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EXHIBIT 1
3,125,000 Shares
AMERICAN RETIREMENT CORPORATION
Common Stock
UNDERWRITING AGREEMENT
May __, 1997
NATWEST SECURITIES LIMITED
EQUITABLE SECURITIES CORPORATION
McDONALD & COMPANY SECURITIES, INC.
As Representatives of the several Underwriters
c/o NatWest Securities Limited
135 Bishopsgate
London EC2M 3XT
England
Ladies and Gentlemen:
AMERICAN RETIREMENT CORPORATION, a Tennessee corporation (the
"Company"), proposes to issue and sell an aggregate of 3,125,000 shares (the
"Firm Shares") of the Company's common stock, par value $.01 per share (the
"Common Stock"), to you and the other underwriters named in Schedule I hereto
(collectively, the "Underwriters"), for whom you are acting as representatives
(the "Representatives"). The Company has also agreed to grant to you and the
other Underwriters an option (the "Option") to purchase up to an additional
468,750 shares of Common Stock (the "Option Shares") on the terms and for the
purposes set forth in Section 1(b) hereto. The Firm Shares and the Option Shares
are hereinafter collectively referred to as the "Shares."
The Company hereby confirms as follows its agreements with the
Representatives and the several other Underwriters.
Agreement to Sell and Purchase
On the basis of the representations, warranties and agreements of the
Company herein contained and subject to all the terms and conditions of this
Agreement, (i) the Company agrees to sell to the several Underwriters and (ii)
each of the Underwriters, severally and nost jointly, agrees to purchase from
the Company, at a purchase price of
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$_____ per share, the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto, plus such additional number of Firm Shares
which such Underwriter may become obligated to purchase pursuant to Section 10
hereof.
Subject to all the terms and conditions of this Agreement, the Company
grants the Option to the several Underwriters to purchase, severally and not
jointly, the Option Shares at the same price per share as the Underwriters shall
pay for the Firm Shares. The Option may be exercised only to cover
over-allotments in the sale of the Firm Shares by the Underwriters and may be
exercised in whole or in part at any time and from time to time on or before the
30th day after the date of this Agreement (or on the next business day if the
30th day is not a business day), upon notice (the "Option Shares Notice") in
writing or by telephone (confirmed in writing) by the Representatives to the
Company not later than 5:00 p.m., New York City time, at least two and not more
than five business days before the date specified for closing in the Option
Shares Notice (the "Option Closing Date") setting forth the aggregate number of
Option Shares to be purchased and the time and date for such purchase. On the
Option Closing Date, the Company will issue and sell to the Underwriters the
number of Option Shares set forth in the Option Shares Notice and each
Underwriter will purchase such percentage of the Option Shares as is equal to
the percentage of Firm Shares that such Underwriter is purchasing, as adjusted
by the Representatives in such manner as they deem advisable to avoid fractional
shares.
Delivery and Payment. Delivery of the Firm Shares shall be made to
the Representatives for the accounts of the Underwriters against payment of the
purchase price by certified or official bank checks payable in New York Clearing
House (next-day) funds to the order of the Company (the "Closing") at the office
of Stroock & Stroock & Lavan LLP, counsel to the Underwriters, 180 Maiden Lane,
New York, New York 10038. Such payment shall be made at 10:00 a.m., New York
City time, on the third full business day following the date of this Agreement,
or at such other time on such other date, not later than seven business days
after the date of this Agreement, as may be agreed upon by the Company and the
Representatives (such date is hereinafter referred to as the "Closing Date").
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and date
(which may be the Closing Date) specified in the Option Shares Notice.
Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection with the
issuance,
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sale and delivery of the Firm Shares and Option Shares by the Company to the
respective Underwriters shall be borne by the Company. The Company will pay
and save each Underwriter and any subsequent holder of the Shares harmless
from any and all liabilities, interest and penalties with respect to or
resulting from any failure or delay in paying Federal or state stamp and other
transfer taxes, if any, which may be payable or determined to be payable in
connection with the original issuance, sale or delivery to such Underwriter of
the Firm Shares and Option Shares.
Representations and Warranties of the Company. The Company represents,
warrants and covenants to each Underwriter that:
A registration statement on Form S-1 (Registration No. 333-23197)
relating to the Shares, including a preliminary prospectus relating to the
Shares and such amendments to such registration statement as may have been
required to the date of this Agreement, has been prepared by the Company under
the provisions of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (collectively referred to as the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") thereunder, and has
been filed with the Commission. The Commission has not issued any order
preventing or suspending the use of the Prospectus (as defined below) or any
Preliminary Prospectus (as defined below). The term "Preliminary Prospectus" as
used herein means a preliminary prospectus relating to the Shares, as
contemplated by Rule 430 or Rule 430A ("Rule 430A") of the Rules and
Regulations, included at any time as part of the foregoing registration
statement or any amendment thereto before it became effective under the Act and
any prospectus filed with the Commission by the Company pursuant to Rule 424(a)
of the Rules and Regulations. Copies of such registration statement and
amendments and of each related Preliminary Prospectus have been delivered to the
Representatives. If such registration statement has not become effective, a
further amendment to such registration statement, including a form of final
prospectus, necessary to permit such registration statement to become effective
will be filed promptly by the Company with the Commission. If such registration
statement has become effective, a final prospectus relating to the Shares
containing information permitted to be omitted at the time of effectiveness by
Rule 430A will be filed by the Company with the Commission in accordance with
Rule 424(b) of the Rules and Regulations promptly after execution and delivery
of this Agreement. The term "Registration Statement" means the registration
statement as amended at the time it becomes or became effective (the "Effective
Date"), including all financial statements and schedules and all exhibits, and
all information contained in any final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations or in a term sheet
described in Rule 434 of the Rules and Regulations in accordance with Section 5
hereof and deemed to be included therein as of the Effective Date by Rule 430A
of the Rules and Regulations. The term "Prospectus" means the prospectus
relating to the Shares as first filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations or, if no such filing is required, the form
of final prospectus relating to the Shares included in the Registration
Statement at the Effective Date.
On the date that any Preliminary Prospectus was filed with the
Commission, the
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date the Prospectus is first filed with the Commission pursuant to Rule 424(b)
(if required), at all times subsequent to and including the Closing Date and, if
later, the Option Closing Date and when any post-effective amendment to the
Registration Statement becomes effective or any amendment or supplement to the
Prospectus is filed with the Commission, the Registration Statement, each
Preliminary Prospectus and the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment or supplement
thereto), including the financial statements included in the Prospectus, did or
will comply with all applicable provisions of the Act and the Rules and
Regulations and did or will contain all statements required to be stated therein
in accordance with the Act and the Rules and Regulations. On the Effective Date
and when any post-effective amendment to the Registration Statement becomes
effective, no part of the Registration Statement or any such amendment did or
will contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading. At the Effective Date, the date the Prospectus or any
amendment or supplement to the Prospectus is filed with the Commission and at
the Closing Date and, if later, the Option Closing Date, the Prospectus did not
or 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. The foregoing
representations and warranties in this Section 3(b) do not apply to any
statements or omissions made in reliance on and in conformity with information
relating to any Underwriter furnished in writing to the Company by the
Representatives specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto. The Company has not
distributed, and, prior to the later to occur of (i) the Closing Date or, if
later, the Option Closing Date and (ii) completion of the distribution of the
Shares, will not distribute, any offering material in connection with the
offering or sale of the Shares other than the Registration Statement, the
Preliminary Prospectus, the Prospectus or any other materials, if any, permitted
by the Act.
The Company currently is a wholly-owned subsidiary of American
Retirement Communities, L.P. ("ARCLP"). Prior to the consummation of the
offering of the shares of Common Stock (the "Offering"), ARCLP will be
reorganized (the "Reorganization") as contemplated by that certain
Reorganization Agreement dated as of [February 28, 1997] (the "Reorganization
Agreement"), a copy of which has been filed as Exhibit 2.3 to the Registration
Statement, pursuant to which ARCLP will contribute its assets, subject to all of
its liabilities, to the Company in exchange for a total of 7,812,500 shares of
Common Stock and a promissory note in the principal amount of $25.0 million (the
"Reorganization Note"). Immediately after consummation of the Reorganization,
ARCLP will distribute all such 7,812,500 shares of Common Stock to its limited
partners and to its general partner, American Retirement Communities, LLC (the
"LLC"). Concurrently with the consummation of the Offering, the Reorganization
Note will be repaid by the Company out of the net proceeds from the Offering and
such amounts received by ARCLP will be distributed to the limited partners of
ARCLP in liquidation. The Reorganization will be consummated prior to the
Closing and in accordance with the Reorganization Agreement.
