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EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of the
14th day of July, 1998, by and among AMERICAN RETIREMENT CORPORATION, a
Tennessee corporation (the "Company"), and the shareholders of the Company
listed on Exhibit A attached hereto (the "Shareholders").
WITNESSETH:
WHEREAS, Freedom Group, Inc., a Florida corporation ("FGI"), the
Shareholders, and the Company are parties to that certain Agreement and Plan of
Merger, dated as of May 29, 1998 (the "Merger Agreement"), pursuant to which the
Company has agreed to grant to the Shareholders certain registration rights with
respect to shares of the common stock, par value $.01 per share, of the Company
("Common Stock") into which the Shareholders' shares of the capital stock of FGI
shall be converted;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto agree as follows:
1. Definitions - As used in this Agreement, the following terms shall
have the following meanings:
"Affiliate" shall have the meaning set forth in Rule 144
promulgated under the Securities Act.
"Holder" means each Shareholder that owns Registrable
Securities, including their respective permitted successors and assigns who
acquire Registrable Securities, directly or indirectly, from a Shareholder;
provided, however, that a successor or assign will become a Holder and thereby
be entitled to rights under this Agreement only if such successor or assign is a
family member of a Holder, a trust for the benefit of a Holder or a family
member of a Holder, or a transferee who receives such Registrable Securities as
part of a pro rata distribution by a Holder that is not a natural person. For
purposes of this Agreement, the Company may deem and treat the holder of a
Registrable Security reflected on the Company's transfer agent's records as the
Holder and absolute owner thereof and the Company shall not be affected by any
notice to the contrary.
"Prince Entities" means PHC, L.L.C., a Michigan limited
liability company, and The Xxxxx and Xxxx Xxxxxx Foundation, a Michigan
corporation.
"Registrable Securities" means (a) shares of Common Stock to
be delivered to the Shareholders pursuant to the Merger Agreement (the "Merger
Shares") and (b) any shares of Common Stock issued or issuable in respect of the
Merger Shares by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, reclassification, merger, or
consolidation, and any other securities of the Company issued pursuant to any
pro rata distribution
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with respect to such Merger Shares. For purposes of this Agreement, a
Registrable Security ceases to be a Registrable Security upon the earlier of:
(x) when its offer and sale has been effectively registered under the Securities
Act and it has been sold or distributed in accordance with such effective
registration statement; (y) when it has been or may be sold or distributed to
the public in one transaction with all other Merger Shares owned by the Holder
thereof pursuant to Rules 144 or 145 (or any successor or similar provisions)
under the Securities Act; or (z) on the third anniversary of the date of this
Agreement.
"Xxxxxxx" means Xxxxxx X. Xxxxxxx.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
2. Demand Registration.
(a) Subject to the terms and conditions set forth herein, if, at any
time on or after July 14, 1999, the Company is and continues to be eligible to
effect a Registration Statement on Form S-3 covering resales of Common Stock by
the Company's shareholders and the Company shall receive a written request from
Xxxxxxx to register under the Securities Act twenty-five percent (25%) or more
of the Registrable Securities held by Xxxxxxx and his Affiliates, within 15
business days of receipt of such request the Company shall give written notice
of such registration request to all other Holders and the Company will include
in such registration all Registrable Securities of such Holders with respect to
which the Company has received written requests for inclusion therein within 15
days after the date of such notice.
(b) Subject to the terms and conditions set forth herein, if, at any
time on or after July 14, 1999, the Company is and continues to be eligible to
effect a Registration Statement on Form S-3 covering resales of Common Stock by
the Company's shareholders and the Company shall receive a written request from
the Prince Entities to register under the Securities Act twenty-five percent
(25%) or more of the Registrable Securities held by the Prince Entities, within
15 business days of receipt of such request the Company shall give written
notice of such registration request to all other Holders and the Company will
include in such registration all Registrable Securities of such Holders with
respect to which the Company has received written requests for inclusion therein
within 15 days after the date of such notice (any Holder electing to include
Registrable Securities in a registration statement pursuant to Section 2(a) or
(b) is referred to herein as a "Requesting Holder").
