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EXHIBIT 1.1
5,000,000 Shares
SUNRISE ASSISTED LIVING, INC.
Common Stock
UNDERWRITING AGREEMENT
October ___, 1996
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
ALEX. XXXXX & SONS INCORPORATED
NATWEST SECURITIES LIMITED
X.X. XXXXXXXX & CO.
As representatives of the
several underwriters
named in Schedule I hereto
c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Sunrise Assisted Living, Inc., a Delaware corporation (the "Company"),
and the stockholders of the Company named in Schedule II hereto (collectively,
the "Selling Stockholders"), severally and not jointly propose to sell an
aggregate of 5,000,000 shares of Company Common Stock, $.01 par value per share
("Common Stock"), to the several underwriters named in Schedule I hereto (the
"Underwriters"). Such 5,000,000 shares of Common Stock are hereinafter
referred to as the "Firm Shares". In addition, the Company and certain
stockholders of the Company named in Schedule III hereto (collectively, the
"Additional Selling Stockholders"), propose to sell to the several Underwriters
not more than 750,000 additional shares of Common Stock (the "Additional
Shares") if requested by the Underwriters as provided in Section 2 hereof. The
Firm Shares consist of 4,000,000 authorized and unissued shares to be issued
and sold by the Company and 1,000,000 issued and outstanding shares to be sold
by the Selling Stockholders. The Additional Shares consist of 546,667
authorized and unissued shares to be issued and sold
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by the Company and 203,333 issued and outstanding shares to be sold by the
Additional Selling Stockholders. The Firm Shares and the Additional Shares are
herein collectively called the "Shares". The Company, the Selling Stockholders
and the Additional Selling Stockholders are hereinafter collectively called the
"Sellers".
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively called the "Act"), a registration statement on Form S-1 including
a prospectus relating to the Shares, which may be amended. The registration
statement as amended at the time when it becomes effective, including a
registration statement (if any) filed pursuant to Rule 462(b) under the Act
increasing the size of the offering registered under the Act and information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Act, is hereinafter referred to
as the "Registration Statement", and the prospectus in the form first used to
confirm sales of Shares is hereinafter referred as the "Prospectus".
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, (i) the Company agrees to issue and sell 4,000,000 Firm
Shares to the Underwriters (ii) each Selling Stockholder agrees, severally and
not jointly, to sell the number of Firm Shares set forth opposite such Selling
Stockholder's name in Schedule II hereto and (iii) each Underwriter agrees,
severally and not jointly, to purchase from the Company and each Selling
Stockholder at a price per share of $________ (the "Purchase Price") the number
of Firm Shares (subject to adjustments to eliminate fractional shares as you
may determine) which bears the same proportion to the total number of Firm
Shares to be sold by such Underwriter in Schedule I hereto bears to the total
number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, (i) the Company agrees to
issue and sell up to 546,667 Additional Shares to the Underwriters, (ii) the
Additional Selling Stockholders agree to sell up to 203,333 Additional Shares
to the Underwriters and (iii) the Underwriters shall have the right to
purchase, severally and not jointly, up to 546,667 Additional Shares from the
Company at the Purchase Price and up to the number of Additional Shares set
forth opposite each Additional Selling Stockholder's name in Schedule III
hereto from such Additional Selling Stockholder at the Purchase Price.
Additional Shares may be purchased solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. The
Underwriters may exercise their right to purchase Additional Shares in whole or
in part from time to time by giving written notice thereof to the Additional
Selling Stockholders, care of the Company, within 30 days after the date of
this Agreement. You shall give any such notice on behalf of the Underwriters
and such notice shall specify the aggregate number of Additional Shares to be
purchased pursuant to such exercise and the date for payment and delivery
thereof. The date specified in any such notice shall be a business day (i) no
earlier than the Closing
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Date (as hereinafter defined), (ii) no later than ten business days after such
notice has been given and (iii) no earlier than two business days after such
notice has been given. If any Additional Shares are to be purchased, each
Underwriter, severally and not jointly, agrees to purchase from the Company
and/or the Additional Selling Stockholders, as the case may be, the number of
Additional Shares (subject to such adjustments to eliminate fractional shares
as you may determine) which bears the same proportion to the total number of
Additional Shares to be purchased as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I bears to the total number
of Firm Shares. In the event the Underwriters elect to exercise their option
to purchase the Additional Shares in part, the Company and the Additional
Selling Stockholders shall sell to the Underwriters, and the Underwriters shall
purchase (i) first, the Additional Shares to be sold by the Additional Selling
Stockholders until all such Additional Shares have been sold, and (ii) second,
the Additional Shares to be sold by the Company until all such Additional
Shares have been sold. In the event the Underwriters elect to exercise their
option to purchase Additional Shares such that the Underwriters will purchase a
portion but not all of the Additional Shares to be sold by the Additional
Selling Stockholders pursuant to clause (i) of the immediately preceding
sentence, the Underwriters shall purchase from each Additional Selling
Stockholder that number of Additional Shares equal to the total number of
Additional Shares remaining to be purchased by the several Underwriters from
the Additional Selling Stockholders multiplied by a fraction, the numerator of
which is the number of Additional Shares set forth opposite the name of such
Additional Selling Stockholder in Schedule III hereto and the denominator of
which is the aggregate number of Additional Shares offered by all of the
Additional Selling Stockholders as set forth in Schedule III hereto.
The Company agrees that the Company shall, concurrently with the
execution of this Agreement, deliver letter agreements executed by (i) each of
the directors and officers of the Company and (ii) each Selling Stockholder,
pursuant to which each such person agrees, not to offer, sell, contract to
sell, grant any option to purchase, or otherwise dispose of any Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or in any other manner transfer all or a portion of the economic consequences
associated with the ownership of any Common Stock, except to the Underwriters
pursuant to this Agreement, for a period of 90 days after the effective date of
the Registration Statement, other than (i) as a gift or gifts, provided the
donee or donees thereof agree in writing to be bound such letter agreement,
(ii) transfers to a transferor's affiliates, as such term is defined in Rule
405 promulgated under the Act, provided the transferee agrees in writing to be
bound by such letter agreement, or (iii) with the prior written consent of
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation (except as to shares held
by affiliates of Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation which
require the prior written consent of Alex. Xxxxx & Sons Incorporated, NatWest
Securities Limited and X.X. Xxxxxxxx & Co.). Notwithstanding the foregoing,
during such period the Company (i) may grant stock options (and may issue
shares of its Common Stock upon exercise thereof) pursuant to the Company's
existing 1995 Stock Option Plan or the Company's existing 1996 Directors' Stock
Option Plan or the Company's existing 1996 Stock Option Plan or a similar
option plan that provides for the
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granting of no more than 250,000 options for the benefit of employees of the
Company which plan is approved by the Board of Directors of the Company
(collectively, the "Option Plans"), (ii) may issue shares of Common Stock upon
the exercise of any of the 450,000 stock options granted to Xxxxx X. Xxxxxx
outside of the Option Plans, (iii) may issue shares of Common Stock upon the
exercise of the 50,000 warrants outstanding on the date hereof, (iv) may issue
shares of Common Stock to Xxxxxxx Xxxxxx in satisfaction of a $200,000
non-interest bearing loan from Xx. Xxxxxx and (v) may issue shares of Common
Stock in connection with the Company's acquisition of assets of, or an
ownership interest in, another business or entity, provided, however, that,
without the prior written consent of Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation, the Company may not (i) register the shares of Common Stock
referred to in clauses (iv) or (v) above under the Act for a period of 90 days
after the effective date of the Registration Statement or (ii) grant any
registration rights with respect to the shares of Common Stock referred to in
clauses (iv) or (v) above that are exercisable within 90 days after the
effective date of the Registration Statement.