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Set forth on Exhibit A attached hereto is a list of (A) each
corporation that is wholly owned by ARCLP and (B) each limited partnership in
which ARCLP has a general or limited partnership interest (collectively, the
"Subsidiaries"). Upon completion of the Reorganization on the Closing Date, each
of the Subsidiaries will become a [direct] wholly-owned subsidiary of the
Company. Each Subsidiary is listed in Exhibit 21 to the Registration Statement.
Each of the Company, ARCLP and the Subsidiaries is, and at the Closing Date and
any Option Closing Date will be, duly organized, validly existing and in good
standing under the laws of the Tennessee. Each of the Company, ARCLP and the
Subsidiaries has, and at the Closing Date and the Option Closing Date will have,
full corporate, partnership or other power and authority to conduct all the
activities conducted by it, to own or lease all the assets owned or leased by it
and to conduct its business as described in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, in the most recent
Preliminary Prospectus), assuming and giving effect to, in each case, the
consummation of the Reorganization. Each of the Company, ARCLP and the
Subsidiaries is, and at the Closing Date and the Option Closing Date will be,
duly licensed or qualified to do business and in good standing as a foreign
organization in all jurisdictions in which the nature of the activities
conducted by it or the character of the assets owned or leased by it makes such
licensing or qualification necessary (assuming, in each case, the consummation
of the Reorganization). Upon completion of the Reorganization and prior to the
Closing Date, the Company will beneficially own all of the outstanding equity
interests in each of the Subsidiaries, free and clear of all liens, security
interests, restriction, pledgees, encumbrances, charges, equities, claims,
easements, assessments and tenancies (collectively, "Encumbrances")[, except for
_____________]. Except with respect to the Subsidiaries upon completion of the
Reorganization on the Closing Date and except as described in the Registration
Statement and Prospectus (or, if the Prospectus is not in existence, in the most
recent Preliminary Prospectus), the Company does not own, and at the Closing
Date and any Option Closing Date will not own, directly or indirectly, any
shares of stock or any other equity or long-term debt securities of any
corporation or have any equity interest in any firm, partnership, limited
liability company, joint venture, association or other entity. Complete and
correct copies of the articles of incorporation and the bylaws or partnership
agreements or other governing documents of the Company, ARCLP, each Subsidiary
and the LLC and all amendments thereto have been delivered to the
Representatives, and no changes therein will be made subsequent to the date
hereof and prior to the Closing Date or, if later, the Option Closing Date,
except as contemplated by the Reorganization Agreement.]
The outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable and are not
subject to any preemptive or similar rights. The Shares to be issued and sold by
the Company will be, upon such issuance and payment therefor, duly authorized,
validly issued, fully paid and nonassessable and will not be subject to any
preemptive or similar rights. The Company has, and, upon completion of the sale
of the Shares and the Reorganization, will have, an authorized, issued and
outstanding capitalization as set forth in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, in the most recent
Preliminary Prospectus). The description of the securities of the
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Company in the Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, in the most recent Preliminary Prospectus) is, and at the
Closing Date and, if later, the Option Closing Date will be, complete and
accurate in all respects. Except as set forth in the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, in the most recent
Preliminary Prospectus), the Company does not have outstanding, and at the
Closing Date and, if later, the Option Closing Date will not have outstanding,
any options to purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, any shares of its capital stock or any such warrants, convertible
securities or obligations.
The combined and consolidated financial statements and the related
notes and schedules of ARCLP set forth in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, in the most recent
Preliminary Prospectus) present fairly the financial condition of ARCLP as of
the dates indicated and the combined and consolidated results of operations,
changes in partners' and shareholders' equity and cash flows of ARCLP for the
periods covered thereby, all in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the entire period
involved, except as otherwise disclosed therein. The combined financial
statements and the related notes and schedules of Carriage Club of
Charlottesville Limited Partnership and Carriage Club of Jacksonville Limited
Partnership (the "Carriage Clubs") set forth in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) present fairly the financial condition of the Carriage
Clubs as of the dates indicated and the combined results of operations,
partners' equity and cash flows of the Carriage Clubs for the periods covered
thereby, all in conformity with GAAP applied on a consistent basis throughout
the entire period involved. The selected financial data for the Company, ARCLP
and certain affiliated partnerships and corporations (collectively, the
"Predecessor Entities") set forth under the captions "Prospectus
Summary--Summary Combined and Consolidated Financial and Other Data" and
"Selected Financial Data" in the Registration Statement and Prospectus (or, if
the Prospectus is not in existence, in the most recent Preliminary Prospectus)
have been prepared on a basis consistent with the financial statements of ARCLP
and the Predecessor Entities. The pro forma financial statements included in the
Registration Statement and the Prospectus comply in all material respects with
the applicable requirements of Rule 11-02 of Regulation S-X of the Commission
and the pro forma adjustments have been properly applied to the historical
amounts in the compilation of such statements. No other financial statements or
schedules of the Company, ARCLP, any Subsidiary, the Carriage Clubs or any other
entity are required by the Act or the Rules and Regulations to be included in
the Registration Statement or the Prospectus. KMPG Peat Marwick, LLP (the
"Accountants"), who have reported on those of such financial statements and
schedules which are audited, are independent accountants with respect to the
Company, ARCLP, the Subsidiaries and the Carriage Clubs as required by the Act
and the Rules and Regulations.
Each of the Company, ARCLP and the Subsidiaries maintains a system of
internal accounting control sufficient to provide reasonable assurance that (i)
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transactions are executed in accordance with management's general or specific
authorization, (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain accountability
for assets, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
Except as set forth in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus and prior to the Closing Date
and, if later, the Option Closing Date, (i) there has not been, and will not
have been (after giving effect to the consummation of the Reorganization), any
change in the capitalization of the Company or any material adverse change in
the business, properties, prospects, condition (financial or otherwise), net
worth or results of operations of the Company, ARCLP or any Subsidiary arising
for any reason whatsoever, (ii) none the Company, ARCLP or any Subsidiary has
incurred, nor will any of them have incurred (after giving effect to the
consummation of the Reorganization), any material liabilities or obligations,
direct or contingent, (iii) none of the Company, ARCLP or any Subsidiary has
entered into, nor will any of them have entered into (after giving effect to the
consummation of the Reorganization), any material transactions, other than
pursuant to this Agreement or the Reorganization Agreement, and (iv) none of the
Company, ARCLP or any of the Subsidiaries has, nor will any of them have (after
giving effect to the consummation of the Reorganization), paid or declared any
dividends or other distributions of any kind on any class of its capital stock,
partnership interests or other equity securities.
Each of ARCLP or the Subsidiaries has good and indefeasible title to
the respective properties described in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) as owned by them or by the Company (collectively, the
"Owned Properties"), in each case free and clear of all Encumbrances or leases
and without title company exceptions, disclaimers of liability or objections,
except as set forth in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus). Each of ARCLP or the
Subsidiaries has valid, subsisting and enforceable leases for the respective
properties described in the Registration Statement and the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus) as
leased by them or by the Company (collectively, the "Leased Properties"), in
each case free and clear of all Encumbrances, except as set forth in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
The mortgages and deeds of trust encumbering the Owned Properties are
not convertible into equity interests in the Owned Properties. Such mortgages
and deeds of trust are not cross-defaulted or cross-collateralized to any
property not to be owned directly or indirectly by the Company or a Subsidiary.
Upon consummation of the Reorganization, either the Company or a
Subsidiary
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will have good and marketable title to all properties and assets described in
the Registration Statement and Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) as to be owned by it,
including, but not limited to each Initial Property, free and clear of all
Encumbrances, except such as are described in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus). The
Company, ARCLP or the Subsidiaries each has valid, subsisting and enforceable
leases for the properties described in the Prospectus as to be leased by it,
free and clear of all Encumbrances, except such as are described in the
Registration Statement and Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus). Upon consummation of the
Reorganization, title insurance in favor of the Company will be in full force
and effect with respect to each Initial Property in amounts prudent and
customary in the business in which the Company and the Subsidiaries are engaged.
The Company is not an "investment company" or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act").
Except as set forth in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, in the most recent Preliminary
Prospectus), there are no actions, suits or proceedings pending or threatened
against or affecting the Company, ARCLP, any Subsidiary, the LLC or any
directors, officers, partners or shareholders of any of the foregoing in their
capacity as such, or any of the Owned Properties or Leased Properties, before or
by any Federal or state court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign (collectively, a
"Governmental Body"), wherein an unfavorable ruling, decision or finding might,
upon consummation of the Reorganization, adversely affect the business,
properties, prospects, condition (financial or otherwise), net worth or results
of operations of the Company or the Subsidiaries, taken as a whole.
Except as set forth in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, in the most recent Preliminary
Prospectus), each of the Company, ARCLP and the Subsidiaries has, and at the
Closing Date, the Option Closing Date (if any) and upon consummation of the
Reorganization will have, all governmental licenses, permits, consents, orders,
approvals, franchises, certificates and other authorizations (collectively,
"Licenses") necessary to carry on its business and to own or lease and operate
its properties as contemplated in the Prospectus (or, if the Prospectus is not
in existence, in the most recent Preliminary Prospectus), except where the
failure to have any such License would not have a material adverse effect on the
business, properties, prospects, condition (financial or otherwise), net worth
or results of operations of the Company and the Subsidiaries, taken as a whole.