(c) In the event the Company receives a request pursuant to Section
2(a) or (b), the Company shall use all reasonable efforts to cause to be filed
and declared effective as soon as reasonably practicable a registration
statement, on such appropriate form as the Company in its discretion shall
determine, providing for the sale of the Registrable Securities requested to be
included by each of such Requesting Holders; provided, however, that such
requests shall express the present intention of the Requesting Holders to offer
or cause the offering of such Registrable Securities for
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distribution and shall state the intended method of distribution thereof. Each
registration statement filed pursuant to Section 2(a) or (b) is hereinafter
referred to as a "Demand Registration Statement."
The Company's obligation to use all reasonable efforts to cause
Registrable Securities to be registered in accordance with Section 2(a) or (b)
is subject to each of the following limitations, conditions, and qualifications:
(i) If the Company shall have previously filed a Demand
Registration Statement by reason of a request pursuant to this Section
2 that shall have become effective and remained effective for the
period specified in Section 4(a)(ii), then the Company shall not be
required to effect any additional registration requested pursuant to
this Section 2 for a period of twelve months from the date of the
termination of the effectiveness of such prior Demand Registration
Statement.
(ii) If the Company shall have previously given notice of a
proposed registration to the Holders pursuant to Section 3 hereof, then
the Company shall not be required to effect any registration requested
pursuant to Section 2(a) or (b) for a period of 180 days from the date
of such notice; provided, however, that if the registration statement
filed in connection therewith becomes effective within such 180-day
period, such 180-day period shall be extended for such period as may be
required pursuant to the terms and conditions of any underwriting
agreement entered into in connection with such proposed registration.
(iii) The Company may postpone for a period of 90 days the
filing or the effectiveness of a registration requested pursuant to
Section 2(a) or (b) if (A) such registration is demanded within 90 days
following the effective date of a registration statement filed by the
Company or (B) the Board of Directors of the Company determines in good
faith that such registration might have an adverse effect on any plan
or proposal by the Company or any of its subsidiaries with respect to
any financing, acquisition, recapitalization, reorganization, or other
material transaction or that the Company is in possession of material
non-public information and disclosure of such information is not in the
best interests of the Company or any of its subsidiaries; provided,
however, that as soon as the conditions permitting such delay no longer
exist, the Company shall give notice of that fact to the Requesting
Holders and shall proceed with the registration unless the Requesting
Holders shall have elected, at any time prior to the close of business
on the tenth business day after the Company has so notified the
Requesting Holders, to withdraw their request for registration, and
such withdrawn request shall not constitute a request hereunder.
(iv) The Company shall not be required to effect any
registration pursuant to Section 2(a) or (b) unless such registration
relates to Registrable Securities representing at least twenty-five
percent (25%) of the then outstanding shares of such Registrable
Securities. In addition, the Company shall not be required to effect
any registration pursuant to Section 2(a) or (b) with respect to
Registrable Securities which may be sold by the Holder thereof in
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a single transaction pursuant to Rule 144 or 145 (or any successor or
similar provisions) under the Securities Act.
(v) The obligation of the Company to register the offer and
sale of Registrable Securities pursuant to Section 2(a) or (b) shall
expire with respect to such subsection after a Demand Registration
Statement filed by reason of a request pursuant to such subsection
shall have become effective and remained effective for the period
specified in Section 4(a)(ii) hereof.
(d) The Company agrees that, except as otherwise permitted by Section
2(f) hereof, it will not effect any public sale or distribution (or any
registration with respect thereto) of any of its Common Stock during a period
beginning on the 15th day prior to, and ending on the earlier of the 45th day
after, the date such Demand Registration Statement is declared effective or the
date when attempts to effect such registration are abandoned by or at the
request of the Required Holders (the "Hold-Back Period").
