
Market.
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(xxvi) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).
(xxvii) The Company has filed a registration statement pursuant to Section
12(g) of the Exchange Act, to register the Common Stock, has filed an
application to list the Shares on the New York Stock Exchange, and has received
notification that the listing has been approved, subject to official notice of
issuance.
(xxviii) Except as disclosed in the Prospectus, there are no business
relationships or related party transactions required to be disclosed therein by
Item 404 of Regulation S-K of the Commission.
(xxix) The Company and each of the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (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
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xxx) Neither the Company nor any of the Subsidiaries, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company or any Subsidiary has, directly or indirectly, used any corporate funds
for unlawful contributions, gift, entertainment or other unlawful expenses
related to foreign or domestic political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; failed to disclose fully
any contribution in violation of law; violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or made any
unlawful bribe, rebate, payoff, influence, kick-back or other unlawful payment.
(xxxi) No statement, representation, warranty or covenant made by the
Company in any certificate or document required by this Agreement to be
delivered to the Underwriters was or will be, when made, inaccurate, untrue or
incorrect in any material respect.
(xxxii) Neither of the Company nor any of their directors, officers or
controlling persons, has taken or will take, directly or indirectly, any action
resulting in a violation of Rule 10b-6 under the 1934 Act, or designed to cause
or result in or that has constituted or reasonably might be expected to
constitute, the stabilization or manipula-
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tion of the price of any security of the Company to facilitate the sale or
resale of the Shares.
(xxxiii) Neither the execution, delivery or performance of the
transactions contemplated by the Formation (as defined in the Prospectus) nor
the consummation of the transactions contemplated thereby (i) required any
consent, approval, authorization or other order of, or registration or filing
with, any court regulatory body, administrative agency or other governmental
body, agency or official which was not obtained or filed, (ii) conflicted with
or constituted a default under, the certificate or articles of incorporation or
bylaws, or other organizational documents, of the Company or any of the
Subsidiaries, (iii) except as disclosed in the Prospectus, conflicted or
constituted a breach of or default under, any material agreement, indenture,
lease, or other instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective properties may be
bound, or violated any statute, law, regulation or filing of judgment,
injunction, order or decree applicable to the Company or any of the Subsidiaries
or any of the respective properties, or resulted in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or
any of the Subsidiaries pursuant to the terms of any agreement or instrument to
which the Company or any of the Subsidiaries may be bound or to which any of the
property or assets of any of them is subject, in each case which, individually
or in the aggregate, would result in a material adverse change in the condition
(financial or other), business, properties, prospects, net worth or results of
operations of the Company and the Subsidiaries taken as a whole.
(xxxiv) At the time of the Formation (as defined in the Prospectus), River
Oaks Partnership and Ponds of Pembroke will have aggregate unrestricted cash
balances in the minimum amount of $800,000 and the Original Facilities (as
defined in the Prospectus) will have been operated in the ordinary course of
business in accordance with past practices and will be in good condition and
repair, with all maintenance and capital expenditures having been made in
accordance with past practices.
(xxxv) The Company has entered into definitive agreements with
________________, containing no contingencies or conditions which have not been
satisfied, providing for the issuance of replacement credit enhancement securing
the $65.0 million of tax-exempt bonds relating to the Hallmark and the
Devonshire facilities on the terms described in the Prospectus.
(xxxvi) The Company estimates that approximately 99.9% of its pro forma
revenues are derived from private pay sources.
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SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING; RESERVATION OF
SHARES.
2(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
sell the 5,000,000 Firm Shares to each Underwriter, severally and not jointly,
and each Underwriter, severally and not jointly, agrees to purchase from the
Company, at the price per share set forth in the Pricing Agreement, the number
of Firm Shares set forth in Schedule A hereto opposite the name of such
Underwriter (except as otherwise provided in the Pricing Agreement), plus any
additional number of Firm Shares which such Underwriter may become obligated to
purchase pursuant to Section 9 hereof.
If the Company has elected not to rely upon Rule 430A under the 1933 Act
Regulations, the public offering price and the purchase price per share to be
paid by the Underwriters for the Shares have each been determined and set forth
in the Pricing Agreement, dated the date hereof, and an amendment to the
Registration Statement and the Prospectus reflecting such information will be
filed before the Registration Statement becomes effective.
If the Company has elected to rely upon Rule 430A under the 1933 Act
Regulations, the purchase price per share to be paid by the Underwriters for the
Shares shall be an amount equal to the public offering price, less an amount per
share to be determined by agreement between the Representative and the Company.
The public offering price per share of the Shares shall be a fixed price to be
determined by agreement between the Representative and the Company. The public
offering price and the purchase price, when so determined, shall be set forth in
the Pricing Agreement. In the event that such prices have not been agreed upon
and the Pricing Agreement has not been executed and delivered by all parties
thereto by the close of business on the fourth business day following the date
of this Agreement, this Agreement shall terminate forthwith, without liability
of any party to any other party hereunder other than pursuant to Section 6
hereof, unless otherwise agreed to by the Company and the Representative.
