Filed Pursuant to Rule 424(b)(4)
Registration No. 333-41107
PROSPECTUS
DECEMBER 9, 1997
2,500,000 SHARES
ATRIA COMMUNITIES, INC.
COMMON STOCK
(PAR VALUE $.10 PER SHARE)
This prospectus relates to 2,500,000 shares (the "Shares") of the Common
Stock, par value $.10 per share ("Common Stock"), of Atria Communities, Inc.
(the "Company") which may be offered and issued by the Company from time to
time in connection with the acquisition by the Company directly, or indirectly
through subsidiaries, of various businesses or assets, or interests therein.
The Shares may be issued in mergers or consolidations, in exchange for shares
of capital stock, partnership interests or other assets representing an
interest, direct or indirect, in other companies or other entities, or in
exchange for tangible or intangible assets, including assets constituting all
or substantially all of the assets and business of such entities. Shares may
also be reserved for issuance pursuant to, or offered, issued and sold upon
exercise or conversion of, warrants, options, convertible instruments or
rights issued by the Company from time to time in connection with any such
acquisition.
The Company anticipates that the terms of acquisitions involving the
issuance of Shares will be determined by direct negotiations with the owners
or controlling persons of the businesses or assets to be acquired, and that
the Shares so issued will be valued at prices based on or related to market
prices for the Common Stock on the Nasdaq National Market System at or about
the time the terms of an acquisition are agreed upon or at or about the time
of delivery of such Shares, or based on average market prices for periods
ending at or about such times. No underwriting discounts or commissions will
be paid, although brokers' or finders' fees may be paid from time to time in
connection with specific acquisitions. Under some circumstances, the Company
may issue Shares in full or partial payment of such fees. Any person receiving
any such fees may be deemed to be an underwriter within the meaning of the
Securities Act of 1933, as amended (the "Securities Act").
With the consent of the Company, this Prospectus may also be used by persons
("Selling Stockholders") who have received or will receive Shares in
connection with acquisitions and who may wish to sell such Shares under
circumstances requiring or making desirable its use. See "Resales of Shares".
The Shares will, prior to their issuance, be listed on the Nasdaq National
Market subject to official notice of issuance. The Common Stock is traded
under the symbol "ATRC." The last reported sale price of the Common Stock on
the Nasdaq National Market on December 9, 1997, was $17.00 per share.
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SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE COMMON STOCK.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
AVAILABLE INFORMATION
The Company is subject to the informational and reporting requirements of
the Securities and Exchange Act of 1934 (the "Exchange Act") and, in
accordance therewith, is required to file proxy statements, reports and other
information with the Securities and Exchange Commission (the "Commission").
The Registration Statement, as well as any such report, proxy statement and
other information filed by the Company with the Commission, may be inspected
and copied at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following regional offices of the SEC: Northeast Regional Office, 7
World Trade Center, 13th Floor, New York, New York 10048; and Midwest Regional
Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. Such filings may also be obtained from the
Commission through the Internet at http://www.sec.gov.
Statements made in this Prospectus concerning the provisions of any
contract, agreement or other document referred to herein are not necessarily
complete. For each such statement concerning a contract, agreement or other
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission, reference is made to such exhibit or other filing for a
more complete description of the matter involved and each such statement is
qualified in its entirety by such reference.
The Company intends to furnish to its stockholders annual reports containing
financial statements audited by an independent accounting firm. The Company
also intends to furnish such other reports as it may determine or as may be
required by law.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are incorporated by reference: The Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996; the Company's Quarterly
Reports for the quarters ended March 31, 1997, June 30, 1997 and September 30,
1997; the Company's Current Reports on Form 8-K dated April 1, 1997 and
October 23, 1997; and the description of the Common Stock contained in the
Company's Registration Statement on Form 8-A, as the same may be amended.
All documents and reports subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering made by this
Prospectus shall be deemed to be incorporated by reference herein. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any subsequently filed document which is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE FROM AUDRA J.
ECKERLE, GENERAL COUNSEL, ATRIA COMMUNITIES, INC., 515 WEST MARKET STREET,
SUITE 200, LOUISVILLE, KENTUCKY 40202 (TELEPHONE (502) 596-7540). IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE AT LEAST
FIVE BUSINESS DAYS PRIOR TO THE DATE ON WHICH A FINAL INVESTMENT DECISION IS
TO BE MADE.
THE COMPANY
Atria is a leading national provider of assisted and independent living
services for the elderly. At September 30, 1997, the Company operated 37
communities in 17 states with a total of 3,890 units. The Company also had
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33 assisted living communities under development, including 17 communities
under construction. The Company's communities included 1,878 assisted living
units and 2,012 independent living units. The Company owns 30 of its
communities, holds a majority interest in two communities, leases two
communities and manages three communities.
Assisted living is a rapidly emerging component of the non-acute health care
system for the elderly. The assisted and independent living industries serve
the long-term care needs of the elderly who do not require the more extensive
medical services available in skilled nursing facilities, yet who are no
longer capable of a totally independent lifestyle. Assisting living residents
typically require assistance with two or more activities of daily living
("ADLs"), such as eating, grooming and bathing, personal hygiene and
toileting, dressing, transportation, walking and medication supervision. The
independent living industry serves the long-term care needs of the elderly who
require only occasional assistance with ADLs.
According to industry estimates, the assisted living industry represented
approximately $12.0 billion in revenue in 1996. The Company believes that
growth in the demand for assisted and independent living services is being
driven by: the growing elderly population segment; changing societal patterns
that make it difficult for families to provide in-home care for the elderly;
increasing recognition among the elderly and their families that assisted and
independent living facilities afford a cost-effective, independent, secure and
attractive lifestyle; and the limited supply of purpose-built assisted living
facilities currently available.