Each of the Company, ARCLP and the Subsidiaries has complied, and at the Closing
Date and the Option Closing Date (if any) and upon consummation of the
Reorganization will have complied, in all material respects with all laws,
regulations, Licenses and orders applicable to it or its business and
properties. None of the Company, ARCLP or any Subsidiary is, and, at the Closing
Date, the Option Closing Date (if any) and upon
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consummation of the Reorganization, none of them will be, in default (nor has
any event occurred which, with notice or lapse of time or both, would constitute
a default) in the due performance and observation of any term, covenant or
condition of any indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument (collectively, a
"contract or other agreement") to which any of them is, or, upon consummation of
the Reorganization, will be, a party or by which any of their respective
properties is, or, upon consummation of the Reorganization, will be, bound or
affected, violation of which would individually or in the aggregate have a
material adverse effect on the business, properties, prospects, condition
(financial or otherwise), net worth or results of operations of the Company and
the Subsidiaries, taken as a whole. To the best knowledge of the Company, no
other party under any such contract or other agreement is, or, at the Closing
Date, the Option Closing Date (if any) or upon consummation of the
Reorganization, will be, in default in any material respect thereunder. Without
limiting the generality of the foregoing, each of the senior living communities
to be operated by the Company upon consummation of the Reorganization is, and,
upon consummation of the Reorganization, will be, certified to participate in
those Medicaid and Medicare programs, if any, in which such residences have
historically participated, and, upon consummation of the Reorganization, such
certification currently in effect will remain in full force and effect, without
interruption whatsoever. There are no governmental proceedings or actions
pending or threatened for the purpose of suspending, modifying or revoking any
License held, or, upon consummation of the Reorganization, to be held, by the
Company, ARCLP or any Subsidiary (including, without limitation, any proceeding
or action to decertify any of the Owned Properties or Leased Properties from
participation in any Medicaid or Medicare program). None of the Company, ARCLP
or any Subsidiary is in violation of any provision of its articles of
incorporation or bylaws or partnership agreement or other governing instrument.
No consent, approval, authorization or order of, or any filing or
declaration with, any Governmental Body is required for the consummation of the
transactions contemplated by this Agreement or the Reorganization or in
connection with the issuance and sale of shares of Common Stock by the Company
in the Reorganization or the issuance of the Shares by the Company in the
Offering, except such as have been obtained under the Act or the Rules and
Regulations and such as may be required under state securities or Blue Sky laws
or the bylaws and rules of the National Association of Securities Dealers, Inc.
(the "NASD") in connection with the purchase and distribution by the
Underwriters of the Shares to be sold by the Company. All consents of the
partners or shareholders of ARCLP, each Subsidiary and the LLC required for the
consummation of the Reorganization were duly and validly obtained prior to the
date the registration statement described in Section 3(a) hereof was first filed
with the Commission, have not been revoked and remain in full force and effect;
such consents were solicited on the basis of information supplied by such
entities and no such information included any untrue statement of a material
fact or omitted to state a material fact necessary to make the statements made,
in light of the circumstances under which they were made, not misleading.
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The Company has full corporate power and authority to enter into this
Agreement and the Reorganization Agreement and to carry out all the terms and
provisions hereof and thereof to be carried out by it. This Agreement has been
duly authorized, executed and delivered by the Company and constitutes a valid
and binding agreement of the Company and is enforceable against the Company in
accordance with the terms hereof. The Reorganization Agreement and any other
documents required to be executed thereunder have been duly authorized, executed
and delivered and constitute valid and binding agreements of the parties thereto
and are enforceable against the parties thereto in accordance with the terms
thereof. Except as disclosed in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), the execution, delivery and the performance of this Agreement and
the Reorganization Agreement and the consummation of the transactions
contemplated hereby and thereby will not result in the creation or imposition of
any Encumbrance upon any of the Owned Properties or Leased Properties or any of
the other assets of the Company, ARCLP or any Subsidiary pursuant to the terms
or provisions of, or result in a breach or violation of or conflict with any of
the terms or provisions of, or constitute a default under, or give any other
party a right to terminate any of its obligations under, or result in the
acceleration of any obligation under, (i) the articles of incorporation or
bylaws or the partnership agreement or other organizational document of the
Company, ARCLP, any Subsidiary or the LLC, or (ii) any contract or other
agreement to which any of them is a party or by which they, any of the Owned
Properties or Leased Properties, or any of their assets or properties are, or,
upon consummation of the Reorganization, will be, bound or affected, or (iii)
any judgment, ruling, decree, order, law, statute, rule or regulation of any
Governmental Body applicable to the Owned Properties or Leased Properties or the
business or other assets of the Company, ARCLP or any Subsidiary. The Company
has full corporate power and authority to authorize, issue, offer and sell the
Shares, as contemplated by this Agreement, free of any preemptive rights. The
offer, issuance and sale by the Company of shares of Common Stock in the
Reorganization will be exempt from the registration requirements of the Act and
applicable state securities, real estate syndication and Blue Sky laws.
There is no document or contract 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 which is not described or filed as
required. All contracts to which the Company is, or, upon consummation of the
Reorganization, will be, a party have been duly authorized, executed and
delivered by the Company, constitute valid and binding agreements of the Company
and are enforceable against the Company in accordance with the terms thereof.
Neither the Company nor any of its directors, officers or affiliates
(within the meaning of the Rules and Regulations) has taken, nor will he, she or
it take, directly or indirectly, any action designed, or which might reasonably
be expected in the future, to cause or result in, under the Act or otherwise, or
which has constituted, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares or
otherwise.
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No holder of securities of the Company has rights to the registration
of any securities of the Company as a result of the filing of the Registration
Statement.
The Shares have been approved for listing on the New York Stock
Exchange (the "NYSE"), subject only to notice of issuance.
No labor dispute with the employees of the Company or with the
employees of any Subsidiary exists or is threatened or imminent.
Except as set forth in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), the Company or a Subsidiary owns, or is licensed or otherwise has
the full exclusive right to use, or, upon consummation of the Reorganization,
will own, be licensed or otherwise have the full exclusive right to use, all
material trademarks and trade names which are used in or necessary for the
conduct of its business as described in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, in the most recent
Preliminary Prospectus). To the Company's best knowledge, no claims have been
asserted by any person to the use of any such trademarks or trade names or
challenging or questioning the validity or effectiveness of any such trademark
or trade name. The use, in connection with the business and operations of the
Company, of such trademarks and trade names does not, to the Company's
knowledge, infringe on the rights of any person.
None of the Company, ARCLP or any Subsidiary, nor, to the Company's
best knowledge, any employee or agent of the Company, ARCLP or any Subsidiary,
has made any payment of funds of the Company, ARCLP, any Subsidiary or the LLC
or received or retained any funds of the Company, ARCLP, any Subsidiary or the
LLC in violation of any law, rule or regulation or of a character required to be
disclosed in the Registration Statement and Prospectus (or, if the Prospectus is
not in existence, in the most recent Preliminary Prospectus).
The Company is, or, upon consummation of the Reorganization, will be,
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the business in
which the Company is engaged; none of the Company, ARCLP or any Subsidiary has
been refused any insurance coverage sought or applied for; and the Company has
no reason to believe that it will not be able to renew its existing insurance
coverage (or such coverage as will be in effect upon consummation of the
Reorganization) as and when such coverage expires.
The business, operations and facilities of the Company, ARCLP and each
Subsidiary have been, are being and, upon consummation of the Reorganization,
will be conducted in compliance with all applicable laws, ordinances, rules,
regulations, Licenses, permits, approvals, plans, authorizations or requirements
relating to occupational safety and health, or pollution, or protection of
health or the environment (including, without limitation, those relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic substances,
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materials or wastes into ambient air, surface water, groundwater or land, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of chemical substances, pollutants, contaminants
or hazardous or toxic substances, materials or wastes, whether solid, gaseous or
liquid in nature) of any governmental department, commission, board, bureau,
agency or instrumentality of the United States, any state or political
subdivision thereof, or any foreign jurisdiction, and all applicable judicial or
administrative agency or regulatory decrees, awards, judgments and orders
relating thereto; and none of the Company, ARCLP or any Subsidiary has received
any notice from governmental instrumentality or any third party alleging any
violation thereof or liability thereunder (including, without limitation,
liability for costs of investigating or remediating sites containing hazardous
substances and/or damages to natural resources), except for such noncompliances,
violations or liabilities that would not have a material adverse effect upon the
business, properties, prospects, condition (financial or otherwise), net worth
or results of operations of the Company and the Subsidiaries, taken as a whole.