(e) The Company may, at its option and in its sole discretion, require
that all shares proposed to be sold pursuant to a Demand Registration Statement
be sold in a firm-commitment underwriting. The Company shall have the right to
select any nationally recognized investment banking firm(s) to underwrite the
offering.
(f) The Company and, at the Company's election, any other holders of
Common Stock with registration rights, may include in any registration requested
pursuant to Section 2(a) or (b) any shares of Common Stock that it or they shall
determine so to include (the "Additional Registrable Securities") and the
consent of the Requesting Holders shall not be required with respect thereto;
provided, however, that, if, in the opinion of the managing underwriter(s) of
such offering, the inclusion in such registration statement of all Additional
Registrable Securities would materially interfere with the successful marketing
of the Requesting Holders' Registrable Securities, then the number of the
Additional Registrable Securities shall be reduced to such number, if any, that,
in the opinion of such managing underwriter(s), can be included in such
underwriting without such interference with the successful marketing of the
Requesting Holders' Registrable Securities.
3. Incidental Registration. Subject to the terms and conditions set
forth herein, if the Company proposes on or after January 14, 1999 to register
the offer and sale of shares of Common Stock for its own account (the "Initially
Proposed Shares") for cash under the Securities Act in an underwritten public
offering, the Company will promptly give written notice to the Holders of its
intention to effect such registration (such notice to specify, to the extent
known, the proposed offering price, the number of shares of Common Stock
proposed to be registered, and the distribution arrangements, including
indemnification of underwriters), and the Holders shall be entitled to include
in such registration statement, as a part of such underwritten offering, such
number of Registrable Securities (the "Holder Shares") to be sold for the
account of the Holders (on the same terms and conditions as the Initially
Proposed Shares) as shall be specified in a request in writing delivered to the
Company within 15 days after the date upon which the Company gave the
aforementioned notice.
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The Company's obligations to include Holder Shares in a registration
statement pursuant to this Section 3 is subject to each of the following
limitations, conditions, and qualifications:
(a) If, at any time after giving written notice of its intention to
effect a registration of any of its shares of Common Stock prior to the
effective date of any registration statement filed in connection with such
registration, the Company shall determine for any reason not to register the
offer and sale of such shares, the Company may, at its election, give written
notice of such determination to the Holders of Holder Shares and thereupon it
shall be relieved of its obligation to use any efforts to register any Holder
Shares in connection with such aborted registration.
(b) If, in the opinion of the managing underwriter(s) of such offering,
the distribution of all or a specified portion of the Holder Shares would
materially interfere with the registration and sale, in accordance with the
intended method thereof, or materially adversely affect the pricing of the
Initially Proposed Shares, then the number of Holder Shares and shares of Common
Stock to be registered on behalf of any person (other than the Company) entitled
to exercise incidental registration rights with respect to such registration
("Other Holders") to be included in such registration statement shall be reduced
(pro rata among the Holders and Other Holders on the basis of the number of
shares that each such Holder and Other Holder requested be included unless such
Other Holder's rights are being exercised pursuant to a demand registration
right or are expressly superior to the rights of the Holders pursuant to this
Agreement, in which case such Other Holder's number of shares shall not be
reduced pursuant to this Section 3(b)) to such number, if any, that, in the
opinion of such managing underwriter(s), can be included without such
interference. If, as a result of the provisions of the preceding sentence, any
Holder is not entitled to include all of the Holder Shares in such registration,
such Holder may elect to withdraw its request to include any Holder Shares in
such registration (a "Withdrawal Election"); provided, however, that a
Withdrawal Election shall be irrevocable and such Holder shall no longer have
any right to include any Holder Shares in the registration as to which such
Withdrawal Election was made.
(c) As a condition to each Holder's right to include Holder Shares in a
registration pursuant to this Section 3, such Holder shall, if requested by the
Company or the managing underwriter(s) in connection with such registration and
distribution, (A) agree to sell the Holder Shares on the basis provided in any
underwriting arrangements entered into in connection therewith and (B) complete
and execute all questionnaires, powers of attorney, indemnities, underwriting
agreements, and other documents that are customary in similar transactions and
required under the terms of such underwriting arrangements.