3. Terms of Public Offering. The Sellers are advised by you that
the Underwriters propose (i) to make a public offering of their respective
portions of the Shares as soon after the effective time of the Registration
Statement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
4. Delivery and Payment. Delivery to the Underwriters of and
payment for the Firm Shares shall be made at 10:00 A.M., New York City time, on
the third or fourth business day (unless otherwise permitted by the Commission
pursuant to Rule 15c6-1 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) following the date of this Agreement (the "Closing Date"), at
the offices of Xxxxx & Xxxxxxx L.L.P., 000 Xxxxxxxxxx Xxxxxx, XX, Xxxxxxxxxx,
X.X. 00000, or at such other place outside the State of New York as you shall
designate. The Closing Date and the location of delivery of and the form of
payment for the Firm Shares may be varied by agreement between you, the Company
and the Selling Stockholders.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at the offices of Xxxxx &
Xxxxxxx L.L.P., 000 Xxxxxxxxxx Xxxxxx, XX, Xxxxxxxxxx, X.X. 00000, or at such
other place as you shall designate, at 10:00 A.M., New York City time, on the
date specified in the applicable exercise notice given by you pursuant to
Section 2 (an "Option Closing Date"). Any such Option Closing Date and the
location of delivery of and the form of payment for such Additional Shares may
be varied by agreement between you, the Company and the Additional Selling
Stockholders.
Certificates for the Shares shall be registered in such names and
issued in such denominations as you shall request in writing not later than two
full business days prior to the Closing Date or an Option Closing Date, as the
case may be. Such certificates shall be made available to you for inspection
not later than 9:30 A.M., New York City time, on the business day next
preceding the Closing Date or an Option Closing Date, as the case may be.
Certificates in definitive form evidencing the Shares shall be delivered to you
on the Closing Date or an Option Closing Date, as the case may
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be, with any transfer taxes thereon duly paid by the respective Sellers, for
the respective accounts of the several Underwriters, against payment of the
Purchase Price therefor by wire transfer of immediately available funds to the
order of the applicable Sellers; provided, however, that in the case of the
Additional Selling Stockholders, the amount payable to them shall be net of (i)
the aggregate exercise price of the stock options that are being exercised by
them and (ii) applicable withholding taxes, which amounts shall be paid by wire
transfer of immediately available funds to the Company.
5. Agreements of the Company. The Company agrees with you:
(a) To advise you promptly and, if requested by you, to
confirm such advice in writing, (i) when any post-effective amendment
to the Registration Statement becomes effective, (ii) of any request
by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purposes,
and (iv) of the occurrence of any event during the period referred to
in paragraph (e) below 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. If at any time the Commission shall issue any stop
order suspending the effectiveness of the Registration Statement, the
Company will make every reasonable effort to obtain the withdrawal or
lifting of such order at the earliest possible time.
(b) To furnish to you, without charge, four signed copies
of the Registration Statement as first filed with the Commission and
of each amendment to it, including all exhibits, and to furnish to you
and each Underwriter designated by you such number of conformed copies
of the Registration Statement as so filed and of each amendment to it,
without exhibits, as you may reasonably request.
(c) Not to file any amendment or supplement to the
Registration Statement, whether before or after the time when it
becomes effective, or to make any amendment or supplement to the
Prospectus of which you shall not previously have been advised or to
which you shall reasonably object; and to prepare and file with the
Commission, promptly upon your reasonable request, any amendment to
the Registration Statement or supplement to the Prospectus which may
be necessary or advisable in connection with the distribution of the
Shares by you, and to use its best efforts to cause the same to become
promptly effective.
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(d) Promptly after the Registration Statement becomes
effective, and from time to time thereafter for such period as a
prospectus is required by law to be delivered in connection with sales
by an Underwriter or a dealer, to furnish to each Underwriter and
dealer as many copies of the Prospectus (and of any amendment or
supplement to the Prospectus) as such Underwriter or dealer may
reasonably request.
(e) If during the period specified in paragraph (d) any
event shall occur as a result of which, in the judgment of the Company
or in the opinion of counsel for the Underwriters, it becomes
necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Prospectus to comply with any
law, forthwith to prepare and file with the Commission an appropriate
amendment or supplement to the Prospectus so that the statements in
the Prospectus, as so amended or supplemented, will not in the light
of the circumstances when it is so delivered, be misleading, or so
that the Prospectus will comply with law, and to furnish to each
Underwriter and to such dealers as you shall specify, such number of
copies thereof as such Underwriter or dealers may reasonably request.
(f) Prior to any public offering of the Shares, to the
extent required by law, to cooperate with you and counsel for the
Underwriters in connection with the registration or qualification of
the Shares for offer and sale by the several Underwriters and by
dealers under the state securities or Blue Sky or real estate
syndication laws of such jurisdictions as you may request, to continue
such qualification in effect so long as required for distribution of
the Shares and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification; provided, however, that the Company shall not be
obligated in connection therewith or as a condition thereof to (i)
file any general consent to service of process or to qualify as a
foreign corporation in any jurisdiction in which it is not otherwise
required to so file a general consent to service of process or to be
so qualified, or (ii) take any action that would subject it to income
taxation in any jurisdiction in which it is not otherwise subject to
income taxation. In addition, to the extent required by law, 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-g(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.
(g) To mail and make generally available to its
stockholders as soon as reasonably practicable, but in any event not
later than the 90th day following the
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end of the fiscal quarter first occurring after the first anniversary
of the effective date of the Registration Statement, an earning
statement covering a period of at least twelve months after the
effective date of the Registration Statement which shall satisfy the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
(h) For a period of five (5) years from the date of this
Agreement, to furnish to you as soon as available copies of all annual
reports and other documents, reports, financial statements and
information (i) furnished by the Company to its stockholders, (ii)
furnished to The Nasdaq Stock Market, Inc.'s Nasdaq National Market
(the "Nasdaq National Market") or any securities exchange upon which
the Common Stock may be listed or quoted pursuant to the requirements
of or agreements with such market or exchange or (iii) filed with the
Commission under or pursuant to the Act or the Exchange Act.
(i) To pay all costs, expenses, fees and transfer taxes
incident to (i) the preparation, printing, filing and distribution
under the Act of the Registration Statement (including financial
statements and exhibits), each preliminary prospectus and all
amendments and supplements to any of them prior to or during the
period specified in paragraph (e), (ii) the printing and delivery of
the Prospectus and all amendments or supplements to it during the
period specified in paragraph (e), (iii) the printing and delivery of
this Agreement, the Preliminary and Supplemental Blue Sky Memoranda
and all other agreements, memoranda, correspondence and other
documents printed and delivered in connection with the offering of the
Shares (including in each case any disbursements of counsel for the
Underwriters relating to such printing and delivery), (iv) the
registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the several states (including in
each case the fees and disbursements of counsel for the Underwriters
relating to such registration or qualification and memoranda relating
thereto), (v) filings and clearance with the National Association of
Securities Dealers, Inc. ("NASD") in connection with the offering,
(vi) the listing of the Shares on the Nasdaq National Market, (vii)
furnishing such copies of the Registration Statement, the Prospectus
and all amendments and supplements thereto as may be reasonably
requested for use in connection with the offering or sale of the
Shares by the Underwriters or by dealers to whom Shares may be sold
and (viii) the performance by the Sellers of their other obligations
under this Agreement. Pursuant to a Registration Agreement dated
January 4, 1995, the Selling Stockholders and the Company have
entered into certain agreements regarding the payment of such expenses.
(j) To use its best efforts to maintain the inclusion of
the Common Stock in the Nasdaq National Market (or on a national
securities exchange) for a period of five years after the effective
date of the Registration Statement.
(k) To 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
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to the Closing Date or any Option Closing Date, as the case may be,
and to satisfy all conditions precedent on its part to the delivery of
the Shares.
6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective; no
stop order suspending the effectiveness of the Registration Statement
is in effect, and no proceedings for such purpose are pending before
or, to the Company's knowledge, threatened by the Commission.
(b)(i) The Registration Statement, when it became effective,
did not contain and, as amended or supplemented, if applicable, 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, (ii) the Registration Statement and
the Prospectus comply and, as amended or supplemented, if applicable,
will comply in all material respects with the Act and (iii) the
Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except that the representations and warranties set
forth in this paragraph (b) do not apply to statements or omissions in
the Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by or
on behalf of such Underwriter through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Act, and each
Registration Statement filed pursuant to Rule 462(b) under the Act, if
any, complied when so filed in all material respects with the Act; and
did 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, in the light of the circumstances under
which they were made, not misleading.
(d) The Company has been duly organized, is validly
existing as a corporation in good standing under the laws of the State
of Delaware 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 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 (hereafter
defined), taken as a whole.