Upon consummation of the Reorganization the Company will receive or the
Subsidiaries will retain good and marketable title in fee simple to the Owned
Properties, in each case, free and clear of all Encumbrances, other than those
described in the Registration Statement and Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) and those that will
not materially affect the value of such properties and will not interfere with
the use made and proposed to be made of such properties by the Company. Upon the
consummation of the Reorganization, the Leased Properties will be held by the
Company or a Subsidiary under valid, subsisting and enforceable leases, free and
clear of all Encumbrances, other than those described in the Registration
Statement and Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) or which are not material and will not interfere
with the use made and proposed to be made of such property and buildings by the
Company. All Encumbrances on or affecting the Owned Properties which are
required to be disclosed in the Registration Statement and Prospectus are
disclosed therein. The use and occupancy of each of the Owned Properties and
Leased Properties complies with all applicable codes and zoning laws and
regulations and there is no pending or, to the best knowledge of the Company,
threatened condemnation, zoning change, environmental or other proceeding or
action that will in any material respect adversely affect the size of, use of,
improvements on, construction on, or access to the Owned Propertiesv or Leased
Properties.
Each of the Company, ARCLP, the Subsidiaries and the LLC has filed all
foreign, federal, state and local tax returns that are required to be filed or
has requested extensions thereof and has paid all taxes required to be paid by
it and any other assessment, fine or penalty levied against it, to the extent
that any of the foregoing is due and payable.
Each officer and director of the Company, and each person who will,
upon consummation of the Reorganization and the liquidation of ARCLP, become a
beneficial holder of 5% or more of the shares of Common Stock, have delivered to
NatWest Securities Limited an agreement in the form set forth as Exhibit B
hereto to
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the effect that he or she will not, for a period of 180 days after the date
hereof, without the prior written consent of NatWest Securities Limited, offer
to sell, sell, contract to sell, grant any option to purchase or otherwise
dispose (or announce any offer, sale, grant of any option to purchase or other
disposition) of any shares of Common Stock or securities convertible into, or
exchangeable or exercisable for, shares of Common Stock.
Each certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
Representations and Warranties of the Underwriters. Upon your
authorization of the release of the Firm Shares, the several Underwriters
propose to offer the Firm Shares for sale to the public upon the terms set forth
in the Prospectus. NatWest Securities Limited represents and agrees that (i) it
has not offered or sold and will not offer or sell any Shares 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
which 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 Act 1986 (the "UK Act"); (ii) it has complied and
will comply with all applicable provisions of the UK Act with respect to
anything done by it in relation to the Shares 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 which consists of or any
part of listing particulars or any other document required or permitted to be
published by listing rules under Part IV of the UK Act, to a person who is of a
kind described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or is a person to whom the document may
otherwise lawfully be issued or passed on.
Agreements of the Company. The Company covenants and agrees with
each of the several Underwriters as follows:
The Company will not, either prior to the Effective Date or thereafter
during such period as the Prospectus is required by law to be delivered in
connection with sales of the Shares by an Underwriter or dealer, file any
amendment or supplement to the Registration Statement or the Prospectus, unless
a copy thereof shall first have been submitted to the Representatives within a
reasonable period of time prior to the filing thereof and the Representatives
shall not have objected thereto in good faith.
If the Registration Statement is not yet effective, the Company will
use its best efforts to cause the Registration Statement to become effective not
later than the time indicated in Section 7(a) hereof. The Company will notify
the Representatives promptly, and will confirm such advice in writing, (i) when
the Registration Statement has become effective and when any post-effective
amendment thereto becomes effective, (ii) of any request by the Commission for
amendments or supplements to the Registration Statement or the Prospectus or for
additional information, (iii) of the issuance by the
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Page 14
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose or the threat
thereof, (iv) of the happening of any event during the period mentioned in the
second sentence of Section 5(f) that in the judgment of the Company makes any
statement made in the Registration Statement or the Prospectus untrue or that
requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances in which they are made, not misleading and (v) of receipt by the
Company or any representative or attorney of the Company of any other
communication from the Commission relating to the Company, the Registration
Statement, any Preliminary Prospectus or the Prospectus. If at any time the
Commission shall issue any order suspending the effectiveness of the
Registration Statement, the Company will use its best efforts to obtain the
withdrawal of such order at the earliest possible moment. The Company will
prepare the Prospectus in a form approved by the Representatives and will file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement or, if applicable, such earlier time as
may be required by Rule 430A(a)(3) under the Securities Act. If the Company has
omitted any information from the Registration Statement pursuant to Rule 430A,
the Company will use its best efforts to comply with the provisions of, and to
make all requisite filings with the Commission pursuant to, said Rule 430A and
to notify the Representatives promptly of all such filings.
If, at any time when a Prospectus relating to the Shares is required to
be delivered under the Act, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or the Registration Statement, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein not misleading,
or if for any other reason it is necessary at any time to amend or supplement
the Prospectus or the Registration Statement to comply with the Act or the Rules
and Regulations, the Company will promptly notify the Representatives thereof
and, subject to Section 5(b) hereof, will prepare and file with the Commission,
at the Company's expense, an amendment to the Registration Statement or an
amendment or supplement to the Prospectus that corrects such statement or
omission or effects such compliance.
The Company will furnish to the Representatives, without charge, two
signed copies of the Registration Statement and of any post-effective amendment
thereto, including financial statements and schedules, and all exhibits thereto
and will furnish to the Representatives, without charge, for transmittal to each
of the other Underwriters, copies of the Registration Statement and any
post-effective amendment thereto, including financial statements and schedules
but without exhibits.
The Company will comply with all the provisions of all undertakings
contained in the Registration Statement.
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Page 15
On the Effective Date, and thereafter from time to time for such period
as the Prospectus is required by the Act to be delivered, the Company will
deliver to each of the Underwriters, without charge, as many copies of the
Prospectus or any amendment or supplement thereto as the Representatives may
reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the several Underwriters and by all dealers
to whom the Shares may be sold, both in connection with the offering or sale of
the Shares and for any period of time thereafter during which the Prospectus is
required by law to be delivered in connection therewith. If during such period
of time any event shall occur which in the judgment of the Company or counsel to
the Underwriters should be set forth in the Prospectus in order to make any
statement therein, in the light of the circumstances under which it was made,
not misleading, or in the Registration Statement in order to make any statement
therein not misleading, or if it is necessary to supplement or amend the
Prospectus or the Registration Statement to comply with law, the Company will
forthwith prepare and duly file with the Commission an appropriate supplement or
amendment thereto, and will deliver to each of the Underwriters, without charge,
such number of copies thereof as the Representatives may reasonably request.
Prior to any public offering of the Shares by the Underwriters, the
Company will cooperate with the Representatives and counsel to the Underwriters
in connection with the registration or qualification of the Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representatives may request; provided, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to general service of
process in any jurisdiction where it is not now so subject.
During the period of five years commencing on the Effective Date, the
Company will furnish to each of the Representatives and each other Underwriter
who may so request copies of such financial statements and other periodic and
special reports as the Company may from time to time distribute generally to the
holders of any class of its capital stock, and will furnish to each of the
Representatives and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the Commission.
The Company will make generally available to holders of its securities,
as soon as may be practicable, but in no event later than the last day of the
fifteenth full calendar month following the calendar quarter in which the
Effective Date falls, a consolidated earnings statement (which need not be
audited but shall be in reasonable detail) for a period of 12 months commencing
after the Effective Date, and satisfying the provisions of Section 11(a) of the
Act (including Rule 158 of the Rules and Regulations).
The Company will not at any time, directly or indirectly, take any
action intended, or which might reasonably be expected, to cause or result in,
or which will constitute, stabilization of the price of the shares of Common
Stock to facilitate the sale or resale of any of the Shares.
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Page 16
The Company will apply the net proceeds from the offering and sale of
the Shares to be sold by the Company in the manner set forth in the Prospectus
under "Use of Proceeds" and shall file such reports with the Commission with
respect to the sale of the Shares and the application of the proceeds therefrom
as may be required in accordance with Rule 463 of the Rules and Regulations
under the Act.
The Company will not for a period of 180 days after the date hereof,
without the prior written consent of NatWest Securities Limited, offer to sell,
sell, contract to sell, grant any option to purchase or otherwise dispose (or
announce any offer to sell, sale, contract to sell, grant of any option to
purchase or other disposition) of any shares of Common Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Common Stock
(except that the Company may grant options to purchase or award shares of Common
Stock under the Stock Incentive Plan and the Stock Purchase Plan and may issue
privately placed shares in connection with acquisitions).
The Company will cause ARCLP to be dissolved and liquidated as promptly
as practicable following the Closing; and the Company will cause ARCLP to
distribute the shares of Common Stock to be issued by the Company as set forth
in the Reorganization Agreement, as promptly as practicable following the
Closing.
Expenses.
Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Company will pay, or reimburse
if paid by the Representatives, all costs and expenses incident to the
performance of the obligations of the Company under this Agreement, including
but not limited to costs and expenses of or relating to (1) the preparation,
printing and filing of the Registration Statement and exhibits thereto, each
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Registration Statement or the Prospectus, (2) the preparation and delivery of
certificates representing the Shares and the shares of Common Stock to be issued
in the Reorganization, (3) the printing of this Agreement, the Agreement among
Underwriters, any Dealer Agreements and any Underwriters' Questionnaire, (4)
furnishing (including costs of shipping and mailing) such copies of the
Registration Statement, the Prospectus and any Preliminary Prospectus, and all
amendments and supplements thereto, as may be requested for use in connection
with the offering and sale of the Shares by the Underwriters or by dealers to
whom Shares may be sold, (5) the listing of the Shares on the NYSE, (6) any
filings required to be made by the Underwriters with the National Association of
Securities Dealers, Inc., (7) the registration or qualification of the Shares
for offer and sale under the securities or Blue Sky laws of such jurisdictions
designated pursuant to Section 5(g), including the reasonable fees,
disbursements and other charges of counsel to the Underwriters in connection
therewith, and the preparation and printing of preliminary, supplemental and
final Blue Sky memoranda, (8) counsel and accountants to the Company and (9) the
transfer agent for the Shares.
If this Agreement shall be terminated by the Company pursuant to any of
the provisions hereof (otherwise than pursuant to Section 10) or if for any
reason the
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Page 17
Company shall be unable to perform its obligations hereunder, the Company will
reimburse the several Underwriters for all out-of-pocket expenses (including the
fees, disbursements and other charges of counsel to the Underwriters) incurred
by them in connection herewith.
Conditions of the Obligations of the Underwriters. The obligations of
each Underwriter hereunder are subject to the following conditions:
Notification that the Registration Statement has become effective shall
be received by the Representatives not later than 12:00 p.m., New York City
time, on the date of this Agreement or at such later date and time as shall be
consented to in writing by the Representatives and all filings required by Rule
424 of the Rules and Regulations and Rule 430A shall have been made.
(i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall be
pending or threatened by the Commission, (ii) no order suspending the
effectiveness of the Registration Statement or the qualification or registration
of the Shares under the securities or Blue Sky laws of any jurisdiction shall be
in effect and no proceeding for such purpose shall be pending before or
threatened or contemplated by the Commission or the authorities of any such
jurisdiction, (iii) any request for additional information on the part of the
staff of the Commission or any such authorities shall have been complied with to
the satisfaction of the staff of the Commission or such authorities and (iv)
after the date hereof no amendment or supplement to the Registration Statement
or the Prospectus shall have been filed unless a copy thereof was first
submitted to the Representatives and the Representatives did not object thereto
in good faith, and the Representatives shall have received certificates, dated
the Closing Date and the Option Closing Date and signed by the Chief Executive
Officer of the Company and the Chief Financial Officer of the Company (who may,
as to proceedings threatened, rely upon the best of their information and
belief), to the effect of the foregoing clauses (i), (ii) and (iii).
Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results of
operations of the Company, ARCLP or any Subsidiary, whether or not arising from
transactions in the ordinary course of business, and (ii) none of the Company,
ARCLP or any Subsidiary shall have sustained any material loss or interference
with its business or properties from fire, explosion, flood or other casualty,
whether or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree, which is not set
forth in the Registration Statement and the Prospectus, if in the judgment of
the Representatives any such development makes it impracticable or inadvisable
to consummate the sale and delivery of the Shares by the Underwriters at the
initial public offering price.
Since the respective dates as of which information is given in the
Registration
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Statement and the Prospectus, there shall have been no litigation or other
proceeding instituted against the Company, ARCLP or any Subsidiary or any of
their respective officers, directors, partners or shareholders in their
capacities as such, before or by any Governmental Body in which litigation or
proceeding an unfavorable ruling, decision or finding would materially and
adversely affect the business, properties, business prospects, condition
(financial or otherwise), net worth or results of operations of the Company,
ARCLP or any Subsidiary.
Each of the representations and warranties of the Company contained
herein shall be true and correct at the Closing Date and, with respect to the
Option Shares, at the Option Closing Date, as if made on such date, and all
covenants and agreements herein contained to be performed on the part of the
Company and all conditions herein contained to be fulfilled or complied with by
the Company at or prior to the Closing Date and, with respect to the Option
Shares, at or prior to the Option Closing Date, shall have been fully performed,
fulfilled or complied with.
The Representatives shall have received an opinion, dated the Closing
Date and the Option Closing Date, from Bass, Berry & Sims PLC, counsel for the
Company, to the following effect:
Each of the Company, ARCLP and the Subsidiaries (A) has been
duly incorporated or organized and is a validly existing corporation,
partnership or limited liability company in good standing under the
laws of its jurisdiction of incorporation or organized with full power
and authority (corporate, partnership or other) to own or lease and to
operate its properties and to conduct its business as described in the
Registration Statement and Prospectus (in the case of the Company, as
to be owned, leased, operated or conducted upon consummation of the
Reorganization), and (B) is duly qualified to do business as a foreign
corporation or partnership and is in good standing in each jurisdiction
(x) in which the conduct of its business (in the case of the Company,
as to be conducted upon consummation of the Reorganization) requires
such qualification and (y) in which it owns or leases property;
The Company owns no capital stock or other beneficial interest
in any corporation, partnership, joint venture or other business entity
except for equity interests in the Subsidiaries as set forth on Exhibit
A hereto;
The Company has authorized capital stock as set forth in the
Prospectus; the securities of the Company conform in all material
respects to the description thereof contained in the Registration
Statement and Prospectus; the outstanding shares of Common Stock have
been duly authorized and validly issued by the Company, are fully paid
and nonassessable and are free of any preemptive or other rights to
subscribe for any of the Shares; the Company has duly authorized the
issuance and sale of the Shares to be sold by it hereunder; such
Shares, when issued by the Company and paid for in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and
will conform in all material respects to the description thereof
contained in the Registration
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Page 19
Statement and Prospectus and will not be subject to any preemptive,
subscription or other similar rights; and the Shares have been duly
authorized for listing, subject to official notice of issuance, on the
NYSE;
The Registration Statement is effective under the Act; any
required filing of the Prospectus pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule 424(b); and
no stop order suspending the effectiveness of the Registration
Statement or any amendment thereto has been issued, and no proceedings
for that purpose have been instituted or are pending or, to the best
knowledge of such counsel, are threatened or contemplated under the
Act; the registration statement originally filed with respect to the
Shares and each amendment thereto and the Prospectus and, if any, each
amendment and supplement thereto (except for the financial statements,
schedules and other financial data included therein, as to which such
counsel need not express any opinion), complied as to form in all
material respects with the requirements of the Act and the Rules and
Regulations; the descriptions contained and summarized in the
Registration Statement and the Prospectus of contracts and other
documents are accurate and fairly present in all material respects the
information required to be shown by the Act and the Rules and
Regulations; to the best knowledge of such counsel, there are no
contracts or documents which are required by the Act to be described in
the Registration Statement or the Prospectus or to be filed as exhibits
to the Registration Statement which are not described or filed as
required by the Act and the Rules and Regulations; to the best
knowledge of such counsel, there is not pending or threatened against
the Company any action, suit, proceeding or investigation before or by
any Governmental Body of a character required to be disclosed in the
Registration Statement or the Prospectus which is not so disclosed
therein; and the statements set forth under the headings "The
Company--The 1995 Roll-Up", "--Pending Reorganization,"
"Business--Government Regulation," "Business-Insurance and Legal
Proceedings," "Management--Limitation of Liability and
Indemnification," "Certain Transactions" and "Description of Capital