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4. Registration Procedures.
(a) Whenever the Company is required to use all reasonable efforts to
effect the registration of any Registrable Securities under the Securities Act
pursuant to the terms and conditions of Section 2(a) or (b) regarding demand
registrations, the Company will use all reasonable efforts to effect the
registration and sale of the Registrable Securities in accordance with the
intended method of disposition thereof. Without limiting the generality of the
foregoing, the Company will as soon as practicable:
(i) prepare and file with the SEC a registration statement on
any appropriate form under the Securities Act with respect to the
Registrable Securities and use all reasonable efforts to cause such
registration statement to become effective;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all the Registrable Securities
and other securities covered by such registration statement until the
earlier of (A) the expiration of 60 days after the Holders are notified
by the Company that they may commence the sale of the Registrable
Securities covered by such registration statement and (B) until the
Company has received written notice from all of the participating
Holders that they do not intend to sell additional securities;
provided, that, if the offering of Registrable Securities pursuant to
such registration statement is terminated or suspended by any stop
order, injunction, or other order or requirement of the SEC or any
other governmental agency or court, the foregoing time period shall be
extended by the number of days during the period from and including the
date such stop order, injunction, or other order or requirement becomes
effective to and including the date when such termination or suspension
no longer exists;
(iii) furnish the Holders of the Registrable Securities
covered by such registration statement, without charge, such number of
conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case without exhibits unless
specifically requested), such number of copies of the prospectus and
each supplement thereto included in such registration statement
(including each preliminary prospectus), such documents incorporated by
reference in such registration statement or prospectus, and such other
documents, as such Holders may reasonably request;
(iv) use all reasonable efforts to register, qualify, or
exempt the Registrable Securities covered by such registration
statement under the securities or blue sky laws of such jurisdictions
as the managing underwriter(s) shall reasonably recommend, and do any
and all other acts and things that may be reasonably necessary or
advisable to enable the Holders to consummate the disposition in such
jurisdictions of the Registrable Securities covered by such
registration statement, except that the Company shall not for any such
purpose be required to (A) qualify generally to do business as a
foreign corporation in any jurisdiction wherein it
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is not so qualified; (B) subject itself to taxation in any such
jurisdiction wherein it is not so subject; or (C) consent to general
service of process in any such jurisdiction or otherwise take any
action that would subject it to the general jurisdiction of the courts
of any jurisdiction in which it is not so subject;
(v) otherwise use all reasonable efforts to comply with all
applicable rules and regulations of the SEC;
(vi) furnish, at the Company's expense, unlegended
certificates representing ownership of the securities being sold in
such denominations as shall be requested and instruct the transfer
agent to release any stop transfer orders with respect to the
Registrable Securities being sold;
(vii) notify each Requesting Holder at any time when a
prospectus relating to the Registrable Securities is required to be
delivered under the Securities Act of the happening of any event as a
result of which the prospectus included in such Registration Statement
contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein (in the case of
the prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading, and the
Company will, as promptly as practicable thereafter, prepare and file
with the SEC and furnish a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of Registrable
Securities such prospectus will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(viii) enter into customary agreements (including an
underwriting agreement in customary form in the case of an underwritten
offering) and make such representations and warranties to the
Requesting Holders and underwriter(s) (in the case of underwritten
offerings) in form, substance, and scope as are customarily made by
issuers to sellers or underwriter(s) in similar offerings;
(ix) make available for inspection by the Requesting Holders,
any underwriter or agent participating in any disposition pursuant to
such Registration Statement, and any attorney, accountant, or other
similar professional advisor retained by any such Requesting Holders,
underwriter(s) or agents (collectively, the "Inspectors"), all
pertinent financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "Records"), as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors, and
employees to supply all information reasonably requested by any such