Atria's objective is to expand its position as a leading national provider
of high-quality assisted living services. Key elements of the Company's
strategy are to continue to: (i) develop or acquire, in geographic clusters,
60 to 85 additional assisted living communities consisting of approximately
5,400 to 7,650 units by the year 2000 (including the 33 communities under
development at September 30, 1997 and the communities developed or acquired
since the Company's initial public offering to achieve regional density); (ii)
convert at least 750 of its existing independent living units to assisted
living units by the year 2000 (approximately 250 per year); (iii) focus on
private pay, middle- and upper-income residents; (iv) develop network
relationships and strategic alliances with leading national and regional
health care providers; (v) offer a broad range of high-quality services that
meet the individual needs of residents to enable them to "age in place"; and
(vi) develop the Atria prototype model in targeted markets to increase brand
awareness and achieve construction and operational efficiencies.
Prior to completion of the Company's initial public offering in August 1996
(the "IPO"), certain of the Company's assisted and independent living
communities had been operated by Vencor, Inc. ("Vencor") and its predecessors
for over a decade. Vencor operates an integrated network of health care
services primarily focusing on the needs of the elderly. In July 1997, the
Company completed a public offering of 6.9 million primary shares of Common
Stock (the "Secondary Offering"). In the fourth quarter of 1997, the Company
sold $143.75 million of 5.0% Convertible Subordinated Notes due 2002 (the
"Notes") in an offering exempt from registration under the Securities Act
pursuant to Rule 144A (the "Note Offering"). At September 30, 1997, Vencor
owned 42.8% of the Company's outstanding Common Stock.
The Company's executive offices are located at 515 West Market Street, Suite
200, Louisville, Kentucky 40202, and its telephone number is (502) 596-7540.
RECENT DEVELOPMENTS
In April 1997, the Company acquired American ElderServe Corporation
("American ElderServe"), an Atlanta based operator of assisted living
communities, for approximately $30.5 million in cash, stock and assumption of
debt. At the time of the acquisition, American ElderServe operated 12 assisted
living communities consisting of 503 units (six of the communities were owned;
one was leased; and five were managed under contract). The Company terminated
the management contracts on four of the five managed communities during July
1997. At the time of the acquisition, American ElderServe had six additional
communities under construction, one of which opened in April 1997, and the
remainder of which are scheduled to open by the end
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of 1997. In connection with the acquisition, Andy L. Schoepf, the former
President and Chief Executive Officer and principal shareholder of American
ElderServe, joined the Company as its Chief Operating Officer, received
636,487 shares of Common Stock (including certain demand and incidental
registration rights with respect thereto) and was subsequently elected a
director of the Company.
In connection with the American ElderServe acquisition, the Company entered
into a development agreement with Elder HealthCare Developers, LLC ("Elder
HealthCare"), a Georgia limited liability company owned 10% by Atria and 90%
by Assisted Care Developers, LLC ("Assisted Care Developers"). Assisted Care
Developers is wholly-owned by George A. Schoepf, former Executive Vice
President of American ElderServe and the brother of Andy L. Schoepf. Elder
HealthCare has the exclusive right to develop assisted living communities for
the Company in nine southeastern states. The Company has agreed that Elder
HealthCare will develop at least 15 communities in this southeast region over
the next three years; nine of those communities are currently under
development. The Company will have the first option to purchase any such
development community at the lesser of its fair market value or the cost to
develop and operate such community through the time of purchase plus $666,666.
The Company may exercise its option to purchase a community only after the
community's operations become profitable as defined in the development
agreement. Under the terms of the Operating Agreement of Elder HealthCare, as
amended, Elder HealthCare will fund the development, construction and working
capital needs of its communities by use of third party financing. If such
financing is unavailable or insufficient to cover all of the construction and
start-up costs associated with any of such communities, Atria will extend the
necessary funds or guarantees to Elder HealthCare. Assisted Care Developers
has agreed to indemnify the Company for up to 90% of any loss suffered by
Atria as a result of the default of Elder HealthCare on any loan either
extended or guaranteed by Atria. The Company will manage communities developed
by Elder HealthCare from the day they commence operations. See "Risk Factors--
Increased Leverage and Risks of Indebtedness."
The Company is in the process of completing the acquisition from The Carra
Company, LLC ("Carra") of five assisted living community development sites
located in Tennessee, Texas and Alabama. Carra will complete the development
of these communities pursuant to development agreements with the Company. The
total cost to acquire and complete the development of these communities will
be approximately $24.4 million. The development of one of these communities,
with 92 units located in Memphis, Tennessee, was completed in March 1997. A
second 84-unit community located in Memphis opened in September 1997.
Communities to be developed at the remaining three sites are scheduled to open
from late 1997 through early 1998.
In June 1997, the Company and MedGroup Management, Inc. ("MedGroup"), a
wholly-owned for-profit subsidiary of Jewish Hospital HealthCare Services,
Inc. ("Jewish HealthCare") reached an agreement regarding the development of
assisted living communities within the market areas of Jewish HealthCare
facilities. MedGroup has an exclusive right of first refusal to be the sole
participant with Atria in the development of assisted living communities in
southern Indiana and central Kentucky. Three communities are currently under
development in the greater Louisville area. Jewish HealthCare is one of the
largest operators of health care facilities in Kentucky and southern Indiana,
with a network of 36 health care facilities.
In February 1997, the Company acquired a 102-unit assisted living community
and a 48 bed, 27-unit memory impairment and dementia care community. Both of
these communities are located in Knoxville, Tennessee. In September 1997, the
Company opened a 48-unit assisted living community in Memphis, Tennessee.
In July 1997, the Company completed the Secondary Offering. The Company
intends to use the net proceeds from the Secondary Offering, approximately
$91.0 million, to finance the development and acquisition of assisted living
communities and for general corporate purposes.
In October 1997, the Company completed the Note Offering. The Notes will be
convertible into shares of Common Stock commencing on January 14, 1998, unless
previously redeemed or repurchased, at a conversion price of $20.86 per share,
subject to certain adjustments. The net proceeds of the Note Offering will be
used by
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the Company to finance the development and acquisition of additional assisted
living facilities and for working capital and other general corporate
purposes.
Additionally, in October 1997, the Company purchased the assets of a
retirement community in Stamford, Connecticut for approximately $14.0 million.