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(e) All of the outstanding shares of capital stock of the
Company (including all of the Firm Shares to be sold by the Selling
Stockholders and, as of any Option Closing Date, all Additional Shares
to be sold by the Additional Selling Stockholders on such Option
Closing Date) have been duly authorized and validly issued and are
fully paid and non-assessable, have been issued in compliance with all
federal and state securities laws, and were not issued in violation of
or subject to any preemptive or similar rights. The Shares to be
issued and sold by the Company hereunder have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and,
when issued and delivered to the Underwriters against payment therefor
as provided in this 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; and 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 such Shares or the issuance
and sale thereof, other than those that have been expressly waived
prior to the date hereof. 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 to be
issued and sold by the Company hereunder 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. 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 any of the Company's stockholders.
(f) The authorized capital stock of the Company (i) is as
set forth in the Prospectus under the caption "Capitalization" and
(ii) conforms to the description thereof and the statements relating
thereto contained in the Prospectus.
(g) All of the consolidated corporations, partnerships
and limited liability companies 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 interest in each of the facilities listed in the
Prospectus under the caption "Business-Owned Facilities" is owned by
the Company directly or indirectly through one or more Subsidiaries
and the Company's direct or indirect percentage ownership interests in
such facilities are as described under such caption.
(h) 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
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foreign corporation 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 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.
(i) Each Subsidiary that is a limited partnership (a
"Limited Partnership Subsidiary") has been duly organized, is validly
existing as a limited partnership in good standing under the laws of
its jurisdiction of organization and has the limited partnership 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 limited
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 limited partnership interests in the Limited
Partnership Subsidiaries were issued and sold in compliance with the
applicable limited partnership agreements of such Limited Partnership
Subsidiaries and all applicable federal and state securities laws, and
the limited 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 limited partnership agreements of such
Limited 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 limited
partnership agreement pursuant to which the Company or a Subsidiary
holds a partnership interest in a Limited 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
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general equitable principles. There has been no material breach of or
default under, and no event which with notice or lapse of time would
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.
(j) Each Subsidiary that is a limited liability company
(an "LLC Subsidiary") has been duly organized, is validly existing as
a limited liability company in good standing under the laws of its
jurisdiction of organization and has the limited liability company
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
limited liability company 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 membership interests
in the LLC Subsidiaries were issued and sold in compliance with the
applicable operating agreements of such LLC Subsidiaries and all
applicable federal and state securities laws, and the membership
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 operating agreements of such LLC Subsidiaries and (iv) for
transfer restrictions under applicable federal and state securities
and real estate syndication laws. To the knowledge of the Company,
each operating agreement pursuant to which the Company or a Subsidiary
holds a membership interest in an LLC 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 constitute a material breach
of or default under, such operating agreements by the Company or any
Subsidiary or, to the Company's knowledge, any other party to such
agreements.
(k) Neither the Company nor any of the Subsidiaries is in
violation of its respective charter, by- laws, partnership agreement,
operating agreement or other governing document(s). Neither the
Company nor any of the Subsidiaries is in default in the performance
of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any other
agreement, indenture or instrument material to the conduct of the
business of the Company and the Subsidiaries, taken as a whole, to
which the Company or any of
- 11 -
12
the Subsidiaries is a party or by which it or any of the Subsidiaries
or their respective property is bound, except for any such defaults
that 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. 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. Neither the Company nor any of
the Subsidiaries is in violation of any law, ordinance, rule or
regulation applicable to the Company or any of the Subsidiaries, which
violation would 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.
(l) The Company has, and on the Closing Date and each
Option Closing Date will have, full legal right, power and authority
to enter into this Agreement and to issue, sell and deliver, in the
manner provided herein, the Shares to be issued and sold by the
Company hereunder. This Agreement has been duly authorized, executed
and delivered by the Company and this Agreement is a valid and binding
agreement of the Company enforceable in accordance with its terms,
except as rights to indemnity and contribution hereunder may be
limited by applicable law. The execution, delivery and performance of
this Agreement, compliance by the Company with all the provisions
hereof and the consummation by the Company of the transactions
contemplated hereby will not require any consent, approval,
authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except as has been
obtained and except as may be required under the federal securities
laws or the securities, Blue Sky or real estate syndication laws of
the various states) and will not conflict with or constitute a breach
of any of the terms or provisions of, or a default under, the charter,
by-laws, partnership agreement, operating agreement or other governing
document(s) of the Company or any of the Subsidiaries or any
agreement, indenture or other instrument to which the Company or any
of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries or their respective property is bound, or violate or
conflict with any laws, administrative regulations or rulings or court
decrees applicable to the Company, any of the Subsidiaries or their
respective property, except as disclosed in the Prospectus and except
as rights to indemnity and contribution hereunder may be limited by
applicable law.
(m) Except as otherwise set forth in the Prospectus,
there are no material legal or governmental proceedings pending or, to
the Company's knowledge, threatened or contemplated to which the
Company or any of the Subsidiaries is a party or of which any of their
respective property is the subject that (i) are required to be set
forth in the Registration Statement, (ii) could reasonably be expected
to result in a material adverse change in the condition
- 12 -
13
(financial or other), business, prospects, properties, net worth or
results of operations of the Company and the Subsidiaries, taken as a
whole, or (iii) could reasonably be expected to adversely effect the
issuance or validity of the Shares to be issued and sold by the
Company hereunder. No contract or document of a character required to
be described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement is not so described
or filed as required.
(n) Neither the Company nor any of the Subsidiaries has
violated any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor any provisions
of the Employee Retirement Income Security Act or the rules and
regulations promulgated thereunder, which in each case could
reasonably be expected to result in any material adverse change in the
condition (financial or other), business, prospects, properties, net
worth or results of operations of the Company and the Subsidiaries,
taken as a whole.
(o) Except as described in the Prospectus, the Company
and the 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 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; 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 materially and adversely impact their
operations or business prospects other than as disclosed in the
Prospectus.
(p) Except as otherwise set forth in the Prospectus or
such as are not material to the business, prospects, financial
condition or results of operation of the Company and the Subsidiaries,
taken as a whole, the Company and each of the Subsidiaries has good
and marketable title, free and clear of all liens, claims,
- 13 -
14
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 (other than stock or other ownership
interests in Subsidiaries, which are the subject of the
representations in paragraphs (h) through (j) above). 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, moratorium 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. All leases to which
the Company or any of the Subsidiaries is a party are valid and
binding and no default has occurred or is continuing thereunder, which
could reasonably be expected to result in any material adverse change
in the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole, and the Company and the Subsidiaries
enjoy peaceful and undisturbed possession under all such leases to
which any of them is a party as lessee with such exceptions as do not
materially interfere with the use made by the Company or such
Subsidiary.
(q) 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.
(r) Except as disclosed in the Prospectus, there are no
outstanding subscriptions, rights, warrants, options, calls,
convertible securities, commitments of sale or liens related to or
entitling any person to purchase or otherwise to acquire any shares of
the capital stock of, or other ownership interest in, the Company or
any Subsidiary.
(s) There is (i) no material unfair labor practice
complaint pending against the Company or any of the Subsidiaries or,
to the knowledge of the Company, threatened against any of them,
before the National Labor Relations Board or any state or local labor
relations board, and no material grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is so
pending against the Company or any of the Subsidiaries or, to the
knowledge of the Company, threatened against any of them, and (ii) no
material strike, labor dispute, slowdown or stoppage pending against
the Company or any of the Subsidiaries or, to the knowledge of the
Company, threatened against it or any of
- 14 -
15
the Subsidiaries. No collective bargaining agreement exists with any
of the Company's employees and, to the Company's knowledge, no such
agreement is imminent.
(t) All material tax returns required to be filed by the
Company and each of the Subsidiaries in any jurisdiction have been
filed, other than those filings being contested in good faith, and all
material taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due pursuant to such returns or
pursuant to any assessment received by the Company or any of the
Subsidiaries have been paid, other than those being contested in good
faith and for which adequate reserves have been provided.
(u) Except as described in the Prospectus, the Company
owns or possesses adequate rights to use all material trademarks,
service marks, trade names, trademark registrations, service xxxx
registrations, copyrights and licenses necessary for the conduct of
its business and has no reason to believe that the conduct of its
business as described in the Prospectus will conflict with any such
rights of others.
(v) 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, gifts,
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.
(w) Each of Ernst & Young LLP, Xxxxxxx, Xxxxxxxx &
Xxxxxxxxxx P.C. and KPMG Peat Marwick LLP are independent public
accountants with respect to the Company as required by the Act.
(x) The financial statements, together with related
schedules and notes forming part of the Registration Statement and the
Prospectus (and any amendment or supplement thereto), present fairly
the consolidated financial position, results of operations and changes
in financial position of the Company and the Subsidiaries or the Xxxxx
Retirement Properties, as the case may be, on the basis stated in the
Registration Statement at the respective dates or for the respective
periods to which they apply; such statements and related schedules and
notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved, except as disclosed therein; and the other financial and
statistical information and data set forth in the Registration
Statement and the Prospectus (and any amendment or supplement
- 15 -
16
thereto) is, in all material respects, accurately presented and
prepared (i) on a basis consistent with such financial statements and
the books and records of the Company and (ii) as to pro forma
information, in good faith on the basis of the assumptions described
in the Registration Statement and such assumptions are reasonable and
the adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.
(y) Neither the Company nor any of the Subsidiaries is,
nor will the Company or any of the Subsidiaries become upon the sale
of the Shares and the application of the proceeds therefrom as
described in the Prospectus under the caption "Use of Proceeds," an
"investment company" or a person "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(z) Except as disclosed in the Prospectus, no holder of
any security of the Company has any right to require registration of
shares of Common Stock or any other security of the Company.
(aa) The Company has complied with all provisions of
Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
(bb) The Company has filed a notification of listing the
Shares on the Nasdaq National Market.
(cc) 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.
(dd) 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.
(ee) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus,
there has not been (i) any material adverse change in the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company and the Subsidiaries, taken as a whole, (ii)
any transaction that is material to the Company and the Subsidiaries,
taken as a whole, except transactions entered into in the ordinary
course of business, (iii) any obligation, direct or contingent, that
is material to the Company
- 16 -
17
and the Subsidiaries, taken as a whole, incurred by the Company or the
Subsidiaries, except obligations incurred in the ordinary course of
business, (iv) any change in the capital stock (other than as
expressly contemplated therein) or outstanding indebtedness of the
Company or any of the Subsidiaries that is material to the Company and
the Subsidiaries, taken as a whole, (v) any dividend or distribution
of any kind declared, paid or made on the capital stock of the
Company, or (vi) any loss or damage (whether or not insured) to the
property of the Company or any of the Subsidiaries which has been
sustained or will have been sustained which has 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.
(ff) The Company has not distributed and will not
distribute prior to the later of (i) the Closing Date, or any date on
which Additional Shares are to be purchased, as the case may be, and
(ii) completion of the distribution of the Shares, any offering
material in connection with the offering and sale of the Shares other
than any preliminary prospectuses filed as part of the Registration
Statement, the Prospectus, the Registration Statement and other
materials, if any, permitted by the Act.
(gg) The Company has not taken and will not take, directly
or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the
Shares.
(hh) Each Additional Selling Stockholder has vested and
presently exercisable options to purchase from the Company a number of
shares of Common Stock equal to the total number of Additional Shares
that you have the right to purchase from such Additional Selling
Stockholder pursuant to this Agreement.
7. Representations and Warranties of the Selling Stockholders and
Additional Selling Stockholders. Each Selling Stockholder (with respect to
each of the following matters that relate to a Selling Stockholder) and each
Additional Selling Stockholder (with respect to each of the following matters
that relate to an Additional Selling Stockholder) severally and not jointly
represents and warrants to each Underwriter that:
(a) Such Selling Stockholder is the lawful owner of the
Shares to be sold by such Selling Stockholder pursuant to this
Agreement and has, and on the Closing Date will have, good and valid
title to such Shares, free of all restrictions on transfer, pledges,
liens, encumbrances, security interests and claims whatsoever. Such
Additional Selling Stockholder has beneficial ownership of the Shares
to be sold by such Additional Selling Stockholder pursuant to this
Agreement and on any Option Closing Date on which any of such Shares
are to be sold hereunder will be the lawful owner of such Shares and
will have good and valid title to such
- 17 -
18
Shares, free of all restrictions on transfer, pledges, liens,
encumbrances, security interests and claims whatsoever.
(b) Upon delivery of and payment for such Shares pursuant
to this Agreement, good and valid title to such Shares will pass to
the Underwriters, free and clear of all restrictions on transfer,
pledges, liens, encumbrances, security interests and claims
whatsoever; and no co-sale right, tag along right, right of first
refusal or other similar right exists with respect to any of such
Shares or the transfer and sale thereof.
(c) Such Selling Stockholder has, and on the Closing Date
will have, full legal right, power and authority to enter into this
Agreement, the Letter of Transmittal and Custody Agreement between
such Selling Stockholder and First Union National Bank of North
Carolina, as Custodian (the "Custody Agreement"), and the Selling
Stockholder's Irrevocable Power of Attorney between such Selling
Stockholder and Xxxx X. Xxxxxxxx and Xxxxx X. Xxxxxx (the "Power of
Attorney"), and to sell, assign, transfer and deliver such Shares in
the manner provided herein and therein, and this Agreement, the
Custody Agreement and the Power of Attorney have been duly executed
and delivered by such Selling Stockholder and each of this Agreement,
the Custody Agreement and the Power of Attorney is a valid and binding
agreement of such Seller enforceable in accordance with its terms,
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, and except as rights to
indemnity and contribution hereunder may be limited by applicable law.
Such Additional Selling Stockholder has, and on any applicable Option
Closing Date will have, full legal right, power and authority to enter
into this Agreement and to sell, assign, transfer and deliver such
Shares in the manner provided herein, and this Agreement has been duly
executed and delivered by such Additional Selling Stockholder and this
Agreement is a valid and binding agreement of such Additional Selling
Stockholder enforceable in accordance with its terms, 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, and except as rights to indemnity
and contribution hereunder may be limited by applicable law.
(d) Such Seller has not taken, and will not take,
directly or indirectly, any action designed to, or which might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares pursuant to the distribution
contemplated by this Agreement; and other than as permitted by the
Act, such Seller has not distributed and will not distribute any
prospectus or other offering material in connection with the offering
and sale of the Shares.
(e) The execution, delivery and performance of this
Agreement by such Seller, compliance by such Seller with all the
provisions hereof and the
- 18 -
19
consummation by such Seller of the transactions contemplated hereby
will not require any consent, approval, authorization or order of any
court, regulatory body, administrative agency or other governmental
body or of any other governmental or non-governmental person or entity
(except as has been obtained and except as may be required under the
federal securities laws or the state securities, Blue Sky or real
estate syndication laws) and will not conflict with or constitute a
breach of any of the terms or provisions of, or a default under, any
agreement, indenture or other instrument to which such Seller is a
party or by which such Seller or property of such Seller is bound, or
violate or conflict with any laws, administrative regulation or ruling
or court decree applicable to such Seller or property of such Seller,
except as rights to indemnity and contribution hereunder may be
limited by applicable law.
(f) Such parts of the Registration Statement under the
caption "Principal and Selling Stockholders" which specifically relate
to such Seller do not, and will not (after amendment, if necessary,
for any change in such information as provided in paragraph 7(g)
below) on the Closing Date or any Option Closing Date, as the case may
be, 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, in light of circumstances under which they
were made, not misleading.
(g) At any time during the period described in paragraph
5(e) hereof, if there is any change in the information referred to in
paragraph 7(f) above, such Seller will immediately notify you of such
change.
(h) Such Additional Selling Stockholder has vested and
presently exercisable options to purchase from the Company a number of
shares of Common Stock equal to the total number of Additional Shares
that you have the right to purchase from such Additional Selling
Stockholder pursuant to this Agreement. Such Additional Selling
Stockholder has taken all actions (including, without limitation, the
payment of the full exercise price for and the valid execution and
delivery to the Company of any required notice of exercise of such
stock options) necessary to effect the valid cashless exercise of such
stock options and the purchase by such Additional Selling Stockholder
of such Additional Shares from the Company, subject only to the
exercise and closing of your right to purchase such Additional Shares
from such Additional Selling Stockholder hereunder. Such Additional
Selling Stockholder further represents, warrants, covenants,
acknowledges and agrees with you that: (i) the actions referred to in
the immediately preceding sentence are coupled with an interest and
were taken subject to and in consideration of the interests of the
Underwriters and, until the 41st day following the date of this
Agreement, are irrevocable and not subject to termination by such
Additional Selling Stockholder or by operation of law, whether by the
death or incapacity of such Additional Selling Stockholder, the
termination of any trust or estate, the death or incapacity of one or
more trustees,
- 19 -
20
guardians, executors or administrators under such trust or
estate, the dissolution or liquidation of any corporation or
partnership or the occurrence of any other event; and (ii) if such
Additional Selling Stockholder should die or become incapacitated, if
any trust or estate should be terminated, if any corporation or
partnership should be dissolved or liquidated, or if any other such
event should occur before the delivery of the Additional Shares to be
sold by such Additional Selling Stockholder under this Agreement, such
Additional Shares shall be delivered to you on behalf of such
Additional Selling Stockholder in accordance with the terms and
conditions of this Agreement as if such death or incapacity,
termination, dissolution, liquidation or other event had not occurred,
regardless of whether or not you shall have received notice of such
death, incapacity, termination, dissolution, liquidation or other
event. Such Additional Selling Stockholder further represents and
warrants that he has executed and delivered to the Company's transfer
agent a stock power or other valid instrument of transfer, duly
endorsed for transfer to the Underwriters of the Additional Shares
that may be sold by such Additional Selling Stockholder hereunder,
bearing the signature of such Additional Selling Stockholder
guaranteed by a commercial bank or trust company having an office or a
correspondent in New York, New York or by a member firm of the New
York, American or Pacific Stock Exchange, subject only to the exercise
and closing of your right to purchase such Additional Shares from
such Additional Selling Stockholder hereunder.
8. Indemnification. (a) The Company, each Selling Stockholder
and each Additional Selling Stockholder, jointly, agree to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and judgments
caused by or based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or judgments are caused by
any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to any Underwriter furnished in writing to the
Company by or on behalf of any Underwriter through you expressly for use
therein, and except that the indemnification obligation of each Selling
Stockholder and Additional Selling Stockholder hereunder shall be limited
solely to losses, claims, damages, liabilities and judgments caused by untrue
statements or alleged untrue statements or omissions or alleged omissions made
in reliance upon information relating to such Selling Stockholder or Additional
Selling Stockholder furnished in writing to the Company by or on behalf of such
Selling Stockholder or Additional Selling Stockholder expressly for use
therein. Notwithstanding the foregoing, the aggregate liability of any Selling
Stockholder or Additional Selling Stockholder pursuant to the provisions of
this paragraph, or for any breaches of one or more representations or
warranties contained in this Agreement, shall be limited to an amount equal to
the aggregate purchase price (net of underwriting discounts and commissions)
received by such Selling Stockholder or Additional Selling Stockholder from the
sale of
- 20 -
21
such Selling Stockholder's or Additional Selling Stockholder's Shares
hereunder; provided, however, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages and
liabilities and judgments purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) was not
sent or given by or on behalf of such Underwriter to such person, if required
by law so to have been delivered, at or prior to the written confirmation of
the sale of the Shares to such person, and if the Prospectus (as so amended and
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or judgment.
(b) In case any action shall be brought against any
Underwriter or any person controlling such Underwriter, based upon any
preliminary prospectus, the Registration Statement or the Prospectus or any
amendment or supplement thereto and with respect to which indemnity may be
sought against the Company or any Selling Stockholder or Additional Selling
Stockholder, such Underwriter shall promptly notify the Company or such
Selling Stockholder or Additional Selling Stockholder, as the case may be, in
writing and the Company or such Selling Stockholder or Additional Selling
Stockholder, as the case may be, shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such indemnified party and
payment of all reasonable fees and expenses. Any Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the reasonable fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the employment of such counsel has been
specifically authorized in writing by the Company, or such Selling Stockholder
or Additional Selling Stockholder, as the case may be, (ii) the Company or such
Selling Stockholder or Additional Selling Stockholder, as the case may be,
shall have failed to assume the defense and employ counsel or (iii) the named
parties to any such action (including any impleaded parties) include both such
Underwriter or such controlling person and the Company or such Selling
Stockholder or Additional Selling Stockholder, as the case may be, and such
Underwriter or such controlling person shall have been advised by such counsel
that there may be one or more legal defenses available to it which are
different from or additional to those available to the Company or such Selling
Stockholder, as the case may be, (in which case the Company or such Selling
Stockholder or Additional Selling Stockholder, as the case may be, shall not
have the right to assume the defense of such action on behalf of such
Underwriter or such controlling person, it being understood, however, that the
Company or such Selling Stockholder shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for all such Underwriters and
controlling persons, which firm shall be designated in writing by Xxxxxxxxx,
Xxxxxx & Xxxxxxxx Securities Corporation and that all such fees and expenses
shall be reimbursed as they are incurred). A Seller shall not be liable for
any settlement of any such action effected without the written consent of such
Seller but if settled with the written consent of such Seller, such Seller
- 21 -
22
agrees to indemnify and hold harmless any Underwriter and any such controlling
person from and against any loss or liability by reason of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(c) Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its officers who
sign the Registration Statement, any person controlling the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, each
Selling Stockholder, each Additional Selling Stockholder and each person, if
any, controlling such Selling Stockholder or Additional Selling Stockholder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
to the same extent as the foregoing indemnity from the Sellers to each
Underwriter but only with reference to information relating to such Underwriter
furnished in writing by or on behalf of such Underwriter through you expressly
for use in the Registration Statement, the Prospectus or any preliminary
prospectus. In case any action shall be brought against the Company, any of
its directors, any such officer or any person controlling the Company, or any
Selling Stockholder or Additional Selling Stockholder or any person controlling
such Selling Stockholder or Additional Selling Stockholder, based on the
Registration Statement, the Prospectus or any preliminary prospectus and in
respect of which indemnity may be sought against any Underwriter, the
Underwriter shall have the rights and duties given to the Sellers (except that
if any Seller shall have assumed the defense thereof such Underwriter shall not
be required to do so, but may employ separate counsel therein and participate
in the defense thereof but the fees and expenses of such counsel shall be at
the expense of such Underwriter), and the Company, its directors, any such
officers and any person controlling the Company, and the Selling Stockholders,
the Additional Selling Stockholders and any person controlling such Selling
Stockholders or Additional Selling Stockholders, shall have the rights and
duties given to the Underwriters, by Section 8(b) hereof.
(d) If the indemnification provided for in this Section 8
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each 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 and judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Sellers on the one
hand and the Underwriters on the other hand from the offering of the Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Sellers and the Underwriters in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The
relative benefits received by the Sellers
- 22 -
23
and the Underwriters shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by the
Sellers, and the total underwriting discounts and commissions received by the
Underwriters, bear to the total price to the public of the Shares, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault of the Sellers and the Underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Company, the Selling Stockholders, the Additional Selling
Stockholders or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Sellers and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) 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 in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, 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 Section 8, 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 and no
Selling Stockholder or Additional Selling Stockholder shall be required to
contribute any amount in excess of the aggregate purchase price (net of
underwriting discounts and commissions) received by such Selling Stockholder or
Additional Selling Stockholder from the sale of Shares hereunder. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 8(d) are several in proportion to the
respective number of Shares purchased by each of the Underwriters hereunder and
not joint.
(e) You, on behalf of the Underwriters, represent and
warrant that the information set forth (i) in the last paragraph on the front
cover page, (ii) on the inside front cover page concerning United Kingdom
purchasers, stabilization and over-allotment, and passive market making, and
(iii) under the caption "Underwriting" in the Registration Statement, any
preliminary prospectus and the Prospectus relating to the Shares (insofar as
such information relates to the Underwriters) constitutes the only information
furnished by the Underwriters for inclusion in the Registration Statement, any
preliminary prospectus and the Prospectus.
- 23 -
24
(f) The Company and the Selling Stockholders have entered
into a Registration Agreement dated January 4, 1995, pursuant to which the
Company has agreed to indemnify the Selling Stockholders against certain
liabilities (and vice versa). The Additional Selling Stockholders agree to
indemnify the Company on the same basis as the indemnification of the Company
by the Selling Stockholders under such registration Agreement, subject to the
same limitation on the aggregate liability of each Additional Selling
Stockholder contained in Section 8(a).
(g) NatWest Securities Limited hereby agrees that, as
part of the distribution of the Common Stock offered by the Prospectus and
subject to certain exceptions, it will not offer any Common Stock within the
United States, its territories or possessions, or to persons who are citizens
thereof or residents therein. NatWest Securities Limited further represents
and agrees that: (i) it has not offered or sold and will not offer or sell any
shares of Common Stock to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing
of investments (whether as principal or agent) for the purposes of their
businesses or otherwise in circumstances that have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995 or the Financial Services Xxx
0000 (the "Act"); (ii) it has complied and will comply with all applicable
provisions of the Act with respect to anything done by it in relation to the
shares of Common Stock in, from, or otherwise involving the United Kingdom; and
(iii) it has only issued or passed on and will only issue or pass on, in the
United Kingdom, any document that consists of or any part of listing
particulars, supplementary listing particulars, or any other document required
or permitted to be published by listing rules under Part IV of the Act, to a
person who is of a kind described in Article 11(3) of the Financial Services
Xxx 0000 (Investment Advertisements) (Exemptions) Order 1995 or is a person to
whom the document may otherwise lawfully be issued or passed on.
9. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company
and the Subsidiaries contained in this Agreement shall be true and
correct on the Closing Date with the same force and effect as if made
on and as of the Closing Date.
(b) The Registration Statement shall have become
effective not later than 5:00 P.M.(and in the case of a Registration
Statement filed under Rule 462(b) of the Act, not later than 10:00
p.m.), New York City time, on the date of this Agreement or at such
later date and time as you may approve in writing, and at the Closing
Date no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose
shall have been commenced or shall be pending before or, to the
knowledge of the Company or any Underwriter, contemplated by the
Commission.
- 24 -
25
(c)(i) Since the date of the latest balance sheet included
in the Registration Statement and the Prospectus, there shall not have
been 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,
of the Company, (ii) since the date of the latest balance sheet
included in the Registration Statement and the Prospectus there shall
not have been any material adverse change, or any development
involving a prospective material adverse change, in the capital stock
or in the long-term debt of the Company from that set forth in or
contemplated by the Registration Statement and Prospectus, (iii) the
Company and the Subsidiaries shall have no liability or obligation
(other than long-term debt, which is the subject of the immediately
preceding clause (ii) of this paragraph 9(c)), direct or contingent,
which is material to the Company and the Subsidiaries, taken as a
whole, other than those reflected in the Registration Statement and
the Prospectus and (iv) on the Closing Date you shall have received a
certificate dated the Closing Date, signed by Xxxx X. Xxxxxxxx and
Xxxxx X. Xxxxxx, in their capacities as the Chief Executive Officer
and Chief Financial Officer of the Company, respectively, confirming
the matters set forth in paragraphs (a), (b), and (c) of this Section
9 and addressing such other matters as may be reasonably requested by
you or your counsel.
(d) All the representations and warranties of the Selling
Stockholders and Additional Selling Stockholders contained in this
Agreement shall be true and correct on the Closing Date with the same
force and effect as if made on and as of the Closing Date and you
shall have received a certificate to such effect, dated the Closing
Date, from the Selling Stockholders and Additional Selling
Stockholders.
(e) You shall have received on the Closing Date an
opinion (reasonably satisfactory to you and counsel for the
Underwriters), dated the Closing Date, of Xxxxx & Xxxxxxx L.L.P.,
counsel for the Company, to the effect that:
(i) The Company was duly incorporated, and is
validly existing and in good standing under the laws of the
State of Delaware as of the date specified in such opinion
letter, and has the corporate power and corporate authority to
own, lease and operate its properties and to conduct its
business as described in the Prospectus. The Company is
authorized to transact business as a foreign corporation in
each jurisdiction identified on a Schedule to such opinion
letter, as of the respective dates of the certificates
specified therein.
(ii) The authorized, issued and outstanding
capital stock of the Company, as of June 30, 1996, was set
forth under the caption "Capitalization" in the Prospectus.
All shares of Common Stock shown as issued and outstanding
under said caption (including the Shares to be sold by the
Selling Stockholders and, as of any Option Closing Date, all
- 25 -
26
Additional Shares to be sold by the Additional Selling
Stockholders on such Option Closing Date pursuant to Section 2
of this Agreement) have been duly authorized and are validly
issued, fully paid and non-assessable, and were not issued in
violation of (A) any preemptive rights under the Company's
Restated Certificate of Incorporation or Delaware corporate
law or (B) to such counsel's knowledge, similar contractual
rights.
(iii) The Company has the corporate power and
corporate authority to enter into this Agreement and to
consummate the transactions contemplated hereby and this
Agreement has been duly authorized, executed and delivered by
the Company. The Shares to be issued and sold by the Company
pursuant to this Agreement, when issued and delivered to the
Underwriters against payment therefor as provided in this
Agreement, will be duly authorized, validly issued, fully paid
and non-assessable, and will not have been issued in violation
of (A) any preemptive rights under the Company's Restated
Certificate of Incorporation or Delaware corporate law or (B)
to such counsel's knowledge, similar contractual rights.
(iv) Each of the Corporate Subsidiaries
incorporated in Virginia was incorporated, and is validly
existing and in good standing under the laws of its
jurisdiction of incorporation as of the respective dates
specified in such opinion letter and has the corporate power
and corporate authority to own, lease and operate its
properties and to conduct its business as described in the
Prospectus. Each such Corporate Subsidiary is authorized to
transact business as a foreign corporation in each
jurisdiction identified on a Schedule to such opinion letter,
as of the respective dates of the certificates specified
therein.
(v) All of the outstanding shares of capital
stock of each such Corporate Subsidiary (a) have been duly
authorized and are validly issued, fully paid and
nonassessable, and (b) to such counsel's knowledge, were not
issued in violation of any preemptive rights under such
Corporate Subsidiary's charter or under the laws of the
jurisdiction of its incorporation or in violation of any
similar contractual rights.
(vi) Each Limited Partnership Subsidiary formed in
Virginia or Maryland was formed, and is validly existing and
in good standing under the laws of its jurisdiction of
organization as of the respective dates specified in such
opinion letter, and has the limited partnership power and
limited partnership authority to own, lease and operate its
properties and to conduct its business as described in the
Prospectus. Each Limited Partnership Subsidiary is authorized
to transact business as a foreign limited partnership in each
jurisdiction identified on a Schedule to such opinion letter,
as of the respective dates of the certificates specified
therein.
- 26 -
27
(vii) Each LLC Subsidiary formed in Maryland was
formed, and is validly existing and in good standing under the
laws of its jurisdiction of organization as of the respective
dates specified in such opinion letter, and has the limited
liability company power and limited liability company
authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus.
(viii) The authorized capital stock of the Company
conforms in all material respects to the description thereof
contained in the Prospectus under the caption "Description of
Capital Stock". The form of certificate evidencing the Firm
Shares has been duly authorized and complies with the
requirements of the Delaware General Corporation Law and the
Restated Certificate of Incorporation and Amended and Restated
Bylaws of the Company.
(ix) The Registration Statement has become
effective under the Act and, to such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
have been instituted or threatened by the Commission.
(x) The execution, delivery and performance as of
the Closing Date by the Company of this Agreement do not (i)
violate the Restated Certificate of Incorporation or Amended
and Restated Bylaws of the Company, the charter, bylaws,
partnership agreements or operating agreements of any of the
Subsidiaries or the General Corporation Law of the State of
Delaware or (ii) breach or constitute a default under any
contract or agreement listed on a Schedule to such opinion
letter. No approval or consent of any Delaware, Virginia or
Maryland governmental agency is required to be obtained by the
Company in connection with the execution, delivery and
performance as of the Closing Date by the Company of this
Agreement.
(xi) Each of the Company's owned assisted living
facilities in Maryland and Virginia currently holds (or has
pending a renewal application for) a license authorizing such
facility to furnish assisted living services as described
under the heading "Services" on pages 34-35 of the Prospectus.
(xii) To such counsel's knowledge, except as set
forth in the Prospectus, no holders of Common Stock or other
securities of the Company have registration rights with
respect to securities of the Company and, except as set forth
in the Prospectus, all holders of securities of the Company
having rights to registration of shares of Common Stock or
other securities because of the filing of the Registration
Statement by the
- 27 -
28
Company have, solely with respect to the offering contemplated
thereby, either waived such rights or included in the
Registration Statement the shares of Common Stock they wish to
have registered.
(xiii) Neither the Company nor any of the
Subsidiaries is required to be registered as an "investment
company" under the 1940 Act.
(xiv) The Registration Statement (including any
Registration Statement filed under 462(b) of the Act, if any)
and the Prospectus and any supplement or amendment thereto
(except for financial statements and supporting schedules and
other financial and statistical information and data included
therein, as to which no opinion need be expressed) comply as
to form in all material respects with the Act.