Stock" in the Registration Statement and Prospectus, insofar as such
statements constitute a summary of the legal matters, documents or
proceedings referred to therein, provide an accurate summary of such
legal matters, documents and proceedings;
The Company has full legal right, power, and authority to
enter into this Agreement and to consummate the transactions provided
for herein; this Agreement has been duly authorized, executed and
delivered by the Company; this Agreement, assuming due authorization,
execution and delivery by each other party hereto, is a valid and
binding agreement of the Company, enforceable in accordance with its
terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws now or hereafter in effect
relating to or affecting creditors' rights generally or by general
principles of equity relating to the availability of remedies and
except as rights to indemnity and contribution may be limited by
federal or state securities laws or the public policy underlying such
laws; none of the Company's execution or
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Page 20
delivery of this Agreement, its performance hereof, its consummation of
the transactions contemplated herein or its application of the net
proceeds of the offering in the manner set forth in the Prospectus
under the caption "Use of Proceeds", conflicts or will conflict with or
results or will result in any breach or violation of any of the terms
or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon, any
property or assets of the Company or any Subsidiary pursuant to (A) the
terms of the articles of incorporation or bylaws of the Company or any
Subsidiary; (B) the terms of any contract or other agreement known to
such counsel after reasonable investigation to which the Company or any
Subsidiary is (or, upon consummation of the Reorganization, will be) a
party or by which any of them is or may be (or, upon consummation of
the Reorganization, will or may be) bound or to which any of their
respective properties is or may be (or, upon consummation of the
Reorganization, will or may be) subject; (C) any statute, rule or
regulation of any Governmental Body having (or that, upon consummation
of the Reorganization, will have) jurisdiction over the Company or any
Subsidiary or any of their respective activities or properties; or (D)
the terms of any judgment, decree or order, known to such counsel after
reasonable investigation, of any arbitrator or Governmental Body having
(or that, upon consummation of the Reorganization, will have) such
jurisdiction; and no consent, approval, authorization or order of any
Governmental Body has been or is required for the Company's performance
of this Agreement or the consummation of the transactions contemplated
hereby, except such as have been obtained under the Act or may be
required under state securities or blue sky laws in connection with the
purchase and distribution by the Underwriters of the Shares;
To the best of such counsel's knowledge, the conduct of the
business of each of the Company and the Subsidiaries is not, and, upon
consummation of the Reorganization, will not be, in violation of any
federal, state or local statute, administrative regulation or other
law, where such violation is likely to have a material adverse effect
on the Company; and each of the Company and the Subsidiaries has
obtained all Licenses as are necessary or required for the ownership,
leasing and operation of its properties and the conduct of its business
as presently conducted and, in the case of the Company, as contemplated
by the Registration Statement and Prospectus upon consummation of the
Reorganization;
The Company is not (after giving effect to the Reorganization
and the sale of the Shares) an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment
Company Act;
Each of the Company, ARCLP, the Subsidiaries and the LLC has
full legal right, power, and authority to enter into the Reorganization
Agreement and each other agreement relating thereto to which it is a
party and to consummate the transactions provided for in each thereof;
the Reorganization Agreement has been duly authorized, executed and
delivered by the Company, ARCLP, the
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Subsidiaries and the LLC is a valid and binding agreement of the
Company, ARCLP, the Subsidiaries and the LLC, enforceable in accordance
with its terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws now or hereafter in effect
relating to or affecting creditors' rights generally or by general
principles of equity relating to the availability of remedies; none of
the execution or delivery of the Reorganization Agreement by the
Company, ARCLP, the Subsidiaries or the LLC, the performance by any
thereof of its obligations thereunder, or the consummation by any
thereof of the transactions contemplated therein or of any other
Reorganization transactions, conflicts or will conflict with or results
or will result in any breach or violation of any of the terms or
provisions of, or constitutes or will constitute a default under, or
results or will result in the creation or imposition of any lien,
charge or encumbrance upon, any property or assets of any of them
pursuant to (A) the terms of the articles of incorporation or bylaws or
partnership agreement or other governing instruments or documents of
any of them; (B) the terms of any contract or other agreement known to
such counsel after reasonable investigation to which any of them is
(or, upon consummation of the Reorganization, will be) a party or by
which any of them is or may be (or, upon consummation of the
Reorganization, will or may be) bound or to which any of their
respective properties is or may be (or, upon consummation of the
Reorganization, will or may be) subject; (C) any statute, rule or
regulation of any Governmental Body having (or that, upon consummation
of the Reorganization, will have) jurisdiction over any of them or any
of their respective activities or properties; or (D) the terms of any
judgment, decree or order, known to such counsel after reasonable
investigation, of any arbitrator or Governmental Body having (or that,
upon consummation of the Reorganization, will have) such jurisdiction;
and no consent, approval, authorization or order of any Governmental
Body has been or is required for the performance of the Reorganization
Agreement or the consummation of the transactions contemplated thereby
or the consummation of any other Reorganization transaction, in each
case by any of the Company, ARCLP, the Subsidiaries or the LLC, except
such as have been obtained under the Act or may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution by the Underwriters of the Shares;
The Shares have been duly authorized for listing on the NYSE,
subject only to official notice of issuance;
The offer, issuance and sale by the Company of shares of
Common Stock (other than the Shares) in the Reorganization is exempt
from the registration requirements of the Act and applicable state
securities, real estate syndication and Blue Sky laws; and
None of the Company, ARCLP, any Subsidiary or the LLC is in
any breach or violation of any of the terms or provisions of, or in
default under (nor has an event occurred which with notice or lapse of
time or both would constitute a default or acceleration under), (A) the
terms of its articles of incorporation or
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bylaws, partnership agreement or other governing documents; (B) the
terms of any contract or other agreement known to such counsel after
reasonable investigation to which any of them is a party or by which
any of them is or may be bound or to which any of their respective
properties or assets is or may be subject; (C) any statute, rule or
regulation of any Governmental Body having jurisdiction over any of
them or any of their respective activities or properties; or (D) the
terms of any judgment, decree or order, known to such counsel after
reasonable investigation, of any arbitrator or Governmental Body having
such jurisdiction.
In addition, such counsel shall state that in the course of the
preparation of the Registration Statement and the Prospectus, such counsel has
participated in conferences with officers and representatives of the Company and
with the Company's independent public accountants, at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the Registration Statement and the Prospectus and
(without taking any further action to verify independently the statements made
in the Registration Statement and the Prospectus (other than the sections
identified in paragraph (iv) above) and, except as stated in the foregoing
opinion, without assuming responsibility for the accuracy, completeness or
fairness of such statements) nothing has come to such counsel's attention that
causes such counsel to believe that the Registration Statement as of the date it
was declared effective or as of the Closing Date or the Prospectus as of the
date thereof or as of the Closing Date contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (it being understood that such counsel need not express any opinion
with respect to the financial statements, schedules and other financial data
included in the Registration Statement or the Prospectus).
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
application of laws of any State other than Tennessee (to the extent
satisfactory in form and scope to counsel for the Underwriters) such counsel may
rely upon the opinion of local counsel to the Company. The foregoing opinion
shall also state that the Underwriters are justified in relying upon such
opinion of local counsel, and copies of such opinion shall be delivered to the
Representatives and counsel for the Underwriters.
References to the Registration Statement and the Prospectus in this
paragraph (f) shall include any amendment or supplement thereto at the date of
such opinion.
The Representatives shall have received an opinion, dated the Closing
Date and the Option Closing Date, from Stroock & Stroock & Lavan LLP, counsel to
the Underwriters, which opinion shall be satisfactory in all respects to the
Representatives. In rendering such opinion, such counsel may rely as to all
matters of Tennessee law upon the opinion of Bass, Berry & Sims, PLC, Nashville,
Tennessee.