This community was previously owned by Vencor and has been managed by the
Company since April 1997.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
The statements contained or incorporated by reference in this Prospectus
that are not historical facts constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements
of the Company to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among other things: (i) the successful and timely
implementation of the Company's acquisition and development strategy; (ii) the
Company's ability to obtain financing on acceptable terms to finance its
growth strategy and to operate within the limitations imposed by financing
arrangements; (iii) the cost of implementing the Company's acquisition and
development strategies; and (iv) other factors referenced in this Prospectus.
See "Risk Factors." The Company does not undertake to update any forward-
looking statement that may be made from time to time by, or on behalf of, the
Company.
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
shares of Common Stock offered by this Prospectus.
Financial Risks Associated with Expansion Program. During the first 12
months of operations, a newly developed assisted living community containing
90 units is expected to incur operating losses of between $150,000 and
$250,000. Once opened, the Company estimates that it will take an average of
12 months for a community to achieve targeted occupancy levels. The Company
may incur additional operating losses if it fails to achieve expected
occupancy rates at newly developed communities or if expenses related to the
development, acquisition or operation of new communities exceed expectations.
The risks associated with the Company's development of additional assisted
living communities and uncertainties regarding the profitability of such
operations could have a material adverse effect on the Company's business,
financial condition and results of operations.
Development and Construction Risks. The Company intends to develop or
acquire 60 to 85 additional assisted living communities consisting of
approximately 5,400 to 7,650 units by the year 2000 (including the 33
communities being developed at September 30, 1997 and the communities
developed and acquired since the Company's IPO). The Company's ability to
expand at this pace will depend upon a number of factors, including, but not
limited to, the Company's ability to acquire suitable properties at reasonable
prices; the Company's success in obtaining necessary zoning, land use,
building, occupancy, licensing and other required governmental permits and
authorizations; and the Company's ability to control construction and
renovation costs and project completion schedules. In addition, the Company's
development plan is subject to numerous factors outside its control, including
competition for site acquisitions, shortages of, or inability to obtain, labor
or materials, changes in applicable laws or regulations or in the method of
applying such laws and regulations, the failure of general contractors or
subcontractors to perform under their contracts, strikes and adverse weather.
The Company's business, financial condition and results of operations could be
materially and adversely affected if the Company is unable to achieve its
development plan.
The Company does not currently have a substantial internal development
staff, but it has retained third parties to locate suitable sites for new
assisted living communities and to handle other aspects of the development
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process on a contractual basis. Final approval of all development sites is
made by officers of the Company. If the Company is unable to expand its
development staff or continue to retain third-party sources to assist in the
development process, the Company's ability to execute its development and
growth plans and the Company's business, financial condition and results of
operations could be materially and adversely affected.
Increased Leverage and Risks of Indebtedness. In connection with the sale of
the Notes, the Company incurred $144 million in additional indebtedness and
increased the ratio of its long-term debt to its total capitalization to 56.9%
at September 30, 1997 (after giving effect to the net proceeds of the Note
Offering, including the exercise of the related over-allotment option and the
application of the net proceeds therefrom). As a result of this increased
leverage, the Company's principal and interest obligations will increase
substantially. The degree to which the Company will be leveraged could
adversely affect the Company's ability to obtain additional financing for
working capital, acquisitions or other purposes and could make it more
vulnerable to economic downturns and competitive pressures. The Company's
increased leverage could also adversely affect its liquidity, as a substantial
portion of available cash from operations may have to be applied to meet debt
service requirements and, in the event of a cash shortfall, the Company could
be forced to reduce other expenditures and forego potential acquisitions to be
able to meet such requirements.
The amount of debt and debt-related payments is expected to increase
substantially as the Company pursues its growth strategy. As a result, an
increasing portion of the Company's cash flow will be devoted to debt service
and related payments and the Company will be subject to risks normally
associated with increased financial leverage. There can be no assurance that
the Company will generate sufficient cash flows from operations to cover
required interest, principal and any operating lease payments.
In August 1996, Atria entered into a $200.0 million bank credit facility
(the "Credit Facility") which has a maturity of four years and may be extended
at the option of the banks for one additional year. The obligations under the
Credit Facility are secured by substantially all of Atria's property, the
capital stock of its present and future principal subsidiaries and all
intercompany indebtedness owed to Atria by its subsidiaries. The Credit
Facility contains certain customary financial covenants and other
restrictions.
Under the terms of the Operating Agreement of Elder HealthCare, as amended,
Elder HealthCare will fund the development, construction and working capital
needs of its communities by use of third party financing. If such financing is
unavailable or insufficient to cover all of the construction and start-up
costs associated with any of such communities, Atria will extend the necessary
funds or guarantees to Elder HealthCare. Assisted Care Developers has agreed
to indemnify the Company for up to 90% of any loss suffered by Atria as a
result of the default of Elder HealthCare on any loan either extended or
guaranteed by Atria. The Company will manage communities developed by Elder
HealthCare from the day they commence operations. The Company may exercise its
option to purchase a community only after the community's operations become
profitable. If the Company fails to exercise its option, Elder HealthCare will
not be obligated to obtain new financing to replace the financing provided by
Atria.
Risk of Rising Interest Rates. At September 30, 1997, $61.3 million in
principal amount of the Company's indebtedness bore interest at floating
rates. In addition, other indebtedness that the Company may incur in the
future may also bear interest at a floating rate. Therefore, increases in
prevailing interest rates could increase the Company's interest payment
obligations and could have a material adverse effect on the Company's
business, financial condition and results of operations.
Restrictions Associated with Bond and HUD Financing. At September 30, 1997,
ten of the Company's assisted living and independent living communities
(containing 1,149 units) have been financed in whole or in part by industrial
revenue bonds or HUD financing. Under the terms of the HUD financing, the
Company is required to obtain HUD approval prior to taking certain actions,
including raising prices. In addition, under the terms of the bonds, the
Company is required to rent approximately 250 assisted and independent living
units to individuals who have incomes which are 80% or less of the average
income levels in a designated market. In certain cases, the Company's ability
to increase prices in communities with such bond financing (in response to
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higher operating costs or other inflationary factors) could be limited if it
affects the ability of the Company to attract and retain residents with
qualifying incomes. Failure to satisfy these requirements constitutes an event
of default and could accelerate the maturity dates of these financings. At
September 30, 1997, outstanding amounts under both types of financing totaled
$69.4 million. The Company does not presently expect to seek additional
industrial revenue bond or HUD financing. However, the Company may assume
financings of these types pursuant to acquisitions of additional communities.