(xv) To such counsel's knowledge, the Company owns
directly or indirectly the ownership interests in the
Subsidiaries set forth on Exhibit 21 to the Registration
Statement.
In addition to the matters set forth above, such opinion
letter shall also include a statement to the effect that no facts have
come to the attention of such counsel which cause them to believe that
(i) the Registration Statement, at the time it became effective,
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, or that the Prospectus, as of its
date and as of the Closing Date, contained or contains an untrue
statement of a material fact or omitted or omits 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, (ii)
there are any legal or governmental proceedings pending or threatened
against the Company that are required to be disclosed in the
Registration Statement or the Prospectus, other that those disclosed
therein, or (iii) there are any contracts or documents of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or referred to therein or so filed; provided
that in making the foregoing statements (which shall not constitute
an opinion), such counsel need not express any views as to
the financial statements and supporting schedules and other financial
and statistical information and data included in or omitted from the
Registration Statement or the Prospectus.
In giving its opinion required by this paragraph (e) above,
such counsel may rely, (A) as to all matters of fact, upon
certificates and written statements of officers and employees of the
Company and its Subsidiaries, and (B) as to the qualification and good
standing of the Company and its Subsidiaries to do business in any
jurisdiction, upon certificates of appropriate government officials in
such jurisdictions. Further, such counsel may state that their
opinion is based as to matters of law solely upon (i) the federal
securities laws, (ii) the General
- 28 -
29
Corporation Law, as amended, of each of the States of Delaware and
Virginia, (iii) the limited partnership acts of Virginia and Maryland,
(iv) the limited liability company act of Maryland, (v) Hospitals and
Related Institutions, Md. Health-Gen. Code Xxx. Section Section
19-301 to 19-374, (vi) Domiciliary Care Homes, Md. Regs. Code Section
Section 10.07.03.01 to 10.07.03.27, (vii) Licensing of Homes for
Aged, Infirm or Disabled Adults, Va. Code Xxx. Section Section
63.1-172 to 182.1, and (viii) Standards and Regulations for Licensed
Adult Care Residences, 22 Va. Admin. Code Section Section 40-70-10 to
00-000-000; and that such counsel expresses no opinion as to any other
laws, statutes, ordinances, rules or regulations.
The opinion of Xxxxx & Xxxxxxx L.L.P. described in this
paragraph (e) shall be rendered to you at the request of the Company
and shall so state therein.
(f) You shall have received on the Closing Date an
opinion (reasonably satisfactory to you and counsel for the
Underwriters), dated the Closing Date, from each of (i) the
Vice President and Associate General Counsel of Allstate Insurance
Company, as counsel to each of Allstate Insurance Company, Allstate
Life Insurance Company, Allstate Retirement Plan and Agents
Pension Plan, (ii) Xxxxxxx & Xxxxxx, counsel to Frontenac VI Limited
Partnership, (iii) the Office of the General Counsel of Xxxxxxxxx,
Lufkin & Xxxxxxxx, Inc., as counsel to each of DLJ Capital Corporation
and Sprout Growth II, L.P. and (iv) Watt, Xxxxxx & Hoffar, counsel to
each of the Additional Selling Stockholders, to the effect that:
(i) Each Selling Stockholder and each Additional
Selling Stockholder has full right, power and authority to
enter into and to perform his, her or its obligations under
this Agreement and to sell, transfer, assign and deliver the
Shares to be sold by such Selling Stockholder or Additional
Selling Stockholder hereunder.
(ii) This Agreement has been duly executed and
delivered by or on behalf of each Selling Stockholder and each
Additional Selling Stockholder.
(iii) The execution, delivery and performance of
this Agreement by each Selling Stockholder and each Additional
Selling Stockholder, compliance by each Selling Stockholder
and each Additional Selling Stockholder with all the
provisions hereof and the consummation of the transactions of
each Selling Stockholder and each Additional Selling
Stockholder contemplated hereby do not (a) require any
consent, approval, authorization, order or other action of any
court, regulatory body, administrative agency or other
governmental agency or body (except as may be required under
state securities or Blue Sky laws, as to which such counsel
need express no opinion), (b) constitute a breach of, or a
default under, any agreement, promissory note, mortgage or
other instrument to which such Selling Stockholder or
Additional Selling Stockholder is a party
- 29 -
30
or by which such Selling Stockholder or Additional Selling
Stockholder is bound and of which such counsel has knowledge,
or (c) violate or conflict with any applicable law, rule or
regulation (except state securities or Blue Sky laws, as to
which such counsel need express no opinion) or any order, writ
or decree of any court or governmental agency or body having
jurisdiction over such Selling Stockholder or Additional
Selling Stockholder.
(iv) Each Selling Stockholder has full right,
power and authority to enter into and perform his, her or its
obligations under the Custody Agreement and the Power of
Attorney to be executed and delivered by such Selling
Stockholder in connection with the transactions contemplated
by this Agreement; each of such Custody Agreement and such
Power of Attorney has been duly executed and delivered by such
Selling Stockholder; and each of such Custody Agreement and
such Power of Attorney constitutes a valid and binding
agreement of such Selling Stockholder, enforceable in
accordance with its terms, 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.
The opinions of counsel to the Selling Stockholders described
in this paragraph (f) shall be rendered to you at the request of the
Selling Stockholders and Additional Selling Stockholders (and shall so
state therein) and shall be limited to matters of federal law and the
laws of the respective states of residence of each Selling Stockholder
and Additional Selling Stockholder (other than the securities or Blue
Sky laws of such states, as to which such counsel need express no
opinion).
(g) You shall have received on the Closing Date an
opinion, dated the Closing Date, of Xxxxxx & Bird, counsel for the
Underwriters, in form and substance reasonably satisfactory to you,
with respect to the sufficiency of all such corporate proceedings and
other legal matters relating to this Agreement and the transactions
contemplated hereby as you may reasonably require, and the Company
shall have furnished to such counsel such documents as they may have
requested for the purpose of enabling them to pass upon such matters.
(h) You shall have received a letter on and as of the
Closing Date, in form and substance satisfactory to you, from Ernst &
Young LLP, independent public accountants, with respect to the
financial statements and certain financial information contained in
the Registration Statement and the Prospectus and substantially in the
form and substance of the letter delivered to you by Ernst & Young LLP
on the date of this Agreement. You shall have also received a letter
on and as of the Closing Date, in form and substance satisfactory to
you, from
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31
KPMG Peat Marwick LLP, independent public accountants, with respect to
their review of the unaudited financial statements of the Xxxxx
Retirement Properties as of and for the six-month period ended June
30, 1996 contained in the Registration Statement and the Prospectus
and substantially in the form and substance of the letter delivered to
you by KPMG Peat Marwick LLP on the date of this Agreement.
(i) The Company, the Selling Stockholders and the
Additional Selling Stockholders shall not have failed at or prior to
the Closing Date to perform or comply with any of the agreements
herein contained and required to be performed or complied with by the
Company, the Selling Stockholders or the Additional Selling
Stockholders at or prior to the Closing Date.
(j) The Company, the Selling Stockholders and the
Additional Selling Stockholders shall have furnished to you such
further certificates and documents as you or your counsel shall
reasonably request, including, without limitation, certificates of
officers of the Company and certificates of the Selling Stockholders
and the Additional Selling Stockholders as to the accuracy of the
respective representations and warranties of the Company, the Selling
Stockholders and the Additional Selling Stockholders herein, as to the
performance by the Company, the Selling Stockholders and the
Additional Selling Stockholders of their respective obligations
hereunder and as to the other conditions concurrent and precedent to
the obligations of the Underwriters hereunder.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to counsel to the Underwriters. The Company, the Selling Stockholders and the
Additional Selling Stockholders will furnish you with such number of conformed
copies of such opinions, certificates, letters and documents as you shall
reasonably request.
The several obligations of the Underwriters to purchase any Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to
the good standing of the Company, title to the Additional Shares, the
Registration Statement and Prospectus and other matters related to the Company
or the purchase of such Additional Shares, including, without limitation, (i)
an opinion dated the Option Closing Date of Watt, Xxxxxx & Hoffar, counsel for
the Additional Selling Stockholders, with respect to the matters set forth in
paragraph 9(f) above and to the effect that, upon the delivery of and payment
for the Additional Shares to be sold by the Additional Selling Stockholders as
contemplated in this Agreement, each of the Underwriters (assuming they are
bona fide purchasers within the meaning of the Uniform Commercial Code) will
have acquired title to such Additional Shares purchased by it, free and clear
of any adverse claims, (ii) an opinion dated the Option Closing Date of Xxxxx &
Xxxxxxx L.L.P., counsel for the Company, with respect to the matters set forth
in paragraph 9(e) above (other than opinions relating solely to the Firm
Shares), (iii) an opinion dated the Option Closing Date of Xxxxxx & Bird,
counsel for
- 31 -
32
the Underwriters, with respect to the sufficiency of all such corporate
proceedings and other legal matters relating to this Agreement and the
transactions contemplated hereby as you may reasonably require, (iv) a letter
dated the Option Closing Date from Ernst & Young LLP with respect to the
matters set forth in the first sentence of paragraph 9(h) above and a letter
dated the Option Closing Date from KPMG Peat Marwick LLP with respect to the
matters set forth in the second sentence of paragraph 9(h) above, and (v)
certificates dated the Option Closing Date as to the matters referred to in
paragraph 9(j) above.
10. Effective Date of Agreement and Termination. This Agreement
shall become effective upon the later of (i) execution of this Agreement and
(ii) the effectiveness of the Registration Statement.
This Agreement may be terminated at any time prior to the
Closing Date by you by written notice to the Sellers if any of the following
has occurred: (i) since the respective dates as of which information is given
in the Registration Statement and the Prospectus, any material adverse change
or development involving a prospective material adverse change in the condition
(financial or other) of the Company and the Subsidiaries, taken as a whole, or
the business, prospects, properties, net worth or results of operations of the
Company and the Subsidiaries, taken as a whole, whether or not arising in the
ordinary course of business, which would, in your judgment, make it
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus, (ii) any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic conditions
or in the financial markets of the United States or elsewhere that, in your
judgment, is material and adverse and would, in your judgment, make it
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus, (iii) the suspension or material limitation of trading in
securities on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market or limitation on prices for securities on any such
exchange or Nasdaq National Market, (iv) the enactment, publication, decree or
other promulgation of any federal or state statute, regulation, rule or order
of any court or other governmental authority which in your opinion materially
and adversely affects, or will materially and adversely affect, the business or
operations of the Company and the Subsidiaries, taken as a whole, (v) the
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
If on the Closing Date or on an Option Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase the Firm Shares or Additional Shares, as the case may be, which it or
they have agreed to purchase hereunder on such date and the aggregate number of
Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused
to purchase is not more than one-tenth of the total number of Shares to be
purchased on such date by all Underwriters, each non-defaulting Underwriter
shall
- 32 -
33
be obligated severally, in the proportion which the number of Firm Shares set
forth opposite its name in Schedule I bears to the total number of Firm Shares
which all the non-defaulting Underwriters, as the case may be, have agreed to
purchase, or in such other proportion as you may specify, to purchase the Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused
to purchase on such date; provided that in no event shall the number of Firm
Shares or Additional Shares, as the case may be, which any Underwriter has
agreed to purchase pursuant to Section 2 hereof be increased pursuant to this
Section 10 by an amount in excess of one-ninth of such number of Firm Shares or
Additional Shares, as the case may be, without the written consent of such
Underwriter. If on the Closing Date or on an Option Closing Date, as the case
may be, any Underwriter or Underwriters shall fail or refuse to purchase Firm
Shares, or Additional Shares, as the case may be, and the aggregate number of
Firm Shares or Additional Shares, as the case may be, with respect to which
such default occurs is more than one-tenth of the aggregate number of Shares to
be purchased on such date by all Underwriters and arrangements satisfactory to
you and the applicable Sellers for purchase of such Shares are not made within
48 hours after such default, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter and the applicable Sellers. In any
such case which does not result in termination of this Agreement, either you or
the Sellers shall have the right to postpone the Closing Date or the applicable
Option Closing Date, as the case may be, but in no event for longer than seven
days, in order that the required changes, if any, in the Registration Statement
and the Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any default of any such Underwriter under this
Agreement.
11. Agreements of the Selling Stockholders and Additional Selling
Stockholders. Each Selling Stockholder and Additional Selling Stockholder
severally agrees with you and the Company:
(a) To pay or to cause to be paid all transfer
taxes with respect to the Shares to be sold by such Selling
Stockholder or Additional Selling Stockholder; and
(b) To take all reasonable actions in cooperation
with the Company and the Underwriters to cause the
Registration Statement to become effective at the earliest
possible time, to do and perform all things to be done and
performed by such Selling Stockholder or Additional Selling
Stockholder under this Agreement prior to the Closing Date or
the Option Closing Date, as the case may be, and to satisfy
all conditions precedent to the delivery by such Selling
Stockholder or Additional Selling Stockholder of the Shares to
be sold by such Selling Stockholder or Additional Selling
Stockholder pursuant to this Agreement.
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34
12. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (a) if to the Company, to Xxxx
X. Xxxxxxxx, Chief Executive Officer, Sunrise Assisted Living, Inc., 0000 Xxx
Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000, (b) if to any Selling Stockholder
or Additional Selling Stockholder, to such Selling Stockholder or Additional
Selling Stockholder c/o Sunrise Assisted Living, Inc., 0000 Xxx Xxxxxxx, Xxxxx
000, Xxxxxxx, Xxxxxxxx 00000 and (c) if to any Underwriter or to you, to you
c/x Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Syndicate Department, or in any case to such
other address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Selling Stockholders,
the Additional Selling Stockholders, the Company, its officers and directors
and of the several Underwriters set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect, and will survive delivery
of and payment for the Shares, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of any Underwriter or
by or on behalf of the Sellers, the officers or directors of the Company or any
controlling person of the Sellers, (ii) acceptance of the Shares and payment
for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriters
because of any failure or refusal on the part of the Company or the Selling
Stockholders or Additional Selling Stockholder to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company, the Selling
Stockholders or the Additional Selling Stockholders, as the case may be, agree
to reimburse the several Underwriters for all out-of-pocket expenses (including
the reasonable fees and disbursements of counsel) reasonably incurred by them.
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Sellers, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
This Agreement shall be governed and construed in accordance
with the laws of the State of New York.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
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35
Please confirm that the foregoing correctly sets forth the
agreement by and among the Company, the Selling Stockholders, the Additional
Selling Stockholders and the several Underwriters.
Very truly yours,
SUNRISE ASSISTED LIVING, INC.
By:
-----------------------------------
Xxxxx X. Xxxxxx, Executive Vice President
THE SELLING STOCKHOLDERS
NAMED IN SCHEDULE II HERETO
By:
-----------------------------------
Attorney-in-Fact
--------------------------------------
XXXXX X. XXXXXX
--------------------------------------
XXXXXXX X. XXXXX
--------------------------------------
XXXXXX X. XXXXXX
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
ALEX. XXXXX & SONS INCORPORATED
NATWEST SECURITIES LIMITED
X.X. XXXXXXXX & CO.
Acting severally on behalf of themselves and the
several Underwriters named in Schedule I hereto
By: XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By:
--------------------------------------------
Xxxx X. Xxxxxxxxx, Senior Vice President
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36
SCHEDULE I
Number of Firm Shares
Underwriters to be Purchased
------------ -------------------------
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
Alex. Xxxxx & Sons Incorporated
NatWest Securities Limited
X.X. Xxxxxxxx & Co.
_________
Total 4,000,000
37
SCHEDULE II
Selling Stockholders
Number of Additional
Name Shares Being Sold
---- -----------------
Allstate Insurance Company 140,000
Allstate Life Insurance Company 87,500
CTC Illinois Trust Company, as trustee for 12,500
the benefit of Allstate Retirement Plan
CTC Illinois Trust Company, as trustee for 10,000
the benefit of Agents Pension Plan
Frontenac VI Limited Partnership 375,000
DLJ Capital Corporation 33,838
Sprout Growth II, L.P. 341,162
---------
Total 1,000,000
38
SCHEDULE III
Additional Selling Stockholders
Number of Additional
Name Shares Being Sold*
---- ------------------
Xxxxx X. Xxxxxx 150,000
Xxxxxxx X. Xxxxx 33,333
Xxxxxx X. Xxxxxx 20,000
-------
Total 203,333
_______________
* Represents shares subject to presently exercisable stock options that
will be exercised immediately prior to the Option Closing, if the
Underwriters' over-allotment option is exercised.