Inspectors in connection with such Registration Statement. The
Requesting Holders agree that the Records and other information which
the Company determines to be confidential and of which determination
the Inspectors are so notified shall not be disclosed by the Inspectors
unless (A) the release of such Records is ordered pursuant to a
subpoena, court order, or regulatory or agency request, or (B) the
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information in such Records has been generally disseminated to the
public. Each Requesting Holder agrees that it will, upon learning that
disclosure of such Record is sought in a court of competent
jurisdiction or by a governmental agency, give notice to the Company
and allow the Company, at the Company's expense, to undertake
appropriate action to prevent disclosure of the Records deemed
confidential;
(x) obtain for delivery to the Company, the underwriter(s) or
agent, with copies to the Requesting Holders, a "comfort" letter from
the Company's independent public accountants in customary form and
covering such matters of the type customarily covered by "comfort"
letters as the Requesting Holders or the managing underwriter(s)
reasonably request;
(xi) obtain for delivery to the Requesting Holders and the
underwriter(s) or agent an opinion or opinions from counsel for the
Company in customary form and reasonably satisfactory to the Requesting
Holders, underwriter(s) or agents and their counsel;
(xii) make available to its security holders earnings
statements, which need not be audited, satisfying the provisions of
Section 11(a) of the Securities Act no later than 90 days after the end
of the 12-month period beginning with the first month of the Company's
first quarter commencing after the effective date of any Demand
Registration Statement, which earnings statements shall cover said 12
month period;
(xiii) make every reasonable effort to prevent the issuance
of any stop order suspending the effectiveness of the registration
statement or of any order preventing or suspending the effectiveness of
such registration statement at the earliest possible moment;
(xiv) cause the Registrable Securities to be registered with
or approved by such other governmental agencies or authorities within
the United States as may be reasonably necessary to enable the sellers
or the underwriter(s) to consummate the disposition of such securities;
(xv) cooperate with the Requesting Holders and the managing
underwriter(s), or any other interested party (including any interested
broker-dealer) in making any filings or submission reasonably required
to be made, and the furnishing of all appropriate information in
connection therewith, with the National Association of Securities
Dealers, Inc. ("NASD");
(xvi) effect the listing of the Registrable Securities on the
New York Stock Exchange or such other national securities exchange or
quotation system, on which shares of the Company's Common Stock shall
then be listed or authorized for quotation; and
(xvii) take all other reasonable steps necessary to effect
the registration of the Registrable Securities contemplated hereby.
(b) Each Holder shall provide (in writing and signed by each Holder and
stated to be specifically for use in the related registration statement,
preliminary prospectus, prospectus, or other document incident thereto) all such
information and materials, including without limitation the
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intended plan of distribution, and take all such action as may be required in
order to permit the Company to comply with all applicable requirements of the
SEC and any applicable state securities laws and to obtain any desired
acceleration of the effective date of any registration statement prepared and
filed by the Company in which such Holder's Registrable Securities will be
included.
(c) If a registration pursuant to Section 2 involves an underwritten
offering, and in connection with any registration by the Company of any class of
equity securities of the Company for sale for its own account, including
pursuant to Section 3 hereof, each Holder hereby agrees (and agrees to execute
any additional documents reasonably requested by the underwriters for the
Company to such effect), whether or not any of such Holder's Registrable
Securities are included in such registration, not to effect any sale or
distribution, including any sale pursuant to Section 144 of the Securities Act,
of any securities of the Company which are similar to the securities included in
such registration (other than as part of such underwritten offering), without
the consent of the managing underwriter(s), for a period of 180 days after the
date a request for registration is made pursuant to Section 2(a) or (b) hereof
or the date the Company notifies the Holders of its intent to register such
equity securities for its own account, including pursuant to Section 3 hereof,
as the case may be; provided, however, that if the registration statement filed
in connection therewith becomes effective within such 180-day period, such
180-day period shall be extended for such period as may be required pursuant to
the terms and conditions of any underwriting agreement entered into in
connection with such proposed registration.