Consequences of Default. There can be no assurance that the Company will
generate sufficient cash flows from operations to cover required interest,
principal and operating lease payments. Any payment or other default could
cause the lender to foreclose upon the communities securing such indebtedness
with a consequent loss of income and asset value to the Company. In certain
cases, indebtedness secured by a community is also secured by a pledge of the
Company's interests in the community. In the event of a default with respect
to any such indebtedness, the lender could avoid the judicial procedures
required to foreclose on real property by foreclosing on the pledge instead,
thus accelerating the lender's acquisition of the community. Further, because
most of the Company's mortgages contain cross-default and cross-
collateralization provisions, a default by the Company on one of its payment
obligations could adversely affect a significant number of the Company's other
communities.
Acquisition Risks; Difficulties of Integration. In addition to developing
additional assisted living communities, the Company currently plans to acquire
additional assisted living facilities or other properties that can be
repositioned as assisted living communities. The Company recently acquired (i)
American ElderServe, an operator of 12 assisted living communities with 503
units, and (ii) two assisted living communities with a total of 129 units in
Knoxville, Tennessee. There can be no assurance that the Company will be able
to integrate successfully the operations of these communities or institute
Company-wide systems and procedures to operate successfully the combined
enterprises. There can be no assurance that the Company's acquisition of
assisted living facilities will be completed at the rate currently expected,
if at all. The success of the Company's acquisitions will be determined by
numerous factors, including the Company's ability to identify suitable
acquisition candidates, competition for such acquisitions, purchase price,
financial performance of the communities after acquisition and ability of the
Company to integrate effectively the operations of acquired communities. A
strategy of growth by acquisition also involves the risk of assuming unknown
or contingent liabilities of the acquired businesses, which could be material,
individually or in the aggregate. Any failure by the Company to identify
suitable candidates for acquisition, to integrate or operate acquired
communities effectively or to insulate itself from unwanted liabilities of
acquired businesses may have a material adverse effect on the Company's
business, financial condition and results of operations.
Limited History as a Stand-alone Company. Although the Company's
predecessors have operated assisted and independent living communities for
over a decade, the Company itself has only operated as a stand-alone company
since August 1996. Prior to August 1997, the Company received certain
administrative services from Vencor, including finance and accounting, human
resources, risk management, legal, marketing and information systems support,
pursuant to an administrative services agreement dated August 19, 1996 (the
"1996 Administrative Services Agreement"). Upon the expiration of this
agreement in August 1997, the Company and Vencor entered into an
administrative services agreement (the "New Administrative Services
Agreement") with respect to marketing, human resources and information systems
support. The New Administrative Services Agreement will expire on December 31,
1997, unless the Company requests Vencor to provide information systems
support for an additional 90 days. Although there can be no assurance that
upon termination of this agreement the Company will have adequate staffing to
perform the functions Vencor currently performs for the Company, the Company
is currently implementing plans to insource most of these services, or
contract with third parties for the provision of these services. The costs
associated with securing these services from third parties or insourcing these
services may exceed the costs associated with the provision of these services
by Vencor.
Principal Stockholder. At September 30, 1997, Vencor held 42.8% of the
outstanding Common Stock and, accordingly, is in a position to influence
significantly the management and operations of the Company. Three of the eight
Company directors are officers or directors of Vencor and only three directors
of the Company are
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independent directors who are not Vencor affiliates or employees of the
Company. Vencor has entered into a Voting Agreement pursuant to which it has
agreed to vote all of its shares of Common Stock at any meeting at which
directors are elected in favor of the election of independent directors so
that after such election, if such persons are elected, there will be at least
two independent directors. The Voting Agreement continues in effect until
August 2001 so long as Vencor beneficially owns 30% or more of the Common
Stock. The concentration of ownership in Vencor may have a limiting effect on
the price and trading volume of the Common Stock and may inhibit changes in
control of the Company.
Relationship with Vencor; Conflicts of Interest. Certain directors and
officers of Vencor who are also directors of the Company, and Vencor, as the
Company's principal stockholder, have conflicts of interest with respect to
certain transactions concerning the Company. When the interests of Vencor and
the Company diverge, Vencor may exercise its influence in its own best
interests. The Company anticipates resolving potential conflicts of interest
on a case-by-case basis, which may include the use of committees comprised of
disinterested members of the Board of Directors and the retention of
independent financial and other advisors. Transactions between the Company and
its officers, directors, principal stockholders and their affiliates will be
on terms no less favorable to the Company than could be obtained from
unrelated third parties and any such transactions will be subject to approval
by a majority of the disinterested members of the Board of Directors.
The Company and Vencor have entered into certain agreements, including the
1996 Administrative Services Agreement, an Incorporation Agreement, a Tax
Sharing Agreement, a Registration Rights Agreement, a Guaranty Fee Agreement
and certain Services Agreements (the "Vencor Agreements"), in connection with
the Contribution Transaction. These agreements specify certain services to be
provided to the Company by Vencor. For example, prior to 1997, Vencor provided
certain administrative services to the Company, including finance and
accounting, human resources, risk management, legal and information systems
for an annual fee approximating $458,000. Pursuant to the Incorporation
Agreement, the Company paid Vencor $150,000 for its assistance in connection
with the IPO. The maximum guaranty fee that the Company intends to pay Vencor
in connection with the Guaranty Fee Agreement is $1,125,000 per year. Except
for the New Administrative Services Agreement, these agreements were
negotiated by officers of Vencor and the Company while the Company was a
wholly owned subsidiary of Vencor. Accordingly, there is no assurance that (i)
the terms and conditions of these arrangements are as favorable to the Company
as those the Company could have obtained from unaffiliated third parties; or
(ii) such arrangements will not be terminated or modified in the future.
Although Vencor has advised the Company that it does not intend to compete
with the Company, the Vencor Agreements do not contain any covenant not to
complete or similar restrictions prohibiting Vencor from developing, acquiring
or operating its own assisted or independent living facilities.
Need for Additional Financing. To achieve its growth objectives, the Company
will need to obtain substantial additional financing to fund its development,
construction and acquisition activities. The Company currently estimates that
the net proceeds from the Note Offering, together with existing capital
resources and financing commitments, will be sufficient to fund its
development and acquisition program through mid-1999. There can be no
assurance, however, that the Company will not be required to obtain additional
capital at an earlier date. The Company may from time to time seek additional
financing through public or private financing sources, including equity or
debt financing. If additional funds are raised by issuing equity securities,
the Company's stockholders may experience dilution. There can be no assurance
that adequate funding will be available as needed or on terms acceptable to
the Company. Insufficient financial resources may require the Company to delay
or eliminate all or some of its development projects and acquisition plans,
which could have a material adverse effect on the Company's business,
financial condition and results of operations.
Variations in Operating Results. Although the Company has been profitable,
there can be no assurance that revenue growth or profitability will not
fluctuate on a quarterly or annual basis in the future. The Company may
experience variations in quarterly and annual operating results. Quarterly or
annual variations may result from the timing of opening new communities and
the rate at which certain occupancy levels are achieved. The Company's
operating results for any particular quarter or year may not be indicative of
results for future periods.
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Management of Planned Rapid Growth. The Company's success will depend, in
part, on its ability to manage its planned rapid growth. The Company does not
presently have adequate staff to manage its planned growth and relies on
Vencor to provide certain internal management functions. The Company will need
to expand its operational, financial and management information systems and
continue to attract, motivate and retain key employees. If the Company does
not manage its growth effectively, its business, financial condition and
results of operations could be materially and adversely affected. See "Risk
Factors--Limited History as a Stand-alone Company," and "--Relationship with
Vencor; Conflicts of Interest."
Dependence on Private Pay Residents. The Company currently relies, and in
the foreseeable future expects to rely, primarily on the ability of residents
to pay for the Company's services from their own financial resources. In the
event that managed care becomes a significant factor in the assisted living
industry, the amount the Company receives for its services could be adversely
affected. In addition, inflation or other circumstances that adversely affect
the ability of the elderly to pay for the Company's services could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Competition. The assisted living industry is highly competitive. The Company
faces competition from numerous local, regional and national providers of
assisted and independent living and long-term care services. The Company also
competes with companies providing home-based health care. Some of the
Company's competitors operate on a not-for-profit basis or as charitable
organizations. Also, many of the Company's competitors are significantly
larger and have greater financial resources than the Company. The Company
believes that the assisted living industry will become even more competitive
in the future. Regulatory barriers to entry into the assisted living industry
are generally not substantial. If the development of new assisted living
facilities surpasses the demand for such facilities in particular markets,
such markets may become saturated. The Company also expects to compete for
acquisitions of additional assisted living facilities and properties. There
can be no assurance that competition will not limit the Company's ability to
attract residents or expand its business or have a material adverse effect on
the Company's business, financial condition or results of operations.
Government Regulation. The health care industry is subject to extensive
regulation and frequent regulatory change. At this time, no federal laws or
regulations specifically regulate assisted or independent living facilities.
While a number of states have not yet enacted specific assisted living
regulations, the Company's communities are subject to regulation, licensing,
certificate of need requirements and permitting by state and local health and
social service agencies and other regulatory authorities. Requirements vary
from state to state. Changes in existing laws and regulations, adoption of new
laws and regulations and new interpretations of existing laws and regulations
could have an adverse impact on the Company's operations. The Company believes
that such regulation will increase in the future. In addition, health care
providers are receiving increased scrutiny under anti-trust laws as the
integration and consolidation of health care delivery increases and affects
competition. Regulation of the assisted living industry is evolving. The
Company is unable to predict the content of new regulations and their effect
on its business. There can be no assurance that the Company's operations will
not be adversely affected by regulatory developments. Failure by the Company
to comply with applicable regulatory requirements could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Federal and state fraud and abuse or anti-self referral statutes and
regulations, such as Medicare/Medicaid anti-kickback laws, Stark I and II,
certain provisions of the Health Insurance Portability and Accountability Act
of 1997 and the Balanced Budget Act of 1997 govern certain financial
arrangements among health care providers and others who may be in a position
to refer or recommend patients to such providers. These laws prohibit, among
other things, certain direct and indirect payments that are intended to induce
the referral of patients to, the arranging for services by or the recommending
of a particular provider of health care items or services. Vencor and other
health care providers offer certain services to residents of the Company's
communities. Fraud and abuse oversight is increasing and the application of
these laws has been expanded to include payors beyond Medicare and Medicaid,
such as indemnity insurers, managed care organizations and other private
payors. These laws have been broadly interpreted to apply to certain
relationships between health care providers and sources of patient referral.
These laws and regulations are extremely complex and have been the subject of
little judicial or
9
regulatory interpretation. Similarly, state laws vary, are sometimes vague and
have seldom been interpreted by courts or regulatory agencies. Violation of
these laws can result in loss of licensure, civil and criminal penalties and
exclusion of health care providers or supplies from participation in the
Medicare and Medicaid programs. There can be no assurance that such laws will
be interpreted in a manner consistent with the practices of the Company.
Under the Americans with Disabilities Act of 1990, all places of public
accommodation are required to meet certain federal requirements related to
access and use by disabled persons. A number of additional federal, state and
local laws exist that also may require modifications to existing and planned
communities to create access to the properties by disabled persons. While the
Company believes that its properties are substantially in compliance with
present requirements or are exempt therefrom, if required changes involve a
greater expenditure than anticipated or must be made on a more accelerated
basis than anticipated, additional costs would be incurred by the Company.
Further legislation may impose additional burdens or restrictions with respect
to access by disabled persons, the costs of compliance with which could be
substantial.
Labor Costs. The Company competes with various health care providers and
other employers for qualified and skilled personnel. The Company's labor costs
will increase over time. The Company's business, financial condition and
results of operations could be adversely affected if the Company is unable to
control its labor costs.
Environmental Risks. Under various federal, state and local environmental
laws, ordinances and regulations, a current or previous owner or operator of
real property may be held liable for the cost of removal or remediation of
certain hazardous or toxic substances that may be located on, in or under the
property. These laws and regulations may impose liability regardless of
whether the owner or operator was responsible for, or knew of, the presence of
the hazardous or toxic substances. The liability of the owner or operator and
the cost of any required remediation or removal of hazardous or toxic
substances could exceed the property's value. In connection with the ownership
or operation of its communities, the Company could be liable for these costs.
As a result, the presence of hazardous or toxic substances at any property
currently held or operated by the Company or acquired or operated by the
Company in the future, could have a material adverse effect on the Company's
business, financial condition and results of operations.
Liability and Insurance. In recent years, the long-term care industry has
experienced an increase in the number of lawsuits alleging negligence and
other legal theories, many of which involve significant costs and substantial
claims. The Company maintains insurance policies in amounts and with such
coverage as it deems appropriate for its operations. There can be no
assurance, however, that the Company will be able to continue to obtain
sufficient liability insurance coverage in the future or that such coverage
will be available on acceptable terms. A successful claim in excess of the
Company's coverage or not covered by the Company's insurance could have a
material adverse effect on the Company's business, financial condition and
results of operations. Claims against the Company, regardless of their merit
or outcome, may involve significant legal costs and require management to
devote considerable time that would otherwise be utilized in the operation of
the Company.
Anti-takeover Provisions. The Company's Restated Certificate of
Incorporation and Amended and Restated By-laws, as well as Delaware corporate
law, contain certain provisions that could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
attempting to acquire or take control of the Company. These provisions could
limit the price that certain investors might be willing to pay for shares of
Common Stock. Certain of these provisions allow the Company to issue, without
stockholder approval, preferred stock having voting rights senior to those of
the Common Stock. Other provisions impose various procedural and other
requirements that could make it more difficult for stockholders to effect
certain corporate actions. In addition, the Company's Board of Directors is
divided into three classes, each of which serves for a staggered three-year
term, which may make it more difficult for a third party to gain control of
the Board of Directors. As a Delaware corporation, the Company is subject to
Section 203 of the Delaware General Corporation Law which, in general,
prevents an "interested stockholder" (defined generally as a person owning 15%
or more of a corporation's outstanding voting stock) from engaging in a
"business combination" for three years following the date such person became
an interested stockholder unless certain conditions are satisfied. As
10
a result, third parties may be discouraged from attempting to acquire or take
control of the Company. See "Risk Factors--Principal Stockholder" and
"Description of Capital Stock--Certain Corporate Governance Matters."
Possible Volatility of Stock Price. The Company's Common Stock has been
quoted on the Nasdaq National Market since August 1996. The stock market in
recent years has experienced broad price and volume fluctuations that have
frequently been unrelated to the performance of particular companies. Such
market fluctuations may materially and adversely affect the market price of
the Common Stock.
RESALES OF SHARES
With the consent of the Company, this Prospectus may be used by Selling
Stockholders who have received or will receive Shares in connection with
acquisitions and who may wish to sell such Shares under circumstances
requiring or making desirable its use. The Company may consent to the use of
this Prospectus by Selling Stockholders for a limited period of time and
subject to limitations and conditions that may be varied by agreement between
the Company and one or more Selling Stockholders. Agreements with Selling
Stockholders permitting the use of this Prospectus may provide that an
offering of Shares be effected in an orderly manner through securities
dealers, acting as brokers or dealers, selected by the Company; that Selling
Stockholders enter into custody agreements with one or more banks with respect
to such Shares; and that sales be made only by one or more of the methods
described in this Prospectus, as appropriately supplemented or amended when
required. The Company will not receive any of the proceeds from any sale of
Shares offered hereby by a Selling Stockholder.
Shares may be sold by Selling Stockholders hereunder on one or more
exchanges or otherwise; directly to purchasers in negotiated transactions; by
or through brokers or dealers in ordinary brokerage transactions or
transactions in which the broker solicits purchasers; in block trades in which
the broker or dealer will attempt to sell Shares as agent but may position and
resell a portion of the block as principal; in transactions in which a broker
or dealer purchases as principal for resale for its own account; through
underwriters or agents; or in any combination of the foregoing methods. Shares
may be sold at a fixed offering price, which may be changed, at the prevailing
market price at the time of sale, at prices related to such prevailing market
price or at negotiated prices. Any brokers, dealers, underwriters or agents
may arrange for others to participate in any such transaction and may receive
compensation in the form of discounts, commissions or concessions from Selling
Stockholders and/or the purchasers of Shares. The proceeds to a Selling
Stockholder from any sale of Shares will be net of any such compensation and
of any expenses to be borne by the Selling Stockholder. If required at the
time that a particular offer of Shares is made, a supplement to this
Prospectus will be delivered that describes any material arrangements for the
distribution of Shares and the terms of the offering, including, without
limitation, the names of any underwriters, brokers, dealers or agents and any
discounts, commissions or concessions and other items constituting
compensation from the Selling Stockholder.
Selling Stockholders and any brokers, dealers, underwriters or agents that
participate with a Selling Stockholder in the distribution of Shares may be
deemed to be "underwriters" within the meaning of the Securities Act, in which
event any discounts, commissions or concessions received by any such brokers,
dealers, underwriters or agents and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
The Company may agree to indemnify Selling Stockholders and/or any such
brokers, dealers, underwriters or agents against certain civil liabilities,
including liabilities under the Securities Act, and to reimburse them for
certain expenses in connection with the offering and sale of Shares.
Selling Stockholders may also offer shares of Common Stock issued in past
and future acquisitions by means of prospectuses under other available
registration statements or pursuant to exemptions from the registration
requirements of the Securities Act, including sales that meet the requirements
of Rule 144 or Rule 145(d) under the Securities Act.
11
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company's Restated Certificate of Incorporation provides that the
authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock, par value $.10 per share, and 5,000,000 shares of Preferred
Stock, par value $1.00 per share. At September 30, 1997, 23,372,387 shares of
Common Stock were issued and outstanding, and no shares of Preferred Stock
were issued or outstanding. In the fourth quarter of 1997, the Company sold
$143.75 million principal amount of the Notes, which are convertible into
shares of Common Stock commencing on January 14, 1998, unless previously
redeemed or repurchased, at a conversion price of $20.86 per share, subject to
certain adjustments.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share owned of
record on all matters voted upon by stockholders. Subject to the requirements
(including preferential rights) of any Preferred Stock outstanding, holders of
Common Stock are entitled to receive dividends if, as and when declared by the
Board of Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, holders of Common Stock
are entitled to share equally and ratably in the assets of the Company, if
any, remaining after the payment of all liabilities of the Company and the
liquidation preferences of any outstanding Preferred Stock. Holders of the
Common Stock have no preemptive rights, no cumulative voting rights and no
rights to convert their Common Stock into any other securities, and there are
no redemption or sinking fund provisions with respect to the Common Stock.
The Company has never declared or paid any cash dividends on its Common
Stock and currently plans to retain future earnings to finance the growth of
the Company's business rather than to pay cash dividends. Payment of any cash
dividends in the future will depend on the financial condition, results of
operations and capital requirements of the Company as well as other factors
deemed relevant by the Board of Directors. The Credit Facility prohibits the
Company from paying cash dividends.
National City Bank acts as the transfer agent and registrar for the Common
Stock.
PREFERRED STOCK
The Board of Directors has the authority to issue the authorized shares of
Preferred Stock in one or more series and to fix the designations, powers,
preferences, rights, qualifications, limitations and restrictions of all
shares of each such series, including, without limitation, dividend rates,
conversion rights, voting rights, redemption and sinking fund provisions,
liquidation preferences and the number of shares constituting each such
series, without any further vote or action by the stockholders. The issuance
of Preferred Stock could decrease the amount of earnings and assets available
for distribution to holders of Common Stock or adversely affect the rights and
powers, including voting rights, of the holders of Common Stock. The issuance
of Preferred Stock also could have the effect of delaying, deterring or
preventing a change in control of the Company without further action by the
stockholders.
CERTAIN CORPORATE GOVERNANCE MATTERS
Pursuant to the Company's Restated Certificate of Incorporation and the
Amended and Restated By-laws, the Board is divided into three classes. Two
classes of directors consist of three directors each and one class consists of
two directors, with the term of office of the first class to expire at the
1998 annual meeting of stockholders, the term of office of the second class to
expire at the 1999 annual meeting of stockholders and the term of office of
the third class to expire at the 2000 annual meeting of stockholders. At each
succeeding annual meeting of stockholders, directors will be elected to three-
year terms of office.
The Company's Restated Certificate of Incorporation and the Amended and
Restated By-laws provide that: (i) the number of directors of the Company will
be fixed by resolution of the Board, but in no event will be less
12
than three nor more than 15 directors; (ii) the directors of the Company in
office from time to time will fill any vacancy or newly created directorship
on the Board, with any new director to serve in the class of directors to
which he or she is so elected; (iii) directors of the Company may be removed
only for cause by the holders of at least a majority of the Company's voting
stock; (iv) stockholder action can be taken only at an annual or special
meeting of stockholders and not by written consent in lieu of a meeting; and
(v) except as described below, special meetings of stockholders may be called
only by the Chairman of the Board, the President of the Company or by a
majority of the total number of directors of the Company and the business
permitted to be conducted at any such meeting is limited to that stated in the
notice of the special meeting. The Amended and Restated By-laws also require
that stockholders desiring to bring any business before an annual meeting of
stockholders deliver written notice thereof to the Secretary of the Company
not fewer than 60 days nor more than 90 days in advance of the annual meeting
of stockholders; provided, however, if the date of the meeting is not
furnished to stockholders in a notice, or is not publicly disclosed by the
Company, more than 70 days prior to the meeting, notice by the stockholder, to
be timely, must be delivered to the President or Secretary of the Company not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure
was made.
The Amended and Restated By-laws also provide that stockholders desiring to
nominate persons for election as directors must make their nominations in
writing to the President of the Company not fewer than 60 days nor more than
90 days prior to the scheduled date for the annual meeting; provided, however,
if fewer than 70 days notice or prior public disclosure of the scheduled date
for the annual meeting is given or made, notice by the stockholders, to be
timely, must be delivered to the President or Secretary of the Company not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure
was made.
Under applicable provisions of the Delaware General Corporation Law, the
approval of a Delaware corporation's board of directors, in addition to
stockholder approval, is required to adopt any amendment to the corporation's
certificate of incorporation, but a corporation's by-laws may be amended
either by action of its stockholders or, if the corporation's certificate of
incorporation so provides, its board of directors. The Restated Certificate of
Incorporation and Amended and Restated By-laws provide that the provisions
summarized above may not be amended by the stockholders, nor may any provision
inconsistent therewith be adopted by the stockholders, without the affirmative
vote of the holders of at least 80% of the Company's voting stock, voting
together as a single class.
The foregoing provisions of the Restated Certificate of Incorporation and
Amended and Restated By-laws may discourage or make more difficult the
acquisition of control of the Company by means of a tender offer, open market
purchase, proxy contest or otherwise. These provisions may have the effect of
discouraging certain types of coercive takeover practices and inadequate
takeover bids and to encourage persons seeking to acquire control of the
Company first to negotiate with the Company. The Company's management believes
that the foregoing measures provide benefits to the Company and its
stockholders by enhancing the Company's ability to negotiate with the
proponent of any unfriendly or unsolicited proposal to take over or
restructure the Company and that such benefits outweigh the disadvantages of
discouraging such proposals because, among other things, negotiation of such
proposals could result in an improvement of their terms.
The Company is a Delaware corporation and is subject to Section 203 of the
Delaware General Corporation Law. In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of
the corporation's outstanding voting stock) from engaging in a "business
combination" (as defined in Section 203) with a Delaware corporation for three
years following the date such person became an interested stockholder unless:
(i) before such person became an interested stockholder, the board of
directors of the corporation approved either the transaction in which the
interested stockholder became an interested stockholder or the business
combination; (ii) upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the
time such transaction commenced (excluding stock held by directors who are
also officers of the corporation and by employee stock plans that do not
provide employees with the rights to determine
13
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer); or (iii) following the transaction in which such
person became an interested stockholder, the business combination is approved
by the board of directors of the corporation and authorized at a meeting of
stockholders by the affirmative vote of the holders of at least two-thirds of
the outstanding voting stock of the corporation not owned by the interested
stockholder. Under Section 203, the restrictions described above also do not
apply to certain business combinations proposed by an interested stockholder
following the public announcement or notification (as required by Section 203)
of a transaction which is one of certain extraordinary transactions involving
the corporation, is with or by a person who either has not been an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of a majority of the corporation's directors,
and is approved or not opposed by a majority of the board of directors then in
office. As a result of its initial ownership of all of the outstanding Common
Stock, Vencor is not subject to the restrictions imposed upon an interested
stockholder under Section 203.
REGISTRATION RIGHTS AGREEMENTS
The Company has granted demand and incidental registration rights to both
Vencor and Andy L. Schoepf, the Company's Chief Operating Officer, for the
registration under the Securities Act of shares of Common Stock owned by them.
Vencor is permitted four demand registrations. Mr. Schoepf is permitted one
demand registration. The Company will pay the fees and expenses for the demand
registration of Mr. Schoepf and two demand registrations of Vencor, as well as
all incidental registrations, while Vencor and Mr. Schoepf will pay all
underwriting discounts and commissions. The registration rights of Vencor
expire August 20, 2001 and the registration rights of Mr. Schoepf expire April
1, 1999. The registration rights are subject to certain conditions and
limitations, including the right of underwriters to limit the number of shares
included in a registration.
The Company has agreed to file with the Commission by January 7, 1998, use
its best efforts to cause to be declared effective within 120 days following
such filing and use all reasonable efforts to keep effective for two years, a
registration statement covering the resale of the Notes, and the Common Stock
issuable upon conversion of the Notes, by the holders thereof who satisfy
certain conditions relating to the provision of information in connection with
such registration statement. The Company will be permitted to suspend the use
of the prospectus that is a part of such registration statement during certain
periods and under certain circumstances.
SHARES ELIGIBLE FOR FUTURE SALE
At September 30, 1997, the Company had outstanding 23,372,387 shares of
Common Stock. The 6,900,000 shares sold in the Secondary Offering and the
5,750,000 shares sold in the Initial Public Offering are freely tradable
without restriction or further registration under the Securities Act. The
Company has outstanding 10,636,487 shares which are "restricted securities" as
that term is defined under Rule 144 and were issued by the Company in private
transactions in reliance upon one or more exemptions under the Securities Act.
Such restricted securities may be resold in a public distribution only if
registered under the Securities Act or pursuant to an exemption therefrom,
including Rule 144. The remaining 85,900 shares outstanding have been issued
pursuant to the Company's Non-Employee Directors 1996 Stock Incentive Plan,
the Company's 1996 Stock Incentive Plan and the exercise of options granted by
the Company to certain Vencor employees. The sum of 45,900 of such shares are
freely tradeable without restriction or further registration under the
Securities Act.
In general, under Rule 144, a person (or persons whose shares are
aggregated), including an affiliate of the Company, who has beneficially owned
restricted securities for at least one year is entitled to sell within any
three-month period a number of shares that does not exceed the greater of the
average weekly trading volume during the four calendar weeks preceding such
sale or one percent of the then outstanding shares of the Common Stock,
provided certain manner of sale and notice requirements and requirements as to
the availability of current public information about the Company are
satisfied. In addition, affiliates of the Company must comply with the
restrictions and requirements of Rule 144, other than the holding period, to
see shares of Common Stock. A person who is deemed not to have been an
"affiliate" of the Company at any time during the 90 days preceding
14
a sale by such person, and who has beneficially owned such shares for at least
two years, would be entitled to sell such shares without regard to the volume
limitations described above.
The Company has registered or intends to register under the Securities Act
approximately 2,750,000 shares of Common Stock reserved for issuance pursuant
to the Company's incentive compensation programs. At October 31, 1997, there
were outstanding options to purchase 1,498,875 shares of Common Stock. The
options become exercisable in four equal installments beginning one year from
the date of grant.
Vencor is entitled to certain rights with respect to the registration for
sale under the Securities Act of 10,000,000 restricted shares of Common Stock.
Andy L. Schoepf, the Company's Chief Operating Officer, is entitled to certain
rights with respect to the registration for sale under the Securities Act of
636,487 restricted shares of Common Stock. Certain holders of the Notes are
entitled to certain rights with respect to the registration for sale under the
Securities Act of approximately 6,891,180 shares of Common Stock which may be
issued upon conversion of the Notes. See "Description of Capital Stock--
Registration Rights Agreements."
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for the
Company by Greenebaum Doll & McDonald PLLC, Louisville, Kentucky. William C.
Ballard Jr., a director of the Company, is of counsel to Greenebaum Doll &
McDonald PLLC and as of the date of this Prospectus he beneficially owns
23,000 shares of Common Stock.
EXPERTS
The consolidated financial statements of Atria Communities, Inc. appearing
in the Atria Communities, Inc. Annual Report on Form 10-K for the year ended
December 31, 1996, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon, included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
15
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NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEI-
THER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
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TABLE OF CONTENTS
PAGE
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The Company................................................................ 2
Risk Factors............................................................... 5
Description of Capital Stock............................................... 12
Shares Eligible for Future Sale............................................ 14
Legal Matters.............................................................. 15
Experts.................................................................... 15
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2,500,000 SHARES
ATRIA COMMUNITIES, INC.
COMMON STOCK
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PROSPECTUS
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DECEMBER 9, 1997
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