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Concurrently with the execution and delivery of this Agreement, or, if
the Company elects to rely on Rule 430A, on the date of the Prospectus, the
Accountants shall have furnished to the Representatives a letter, dated the date
of its delivery (the "Original Letter"), addressed to the Representatives and in
form and substance satisfactory to the Representatives, confirming that (i) they
are independent public accountants with respect to the Company, ARCLP and its
consolidated subsidiaries and the Carriage Clubs within the meaning of the Act
and the Rules and Regulations; (ii) in their opinion, the financial statements
and any supplementary financial information and schedules (and pro forma
financial information) included in the Registration Statement and examined by
them comply as to form in all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations; (iii) on the basis of
procedures, not constituting an examination in accordance with generally
accepted auditing standards, set forth in detail in the Original Letter,
including a "SAS 71" review, a reading of the unaudited financial statements and
other information referred to below, a reading of the latest available interim
financial statements of ARCLP and its consolidated subsidiaries, inspections of
the minute books and partnership records of ARCLP and its consolidated
subsidiaries since the latest audited financial statements included in the
Registration Statement and Prospectus, inquiries of officials of ARCLP and its
consolidated subsidiaries and the Carriage Clubs responsible for financial and
accounting matters and such other inquiries and procedures as may be specified
in the Original Letter to a date not more than five days prior to the date of
the Original Letter, nothing came to their attention that caused them to believe
that: (A) the unaudited consolidated financial statements and schedules of ARCLP
and its consolidated subsidiaries included in the Prospectus do not comply as to
form in all material respects with the applicable accounting requirements of the
Act and the Rules and Regulations, or are not fairly presented in conformity
with GAAP applied on a basis substantially consistent with the basis for the
audited financial statements included in the Registration Statement and
Prospectus; (B) any other unaudited income statement data and balance sheet
items included in the Registration Statement and Prospectus do not agree with
the corresponding items in the unaudited financial statements from which such
data and items were derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis for the
corresponding amounts in the audited financial statements included in the
Registration Statement and Prospectus; (C) the unaudited financial statements
which were not included in the Registration Statement and Prospectus but from
which were derived any unaudited financial statements referred to in Clause (A)
and any unaudited income statement data and balance sheet items included in the
Registration Statement and Prospectus and referred to in Clause (B) were not
determined on a basis substantially consistent with the basis for the audited
financial statements included in the Registration Statement and Prospectus; (D)
the unaudited consolidated pro forma financial statements included in the
Registration Statement and Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the Rules
and Regulations or the pro forma adjustments have not been properly applied to
the historical amounts in the compilation of those statements; (E) as of a
specified date not more than five days prior to the date of the Original Letter,
there have been any changes in
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Page 24
the capital stock or partnership interests of the Company, ARCLP, the
Subsidiaries or the LLC or any increase in the long-term debt of the Company,
ARCLP or the Subsidiaries, or any decreases in net current assets or net assets
or other items specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with amounts shown in
the latest balance sheet included in the Registration Statement and Prospectus,
except in each case for changes, increases or decreases which the Registration
Statement and the Prospectus disclose have occurred or may occur or which are
described in the Original Letter; and (F) for the period from the date of the
latest financial statements included in the Registration Statement and
Prospectus to the specified date referred to in Clause (E), there were any
decreases in revenues, income from operations, income before extraordinary items
or the total or per share amounts of net income or other items specified by the
Representatives, or any increases in any items specified by the Representatives,
in each case as compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the Representatives,
except in each case for decreases or increases which the Prospectus discloses
have occurred or may occur or which are described in the Original Letter; and
(iv) in addition to the examination referred to in their reports included in the
Registration Statements and Prospectus and the procedures referred to in clause
(iii) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the general
accounting, financial or other records of ARCLP or the Subsidiaries, as the case
may be, which appear in the Prospectus or in Part II of, or in exhibits or
schedules to, the Registration Statement, and have compared such amounts,
percentages and financial information with such accounting, financial and other
records and have found them to be in agreement. At the Closing Date and, as to
the Option Shares, the Option Closing Date, the Accountants shall have furnished
to the Representatives a letter, dated the date of its delivery, which shall
confirm, on the basis of a review in accordance with the procedures set forth in
the Original Letter, that nothing has come to their attention during the period
from the date of the Original Letter referred to in the prior sentence to a date
(specified in the letter) not more than five days prior to the Closing Date or
the Option Closing Date, as the case may be, which would require any change in
the Original Letter if it were required to be dated and delivered at the Closing
Date or the Option Closing Date, as the case may be. At the Closing Date and, as
to the Option Shares, the Option Closing Date, there shall be furnished to the
Representatives an accurate certificate, dated the date of its delivery, signed
by each of the Chief Executive Officer and the President of the Company, in form
and substance satisfactory to the Representatives, to the effect that:
Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus and (A) as of the date of
such certificate, (x) the Registration Statement does not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading and (y) the Prospectus does not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading and (B) since the Effective Date no
event has occurred as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein not
untrue or misleading in any material respect;
Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the
time such certificate is delivered, true and correct in all material
respects; and
Each of the covenants required herein to be performed by the
Company on or prior to the date of such certificate has been duly,
timely and fully
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Page 25
performed and each condition herein required to be complied with by the
Company on or prior to the delivery of such certificate has been duly,
timely and fully complied with.
The Shares shall be qualified for sale in such states as the
Representatives may reasonably request, each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing Date
and the Option Closing Date.
Prior to the Closing Date, the Shares shall have been approved for
listing on the NYSE, subject only to notice of issuance.
The Reorganization shall have been consummated or shall be consummated
in accordance with the Reorganization Agreement prior to the closing of the
purchase and sale of the Shares hereunder.
On or before the date hereof, the Company shall have delivered to you
executed copies of all of the documents relating to the closing of the
Reorganization.
On or before the date hereof, the Company shall have delivered to you
the lock-up agreements described in Section 3(cc) hereof.
The Company shall have furnished to the Representatives such
certificates, letters and other documents, in addition to those specifically
mentioned herein, as the Representatives may have reasonably requested as to the
accuracy and completeness at the Closing Date and the Option Closing Date of any
statement in the Registration Statement or the Prospectus as to the accuracy at
the Closing Date and the Option Closing Date of the representations and
warranties of the Company, as to the performance by the Company of its
obligations hereunder, or as to the fulfillment of the conditions concurrent and
precedent to the obligations hereunder of the Underwriters.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your counsel. The Company will furnish you with such
conformed copies of such opinions, certificates, letters and other documents as
you shall reasonably request.
Indemnification and Contribution.
The Company agrees to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person,
if any, who controls each Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all losses, claims, damages or
liabilities, joint or several (and actions in respect thereof), to which they,
or any of them, may become subject under the Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement made by the
Company in Section 3 of this Agreement, (ii) any untrue statement or alleged
untrue statement of any material fact contained in (A) any Preliminary
Prospectus, the
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Page 26
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus or (B) any application or other
document, or any amendment or supplement thereto, executed by the Company or
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Shares under the securities or blue sky
laws thereof or filed with the Commission or any securities association or
securities exchange (each, an "Application"), or (iii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any amendment or supplement to the Registration Statement or
the Prospectus or any Application a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse,
as incurred, each Underwriter and each such other person for any legal or other
expenses reasonably incurred by such Underwriter or such other person in
connection with investigating, defending or appearing as a third-party witness
in connection with any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability is based solely upon an untrue
statement or omission or alleged untrue statement or omission in any of such
documents made in reliance upon and in conformity with information relating to
any Underwriter furnished in writing to the Company by the Representatives on
behalf of any Underwriter expressly for inclusion therein; provided, further,
that such indemnity with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter (or any such other person) from whom the
person asserting any such loss, claim, damage, liability or action purchased
Shares which are the subject thereof to the extent that any such loss, claim,
damage or liability (i) results from the fact that such Underwriter failed to
send or give a copy of the Prospectus (as amended or supplemented) to such
person at or prior to the confirmation of the sale of such Shares to such person
in any case where such delivery is required by the Act and (ii) arises out of or
is based upon an untrue statement or omission of a material fact contained in
such Preliminary Prospectus that was corrected in the Prospectus (or any
amendment or supplement thereto), unless such failure to deliver the Prospectus
(as amended or supplemented) was the result of noncompliance by the Company with
Section 5(f). This indemnity agreement will be in addition to any liability that
the Company might otherwise have. The Company will not, without the prior
written consent of each Underwriter, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such Underwriter or any person who controls such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act is a party to
each claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of each Underwriter and each such
other person from all liability arising out of such claim, action, suit or
proceeding. Each Underwriter will indemnify and hold harmless the Company, each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, each director of the Company and each
officer of the Company who signed the Registration Statement against any losses,
claims, damages or liabilities (or actions in respect thereof) to which the
Company and any such director, officer or controlling person may become subject
under the Act or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or
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Page 27
any amendment or supplement to the Registration Statement or the Prospectus or
any Application, or material fact required to be stated therein or (ii) the
omission or the alleged omission to state in the Registration Statement, any
Preliminary Prospectus or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus, or any Application, a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives expressly for use
therein; and, subject to the limitation set forth immediately preceding this
clause, will reimburse, as incurred, any legal or other expenses reasonably
incurred by the Company and any such director, officer or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or any action in respect thereof. The Company acknowledges that, for
all purposes under this Agreement, the statements set forth in [the third, sixth
and seventh paragraphs] under the heading "Underwriting" and the information in
[the two paragraphs on the inside front cover] of any Preliminary Prospectus and
the Prospectus constitute the only information relating to any Underwriter
furnished in writing to the Company by the Representatives on behalf of the
Underwriters expressly for inclusion in the Registration Statement, any
Preliminary Prospectus or the Prospectus. This indemnity agreement will be in
addition to any liability that each Underwriter might otherwise have.
Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party or parties
under this Section 8, notify such indemnifying party or parties of the
commencement thereof; but the omission so to notify the indemnifying party or
parties will not relieve it or them from any liability which it or they may have
to any indemnified party under the foregoing provisions of this Section 8 or
otherwise unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party. If any
such action is brought against an indemnified party and it notifies an
indemnifying party or parties of its commencement, the indemnifying party or
parties against which a claim is made will be entitled to participate therein
and, to the extent that it or they may wish, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably concluded
that there may be one or more legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnifying party shall not have the right to
direct the defense of such action on behalf of such indemnified party or parties
and such indemnified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified party or parties.
After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and approval by such indemnified party
of counsel appointed to defend such action, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or other
expenses other than reasonable costs of investigation subsequently incurred by
such indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to local counsel) in any
one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the
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Page 28
Representatives in the case of paragraph (a) of this Section 8, representing the
indemnified parties under such paragraph (a) who are parties to such action or
actions), or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified party
without the consent of the indemnifying party, unless such indemnified party
waived its rights under this Section 8 in which case the indemnified party may
effect such a settlement without such consent.