2(b) In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the Underwriters to purchase up to an additional
750,000 shares of Common Stock, as Option Shares, at the price per share set
forth in the Pricing Agreement. The option hereby granted will expire 30 days
after the date hereof (or, if the Company has elected to rely upon Rule 430A
under the 1933 Act Regulations, 30 days after the Representation Date) and may
be exercised in whole or in part from time to time only for the purpose of
covering over-allotments which may be made in connection with the offering and
distribution of the Firm Shares upon notice by the Representative to the
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Company setting forth the number of Option Shares as to which the Underwriters
are then exercising the option and the time, date and place of payment and
delivery for such Option Shares. Any such time and date of delivery (a "Date of
Delivery") shall be determined by the Representative but shall not be later than
seven full business days after the exercise of said option, nor in any event
prior to Closing Time, as hereinafter defined, unless otherwise agreed upon by
the Representative and the Company. If the option is exercised as to all or any
portion of the Option Shares, the Option Shares shall be purchased by the
Underwriters, severally and not jointly, in proportion to their respective Firm
Share underwriting obligations as set forth in Schedule A hereto (except as may
be otherwise provided in the Pricing Agreement).
2(c) Payment of the purchase price for and delivery of certificates for
the Firm Shares (the "Closing") shall be made at the offices of Friedman,
Billings, Xxxxxx & Co., Inc., 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx,
or at such other place as shall be agreed upon by the Representative and the
Company, at 10:00 a.m., Washington, D.C. time, on the third business day
following the date the Registration Statement becomes effective (or, if the
Company has elected to rely upon Rule 430A, the third business day after the
Representation Date), or such other time not later than 10 business days after
such date as shall be agreed upon by the Representative and the Company (such
time and date of payment and delivery being herein called "Closing Time"). In
addition, in the event that any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price for and the delivery of such Option
Shares shall be made at the above-mentioned offices of Friedman, Billings,
Xxxxxx & Co., Inc., or at such other place as shall be mutually agreed upon by
the Representative and the Company, on each Date of Delivery as specified in the
notice from the Representative to the Company. Payment shall be made to the
Company by certified or official bank check or checks in New York Clearing House
or similar next day funds payable to the order of the Company or, at the
election of the Company made at the time of execution of this Agreement, in same
day funds, provided that the Company reimburses the Underwriters for the
additional cost of same day funds, in each case against delivery to the
Representative for the respective accounts of the Underwriters of certificates
for the Shares to be purchased by the Underwriters. The certificates for the
Firm Shares and the Option Shares shall be in such authorized denominations and
registered in such names as the Representative may request in writing at least
two business days before Closing Time or each Date of Delivery, as the case may
be. It is understood that each Underwriter has authorized the Representative,
for its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Shares which it has agreed to purchase. FBR,
individually and not as the Representative of the Underwriters, may (but shall
not be obligated to) make payment of the purchase price for the Shares to be
purchased by any Underwriter whose check has not been received by Closing Time,
but such payment shall not relieve such Underwriter from its obligations
hereunder. The certificates for the Firm Shares and the Option
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Shares will be made available for examination and packaging by the Underwriters
not later than 10:00 a.m., Washington, D.C. time, on the last business day prior
to Closing Time or each Date of Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANY.
3(a) The Company covenants with each Underwriter as follows:
(i) The Company will (i) prepare the Prospectus in a form approved by
the Representative and file such Prospectus pursuant to Rule 424(b) of the 1933
Act Regulations not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) of the 1933
Act Regulations; (ii) advise the Representative, promptly after it receives
notice thereof, of the time when the Registration Statement, or any amendment
thereto, has been filed or becomes effective or any supplement to the Prospectus
or any amended Prospectus has been filed; (iii) advise the Representative,
promptly after it receives notice thereof, of (A) the receipt of any comments
from the Commission, (B) the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any preliminary prospectus or the
Prospectus, (C) the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, (D) the initiation or threatening of any proceeding
for any such purpose, or (E) any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; (iv) advise the Representative promptly of the occurrence of any
event, during such period as a prospectus is required by law to be delivered in
connection with sales by an Underwriter or a dealer, which makes any statement
of a material fact made in the Registration Statement or the Prospectus untrue
or which requires the making of any additions to or changes in the Registration
Statement or the Prospectus in order to make the statements therein not
misleading; and, (v) in the event of the issuance of any stop order or any order
preventing or suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, use promptly its best efforts to obtain its
withdrawal.
(ii) The Company will (i) give the Representative notice of its
intention to prepare or file any amendment to the Registration Statement
(including any post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus that the Company proposes for use
by the Underwriters in connection with the offering of the Shares that differs
from the prospectus on file at the Commission at the time the Registration
Statement becomes effective, whether or not such revised prospectus is required
to be filed pursuant to Rule 424(b) of the 1933 Act Regulations), (ii) furnish
the Underwriters with copies of any such amendments or supplements a reasonable
time prior to the proposed filing or use thereof, and (iii) not file any such
amend-
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ment or any supplement or use any such prospectus to which the Representative
shall reasonably object promptly after reasonable notice thereof.
(iii) Promptly from time to time, the Company will take such action
as the Representative may reasonably request to qualify the Shares for offering
and sale under the securities laws of such jurisdictions as the Representative
may request and to comply with such laws so as to permit the continuance of
sales and dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Shares, provided that in connection
therewith the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any jurisdiction. In
addition, the Company agrees to comply in all material respects with (i) the
undertakings set forth in numbered paragraphs 12, 13, 14 and 18 of its
"Application for Exemption Under Sections 352-9(2) and 359-f(2) of the New York
General Business Law for a Real Estate Syndication Offering Registered with the
Securities and Exchange Commission Under the Federal Securities Act of 1933,"
dated March 21, 1996, as amended to date and as may be amended hereafter, and
(ii) any applicable provisions of Section 352-e of the New York General Business
Law or the rules and regulations promulgated thereunder.
(iv) The Company will furnish each Underwriter with copies of the
Prospectus in such quantities as such Underwriter may from time to time
reasonably request. If the delivery of a prospectus is required at any time
prior to the expiration of nine months after the time of issue of the Prospectus
in connection with the offering or sale of the Shares, and if at such time any
event shall have occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be necessary
during such period to amend or supplement the Prospectus in order to comply with
the 1933 Act and the 1933 Act Regulations, the Company will notify the
Representative and upon the Representative's request will prepare and furnish
without charge to the Underwriters and to any dealer in securities as many
copies as the Underwriters may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance. In case the Underwriters are
required to deliver a prospectus in connection with sales of any of the Shares
at any time nine months or more after the time of issue of the Prospectus, upon
the Underwriter's request but at the Underwriter's expense, the Company will
prepare and deliver to the Underwriters as many copies as the Underwriters may
request of an amended or supplemented Prospectus complying with Section 10(a)(3)
of the 1933 Act.
-16-
(v) The Company will make generally available to its securityholders
as soon as practicable, but in any event not later than eighteen months after
the "effective date of the Registration Statement" (as defined in Rule 158(c)),
an earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the 1933 Act and the rules and
regulations thereunder (including, at the option of the Company, Rule 158).
(vi) The Company will furnish to its stockholders, as soon as
practicable after the end of each fiscal year, an annual report (including a
balance sheet and statements of income, stockholders' equity and cash flow of
the Company and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter ending
after the effective date of the Registration Statement), consolidated summary
financial information of the Company and its subsidiaries for such quarter in
reasonable detail.
(vii) During a period of five years from the effective date of the
Registration Statement, the Company will furnish to the Representative copies of
all reports or other communications (financial or other) furnished to
stockholders, and deliver to the Representative, as soon as they are available,
copies of any reports and financial statements furnished to or filed with the
Commission or any national securities exchange or quotation system on which any
class of securities of the Company is listed.
(viii) The Company will not invest, reinvest or otherwise use the
proceeds received by the Company from the sale of the Firm Shares or Option
Shares in such a manner, or take any action or omit to take any action, that
would cause the Company to become an "investment company" as that term is
defined in the Investment Company Act.
(ix) The Company will use the net proceeds of the sale of the Firm
Shares and Option Shares for the purposes described in the Prospectus under "Use
of Proceeds."
(x) The Company will take all action to ensure that the Common Stock
continues to be listed on the Nasdaq National Market or any national securities
exchange.
(xi) Except for the authorization of actions permitted to be taken by
the Underwriters as contemplated herein or in the Prospectus, the Company will
not (A) take, directly or indirectly, any action designed to cause or to result
in, or that might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares, (B) sell, bid for or pur-
-17-
chase the Shares or pay any person any compensation for soliciting purchases of
the Shares, or (C) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(xii) During the period from the date of the Pricing Agreement until
one year after Closing Time, the Company will not, without the prior written
consent of the Representative, directly or indirectly, sell, offer to sell,
grant any option for the sale of, or otherwise dispose of, any Common Stock or
shares of Common Stock or any other security convertible into or exchangeable
into or exercisable for Common Stock, otherwise than (i) in accordance with this
Agreement, (ii) in connection with the Company's stock option plans described in
the Prospectus, or (iii) as otherwise contemplated in the Prospectus.
(xiii) The Company and Prime shall use its best efforts to do and
perform all things required or necessary to be done and performed under this
Agreement by the Company prior to the Closing Time and to satisfy all conditions
precedent on the Company's part to the delivery of the Shares.
SECTION 4. PAYMENTS OF FEES AND EXPENSES. The Company covenants and agrees
with the Underwriters that (a) the Company will pay or cause to be paid the
following: (i) the printing and filing of the Registration Statement as
originally filed and of each amendment thereto, (ii) the preparation, issuance
and delivery of the certificates for the Shares to the Underwriters, (iii) the
fees and other charges of the Company's counsel and accountants, (iv) the
qualification of the Shares under securities laws and real estate syndication
laws in accordance with the provisions of Section 3(a)(iii) hereof, including
filing fees and the reasonable fees and other charges of counsel for the
Underwriters in connection therewith and in connection with the preparation of
the Blue Sky Memorandum, (v) the printing and delivery to the Underwriters of
copies of the Registration Statement as originally filed and of each amendment
thereto, of the preliminary prospectuses, and of the Prospectus and any
amendments or supplements thereto, (vi) the printing and delivery to the
Underwriters of copies of the Blue Sky Memorandum; (vii) the fee of the NASD,
including the reasonable fees and other charges of counsel for the Underwriters
in connection with the NASD's review of the terms of the proposed public
offering of the Shares, (viii) the fees and expenses incurred in connection with
the listing of the Common Stock on the Nasdaq National Market, including filing
and listing fees, and (ix) all out-of-pocket expenses of the Underwriters,
including reasonable fees and disbursements of counsel, reasonably incurred by
the Underwriters in making preparations for the offering, purchase, sale and
delivery of the Shares.
If this Agreement is canceled or terminated by the Representative in
accordance with the provisions of Section 5 hereof, the Company also shall
reimburse the Underwrit-
-18-
ers for its out-of-pocket expenses, including the reasonable fees and other
charges of counsel for the Underwriters, to the extent provided in and limited
by Section 8 hereof.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters hereunder, as to the Shares to be delivered at each Date of
Delivery, shall be subject to the condition that all representations and
warranties and other statements of the Company herein are, at and as of such
Date of Delivery, true and correct, the condition that the Company shall have
each performed all of its obligations hereunder theretofore to be performed, and
the following additional conditions:
5(a) The Registration Statement shall have become effective not later than
5:30 p.m. Eastern time on the first business day following the date hereof, no
stop order suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been complied
with to the Representative's reasonable satisfaction. If the Company has
elected to rely upon Rule 430A of the 1933 Act Regulations, the price of the
Shares and any price-related information previously omitted from the effective
Registration Statement pursuant to such Rule 430A shall have been transmitted to
the Commission for filing pursuant to Rule 424(b) of the 1933 Act Regulations
within the applicable time period prescribed for such filing by the 1933 Act
Regulations and in accordance with Section 3(a) hereof, or a post-effective
amendment providing such information shall have been promptly filed and declared
effective in accordance with the requirements of Rule 430A of the 1933 Act
Regulations.
5(b) Winston & Xxxxxx, counsel for the Company, shall have furnished to
the Representative their written opinion (which shall state that counsel for the
Underwriters may rely upon such opinion in rendering their opinion pursuant to
Section 5(b) hereof), dated such Date of Delivery, in form and substance
satisfactory to the Representative, to the effect that:
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its business as
described in the Prospectus.
(ii) Each of the Corporate Subsidiaries has been duly incorporated and
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and authority to own its
properties and conduct its business as described in the Prospectus.
-19-
(iii) Each Limited Partnership Subsidiary was formed and is validly
existing and in good standing under the laws of its jurisdiction, with limited
partnership power and authority to own its properties and conduct its business
as described in the Prospectus.
(iv) The Company has an authorized capitalization as set forth in the
Prospectus; all of the issued shares of capital stock of the Company (including
the Shares being delivered at such Date of Delivery) have been duly and validly
authorized and issued and are fully paid and nonassessable; the terms of the
Shares conform in all material respects to all statements and descriptions
related thereto contained in the Prospectus.
(v) Each of the Company and the Subsidiaries has been duly qualified
as a foreign corporation, limited partnership, or otherwise, as appropriate, for
the transaction of business and is in good standing (to the extent applicable)
under the laws of each other jurisdiction specified in such opinion (which shall
include each jurisdiction in which the Company or any Subsidiary owns, leases,
or manages properties, or conducts any other business, so as to require such
qualification, or is subject to no material liability or disability by reason of
failure to be so qualified in any such jurisdiction (such counsel being entitled
to rely in respect of the opinion in this clause in respect of matters of fact
upon certificates of officers of the Company and governmental authorities,
provided that such counsel shall state that they believe that both the
Underwriters and they are justified in relying upon such certificates)).
(vi) All of the outstanding shares of capital stock of each Corporate
Subsidiary have been duly authorized and are validly issued, fully paid and
nonassessable, and are owned by the Company, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature.
(vii) To the best of such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental proceedings pending
to which the Company or any Subsidiary is a party or of which any property of
the Company or any Subsidiary is the subject which would individually or in the
aggregate, be reasonably expected to have a material adverse effect on the
consolidated financial position, stockholders' equity or results of operations
of the Company and its subsidiaries; and, to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(viii) This Agreement has been duly authorized, executed, and
delivered by the Company. The Pricing Agreement has been duly authorized,
executed, and delivered by the Company.
-20-
(ix) The issuance and sale of the Shares being delivered at such Date
of Delivery by the Company, the performance by the Company and the Subsidiaries
of their respective obligations under this Agreement, the Pricing Agreement, and
the consummation of the transactions herein and therein contemplated, including
the application of the net proceeds from the sale of the Shares as described in
the Prospectus will not (A) conflict with or result in a breach or violation of
any of the terms or provisions of, constitute a default under, or result in the
acceleration of the maturity of any indebtedness under, any indenture, mortgage,
deed of trust, loan agreement, or other agreement or instrument filed or
incorporated by reference in the Registration Statement to which the Company or
any Subsidiary is a party or by which the Company or any Subsidiary is bound or
to which any of the property or assets of the Company or any Subsidiary is
subject or (B) result in any violation of the provisions of the certificate of
incorporation or by-laws, certificate of limited partnership, partnership
agreement or other organizational documents, as the case may be, of the Company
or any Subsidiary, or any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body having jurisdiction over the
Company or any Subsidiary or any of their respective properties.
(x) The Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized for issuance and
sale to the Underwriters, and, when issued and delivered by the Company pursuant
to this Agreement against payment of the consideration set forth in the Pricing
Agreement, will be duly and validly issued and fully paid and non-assessable.
The issuance of the Shares is not subject to any preemptive or similar rights.
The terms of the Shares conform to all statements and descriptions related
thereto contained in the Prospectus and comply with all applicable legal
requirements. The Shares conform to the provisions of the Charter. The form of
share certificate to be used to evidence the Shares is in due and proper form
and complies with all applicable legal requirements.
(xi) The issuance and sale of the Shares being delivered at such Date
of Delivery by the Company, the performance by the Company and the Subsidiaries
of their respective obligations under this Agreement, the Pricing Agreement, and
the consummation of the transactions herein and therein contemplated, including
the application of the proceeds from the sale of the Shares as described in the
Prospectus will not affect the treatment of the bonds designated "tax-exempt
bonds" in the Prospectus.
(xii) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body or other
person is required for the issuance and sale of the Shares by the Company or the
performance by the Company or any Subsidiary of their respective obligations
under this Agreement, the Pricing Agreement, and the consummation of the
transactions herein and therein contemplated, other than such consents,
approvals, authorizations, registrations or qualifications as have
-21-
been obtained prior to the Closing Time or may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Shares by the Underwriters.
(xiii) The statements made under the captions "Risk Factors," "The
Company and the Formation," "Management's Discussion and Analysis of Financial
Condition and Results of Operation - Overview," "Business - Facilities,"
"Business -Hospital Affiliations," "Business - Development," "Business -
Government Regulation," "Business - The Company and the Formation," "Management
- Compensation of Directors; Indemnification Agreements," "Management--Stock
Incentive Plans," "Management-Employment Agreements", "Certain Transactions,"
"Description of Capital Stock," and "Shares Available for Future Sale," in the
Prospectus and Items 14 and 15 of Part II of the Registration Statement, to the
extent they constitute matters of law or legal conclusions or constitute
summaries of documents described therein, are true and accurate in all material
respects, and fairly present the information called for with respect to such
legal matters, documents and proceedings.
(xiv) The Company is not, and (assuming the application by the
Company of the net proceeds of the issue and sale of the Shares in the manner
described in the Prospectus under the caption "Use of Proceeds") after giving
effect to the issuance and sale of the Shares by the Company will not be, an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act.
(xv) The Registration Statement, as of the Effective Date, and the
Prospectus, as of its date, appeared on their face to be appropriately
responsive in all material respects to the requirements of the 1933 Act and the
1933 Act Regulations, except that such counsel need express no opinion as to the
financial statements and related notes thereto and the other financial,
statistical, and accounting data included in the Registration Statement or the
Prospectus, or as to the accuracy, completeness or fairness of the statements
contained in the Registration Statement, except to the extent set forth in
paragraph (xiii) and the paragraph immediately following paragraph (xx).
(xvi) The Company and each of the Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits"), including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease and operate its respective
properties and to conduct its business in the manner described in the
Prospectus; to the best of such counsel's knowledge after due inquiry, the
Company and each of the Subsidiaries has fulfilled and performed all of its
material obligations with respect to such permits and no event has occurred
which allows, or after notice or lapse of time would allow, revocation or
termination thereof or
-22-
results in any other material impairment of the rights of the holder of any such
permit, subject in each case to such qualification as may be set forth in the
Prospectus; and, except as described in the Prospectus, such permits contain no
restrictions that are materially burdensome to the Company or any of the
Subsidiaries. Without limiting the foregoing, each of the Company's facilities
currently holds (or has pending a renewal application for) the appropriate
permit authorizing such facility to furnish services as described under the
heading "Services" beginning on page ___ of the Prospectus.
(xvii) To the knowledge of such counsel, there is no action, suit, or
proceeding before or by any court or governmental agency or body, domestic or
foreign, now pending or threatened against the Company, any Subsidiary, or any
officer or director of any of the foregoing that is required to be disclosed in
the Registration Statement (other than as disclosed therein). To the knowledge
of such counsel, there are no contracts or documents of a character that are
required to be described in the Prospectus or filed as exhibits to or
incorporated by reference into the Registration Statement by the 1933 Act or the
1933 Act Regulations that have not been so described or filed.
(xviii) To the best of such counsel's knowledge after due inquiry,
the Company owns directly or indirectly the ownership interests in the
Subsidiaries set forth on Exhibit 21 to the Registration Statement.
(xix) To the best of such counsel's knowledge after due inquiry,
except as otherwise specifically set forth in the Registration Statement, the
Company and each of the Subsidiaries has good and marketable title, free and
clear of all liens, claims, encumbrances and restrictions, except liens for
taxes not yet due and payable, to all property and assets described in the
Registration Statement as being owned by it.
(xx) The Formation (as such term is defined in the Prospectus) and
each of the documents and agreements executed and delivered by the Company, the
Subsidiaries and Prime in connection with the Formation have been duly
authorized, executed and delivered by the parties thereto, are the valid and
binding agreements of the parties thereto enforceable by the Company in
accordance with their terms, and are sufficient in form to transfer to the
Company all right, title and interest in the Devonshire and Heritage facilities
and the Acquired Facilities (as defined in the Prospectus) and all leasehold
right, title and interest in the Leased Facilities (as defined in the
Prospectus).
In giving its opinion required by this Section 5(b), such counsel shall
additionally state that, although it has not independently verified and is not
passing upon and assumes no responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration or Prospectus (except
to the extent set forth in paragraph (xiii) above), no facts have come to the
attention of such counsel that lead it to believe that, as of its
-23-
effective date, the Registration Statement or any further amendment thereto made
by the Company prior to such Date of Delivery contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading (it being understood
that such counsel need express no opinion as to the financial statements and
related notes thereto and the other financial, statistical, and accounting data
included in the Registration Statement or the Prospectus) or that, as of its
date, the Prospectus or any further amendment or supplement thereto made by the
Company prior to such Date of Delivery contained an untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading (it being understood that such counsel need express no opinion as to
the financial statements and related notes thereto and the other financial,
statistical, and accounting data included in the Registration Statement or the
Prospectus) or that, as of such Date of Delivery, either the Registration
Statement or the Prospectus or any further amendment or supplement thereto made
by the Company prior to such Date of Delivery contains an untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading
(it being understood that such counsel need express no opinion as to the
financial statements and related notes thereto and the other financial,
statistical, and accounting data included in the Registration Statement or the
Prospectus).
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction other than the laws of the United
States, the general corporate law of Illinois and the general corporate law of
Delaware.
5(c) Xxxxxx & Bird L.L.P., counsel for the Underwriters, shall have
furnished to the Representative such opinion or opinions, dated such Date of
Delivery, with respect to the incorporation of the Company, this Agreement, the
Pricing Agreement, the validity of the Shares being delivered at such Date of
Delivery, the Registration Statement, the Prospectus, and other related matters
as the Representative may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to enable
them to pass upon such matters.
5(d) At the time of the execution of this Agreement and on the effective
date of the most recently filed post-effective amendment to the Registration
Statement and also at each Date of Delivery, Ernst & Young LLP shall have
furnished to the Representative a letter or letters, dated the respective date
of delivery thereof, in form and substance satisfactory to the Representative,
to the effect set forth in Annex I hereto and, if the Company has elected to
rely upon Rule 430A of the 1933 Act Regulations, to the further effect that they
have carried out procedures specified in paragraph (v) of Annex I with respect
to certain amounts, percentages, and financial information specified by the
Repre-
-24-
sentative and deemed to be part of the Registration Statement pursuant to
Rule 430A(b) and have found such amounts, percentages and financial information
to be in agreement with the records specified in such paragraph (v).
5(e) The Registration Statement and the Prospectus shall contain all
statements that are required to be stated therein in accordance with the 1933
Act and the 1933 Act Regulations and shall conform in all material respects to
the requirements of the 1933 Act and the 1933 Act Regulations. Neither the
Registration Statement nor the Prospectus shall contain any untrue Statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
5(f) No action, suit, or proceeding at law or in equity shall be pending
or, to the knowledge of the Company, be threatened against the Company or any
Subsidiary, that would be required to be described in the Prospectus other than
as described therein.
5(g) (A) Neither the Company nor any of its Subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus (i) any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or other),
business, prospects, properties, net worth or results of operations, whether or
not arising in the ordinary course of business or (ii) any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus,
and (B) since the respective dates as of which information is given in the
Prospectus and there shall not have been any change in the capital stock or
long-term debt of the Company or any Subsidiary or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company and the Subsidiaries, otherwise than as set forth or contemplated in
the Prospectus, the effect of which, in any such case described in clause (A) or
(B), is in the Representative's judgment so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares being delivered at such Date of Delivery on the terms and in the
manner contemplated in the Prospectus.
5(h) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the Nasdaq National Market or any national stock exchange; (ii) a
general moratorium on commercial banking activities declared by either Federal
or District of Columbia authorities; or (iii) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war, if the effect of any such event specified in
this clause (iii), in the Representative's judgment, makes it impractica-
-25-
ble or inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Date of Delivery on the terms and in the manner
contemplated by the Prospectus.
5(i) The Shares to be sold by the Company at such Date of Delivery shall
have been duly authorized for inclusion on the Nasdaq National Market.
5(j) The Company shall have furnished or caused to be furnished to the
Representative at such Date of Delivery certificates of officers of the Company
satisfactory to the Underwriters as to the accuracy of the representations and
warranties of the Company herein at and as of such Date of Delivery, as to the
performance by the Company of all of its obligations hereunder to be performed
at or prior to such Date of Delivery, as to the matters set forth in subsections
(a) and (e) through (g) of this Section and as to such other matters as the
Representative may reasonably request.
5(k) The Company shall not have failed at or prior to the Closing to
perform or comply with any of the agreements herein contained and required to be
performed or complied with by the Company at or prior to the Closing.
If any condition specified in this Section 5 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Underwriters by notice to the Company at any time at or prior to the Closing
Time, and such termination shall be without liability of any party to any other
party except as provided in Section 8 hereof.
SECTION 6. INDEMNIFICATION.
6(a) The Company and Prime, jointly and severally, will indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of section 15 of the 1933 Act, against any losses, claims,
damages, or liabilities to which any Underwriter or such controlling person may
become subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Underwriters and such controlling persons for any legal
or other expenses reasonably incurred by the Underwriters or such controlling
persons in connection with investigating or defending any such action or claim
as such expenses are incurred; provided, however, that (i) neither the Company
or Prime shall be liable in any such case to
-26-
the extent that any such loss, claim, damage, or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the second paragraph under the caption "Underwriting"
in the Prospectus and (ii) such indemnity with respect to any Preliminary
Prospectus shall not inure to the benefit of the Underwriters (or any person
controlling the Underwriters) if the person asserting any such loss, claim,
damage or liability did not receive a copy of the Prospectus (or the Prospectus
as supplemented) at or prior to the confirmation of the sale of Shares to such
person in any case where such delivery is required by the 1933 Act and the
untrue statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as supplemented).
6(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company and each of the Company's directors, each officer of the Company who
signed the Registration Statement, and each other person who controls the
Company within the meaning of the 1933 Act, against any losses, claims, damages,
or liabilities to which the Company or each such other person may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
second paragraph under the caption "Underwriting" in the Prospectus, and will
reimburse the Company or each such other person for any legal or other expenses
reasonably incurred by the Company or each such other person in connection with
investigating or defending any such action or claim as such expenses are
incurred.
6(c) Promptly after receipt by an indemnified party under subsection 6(a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying
-27-
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation, unless such indemnified party reasonably objects to such
assumption on the ground that the named parties to any such action (including
any impleaded parties) include both such indemnified party and an indemnifying
party and such indemnified party reasonably believes that there may be legal
defenses available to it that are different from or in addition to those
available to such indemnifying party. In no event shall the indemnifying parties
be liable for fees and expenses of more than one counsel (in addition to local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
6(d) If the indemnification provided for in this Section 6 is unavailable
to, or insufficient to hold harmless, an indemnified party under subsection 6(a)
or (b) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection 6(c)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Shares purchased
under this Agreement (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Underwriters
with respect to the Shares purchased under this Agreement, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company on the
one hand or the Underwriters on the other and the parties relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this subsection 6(d)
-28-
were determined by pro rata allocation (even if the Underwriters 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 above in this
subsection 6(d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection 6(d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection 6(d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 6(d) are several in proportion to the respective number of shares
purchased by each of the Underwriters hereunder and not joint.
6(e) The obligations of the Company and Prime under this Section 6 shall
be in addition to any liability which the Company and Prime may otherwise have
and shall extend, upon the same terms and conditions, to each person, if any,
who controls the Underwriters within the meaning of the 1933 Act; and the
obligations of the Underwriters under this Section 6 shall be in addition to any
liability which the Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company
(including any person who, with his or her consent, is named in the Registration
Statement as about to become a director of the Company) and to each person, if
any, who controls the Company within the meaning of the 0000 Xxx.
6(f) The provisions of this Section 6 shall supersede the indemnification
provisions included in the letter agreement dated __________, 1997 among the
Underwriters, on the one hand, and the Company, on the other hand (the
"Engagement Letter"), insofar, but only insofar, as such indemnification
provisions relate to any such loss, claim, damage or liability that arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in any preliminary prospectus, the Registration
Statement or the Prospectus or any amendment or supplement thereto. In all
other respects, the provisions of the Engagement Letter shall remain in full
force and effect.
SECTION 7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties and other
statements of the Company and the Underwriters, as set forth in this Agreement
and the Pric-
-29-
ing Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of the Underwriters or any controlling person of the Underwriters, or the
Company, or any officer or director or controlling person of the Company, and
shall survive delivery of and payment for the Shares.
SECTION 8. TERMINATION OF AGREEMENT. The Underwriters may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing
Time, pursuant to Section 5, in which event the Company will reimburse the
Underwriters for all out of-pocket expenses, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
offering, purchase, sale and delivery of the Shares and in connection with their
services rendered pursuant to the Engagement Letter; but the Company shall then
be under no further liability to the Underwriters in respect of the Shares not
so delivered except with respect to the Company as provided in Section 4 and
Section 6 hereof.
SECTION 9. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more of
the Underwriters shall fail at Closing Time to purchase the Shares which it or
they are obligated to purchase under this Agreement and the Pricing Agreement
(the "Defaulted Shares"), the Representative shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Shares in such amounts as may be agreed upon and upon the terms
herein set forth; if, however, the Representative shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Shares does not exceed ten percent (10%) of
the Shares, the non-defaulting Underwriters shall be obligated to purchase the
full amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all non-defaulting
Underwriters; or
(b) if the number of Defaulted Shares exceeds ten percent (10%) of the
Shares, this Agreement shall terminate without liability on the part of any non-
defaulting Underwriter.
No action taken pursuant to this Section 9 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, the Representative and the Company each shall have the right to
postpone the Closing Time for a period not exceeding seven days in order to
effect any required
-30-
changes in the Registration Statement or Prospectus or in any other documents or
arrangements.
SECTION 10. NOTICES. All statements, requests, notices and agreements
hereunder shall be in writing, and, if to the Underwriters, shall be delivered
or sent by mail, telex or facsimile transmission to Friedman, Billings, Xxxxxx &
Co., Inc., 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention:
Xxxx Xxxxxxxx; if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Xxxx X. Xxxxxxx. Any such statements,
requests, notices or agreements shall take effect at the time of receipt
thereof.
SECTION 11. PARTIES. This Agreement and the Pricing Agreement shall be
binding upon, and inure solely to the benefit of, (i) the Underwriters, the
Company and Prime, and (ii) to the extent provided in Sections 6 and 7 hereof,
the officers and directors of the Company and the Underwriters and each person
who controls the Company or the Underwriters, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement or the Pricing
Agreement. No purchaser of any of the Shares from the Underwriters shall be
deemed a successor or assign merely by reason of such purchase.
SECTION 12. TIME OF ESSENCE. Time shall be of the essence of this
Agreement and the Pricing Agreement. As used herein, the term "business day"
shall mean any day when the Commission's office in Washington, D.C. is open for
business.
SECTION 13. CHOICE OF LAW. This Agreement and the Pricing Agreement shall
be governed by and construed in accordance with the laws of the State of
Illinois.
SECTION 14. COUNTERPARTS. This Agreement may be executed by any one or
more of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us four counterparts hereof, and, upon the acceptance hereof by the
Underwriters, this letter and such acceptance hereof shall constitute a binding
agreement between the Underwriters, the Company and Prime.
Very truly yours,
BROOKDALE LIVING COMMUNITIES, INC.
By:________________________
Name:
Title:
THE PRIME GROUP, INC.
By: __________________________
Name:________________________
Title:__________________________
CONFIRMED AND ACCEPTED,
as of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX
& CO., INC.
By:_________________________
Name:____________________
Title:_____________________
-31-
SCHEDULE A
Number of
Firm Shares
Underwriter to be Purchased
-32-
ANNEX I
Pursuant to Section 5(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Representative to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the 1933 Act and the
applicable rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplemental
financial information and schedules audited (and, if applicable, and/or pro
forma financial information examined) by them and included in the Prospectus or
the Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the related published
rules and regulations thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute of Certified
Public Accountants of the unaudited consolidated interim financial statements as
indicated in their reports thereon, copies of which have been furnished to the
Underwriters;
(iii) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the Company for
the five recent fiscal years included in the Prospectus agrees with the
corresponding amounts (after restatements where applicable) in the audited
consolidated financial statements for such five fiscal years for such fiscal
years;
(iv) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a reading
of the unaudited financial statements and other information referred to below, a
reading of the latest available interim financial statements of the Company and
its subsidiaries, inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited financial statements included
in the Prospectus, inquiries of officials of the Company and its subsidiaries
responsible for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their attention
that caused them to believe that:
(A) the unaudited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus do not comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the related published rules and
regulations thereunder, or are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent with the basis
for the audited consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus;
-33-
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding items in
the unaudited consolidated financial statements from which such data and items
were derived, and any such unaudited data and items were not determined on a
basis substantially consistent with the basis for the corresponding amounts in
the audited consolidated financial statements included in the Prospectus;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived any unaudited condensed financial
statements referred to in Clause (A) and any unaudited income statement data and
balance sheet items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with the basis for the
audited consolidated financial statements included in the Prospectus;
(D) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated capital
stock (other than issuances of capital stock upon exercise of options and stock
appreciation rights, upon earn-outs of performance shares and upon conversions
of convertible securities, in each case which were outstanding on the date of
the latest financial statements included in the Prospectus) or any increase in
the consolidated long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or other items specified by the
Underwriters or any increases in any items specified by the Underwriters, in
each case as compared with amounts shown in the latest balance sheet included in
the Prospectus, except in each case for changes, increases or decreases which
the Prospectus discloses have occurred or may occur or which are described in
such letter; and
(E) for the period from the date of the latest financial statements
included in the Prospectus to the specified date referred to in Clause (D) there
were any decreases in consolidated net revenues or operating profit or the total
or per share amounts of consolidated net income or other items specified by the
Underwriters, or any increases in any items specified by the Underwriters, in
each case as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the Underwriters, except
in each case for decreases or increases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(v) In addition to the audit referred to in their report(s) included
in the Prospectus and the limited procedures, inspection of minute books,
inquiries and other procedures referred to in paragraphs (iii) and (IV) above,
they have carried out certain specified procedures, not constituting an audit in
accordance with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the Underwriters,
which are derived from the general accounting records of the Company and its
subsidiaries, which appear in the Prospectus, or in Part II of, or in exhibits
and schedules to, the Registration Statement specified by the Underwriters, and
have compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and have found
them to be in agreement.
-34-
Exhibit A
BROOKDALE LIVING COMMUNITIES, INC.
(a Delaware corporation)
5,000,000 Shares
Common Sock
(Par value $0.01 Per Share)
PRICING AGREEMENT
_________, 1997
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Reference is made to the Underwriting Agreement, dated _________, 1997 (the
"Underwriting Agreement"), relating to the purchase by Friedman, Billings,
Xxxxxx & Co., Inc. and those underwriters listed on Schedule A thereto
(collectively, the "Underwriters,") of the above shares of Common Stock and
Option Shares, as each such term is defined in the Underwriting Agreement
(collectively, the "Shares"), of Brookdale Living Communities, Inc. (the
"Company").
Pursuant to Section 2 of the Underwriting Agreement, the Company agrees
with each Underwriter as follows:
1. The public offering price per share for the Shares, determined as
provided in such Section 2, shall be $_____________.
2. The purchase price per share for the Shares to be paid by the several
Underwriters shall be $________, being an amount equal to the public offering
price set forth above less $_____ per share.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Company in accordance with its terms.
Very truly yours,
BROOKDALE LIVING COMMUNITIES, INC.
By:________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX
& CO., INC.
By:__________________________
Name:
Title:
-35-