(d) Upon receipt of any notice from the Company that the Company has
become aware that the prospectus (including any preliminary prospectus) included
in any registration statement filed pursuant to Section 2(a) or (b) or Section 3
hereof, as then in effect, contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, the Holders shall immediately
discontinue disposition of the Registrable Securities pursuant to the
registration statement covering the same until the Holders' receipt of copies of
a supplemented or amended prospectus and, if so directed by the Company, deliver
to the Company all copies other than permanent file copies then in the Holder's
possession, of the prospectus covering the Registrable Securities that was in
effect prior to such amendment or supplement.
(e) The Company shall pay all expenses incurred in connection with any
Demand Registration Statement filed pursuant to Section 2(a) or (b) hereof and
any registration statement filed pursuant to Section 3 hereof, including,
without limitation, all SEC and blue sky registration and filing fees (including
NASD fees), printing expenses, transfer agents and registrar's fees, fees and
disbursements of the Company's counsel and accountants, and fees and
disbursements of experts used by the Company in connection with such
registration statement, except that each Holder shall pay all underwriting
discounts, commissions, and expenses attributable to his, her, or its
Registrable Securities sold pursuant to any such registration statement and any
fees and expenses of his, her, or its own counsel.
(f) Upon the filing of a registration statement that includes a
Holder's Registrable Securities pursuant to a request from such Holder delivered
to the Company in accordance with Section 2(a) or (b) or Section 3, such Holder
shall be deemed to have irrevocably committed to sell
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such Holder's Registrable Securities pursuant to the registration statement and
shall be obligated to sell such Registrable Securities on the terms set forth in
the registration statement.
5. Indemnification; Contribution.
(a) The Company agrees to indemnify and hold harmless, to the extent
permitted by law, each Holder of Registrable Securities, its officers and
directors, and each person, if any, who controls such Holder (within the meaning
of the Securities Act) against all losses, claims, damages, liabilities, and
expenses arising out of any untrue or alleged untrue statement of a material
fact contained in any registration statement under which Registrable Securities
owned by such Holder were registered under the Securities Act, or in any related
prospectus or preliminary prospectus, or any amendment thereof or supplement
thereto, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of a prospectus or preliminary prospectus, in the light of the
circumstances under which they were made) not misleading, except insofar as the
same are caused by or contained in any information or affidavit with respect to
such Holder furnished in writing to the Company by such Holder expressly for use
therein or by such Holder's failure to furnish the Company upon request with the
information with respect to such Holder or such Holder's plan of distribution
that is the subject of the untrue statement or omission or by such Holder's
failure to deliver a copy of the applicable registration statement or prospectus
(exclusive of the documents, if any, from which information is incorporated by
reference) after the Company has furnished such Holder with a sufficient number
of copies of the same. In connection with an underwritten offering, the Company
will also indemnify the underwriters thereof, their officers and directors, and
each person who controls (within the meaning of the Securities Act) such
underwriters to the same extent as provided above with respect to the
indemnification of the Holders of Registrable Securities.
(b) In connection with any registration statement in which a Holder of
Registrable Securities is participating, each such Holder agrees to indemnify
and hold harmless, to the extent permitted by law, the Company, the directors
and officers of the Company, the underwriters participating in the offering, the
underwriters' directors and officers, and each person, if any, who controls
(within the meaning of the Securities Act) the Company or the underwriters
against any losses, claims, damages, liabilities, and expenses arising out of
any untrue or alleged untrue statement of a material fact contained in any
registration statement under which Registrable Securities owned by such Holder
were registered under the Securities Act, or in any related prospectus or
preliminary prospectus, or any amendment thereof or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus, or preliminary prospectus, in the light of the circumstances under
which they were made) not misleading, to the extent that such untrue statement
or omission is contained in any information or affidavit with respect to such
Holder furnished to the Company by such Holder expressly for use therein or such
untrue statement or omission relates to such Holder or such Holder's plan of
distribution and such Holder failed to furnish such information to the Company
upon request, or arising out of the Holder's failure to deliver a copy of the
applicable registration statement or prospectus (exclusive of the documents, if
any, from which information is incorporated by reference) after the Company has
furnished such Holder with a sufficient number of copies of the same.
Notwithstanding the provisions of this Section 5(b), the indemnification
required from any Holder shall be limited to the amount of the proceeds received
by such Holder from the sale of the
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Registrable Securities. The Company and, to the extent customary in underwriting
agreements at the time, its directors and officers and each person, if any, who
controls (within the meaning of the Securities Act) the Company, shall be
entitled to receive indemnities from underwriters, selling brokers, dealer
managers, and similar securities industry professionals participating in the
distribution to the same extent as provided above with respect to information so
furnished by such persons specifically for inclusion in any prospectus or
registration statement, or the failure by such underwriters, selling brokers,
dealer managers, and similar securities industry professionals to deliver a copy
of the applicable registration statement or prospectus (exclusive of the
documents, if any, from which information is incorporated by reference) after
the Company has furnished such persons with a sufficient number of copies of the
same.
(c) Any person entitled to indemnification hereunder agrees to give
prompt written notice to the indemnifying party after the receipt by such person
of any written notice of the commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which such person will claim
indemnification or contribution pursuant to this Agreement and permit the
indemnifying party to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly situated, to assume the
defense of such claim with counsel reasonably satisfactory to such indemnified
party. If the indemnifying party elects to assume the defense of a claim, it
shall not be liable to such indemnified party for legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation. If the indemnifying party is not
entitled to, or elects not to, assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one counsel with respect to
such claim. The indemnifying party will not be subject to any liability for any
settlement made without its consent, which consent shall not be unreasonably
withheld. If the failure of any person to give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification prejudices
such indemnifying party, such indemnifying party shall be relieved of its
obligation to indemnify such person to the extent that such indemnifying party
has been prejudiced. No indemnifying party will consent to entry of any judgment
or enter into any settlement agreement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation.
(d) If the indemnification provided for in this Section 5 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities, or expenses referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities, or expenses in such
proportion as is appropriate to reflect not only the relative benefits received
by the indemnifying party on the one hand and the indemnified party on the other
but also the relative fault of the indemnifying party and the indemnified party
as well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified parties shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statements of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
such action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include,
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subject to the limitation set forth in Section 5(c), any legal or other fees or
expenses reasonably incurred by such party in connection with any investigation
or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation.
6. Conditions Precedent to Registration. The Company's obligations
under this Agreement to effect the registration of any Registrable Securities
are subject to the agreement to and the performance by the Holders of such
Registrable Securities of the obligations of such Holders contained in this
Agreement, including, without limitation, the agreement by such Holders to pay
certain expenses incurred in connection with the sale of the Registrable
Securities pursuant to Section 4(e) hereof and the agreement by such Holders to
indemnify the Company pursuant to Section 5(b) hereof. Unless a Holder shall, if
requested by the Company, complete, execute and deliver all agreements,
questionnaires, indemnities, powers of attorney, underwriting agreements, and
other documents customary in a proposed registration or deemed necessary by the
Company to evidence such Holder's agreements and obligation under this
Agreement, the Company will have no obligation to register such Holder's
Registrable Securities.
7. Effect of Breach. In addition to any other statutory, equitable, or
common law remedy the Company may have, in the event a Holder materially
breaches any of its obligations pursuant to this Agreement and fails to cure the
breach within ten days of its receipt of notice from the Company of such breach,
such Holder shall have no further rights under Section 2 and 3 hereof and this
Agreement will thereupon terminate with respect to such Holder and be of no
continued force or effect. Notwithstanding the foregoing, in the event a Holder
materially breaches any of its obligations hereunder and the Company reasonably
determines that such breach may adversely affect the timing or other aspects of
any offering, this Agreement shall terminate immediately with respect to such
Holder and be of no continued effect. Additionally, in no event will a Holder
have the rights set forth in Section 2 and 3 hereof during any period in which
such Holder is in material breach of or material default under any other written
agreement between such Holder and the Company.
8. Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be effective upon the earlier
of (a) hand delivery or delivery by telecopy or facsimile at the address or
number designated below if delivered on a business day during normal business
hours where such notice is to be received, or the first business day following
such delivery if delivered other than on a business day during normal business
hours where such notice is to be received and (b) on the third business day
following the date of mailing, by registered or certified mail, return receipt
requested, postage prepaid, addressed as set forth below:
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If to the Company:
American Retirement Corporation
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopy (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
Bass, Xxxxx and Xxxx PLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopy (000) 000-0000
Attention: T. Xxxxxx Xxxxx
If to a Holder,
to the address of such Holder shown on the
stock records of the Company.
The Company may from time to time change its address for notices under
this Section 8 by giving at least 10 days' written notice of such changed
address to each of the Holders. Each Holder may from time to time change his,
her, or its address for notices under this Section 8 by giving at least 10 days'
written notice of such changed address to the Company.
9. Additional Registration Rights. Nothing in this Agreement shall
limit the Company's right to authorize or grant demand or incidental
registration rights to other persons who own or have the right to acquire
securities of the Company (including Common Stock), regardless of whether such
registration rights are senior, pari passu, or subordinate to the rights of the
Holders hereunder; provided, however, that the Company shall not, without the
prior consent of the Holders of at least fifty percent (50%) of the Registrable
Securities, grant to any holder of Common Stock incidental registration rights
superior to the rights of the Holders under Section 3 hereof.
10. Headings. The headings herein are for convenience of reference
only, do not constitute a part of this Agreement, and shall not be deemed to
limit or affect any of the provisions hereof.
11. Successors and Assigns; Amendments. This Agreement shall be binding
upon and inure to the benefit of the Company and the Holders and their
respective successors and assigns, including each subsequent Holder of any
Registrable Securities; provided, however, that the Company may amend, modify,
supplement, or revoke this Agreement at any time with the consent of the Holders
of at least fifty percent (50%) of the Registrable Securities.
12. No Third Party Beneficiaries. This Agreement is intended for the
benefit of the Company and the Holders and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
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13. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Tennessee
applicable to agreements made and to be performed wholly within that
jurisdiction without regard to the principles of conflict of laws thereof.
14. Entire Agreement; Integration. This Agreement supersedes all prior
and contemporaneous agreements between or among any of the parties hereto with
respect to the subject matter contained herein and therein and this Agreement
embodies the entire understanding among the parties relating to such subject
matter.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which shall
together constitute one and the same instrument. All signatures need not be on
the same counterpart.
16. Severability. If any provision of this Agreement shall be invalid
or unenforceable, such invalidity or unenforceability shall not affect the
validity and enforceability of the remaining provisions of this Agreement,
unless the result thereof would be unreasonable, in which case the parties
hereto shall negotiate in good faith as to appropriate amendments hereto.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
AMERICAN RETIREMENT CORPORATION
By: /s/ H. Xxxx Xxxxxxxx
--------------------------------
Name: H. Xxxx Xxxxxxxx
--------------------------------
Title: Executive Vice President
--------------------------------
SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxx
PHC, L.L.C.
By: /s/ Xxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxx
--------------------------------
Title: President
--------------------------------
THE XXXXX AND XXXX XXXXXX FOUNDATION
By: /s/ Xxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxx
--------------------------------
Title: Secretary/Treasurer
--------------------------------
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EXHIBIT A
Xxxxxx X. Xxxxxxx
PHC, L.L.C., a Michigan limited liability company
The Xxxxx and Xxxx Xxxxxx Foundation, a Michigan corporation
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