If the indemnification provided for in the foregoing paragraphs of this
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under paragraph (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties, on the one
hand, and the indemnified party, on the other, from the offering of the Shares
or (ii) if, but only if, the allocation provided by the foregoing clause (i) 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 indemnifying party or parties, on the one hand, and the
indemnified party, on the other, in connection with the statements or omissions
or alleged statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand, and the Underwriters, on the other, shall be deemed to be in the same
proportion as the total proceeds from the offering of the Shares (before
deducting expenses) bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. Relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Representatives on behalf of the Underwriters,
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 8(d) were to be 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 into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities (or actions in
respect thereof) referred to above in this Section 8(d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(d), no Underwriter shall be
required to contribute any amount in excess of the total underwriting discounts
received by it with respect to the Shares purchased by such Underwriter under
this Agreement, less the aggregate amount of any damages that such Underwriter
has otherwise been required to pay in respect of the same or any substantially
similar claim.
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No person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) will be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute as provided in this Section 8(d) are several in
proportion to their respective underwriting obligations and not joint. For
purposes of this Section 8(d), each person, if any, who controls an Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
will have the same rights to contribution as such Underwriter, and each director
of the Company, each officer of the Company who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, will have the same
rights to contribution as the Company, subject in each case to the provisions of
this paragraph (d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made under this
Section 8(d), will notify any such party or parties from whom contribution may
be sought, but the omission so to notify will not relieve the party or parties
from whom contribution may be sought from any other obligation(s) it or they may
have hereunder or otherwise than under this paragraph (d) or (y) to the extent
that such party or parties were not adversely affected by such omission. The
contribution agreement set forth above shall be in addition to any liabilities
which any indemnifying party may otherwise have. No party will be liable for
contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld). The indemnity and
contribution agreements contained in this Section 8 and the representations and
warranties of the Company contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any investigation made by or on
behalf of the Underwriters, (ii) acceptance of any of the Shares and payment
therefor or (iii) any termination of this Agreement.
Termination. The obligations of the several Underwriters under this
Agreement may be terminated at any time prior to the Closing Date (or, with
respect to the Option Shares, on or prior to the Option Closing Date), by notice
to the Company from the Representatives, without liability on the part of any
Underwriter to the Company if, prior to delivery and payment for the Firm Shares
(or the Option Shares, as the case may be), in the sole judgment of the
Representatives, (i) trading in any of the equity securities of the Company
shall have been suspended by the Commission or by an exchange that lists the
Shares, (ii) trading in securities generally on the NYSE, the American Stock
Exchange or the International Stock Exchange of the United Kingdom and the
Republic of Ireland, Limited shall have been suspended or limited or minimum or
maximum prices shall have been generally established on any of such exchanges,
or additional material governmental restrictions, not in force on the date of
this Agreement, shall have been imposed upon trading in securities generally by
any of such exchanges or by order of the Commission or any court or other
governmental authority, (iii) a general banking moratorium shall have been
declared by Federal, New York State or United Kingdom authorities or (iv) any
material adverse change in the financial or securities markets in the United
States or United Kingdom or any outbreak or material escalation of hostilities
or declaration by the United States or the United Kingdom of a national
emergency or war or other calamity or crisis shall have occurred, the effect of
any of which is such as to make it, in the sole judgment of the Representatives,
impracticable or inadvisable to market the Shares on the terms and in the manner
contemplated by the Prospectus. Any termination pursuant to Section 9 shall be
without liability of any party to any other party except as provided in Sections
6(a) and 8.
Default of Underwriters. If one or more Underwriters default in their
obligations to purchase Firm Shares or Option Shares hereunder and the
aggregate number of such Shares that such defaulting Underwriter or Underwriters
agreed but failed to purchase is ten percent or less of the aggregate number of
Firm Shares or Option Shares to be purchased by all of the Underwriters at such
time hereunder, the other Underwriters may make arrangements satisfactory to the
Representatives for the purchase of such Shares by other persons (who may
include one or more of the
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non-defaulting Underwriters, including the Representatives), but if no such
arrangements are made by the Firm Closing Date or the related Option Closing
Date, as the case may be, the other Underwriters shall be obligated severally
in proportion to their respective commitments hereunder to purchase the Firm
Shares or Option Shares that such defaulting Underwriter or Underwriters agreed
but failed to purchase. If one or more Underwriters so default with respect to
an aggregate number of Shares that is more than ten percent of the aggregate
number of Firm Shares or Option Shares, as the case may be, to be purchased by
all of the Underwriters at such time hereunder, and if arrangements
satisfactory to the Representatives are not made within 36 hours after such
default for the purchase by other persons (who may include one or more of the
non-defaulting Underwriters, including one or more of the Representatives) of
the Shares with respect to which such default occurs, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or
the Company other than as provided in Section 11 hereof. In the event of any
default by one or more Underwriters as described in this Section 10, the
Representatives shall have the right to postpone the Firm Closing Date or the
Option Closing Date, as the case may be, established as provided in Section 2
hereof for not more than seven business days in order that any necessary
changes may be made in the arrangements or documents for the purchase and
delivery of the Firm Shares or Option Shares, as the case may be. As used in
this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10. Nothing herein shall relieve any defaulting
Underwriter from liability for its default.
Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers and
the several Underwriters set forth in this Agreement or made by or on behalf
of them, respectively, pursuant to this Agreement shall remain in full force
and effect, regardless of (i) any investigation made by or on behalf of the
Company, any of its officers or directors, any Underwriter or any controlling
person referred to in Section 8 hereof and (ii) delivery of and payment for
the Shares. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, 111 Westwood
Place, Suite 402, Brentwood, Tennessee 37027, Attention: Chief Executive
Officer, or (b) if to the Underwriters, to the Representatives at the offices of
NatWest Securities Limited, 135 Bishopsgate, London EC2M 3XT England, Attention:
Melvin Rowe. Any such notice shall be effective only upon receipt. Any notice
under Section 8 or 9 may be made by telex or telephone, but if so made shall be
subsequently confirmed in writing.
Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this
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Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnities of the Company contained in
Section 8 of this Agreement shall also be for the benefit of any person or
persons who control any Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act and (ii) the indemnities of the Underwriters
contained in Section 8 of this Agreement shall also be for the benefit of the
directors of the Company, the officers of the Company who have signed the
Registration Statement and any person or persons who control the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act. No
purchaser of Shares from any Underwriter shall be deemed a successor because of
such purchase. This Agreement shall not be assignable by either party hereto
without the prior written consent of the other party.
APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(Signature page follows)
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Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
AMERICAN RETIREMENT
CORPORATION
By:
------------------------------
Name:
Title:
Confirmed as of the date first above mentioned:
By: NATWEST SECURITIES LIMITED
EQUITABLE SECURITIES CORPORATION
MCDONALD & COMPANY SECURITIES, INC.
By: NATWEST SECURITIES LIMITED
By:
--------------------------------
Name:
Title:
Acting on behalf of themselves
and as the Representatives of the
other several Underwriters named
in Schedule I hereto.
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SCHEDULE I
UNDERWRITERS
Number of Firm
Shares to be
Purchased
------------
NatWest Securities Limited
Equitable Securities Corporation
McDonald & Company Securities, Inc
Total 3,125,000
=========
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EXHIBIT A
SUBSIDIARIES
35
EXHIBIT B
May __, 1997
NATWEST SECURITIES LIMITED
EQUITABLE SECURITIES CORPORATION
MCDONALD & COMPANY SECURITIES, INC.
As Representatives of the
several Underwriters
c/o NatWest Securities Limited
135 Bishopsgate
London EC2M 3XT England
Ladies and Gentlemen:
In order to induce the several underwriters, for which NatWest
Securities Limited, Equitable Securities Corporation and McDonald & Company
Securities, Inc. (the "Representatives") intend to act as Representatives, to
underwrite a proposed initial public offering (the "Offering") of shares of
common stock, $.01 par value per share (the "Common Stock"), of American
Retirement Corporation, a Tennessee corporation (the "Company"), as contemplated
by a registration statement filed with the Securities and Exchange Commission on
Form S-1 (Registration No. 33-23197), the undersigned hereby agrees that the
undersigned will not, directly or indirectly, for a period of 180 days after the
commencement of the Offering, without the prior written consent of NatWest
Securities Limited, offer to sell, sell, contract to sell, grant any option to
purchase or otherwise dispose (or announce any offer, sale, grant of any option
to purchase or other disposition) of any shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock.
This letter shall have no further force or effect if the Company and
the several Underwriters shall not have executed and delivered an underwriting
agreement related to the Offering by [June 30, 1997] or if any underwriting
agreement entered into by such parties shall be terminated prior to the initial
closing date provided for therein.
This letter agreement shall not prohibit the undersigned from
transferring any shares of Common Stock to members of his or her immediate
family or to a trust for their benefit, provided that such persons or trust
agree to be bound by the terms hereof.
Very truly yours,
By:
Name: