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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 8, 1998
REGISTRATION NO. 333-54015
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMERICAN RETIREMENT CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
TENNESSEE 62-1674303
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
</TABLE>
111 WESTWOOD PLACE, SUITE 402
BRENTWOOD, TENNESSEE 37027
(615) 221-2250
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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W.E. SHERIFF
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
111 WESTWOOD PLACE, SUITE 402
BRENTWOOD, TENNESSEE 37027
(615)221-2250
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
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COPIES OF COMMUNICATIONS TO:
T. ANDREW SMITH
BASS, BERRY & SIMS PLC
FIRST AMERICAN CENTER
NASHVILLE, TENNESSEE 37238
(615) 742-6200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective, depending on market
conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY 8, 1998
PROSPECTUS
(AMERICAN RETIREMENT CORPORATION LOGO)
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American Retirement Corporation, a Tennessee corporation (the "Company"),
may offer from time to time, in one or more series (individually, an "Offering,"
and collectively, "Offerings"), its debt securities (the "Debt Securities"),
shares of its preferred stock, no par value per share (the "Preferred Stock"),
and/or shares of its common stock, par value $.01 per share (the "Common
Stock"). The Debt Securities, Preferred Stock, and Common Stock are collectively
referred to herein as the "Securities." The Securities will have an aggregate
offering price of up to $350,000,000 and will be offered on terms to be
determined at the time of each Offering.
In the case of Debt Securities, the specific title, the aggregate principal
amount, the ranking, the purchase price, the maturity, the rate and time of
payment of any interest, any redemption or sinking fund provisions, any
conversion provisions, and any other specific term of the series of Debt
Securities will be set forth in an accompanying supplement to this Prospectus (a
"Prospectus Supplement"). In the case of Preferred Stock, the specific number of
shares, designation, stated value per share, liquidation preference per share,
issuance price, dividend rate (or method of calculation), dividend payment
dates, any redemption or sinking fund provisions, any conversion rights, and any
other specific term of the series of Preferred Stock will be set forth in an
accompanying Prospectus Supplement. In the case of Common Stock, the specific
number of shares and issuance price per share will be set forth in an
accompanying Prospectus Supplement. Each Prospectus Supplement will also
disclose whether the subject Securities will be listed on a national securities
exchange and, if they are not to be listed, the possible effects thereof on
their marketability.
The Securities may be sold: (i) directly by the Company; (ii) through
underwriting syndicates represented by one or more managing underwriters, or
through one or more underwriters without a syndicate; and (iii) through agents
designated from time to time. The names of any underwriters or agents of the
Company involved in the sale of the Securities in respect of which this
Prospectus is being delivered and any applicable commissions or discounts will
be set forth in an accompanying Prospectus Supplement. See "Plan of
Distribution." The net proceeds to the Company from such sale will be set forth
in such Prospectus Supplement.
This Prospectus also relates to an aggregate of 345,000 shares of Common
Stock (the "Shareholder Shares") that are held by certain shareholders of the
Company (the "Selling Shareholders") and that may be offered for the account of
the Selling Shareholders from time to time hereby. The Shareholder Shares will
be offered pursuant to this Prospectus and an accompanying Prospectus Supplement
only in connection with an underwritten Offering of shares of Common Stock by
the Company. The Company will not receive any proceeds from the sale of the
Shareholder Shares by the Selling Shareholders. See "Use of Proceeds" and
"Selling Shareholders."
The Company's Common Stock and 5 3/4% Convertible Subordinated Debentures
Due 2002 (the "Convertible Debentures") are traded on the New York Stock
Exchange (the "NYSE") under the symbols "ACR" and "ACR 02," respectively. On
July 7, 1998, the closing sale price of the Common Stock on the NYSE was
$18.9375 per share.
SEE "RISK FACTORS" COMMENCING ON PAGE 4 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY PROSPECTIVE INVESTORS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
THE DATE OF THIS PROSPECTUS IS , 1998.
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Securities offered hereby. This Prospectus and any
accompanying Prospectus Supplement do not contain all of the information set
forth in the Registration Statement and the exhibits thereto. Certain items are
omitted in accordance with the rules and regulations of the Commission. For
further information with respect to the Company and the Securities, reference is
hereby made to the Registration Statement, including the exhibits and schedules
thereto. Statements contained in this Prospectus and any accompanying Prospectus
Supplement concerning the provisions or contents of any contract, agreement, or
any other document referred to herein or therein are not necessarily complete.
With respect to each such contract, agreement, or document, reference is made to
such document for a more complete description, and each statement is deemed to
be qualified in all respects by such reference. The Registration Statement,
including the exhibits and schedules thereto, may be inspected without charge at
the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C.
and copies of it or any part thereof may be obtained from such office, upon
payment of the fees prescribed by the Commission.
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files proxy statements, reports, and other information
with the Commission. The Registration Statement (with exhibits), as well as such
proxy statements, reports, and other information filed by the Company may be
inspected and copied at the public reference facilities of the Commission
located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at the Northeast Regional Office of the Commission, Seven World Trade
Center, Suite 1300, New York, New York 10048, and at the Midwest Regional Office
of the Commission, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can also be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a web
site that contains reports, proxy and information statements, and other
information regarding registrants, including the Company, that file
electronically with the Commission at http://www.sec.gov. The Company's Common
Stock and Convertible Debentures are listed on the NYSE and proxy statements,
reports, and other information concerning the Company may be inspected at the
offices of the NYSE, 20 Broad Street, New York, New York 10005.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated herein by reference:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(ii) the Company's Quarterly Report on Form 10-Q/A for the quarter
ended June 30, 1997, as filed with the Commission on February 17, 1998;
(iii) the Company's Quarterly Report on Form 10-Q/A for the quarter
ended September 30, 1997, as filed with the Commission on February 17,
1998;
(iv) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998;
(v) the Company's Current Report on Form 8-K, dated May 29, 1998; and
(vi) the description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, filed with the Commission on
May 22, 1997.
Each document filed by the Company pursuant to Sections 13(a), 13(c), 14,
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the Offerings shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date such
document is filed with the Commission. Any statement contained herein, or in any
document, all or a portion of which is incorporated or deemed to be incorporated
by reference herein, shall be deemed to be modified or superseded for purposes
of the Registration Statement and this Prospectus to the extent that a statement
contained herein, or in any subsequently filed document that also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute part of the Registration
Statement or this Prospectus. All information appearing in this Prospectus is
qualified in its entirety by the information and financial statements (including
notes thereto) appearing in the documents incorporated herein by reference.
This Prospectus incorporates documents by reference that are not presented
herein or delivered herewith. These documents (other than exhibits to such
documents that are not specifically incorporated by reference into such
documents) are available without charge, upon written or oral request by any
person to whom this Prospectus has been delivered, from George T. Hicks,
Secretary, 111 Westwood Place, Suite 402, Brentwood, Tennessee 37027, telephone
(615) 221-2250.
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RISK FACTORS
Prospective investors should consider carefully the following factors as
well as the more detailed information contained in or incorporated by reference
into this Prospectus and in any accompanying Prospectus Supplement before making
a decision to invest in the Securities.
SUBSTANTIAL DEBT AND OPERATING LEASE PAYMENTS
At March 31, 1998, the Company had long-term debt (including current
portion) of approximately $239.8 million (including $138.0 million of
Convertible Debentures), of which $77.0 million was payable to one lender,
General Electric Capital Corporation ("GECC"), and was obligated to pay annual
rental obligations of approximately $7.7 million under long-term operating
leases. The Company has entered into non-binding letters of intent to establish
operating lease facilities with Nationwide Health Properties, Inc. ("NHP") and
National Health Investors, Inc. ("NHI"), both health care real estate investment
trusts, pursuant to which NHP and NHI, at the Company's request and upon
satisfaction of certain conditions, would develop, construct, or acquire up to
$110.0 million and $74.7 million, respectively, of senior living communities and
lease the communities to the Company (collectively, the "REIT Facilities").
Currently, the Company has been allocated $41.6 million and $4.7 million,
respectively, in commitments under the REIT Facilities. The Company also
maintains a $50.0 million revolving credit facility with GECC, a $4.0 million
revolving credit facility with a bank, and a $5.0 million revolving credit
facility with a bank that is available for land acquisitions. The Company
currently intends to finance its growth through a combination of bank
indebtedness, construction and mortgage financing, transactions with NHP and NHI
or other real estate investment trusts, the remaining proceeds from the sale of
the Convertible Debentures in September 1997, the net proceeds of the Offerings,
and joint venture and other arrangements. As a result, a substantial portion of
the Company's cash flow will be devoted to debt service and lease payments. As
of March 31, 1998, the Company's existing debt and lease agreements required
aggregate annual payments for the years ending December 31, 1998, 1999, 2000,
2001, and 2002, assuming no change in the Company's average interest cost (6.8%
at March 31, 1998), ranging from approximately $23.9 million to $86.3 million
(approximately $224.3 million for the year ended December 31, 2002 including the
$138.0 million principal amount of the Convertible Debentures due in October
2002). The Company intends to continue to incur significant additional
indebtedness and lease obligations and therefore expects its annual debt service
and lease obligations over the next five fiscal years to be significantly
greater than the amounts set forth in the preceding sentences. For the fiscal
year ended December 31, 1997, the Company's net cash provided by operating
activities, before giving effect to the payment of interest expense on the
Company's outstanding indebtedness, was approximately $24.2 million. There can
be no assurance that the Company will generate sufficient cash flows from
operations to cover required interest, principal, and operating lease payments.
Any payment or other default could cause the lender to foreclose upon the
communities securing such indebtedness, or, in the case of an operating lease,
could terminate the lease, with a consequent loss of income and asset value to
the Company. Furthermore, because most of the Company's mortgages and
sale-leaseback agreements contain cross-default provisions, a default by the
Company on one of its payment obligations could adversely affect a significant
number of the Company's other properties and, consequently, the Company's
business, results of operations, and financial condition.
NEED FOR ADDITIONAL FINANCING; EXPOSURE TO RISING INTEREST RATES
The Company's ability to sustain any operating losses and to otherwise meet
its growth objectives will depend, in part, on its ability to obtain additional
financing on acceptable terms from available financing sources. The Company
maintains a line of credit that restricts the Company's ability to incur
additional indebtedness. There can be no assurance that future debt instruments
will not also include covenants restricting the Company's ability to incur
additional debt. Moreover, raising additional funds through the issuance of
equity securities could cause existing shareholders to experience dilution.
There can be no assurance that the Company will be successful in securing
additional financing or that adequate financing will be available and, if
available, will be on terms that are acceptable to the Company. The Company's
inability to obtain additional financing on acceptable terms could delay or
eliminate some or all of the Company's growth plans.
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Future indebtedness, from commercial banks or otherwise, and lease
obligations, including those related to the REIT Facilities, are also expected
to be based on interest rates prevailing at the time such debt and lease
arrangements are obtained. Therefore, increases in prevailing interest rates
could increase the Company's interest or lease payment obligations and could
have a material adverse effect on the Company's business, financial condition,
and results of operations.
NO ASSURANCE AS TO ABILITY TO MANAGE GROWTH
The Company intends to continue to expand its operations through the
development, construction, and acquisition of senior living communities, as well
as through the selective expansion of the Company's home health care services.
The success of the Company's growth strategy will depend, in large part, on its
ability to effectively operate any newly acquired or developed communities or
home health care agencies, as to which there can be no assurance. The Company
has limited experience developing and operating assisted living residences on a
free-standing basis. The Company's growth plans will also place significant
demands on the Company's management and operating personnel. The Company's
ability to manage its future growth effectively will require it to improve its
operational, financial, and management information systems and to continue to
attract, retain, train, motivate, and manage key employees. If the Company is
unable to manage its growth effectively, its business, results of operations,
and financial condition will be adversely affected.
RISKS IN ACQUISITIONS OF COMMUNITIES AND COMPLEMENTARY BUSINESSES; DIFFICULTIES
OF INTEGRATION
The Company plans to continue to make strategic acquisitions of senior
living communities (which may include a variety of continuing care retirement
communities ("CCRCs"), independent living, assisted living, and skilled nursing
facilities) and other properties or businesses that are complementary to the
Company's operations and growth strategy. The acquisition of existing
communities or other businesses involves a number of risks. Existing communities
available for acquisition frequently serve or target different markets than
those presently served by the Company. The Company may also determine that
renovations of acquired communities and changes in staff and operating
management personnel are necessary to successfully integrate such communities or
businesses into the Company's existing operations. The costs incurred to
reposition or renovate newly acquired communities may not be recovered by the
Company. In undertaking acquisitions, the Company also may be adversely impacted
by unforeseen liabilities attributable to the prior operators of such
communities or businesses, against whom the Company may have little or no
recourse. The success of the Company's acquisition strategy will be determined
by numerous factors, including the Company's ability to identify suitable
acquisition candidates, the competition for such acquisitions, the purchase
price, the requirement to make operational or structural changes and
improvements, the financial performance of the communities or businesses after
acquisition, the Company's ability to finance the acquisitions, and the
Company's ability to integrate effectively any acquired communities or
businesses into the Company's management, information, and operating systems.
There can be no assurance that the Company's acquisition of senior living
communities and complementary properties and businesses will be completed at the
rate currently expected, if at all, or, if completed, that any acquired
communities or businesses will be successfully integrated into the Company's
operations.
NO ASSURANCE AS TO ABILITY TO DEVELOP ADDITIONAL SENIOR LIVING COMMUNITIES
An integral component of the Company's growth strategy is to develop and
operate senior living communities. As part of its growth strategy, the Company
is currently developing 35 senior living communities, with an estimated
aggregate capacity for approximately 3,600 residents, and is expanding or is
planning to commence expansions at six of its existing senior living communities
to add capacity to accommodate approximately 300 additional residents. The
Company's ability to develop successfully additional senior living communities
will depend on a number of factors, including, but not limited to, the Company's
ability to acquire suitable development sites at reasonable prices; the
Company's success in obtaining necessary zoning, licensing, and other required
governmental permits and authorizations; and the Company's ability to control
construction costs and project completion schedules. In addition, the Company's
development plans are subject to numerous factors over which it has little or no
control, including competition for developable
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properties; shortages of labor or materials; changes in applicable laws or
regulations or their enforcement; the failure of general contractors or
subcontractors to perform under their contracts; strikes; and adverse weather
conditions. As a result of these factors, there can be no assurance that the
Company will not experience construction delays, that it will be successful in
developing and constructing currently planned or additional communities, or that
any developed communities will be economically successful. If the Company's
development schedule is delayed, the Company's growth plans could be adversely
affected. Additionally, the Company anticipates that the development and
construction of additional senior living communities will involve a substantial
commitment of capital with little or no revenue associated with communities
under development, the consequence of which could be an adverse impact on the
Company's liquidity.
LOSSES FROM NEWLY DEVELOPED COMMUNITIES AND ACQUISITIONS
Although the Company was profitable in 1994, 1995, 1996, and 1997 (before
giving effect to a non-recurring tax charge incurred in 1997 in connection with
the reorganization of the Company's predecessor, American Retirement
Communities, L.P. (the "Predecessor"), into the Company (the "Reorganization")
and the extraordinary charge relating to the prepayment of indebtedness in
December 1997), in view of its growth plan for development and acquisitions,
there can be no assurance that the Company will continue to be profitable in any
future period. Newly developed senior living communities are expected to incur
operating losses during a substantial portion of their first 12 months of
operations, on average, until the communities achieve targeted occupancy levels.
Newly acquired communities may also incur losses pending their integration into
the Company's operations. The Company may also incur operating losses as a
result of the expansion of its existing home health care agencies.
RISKS OF DEVELOPMENT IN CONCENTRATED GEOGRAPHIC AREAS
The Company's growth strategy involves the development and acquisition of
senior living communities in concentrated geographic service areas. Accordingly,
the Company's occupancy rates in existing, developed, or acquired communities
may be adversely affected by a number of factors, including regional and local
economic conditions, general real estate market conditions including the supply
and proximity of senior living communities, competitive conditions, and
applicable local laws and regulations.
DISCRETIONARY USE OF PROCEEDS
The Company will have broad discretion as to the application of the net
proceeds of the Offerings. The Company intends to use the net proceeds of the
Offerings to fund future acquisitions of senior living communities and
businesses engaged in activities that are similar or complementary to the
Company's business, for the development and construction of new senior living
communities and expansions at the Company's existing communities, and for
general corporate purposes, including working capital. See "Use of Proceeds."
DEPENDENCE ON PRIVATE PAY RESIDENTS
Approximately 89.4% of the Company's total revenues for the year ended
December 31, 1997 and approximately 92.3% of the Company's total revenues for
the three months ended March 31, 1998 were attributable to private pay sources.
For the same periods, 10.6% and 7.7%, respectively, of the Company's revenues
were attributable to reimbursement from third-party payors, including Medicare.
The Company expects to continue to rely primarily on the ability of residents to
pay for the Company's services from their own or familial financial resources.
Inflation or other circumstances that adversely affect the ability of seniors to
pay for the Company's services could have a material adverse effect on the
Company's business, financial condition, and results of operations.
INCREASING COMPETITION
The senior living and health care services industry is highly competitive,
and the Company expects that all segments of the industry will become
increasingly competitive in the future. The Company competes with
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other companies providing independent living, assisted living, skilled nursing,
home health care, and other similar service and care alternatives. Although the
Company believes there is a need for senior living communities in the markets
where the Company is operating and developing residences, the Company expects
that competition will increase from existing competitors and new market
entrants, some of whom may have substantially greater financial resources than
the Company. In addition, some of the Company's competitors operate on a
not-for-profit basis or as charitable organizations and have the ability to
finance capital expenditures on a tax-exempt basis or through the receipt of
charitable contributions, neither of which are readily available to the Company.
Furthermore, if the development of new senior living communities (particularly
given the rapid pace of development of new assisted living residences) outpaces
the demand for such communities in the markets in which the Company has or is
developing senior living communities, such markets may become saturated. An
oversupply of such communities in the Company's markets could cause the Company
to experience decreased occupancy, reduced operating margins, and lower
profitability. Consequently, there can be no assurance that the Company will not
encounter increased competition that would adversely affect its occupancy rates,
pricing for services, and growth prospects.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent on the services of its executive officers,
particularly the Company's Chairman and Chief Executive Officer, W.E. Sheriff,
and the Company's President and Chief Operating Officer, Christopher J. Coates,
for the management of the Company. Neither Mr. Sheriff, Mr. Coates, nor any of
the Company's other executive officers has an employment agreement with the
Company. The Company has a key employee life insurance policy in the amount of
$2.0 million covering Mr. Sheriff. The loss by the Company of certain of its
executive officers and the inability to attract and retain qualified management
personnel could adversely affect the Company's business, financial condition,
and results of operations.
RESIDENCE MANAGEMENT, STAFFING, AND LABOR COSTS
The Company competes with other providers of senior living and health care
services with respect to attracting and retaining qualified management personnel
responsible for the day-to-day operations of each of the Company's communities
and skilled technical personnel responsible for providing resident care. A
shortage of nurses or trained personnel may require the Company to enhance its
wage and benefits package in order to compete in the hiring and retention of
such personnel or to hire more expensive temporary personnel. The Company will
also be dependent on the available labor pool of semi-skilled and unskilled
employees in each of the markets in which it operates. No assurance can be given
that the Company's labor costs will not increase, or that, if they do increase,
they can be matched by corresponding increases in rates charged to residents.
Any significant failure by the Company to attract and retain qualified
management and staff personnel, to control its labor costs, or to pass on any
increased labor costs to residents through rate increases could have a material
adverse effect on the Company's business, financial condition, and results of
operations.
CONTROL BY MANAGEMENT AND CERTAIN SHAREHOLDERS
The Company's officers and directors and entities controlled by them,
collectively, beneficially own approximately 39.4% of the outstanding shares of
Common Stock. Accordingly, such persons have the ability, by voting their shares
in concert, to influence the election of the Company's Board of Directors and
the outcome of all other matters submitted to the Company's shareholders.
Furthermore, such influence could preclude any unsolicited acquisition of the
Company and, consequently, adversely affect the market price of the Common
Stock.
GOVERNMENT REGULATION AND THE BURDENS OF COMPLIANCE
Federal and state governments regulate various aspects of the Company's
business. The development and operation of health care facilities and the
provision of health care services are subject to federal, state, and local
licensure, certification, and inspection laws that regulate, among other
matters, the number of licensed beds, the provision of services, the
distribution of pharmaceuticals, billing practices and policies, equipment,
staffing (including professional licensing), operating policies and procedures,
fire prevention measures,
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environmental matters, and compliance with building and safety codes. Failure to
comply with these laws and regulations could result in the denial of
reimbursement, the imposition of fines, temporary suspension of admission of new
patients, suspension or decertification from the Medicare programs, restrictions
on the ability to acquire new facilities or expand existing facilities, and, in
extreme cases, the revocation of a community's license or closure of a
community. There can be no assurance that federal, state, or local governments
will not impose additional restrictions on the Company's activities that could
materially adversely affect the Company.
The Balanced Budget Act ("BBA") of 1997, Public Law 105-33, included
sweeping changes to Medicare and Medicaid, significantly reducing rates of
increase for payments to home health agencies and skilled nursing facilities.
Under the BBA, beginning in the year 2001, skilled nursing facilities will no
longer be reimbursed under a cost based system. A prospective payment system
under which facilities are reimbursed on a per diem basis will be phased in over
the next three years. The BBA also requires the Secretary of Health and Human
Services to establish and implement a prospective payment system for home health
services for cost reporting periods beginning on and after October 1, 1999. The
Company believes that the phase-in period will allow it to make timely operating
adjustments appropriate under the new system, but does not know the magnitude of
the effect that these changes ultimately will have on skilled nursing and home
health operations. However, pending either institution of prospective pay or
major revisions to the interim payment system now in effect, the Company has
suspended the operation of six of its prestabilized home health care agencies.
Approximately 7.7% of the Company's total revenues for the three months ended
March 31, 1998 and approximately 10.6%, 7.9%, and 8.8% of the Company's total
revenues for the years ended December 31, 1997, 1996, and 1995, respectively,
were attributable to Medicare, including Medicare-related private co-insurance.
Many states, including several of the states in which the Company currently
operates, control the supply of licensed skilled nursing beds and home health
care agencies through certificate of need ("CON") programs. Presently, state
approval is required for the construction of new health care communities, the
addition of licensed beds, and certain capital expenditures at such communities,
as well as the opening of a home health care agency. To the extent that a CON or
other similar approval is required for the acquisition or construction of new
facilities, the expansion of the number of licensed beds, services, or existing
communities, or the opening of a home health care agency, the Company could be
adversely affected by the failure or inability to obtain such approval, changes
in the standards applicable for such approval, and possible delays and expenses
associated with obtaining such approval. In addition, in most states the
reduction of the number of licensed beds or the closure of a community requires
the approval of the appropriate state regulatory agency and, if the Company were
to seek to reduce the number of licensed beds at, or to close, a community, the
Company could be adversely affected by a failure to obtain or a delay in
obtaining such approval.
Federal and state anti-remuneration laws, such as "anti-kickback" laws,
govern certain financial arrangements among health care providers and others who
may be in a position to refer or recommend patients to such providers. These
laws prohibit, among other things, certain direct and indirect payments that are
intended to induce the referral of patients to, the arranging for services by,
or the recommending of, a particular provider of health care items or services.
Federal anti-kickback laws have been broadly interpreted to apply to certain
contractual relationships between health care providers and sources of patient
referral. Similar state laws vary, are sometimes vague, and seldom have been
interpreted by courts or regulatory agencies. Violation of these laws can result
in loss of licensure, civil and criminal penalties, and exclusion of health care
providers or suppliers from participation in the Medicare and Medicaid programs.
There can be no assurance that such laws will be interpreted in a manner
consistent with the practices of the Company.
Under the Americans with Disabilities Act of 1990, all places of public
accommodation are required to meet certain federal requirements related to
access and use by disabled persons. A number of additional federal, state, and
local laws exist that also may require modifications to existing and planned
communities to create access to the properties by disabled persons. Although the
Company believes that its communities are substantially in compliance with
present requirements or are exempt therefrom, if required changes involve a
greater expenditure than anticipated or must be made on a more accelerated basis
than anticipated, additional
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<PAGE> 10
costs would be incurred by the Company. Further legislation may impose
additional burdens or restrictions with respect to access by disabled persons,
the costs of compliance with which could be substantial.
POTENTIAL FOR ENVIRONMENTAL LIABILITY
Under various federal, state, and local environmental laws, ordinances, and
regulations, a current or previous owner or operator of real estate may be
required to investigate and clean up hazardous or toxic substances or petroleum
product releases at such property, and may be held liable to a governmental
entity or to third parties for property damage and for investigation and
clean-up costs incurred by such parties in connection with the contamination.
Such laws typically impose clean-up responsibility and liability without regard
to whether the owner knew of or caused the presence of the contaminants, and
liability under such laws has been interpreted to be joint and several unless
the harm is divisible and there is a reasonable basis for allocation of
responsibility. The costs of investigation, remediation, or removal of such
substances may be substantial, and the presence of such substances, or the
failure to properly remediate such property, may adversely affect the owner's
ability to sell or lease such property or to borrow using such property as
collateral. In addition, some environmental laws create a lien on the
contaminated site in favor of the government for damages and costs it incurs in
connection with the contamination. Persons who arrange for the disposal or
treatment of hazardous or toxic substances also may be liable for the costs of
removal or remediation of such substances at the disposal or treatment facility,
whether or not such facility is owned or operated by such person. Finally, the
owner of a site may be subject to common law claims by third parties based on
damages and costs resulting from environmental contamination emanating from a
site.
LIABILITY AND INSURANCE
The provision of personal and health care services entails an inherent risk
of liability. In recent years, participants in the health care services industry
have become subject to an increasing number of lawsuits alleging negligence or
related legal theories, many of which involve large claims and result in the
incurrence of significant defense costs. Moreover, assisted living residences
offer residents a greater degree of independence in their daily living than
skilled nursing facilities. This increased level of independence may subject the
resident and the Company to certain risks that would be reduced in more
institutionalized settings. The Company currently maintains liability insurance
in amounts it believes are sufficient to cover such claims based on the nature
of the risks, its historical experience, and industry standards. There can be no
assurance, however, that claims in excess of the Company's insurance or claims
not covered by the Company's insurance, such as claims for punitive damages,
will not arise. A claim against the Company not covered by, or in excess of, the
Company's insurance could have a material adverse effect upon the Company. In
addition, the Company's insurance policies must be renewed annually. There can
be no assurance that the Company will be able to obtain liability insurance in
the future or that, if such insurance is available, it will be available on
acceptable economic terms.
EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS
The Company's Board of Directors has the authority, without action by the
shareholders, to issue up to 5,000,000 shares of preferred stock and to fix the
rights and preferences of such shares. This authority, together with certain
provisions of the Company's Charter (including provisions that implement
staggered terms for directors, limit shareholder ability to call a shareholders'
meeting or to remove directors, and require a supermajority vote to amend
certain provisions of the Charter), may delay, deter, or prevent a change in
control of the Company. In addition, as a Tennessee corporation, the Company is
subject to the provisions of the Tennessee Business Combination Act and the
Tennessee Greenmail Act, each of which may be deemed to have anti-takeover
effects and may delay, deter, or prevent a takeover attempt that might be
considered by the shareholders to be in their best interests. In the event of
any change in control of the Company, each of the holders of the Convertible
Debentures will have the right, at such holder's option and subject to certain
conditions and restrictions, to require the Company to repurchase all or any
part of such holder's Convertible Debentures. The right to require the Company
to repurchase Convertible Debentures may delay, deter, or prevent a change in
control of the Company. See "Description of Capital Stock -- Certain Provisions
of the Charter, Bylaws, and Tennessee Law."
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<PAGE> 11
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Sales of substantial amounts of Common Stock in the public market could
adversely affect the prevailing market price of the Common Stock. Approximately
68.0% of the outstanding shares of Common Stock are "restricted securities"
within the meaning of Rule 144 promulgated under the Securities Act and may not
be resold in the public markets unless registered under the Securities Act or
pursuant to an exemption, such as the safe harbor provided by Rule 144. All of
such restricted shares can be sold in the public market pursuant to Rule 144,
subject to the volume and resale restrictions of such rule. In addition, certain
holders of such restricted shares have certain contractual registration rights
with respect thereto. See "Description of Capital Stock -- Registration Rights."
Holders of the Convertible Debentures have the right to convert such
Convertible Debentures into shares of Common Stock at a conversion price of
$24.00 per share. If holders elect to convert all of the Convertible Debentures
into shares of Common Stock, the Company would issue an additional 5,750,000
shares of Common Stock, all of which would be freely tradeable.
POSSIBLE PRICE VOLATILITY OF THE SECURITIES
The market price of the Securities offered from time to time hereby could
be subject to significant fluctuations in response to various factors and
events, including the liquidity of the market for the Securities offered from
time to time hereby, variations in the Company's operating results, and new
statutes or regulations or changes in the interpretation of existing statutes or
regulations affecting the health care industry generally or the senior living
industry in particular. In addition, the stock market in recent years has
experienced broad price and volume fluctuations that often have been unrelated
to the operating performance of particular companies. These market fluctuations
also may adversely affect the market price of the Securities.
FORWARD-LOOKING STATEMENTS
This Prospectus, any accompanying Prospectus Supplement, and the Company's
filings under the Exchange Act contain certain forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act, which are intended to be covered by the safe harbors created thereby. Those
statements include, but may not be limited to, the discussions of the Company's
operating and growth strategy, including its development plans and possible
acquisitions. Investors are cautioned that all forward-looking statements
involve risks and uncertainties including, without limitation, the factors set
forth under the caption "Risk Factors" in this Prospectus. Although the Company
believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be inaccurate and,
therefore, there can be no assurance that the forward-looking statements
included in this Prospectus, any accompanying Prospectus Supplement, or the
Company's filings under the Exchange Act will prove to be accurate. In light of
the significant uncertainties inherent in the forward-looking statements
included herein or therein, the inclusion of such information should not be
regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved. In addition, updated
information will be periodically provided by the Company as required by the
Securities Act and the Exchange Act. The Company, however, undertakes no
obligation to publicly release the results of any revisions to such
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
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<PAGE> 12
THE COMPANY
GENERAL
The Company is a national senior living and health care services provider
offering a broad range of care and services to seniors, including independent
living, assisted living, skilled nursing, and home health care services.
Established in 1978, the Company currently operates 28 senior living communities
in 13 states, consisting of 14 owned communities, six leased communities, and
eight managed communities, with an aggregate capacity for approximately 7,800
residents. The Company also operates seven home health care agencies, including
two agencies managed for third parties. At March 31, 1998, the Company's owned
communities had a stabilized occupancy rate of 93%, its leased communities had a
stabilized occupancy rate of 93%, and its managed communities had a stabilized
occupancy rate of 96% (stabilized communities are generally defined as
communities or expansions thereof that have (i) achieved 95% occupancy or (ii)
been open at least 12 months). Approximately 89.4% and 92.3% of the Company's
total revenues for the year ended December 31, 1997 and the three months ended
March 31, 1998, respectively, were derived from private pay sources.
Since 1992, the Company has experienced significant growth, primarily
through the acquisition of senior living communities. The Company's revenues
have grown from $17.8 million in 1992 to $94.2 million in 1997, an annual growth
rate of 40%. During the same period, the Company's income from operations has
grown from $2.3 million to $18.1 million, an annual growth rate of 51%. The
Company intends to continue its growth by establishing senior living networks
throughout the United States through a combination of (i) selective acquisitions
of senior living communities, including CCRCs and assisted living residences;
(ii) development of senior living communities, including special living units
and programs for residents with Alzheimer's and other forms of dementia;(iii)
expansion of existing communities; and (iv) selective development and
acquisition of other properties and businesses that are complementary to the
Company's operations and growth strategy. The Company is currently developing 35
senior living communities with an estimated aggregate capacity for approximately
3,600 residents, and is expanding or is planning to commence expansions at six
of its existing communities to add capacity to accommodate a total of
approximately 300 additional residents.
The Company was incorporated under the laws of the State of Tennessee in
February 1997 as a wholly-owned subsidiary of the Predecessor in anticipation of
the Reorganization and the Company's initial public offering. The Company's
principal executive offices are located at 111 Westwood Place, Suite 402,
Brentwood, Tennessee 37027, and its telephone number at that address is (615)
221-2250.
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<PAGE> 13
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges of
certain affiliated partnerships and corporations of the Company (the
"Predecessor Entities"), the Predecessor, and the Company. The ratios as of and
for the years ended December 31, 1993 and 1994 and the three months ended March
31, 1995 are derived from the combined financial statements of the Predecessor
Entities. The ratios as of and for the nine months ended December 31, 1995 and
as of and for the year ended December 31, 1996 are derived from the consolidated
financial statements of the Predecessor. The ratios as of and for the three
months ended March 31, 1997, as of and for the year ended December 31, 1997, and
as of and for the three months ended March 31, 1998 are derived from the
consolidated financial statements of the Company and include the operations of
the Predecessor for the period January 1, 1997 though May 28, 1997 and the
Company for the period May 29, 1997 through March 31, 1998.
<TABLE>
<CAPTION>
COMBINED CONSOLIDATED
--------------------------------- ----------------------------------------------------------
PREDECESSOR ENTITIES PREDECESSOR COMPANY
--------------------------------- ------------------------ ------------------------------
YEARS ENDED YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, THREE MONTHS ENDED DECEMBER 31, MARCH 31,
------------ MARCH 31, NINE MONTHS ENDED ------------ --------------------
1993 1994 1995 DECEMBER 31, 1995 1996 1997 1997 1998
---- ---- ------------------ ----------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios of earnings to fixed
charges(1)(2)............. 1.2x 1.0x 0.5x 1.4x 1.4x 1.3x 1.3x 1.2x
</TABLE>
- ---------------
(1) The ratios of fixed earnings to combined fixed charges and preferred stock
dividends is identical to the ratios of earnings to fixed charges for each
period listed because the Company has not yet issued any shares of Preferred
Stock.
(2) For purposes of this computation, earnings are defined as income (loss)
before income taxes and extraordinary item and fixed charges (excluding
capitalized interest). Fixed charges are defined as interest expensed and
capitalized, amortization of capitalized financing costs, and the portion of
operating lease rental expense that is representative of the interest
factor. Earnings were inadequate to cover fixed charges for the three months
ended March 31, 1995 by $1.2 million.
USE OF PROCEEDS
Unless otherwise specified in a Prospectus Supplement that accompanies this
Prospectus, the net proceeds from the sale of the Securities offered from time
to time hereby will be used to fund possible acquisitions of senior living
communities and businesses engaged in activities similar or complementary to the
Company's business, for the development and construction of additional senior
living communities and expansions of the Company's existing communities, and for
general corporate purposes, including working capital. The Company will not
receive any proceeds from the sale of the Shareholder Shares. See "Selling
Shareholders."
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<PAGE> 14
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 50,000,000 shares of Common Stock, par
value $.01 per share, and 5,000,000 shares of Preferred Stock, no par value per
share. Currently, 11,430,084 shares of Common Stock are issued and outstanding,
no shares of Preferred Stock are outstanding, and 815,500 shares of Common Stock
are reserved for issuance pursuant to outstanding stock options under the
Company's 1997 Stock Incentive Plan. In addition, an aggregate of 5,750,000
shares of Common Stock are reserved for issuance upon conversion of the
Convertible Debentures.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share on all
matters to be voted on by shareholders and are not entitled to cumulative voting
in the election of directors, which means that the holders of a majority of the
shares voting for the election of directors can elect all of the directors then
standing for election by the holders of Common Stock. The holders of Common
Stock are entitled to share ratably in such dividends, if any, as may be
declared from time to time by the Board of Directors in its discretion out of
funds legally available therefor. The holders of Common Stock are entitled to
share ratably in any assets remaining after satisfaction of all prior claims
upon liquidation of the Company. The Company's Charter gives holders of Common
Stock no preemptive or other subscription or conversion rights, and there are no
redemption provisions with respect to such shares. All outstanding shares of
Common Stock are, and the shares offered hereby will be, when issued and paid
for, fully paid and nonassessable. The rights, preferences, and privileges of
holders of Common Stock are subject to, and may be adversely affected by, the
rights of holders of shares of any series of Preferred Stock that the Company
may designate and issue in the future.
The Common Stock is listed on the NYSE. The transfer agent and registrar
for the Common Stock is American Stock Transfer and Trust Company, New York, New
York.
PREFERRED STOCK
General
The following description of the Preferred Stock sets forth certain
anticipated general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any Prospectus Supplement (which terms may be
different than those stated below) will be described in such Prospectus
Supplement. The description of certain provisions of the Preferred Stock set
forth below and in any Prospectus Supplement does not purport to be complete and
is subject to and qualified in its entirety by reference to the Company's
Charter and the Board of Directors' resolution relating to each series of the
Preferred Stock that will be filed with the Commission and incorporated by
reference to the Registration Statement of which this Prospectus is a part at or
prior to the time of the issuance of such series of Preferred Stock.
Under the Charter, the Board of Directors of the Company is authorized to
establish and issue, from time to time, up to 5,000,000 shares of Preferred
Stock, in one or more series, with such dividend rights, dividend rate,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), the redemption price or prices, and the liquidation
preference as shall be stated in the resolution providing for the issue of a
series of such stock, adopted, at any time or from time to time, by the Board of
Directors of the Company.
The Preferred Stock shall have the dividend, liquidation, redemption, and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference is
made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i) the
designation and stated value per share of such Preferred Stock and the number of
shares offered; (ii) the amount of liquidation preference per share; (iii) the
initial public offering price at which such Preferred Stock will be issued; (iv)
the dividend rate (or method of calculation), the dates on which dividends shall
be payable, and the dates from which dividends shall
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<PAGE> 15
commence to cumulate, if any; (v) any redemption or sinking fund provisions;
(vi) any conversion rights; and (vii) any additional voting, dividend,
liquidation, redemption, sinking fund, and other rights, preferences,
privileges, limitations, and restrictions.
The Preferred Stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. Unless otherwise stated in a Prospectus
Supplement relating to a particular series of the Preferred Stock, each series
of the Preferred Stock will rank on a parity as to dividends and distributions
of assets with each other series of the Preferred Stock. The rights of the
holders of each series of Preferred Stock will be subordinate to those of the
Company's general creditors.
The Common Stock is listed on the NYSE. The current rules of the NYSE
effectively preclude the listing on the NYSE of any securities of an issuer that
has issued securities or taken other corporate action that would have the effect
of nullifying, restricting, or disparately reducing the per share voting rights
of holders of an outstanding class or classes of securities registered under
Section 12 of the Exchange Act. The Company does not intend to issue any
additional shares of stock that would make the Common Stock ineligible for
continued listing or cause the Common Stock to be delisted from the NYSE.
Dividend Rights
Unless otherwise stated in a Prospectus Supplement relating to a particular
series of the Preferred Stock, holders of shares of the Preferred Stock of each
series will be entitled to receive, when, as, and if declared by the Board of
Directors of the Company, out of funds of the Company legally available
therefor, cash dividends on such dates and at such rates as will be set forth
in, or as are determined by the method described in, the Prospectus Supplement
relating to such series of the Preferred Stock. Such rate may be fixed or
variable or both. Each such dividend will be payable to the holders of record as
they appear on the stock books of the Company on such record dates, fixed by the
Board of Directors of the Company, as specified in the Prospectus Supplement
relating to such series of Preferred Stock.
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating to such series of Preferred Stock. If the Board
of Directors of the Company fails to declare a dividend payable on a dividend
payment date on any series of Preferred Stock for which dividends are
noncumulative, then the holders of such series of Preferred Stock will have no
right to receive a dividend in respect of the dividend period ending on such
dividend payment date, and the Company shall have no obligation to pay the
dividend accrued for such period, whether or not dividends on such series are
declared payable on any future dividend payment dates. Dividends on the shares
of each series of Preferred Stock for which dividends are cumulative will accrue
from the date on which the Company initially issues shares of such series.
Unless otherwise stated in a Prospectus Supplement relating to a particular
series of the Preferred Stock, so long as the shares of any series of the
Preferred Stock shall be outstanding, unless (i) full dividends (including if
such Preferred Stock is cumulative, dividends for prior dividend periods) shall
have been paid or declared and set apart for payment on all outstanding shares
of the Preferred Stock of such series and all other classes and series of
Preferred Stock (other than Junior Stock, as defined below) and (ii) the Company
is not in default or in arrears with respect to the mandatory or optional
redemption or mandatory repurchase or other mandatory retirement of, or with
respect to any sinking or other analogous fund for, any shares of Preferred
Stock of such series or any shares of any other Preferred Stock of any class or
series (other than Junior Stock), the Company may not declare any dividends on
any shares of Common Stock or any other stock of the Company ranking as to
dividends or distributions of assets junior to such series of Preferred Stock
(the Common Stock and any such other stock being herein referred to as "Junior
Stock"), or make any payment on account of, or set apart money for, the
purchase, redemption, or other retirement of, or for a sinking or other
analogous fund for, any shares of Junior Stock or make any distribution in
respect thereof, whether in cash or property or in obligations or stock of the
Company, other than Junior Stock that is neither convertible into, nor
exchangeable or exercisable for, any securities of the Company other than Junior
Stock.
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<PAGE> 16
Liquidation Preference
In the event of any liquidation, dissolution, or winding up of the Company,
voluntary or involuntary, the holders of each series of the Preferred Stock will
be entitled to receive out of the assets of the Company available for
distribution to shareholders, before any distribution of assets or payment is
made to the holders of Common Stock or any other shares of stock of the Company
ranking junior as to such distribution or payment to such series of Preferred
Stock, the amount set forth in the Prospectus Supplement relating to such series
of the Preferred Stock. Upon any voluntary or involuntary liquidation,
dissolution, or winding up of the Company, the Preferred Stock of such series
and such other shares of Preferred Stock will share ratably in any such
distribution of assets of the Company in proportion to the full respective
preferential amounts to which they are entitled. After payment to the holders of
the Preferred Stock of each series of the full preferential amounts of the
liquidating distribution to which they are entitled, the holders of each such
series of the Preferred Stock will be entitled to no further participation in
any distribution of assets by the Company.
If such payment shall have been made in full to all holders of shares of
Preferred Stock, the remaining assets of the Company shall be distributed among
the holders of any other classes of stock ranking junior to the Preferred Stock
upon liquidation, dissolution, or winding up, according to their respective
rights and preferences and in each case according to their respective number of
shares. For such purposes, the consolidation or merger of the Company with or
into any other corporation, or the sale, lease, or conveyance of all or
substantially all of the property or business of the Company, shall not be
deemed to constitute a liquidation, dissolution, or winding up of the Company.
Redemption
A series of the Preferred Stock may be redeemable, in whole or from time to
time in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms, at
the times and at the redemption prices set forth in the Prospectus Supplement
relating to such series. Shares of the Preferred Stock redeemed by the Company
will be restored to the status of authorized but unissued shares of Preferred
Stock of the Company.
In the event that fewer than all of the outstanding shares of a series of
the Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or pro
rata (subject to rounding to avoid fractional shares) as may be determined by
the Company or by any other method as may be determined by the Company in its
sole discretion to be equitable. From and after the redemption date (unless the
Company defaults in the payment of the redemption price plus accumulated and
unpaid dividends, if any), dividends shall cease to accumulate on the shares of
the Preferred Stock called for redemption and all rights of the holders thereof
(except the right to receive the redemption price plus accumulated and unpaid
dividends, if any) shall cease.
So long as any dividends on shares of any series of the Preferred Stock or
any other series of Preferred Stock of the Company ranking on a parity as to
dividends and distributions of assets with such series of the Preferred Stock
are in arrears, no shares of any such series of the Preferred Stock or such
other series of Preferred Stock of the Company will be redeemed (whether by
mandatory or optional redemption) unless all such shares are simultaneously
redeemed, and the Company will not purchase or otherwise acquire any such
shares; provided, however, that the foregoing will not prevent the purchase or
acquisition of such shares of Preferred Stock of such series or of shares of
such other series of Preferred Stock pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of Preferred Stock
of such series and, unless the full cumulative dividends on all outstanding
shares of any cumulative Preferred Stock of such series and any other stock of
the Company ranking on a parity with such series as to dividends and upon
liquidation shall have been paid or contemporaneously are declared and paid for
all past dividend periods, the Company shall not purchase or otherwise acquire
directly or indirectly any shares of Preferred Stock of such series (except by
conversion into or exchange for stock of the Company ranking junior to the
Preferred Stock of such series as to dividends and upon liquidation).
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<PAGE> 17
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of shares of Preferred
Stock to be redeemed at the address shown on the stock transfer books of the
Company.
Conversion Rights
The terms, if any, on which shares of Preferred Stock of any series may be
exchanged for or converted (mandatorily or otherwise) into shares of Common
Stock or another series of Preferred Stock will be set forth in the Prospectus
Supplement relating thereto.
Voting Rights
Except as indicated below or in a Prospectus Supplement relating to a
particular series of the Preferred Stock, or except as required by applicable
law, the holders of the Preferred Stock will not be entitled to vote for any
purpose.
Unless otherwise stated in a Prospectus Supplement relating to a particular
series of the Preferred Stock, so long as any shares of Preferred Stock remain
outstanding, the Company shall not, without the consent or the affirmative vote
of the holders of a majority of the shares of each series of Preferred Stock
outstanding at the time given in person or by proxy, either in writing or at a
meeting (such series voting separately as a class) (i) authorize, create, or
issue, or increase the authorized or issued amount of, any class or series of
stock ranking prior to such series of Preferred Stock with respect to payment of
dividends, or the distribution of assets on liquidation, dissolution, or winding
up or reclassifying any authorized stock of the Company into any such shares, or
create, authorize, or issue any obligation or security convertible into or
evidencing the right to purchase any such shares and (ii) to repeal, amend, or
otherwise change any of the provisions applicable to the Preferred Stock of such
series in any manner that materially and adversely affects the powers,
preferences, voting power, or other rights or privileges of such series of the
Preferred Stock or the holders thereof; provided, however, that any increase in
the amount of the authorized Preferred Stock or the creation or issuance of
other series of Preferred Stock, or any increase in the amount of authorized
shares of such series or of any other series of Preferred Stock, in each case
ranking on a parity with or junior to the Preferred Stock of such series, shall
not be deemed to materially and adversely affect such rights, preferences,
privileges, or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of the Preferred Stock shall have been
redeemed or called for redemption and sufficient funds shall have been deposited
in trust to effect such redemption.
Transfer Agent and Registrar
The transfer agent, dividend and redemption price disbursement agent, and
registrar for shares of each series of the Preferred Stock will be set forth in
the Prospectus Supplement relating thereto.
CERTAIN PROVISIONS OF THE CHARTER, BYLAWS, AND TENNESSEE LAW
General
The provisions of the Charter, the Bylaws, and Tennessee statutory law
described in this section may delay or make more difficult acquisitions or
changes of control of the Company that are not approved by the Board of
Directors. Such provisions have been implemented to enable the Company,
particularly (but not exclusively) in the initial years of its existence as an
independent, publicly-owned company, to develop its business in a manner that
will foster its long-term growth without the disruption of the threat of a
takeover not deemed by the Board of Directors to be in the best interests of the
Company and its shareholders.
Directors
The Bylaws provide that the number of directors shall be no fewer than
three nor more than fifteen, with the exact number to be established by the
Board of Directors and subject to change from time to time as
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<PAGE> 18
determined by the Board of Directors. Vacancies on the Board of Directors
(including vacancies created by an increase in the number of directors) may be
filled by the Board of Directors, acting by a majority of the remaining
directors then in office, or by a plurality of the votes cast by the
shareholders at a meeting at which a quorum is present. Officers are elected
annually by and serve at the pleasure of the Board of Directors.
The Charter and Bylaws provide that the Board of Directors is divided into
three classes of as nearly equal size as possible, and the term of office of
each class expires in consecutive years so that each year only one class is
elected. The Charter also provides that directors may be removed only for cause
and only by (i) the affirmative vote of the holders of a majority of the voting
power of all the shares of the Company's capital stock then entitled to vote in
the election of directors, voting together as a single class, unless the vote of
a special voting group is otherwise required by law; or (ii) the affirmative
vote of a majority of the entire Board of Directors then in office. The overall
effect of these provisions in the Company's Charter and Bylaws may be to render
more difficult a change in control of the Company or the removal of incumbent
management.
Advance Notice for Shareholder Proposals or Making Nominations at Meetings
The Bylaws establish an advance notice procedure for shareholder proposals
to be brought before a meeting of shareholders of the Company and for
nominations by shareholders of candidates for election as directors at an annual
meeting or a special meeting at which directors are to be elected. Subject to
any other applicable requirements, only such business may be conducted at a
meeting of shareholders as has been brought before the meeting by, or at the
direction of, the Board of Directors, or by a shareholder who has given to the
Secretary of the Company timely written notice, in proper form, of the
shareholder's intention to bring that business before the meeting. The presiding
officer at such meeting has the authority to make such determinations. Only
persons who are selected and recommended by the Board of Directors, or the
committee of the Board of Directors designated to make nominations, or who are
nominated by a shareholder who has given timely written notice, in proper form,
to the Secretary prior to a meeting at which directors are to be elected will be
eligible for election as directors of the Company.
To be timely, notice of nominations or other business to be brought before
any meeting must be received by the Secretary of the Company not later than 120
days in advance of the anniversary date of the Company's proxy statement for the
previous year's annual meeting or, in the case of special meetings, at the close
of business on the tenth day following the date on which notice of such meeting
is first given to shareholders.
The notice of any shareholder proposal or nomination for election as
director must set forth various information required under the Bylaws. The
person submitting the notice of nomination and any person acting in concert with
such person must provide, among other things, the name and address under which
they appear on the Company's books (if they so appear) and the class and number
of shares of the Company's capital stock that are beneficially owned by them.
Amendment of the Bylaws and Charter
The Bylaws provide that a majority of the members of the Board of Directors
who are present at any regular or special meeting or, subject to greater voting
requirements imposed by the Charter, the holders of a majority of the voting
power of all shares of the Company's capital stock represented at a regular or
special meeting have the power to amend, alter, change, or repeal the Bylaws.
Any proposal to amend, alter, change, or repeal provisions of the Charter
relating to staggered terms for directors, and limitations on the ability of
shareholders to call a shareholders' meeting or to remove directors require
approval by the affirmative vote of both a majority of the members of the Board
of Directors then in office and the holders of three-fourths of the voting power
of all of the shares of the Company's capital stock entitled to vote on the
amendments. Other amendments to the Charter require the affirmative vote of both
a majority of the members of the Board of Directors then in office and the
holders of a majority of the voting power of all of the shares of the Company's
capital stock entitled to vote on the amendments, with shareholders entitled to
dissenters' rights as a result of the Charter amendment voting together as a
single class. Shareholders entitled to dissenters' rights as a result of a
Charter amendment are those whose rights
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would be materially and adversely affected because the amendment (i) alters or
abolishes a preferential right of the shares; (ii) creates, alters, or abolishes
a right in respect of redemption; (iii) alters or abolishes a preemptive right;
(iv) excludes or limits the right of the shares to vote on any matter, or to
cumulate votes, other than a limitation by dilution through issuance of shares
or other securities with similar voting rights; or (v) reduces the number of
shares held by such holder to a fraction if the fractional share is to be
acquired for cash. In general, however, under the TBCA no shareholder is
entitled to dissenters' rights if the security he or she holds is listed on a
national securities exchange, such as the NYSE.
Anti-Takeover Legislation
The Tennessee Business Combination Act (the "Combination Act") provides,
among other things, that any corporation to which the Combination Act applies,
including the Company, shall not engage in any "business combination" with an
"interested shareholder" for a period of five years following the date that such
shareholder became an interested shareholder unless prior to such date the board
of directors of the corporation approved either the business combination or the
transaction which resulted in the shareholder becoming an interested
shareholder. The Combination Act defines "business combination," generally, to
mean any: (i) merger or consolidation; (ii) share exchange; (iii) sale, lease,
exchange, mortgage, pledge, or other transfer (in one transaction or a series of
transactions) of assets representing 10% or more of (A) the market value of
consolidated assets, (B) the market value of the corporation's outstanding
shares or (C) the corporation's consolidated net income; (iv) issuance or
transfer of shares from the corporation to the interested shareholder; (v) plan
of liquidation; (vi) transaction in which the interested shareholder's
proportionate share of the outstanding shares of any class of securities is
increased; or (vii) financing arrangements pursuant to which the interested
shareholder, directly or indirectly, receives a benefit except proportionately
as a shareholder. The Combination Act defines "interested shareholder,"
generally, to mean any person who is the beneficial owner, either directly or
indirectly, of 10% or more of any class or series of the outstanding voting
stock, or any affiliate or associate of the corporation who has been the
beneficial owner, either directly or indirectly, of 10% or more of the voting
power of any class or series of the corporation's stock at any time within the
five year period preceding the date in question. Consummation of a business
combination that is subject to the five-year moratorium is permitted after such
period if the transaction (i) complies with all applicable charter and bylaw
requirements and applicable Tennessee law and (ii) is approved by at least
two-thirds of the outstanding voting stock not beneficially owned by the
interested shareholder, or when the transaction meets certain fair price
criteria. The fair price criteria include, among others, the requirement that
the per share consideration received in any such business combination by each of
the shareholders is equal to the highest of (i) the highest per share price paid
by the interested shareholder during the preceding five-year period for shares
of the same class or series plus interest thereon from such date at a treasury
bill rate less the aggregate amount of any cash dividends paid and the market
value of any dividends paid other than in cash since such earliest date, up to
the amount of such interest; (ii) the highest preferential amount, if any, such
class or series is entitled to receive on liquidation; or (iii) the market value
of the shares on either the date the business combination is announced or the
date when the interested shareholder reaches the 10% threshold, whichever is
higher, plus interest thereon less dividends as noted above.
The Tennessee Control Share Acquisition Act (the "Acquisition Act")
prohibits certain shareholders from exercising in excess of 20% of the voting
power in a corporation acquired in a "control share acquisition," as defined in
the Acquisition Act, unless such voting rights have been previously approved by
the disinterested shareholders of the corporation. The Company has elected not
to make the Acquisition Act applicable to the Company. No assurance can be given
that such election, which must be expressed in a charter or bylaw amendment,
will not be made in the future.
The Tennessee Greenmail Act (the "Greenmail Act") prohibits the Company
from purchasing or agreeing to purchase any of its securities, at a price in
excess of fair market value, from a holder of 3% or more of any class of such
securities who has beneficially owned such securities for less than two years,
unless such purchase has been approved by the affirmative vote of a majority of
the outstanding shares of each class of
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voting stock issued by the Company or the Company makes an offer of at least
equal value per share to all holders of shares of such class.
The effect of the Combination Act, the Acquisition Act, and the Greenmail
Act may be to render more difficult a change of control of the Company.
REGISTRATION RIGHTS
Certain beneficial holders of shares of Common Stock issued pursuant to the
Reorganization have contractual rights with respect to the registration of the
sale thereof. Holders of shares of Common Stock issued in the Reorganization
that may not otherwise be sold pursuant to Rule 144 of the Securities Act are
entitled to two demand registrations upon the written demand to the Company to
register the sale of 25% or more of such shares; provided, however, that in no
event will any holder of such shares participating in such demand registrations
be permitted to sell in excess of 20% of such holder's shares. In addition,
until May 30, 1999, holders of shares of Common Stock issued in the
Reorganization that may not otherwise be sold pursuant to Rule 144 of the
Securities Act may require the Company to include all or a portion of such
holder's Reorganization Shares in a registration statement filed by the Company
for its own account to issue Common Stock for cash, provided, among other
conditions, that the managing underwriter (if any) of such offering has the
right, subject to certain conditions, to limit the number of such shares or
other shares of Common Stock subject to registration rights granted by the
Company included in such registration statement. In general, all fees, costs,
and expenses of such registrations (other than the underwriting commissions,
dealers' fees, brokers' fees, and concessions applicable to Common Stock) will
be borne by the Company.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an indenture (the "Indenture")
to be executed by the Company and a specified trustee (the "Trustee"), a form of
which has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The following summaries of certain anticipated provisions
of the Indenture and the Debt Securities do not purport to be complete. The
particular terms of the Debt Securities offered by any Prospectus Supplement
(which terms may be different than those stated below) and the extent, if any,
to which such general provisions may apply to the Debt Securities so offered
will be described in the Prospectus Supplement relating to such Debt Securities.
Accordingly, for a description of the terms of a particular issue of Debt
Securities, reference must be made to both the Prospectus Supplement relating
thereto and the following description. Capitalized terms not otherwise defined
herein shall have the meaning ascribed to them in the Indenture. Whenever
particular sections or defined terms of the Indenture are referred to, it is
intended that such sections or defined terms shall be incorporated herein by
reference.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued thereunder and provides that Debt Securities may
be issued from time to time in one or more series. The Prospectus Supplement
will describe certain terms of any Debt Securities offered thereby, including
(i) the title of such Debt Securities; (ii) any limit on the aggregate principal
amount of such Debt Securities and their purchase price; (iii) the date or dates
on which such Debt Securities will mature; (iv) the rate or rates per annum (or
manner in which interest is to be determined) at which such Debt Securities will
bear interest, if any, and the date from which such interest, if any, will
accrue; (v) the dates on which such interest, if any, on such Debt Securities
will be payable and the regular record dates for such interest payment dates;
(vi) any mandatory or optional sinking fund or analogous provisions; (vii)
additional provisions, if any, for the defeasance of such Debt Securities;
(viii) the date, if any, after which and the price or prices at which such Debt
Securities may, pursuant to any optional or mandatory redemption or repayment
provisions, be redeemed and the other detailed terms and provisions of any such
optional or mandatory redemption or repayment provisions; (ix) whether such Debt
Securities are to be issued in whole or in part in registered form represented
by one or more registered global securities (a "Registered Global Security")
and, if so, the
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identity of the depository for such Registered Global Security or Debt
Securities; (x) certain applicable United States federal income tax
consequences; (xi) any provisions relating to security for payments due under
such Debt Securities; (xii) any provisions relating to the conversion or
exchange of such Debt Securities into or for shares of Common Stock or Debt
Securities of another series; (xiii) any provisions relating to the ranking of
such Debt Securities in right of payment as compared to other obligations of the
Company; (xiv) the denomiations in which such Debt Securities are authorized to
be issued; (xv) the place or places where principal of, premium, if any, and
interest, if any, on such Debt Securities will be payable; and (xvi) any other
specific term of such Debt Securities, including any additional events of
default or covenants provided for with respect to such Debt Securities, and any
terms that may be required by or advisable under applicable laws or regulations.
The Indenture does not contain any provision requiring the Company to
repurchase the Debt Securities of any series at the option of the holders
thereof in the event of a leveraged buyout, recapitalization or similar
restructuring of the Company, even though the Company's creditworthiness and the
market value of the Debt Securities may decline significantly as a result of
such transaction. The Indenture does not protect holders of the Debt Securities
of any series against any decline in credit quality, whether resulting from any
such transaction or from any other cause. The Company may at any time buy Debt
Securities of any series on the open market.
CONVERSION RIGHTS
The terms, if any, on which Debt Securities of any series may be exchanged
for or converted into shares of Common Stock or Debt Securities of another
series will be set forth in the Prospectus Supplement relating thereto.
The conversion price will be subject to adjustment under certain
conditions, including (i) the payment of dividends (and other distributions) in
shares of Common Stock on any class of capital stock of the Company; (ii)
subdivisions, combinations, and reclassifications of the Common Stock; (iii) the
issuance to all or substantially all holders of Common Stock of rights or
warrants entitling them to subscribe for or purchase shares of Common Stock at a
price per share (or having a conversion price per share) less than the then
current market price; and (iv) distributions to all or substantially all holders
of shares of Common Stock of evidences of indebtedness or assets (including
securities, but excluding those rights, warrants, dividends, and distributions
referred to above and dividends and distributions not prohibited under the terms
of the Indenture) of the Company, subject to the limitation that all adjustments
by reason of any of the foregoing would not be made until they result in a
cumulative change in the conversion price of at least 1.0%. No adjustments in
the conversion price of the Debt Securities will be made for regular quarterly
or other periodic or recurring cash dividends or distributions. In the event the
Company shall effect any capital reorganization or reclassification of its
shares of Common Stock or shall consolidate or merge with or into any trust or
corporation (other than a consolidation or merger in which the Company is the
surviving entity) or shall sell or transfer substantially all of its assets to
any other trust or corporation, the holders of the Debt Securities of any series
shall, if entitled to convert such Debt Securities at any time after such
transaction, receive upon conversion thereof, in lieu of each share of Common
Stock into which the Debt Securities of such series would have been convertible
prior to such transaction, the same kind and amount of stock and other
securities, cash, or property as shall have been issuable or distributable in
connection with such transaction with respect to each share of Common Stock.
A conversion price adjustment made according to the provisions of the Debt
Securities of any series (or the absence of provisions for such an adjustment)
might result in a constructive distribution to the holders of Debt Securities of
such series or holders of shares of Common Stock that would be subject to
taxation as a dividend. The Company may, at its option, make such reductions in
the conversion price, in addition to those set forth above, as the Board of
Directors of the Company deems advisable to avoid or diminish any income tax to
holders of shares of Common Stock resulting from any dividend or distribution of
shares of Common Stock (or rights to acquire shares of Common Stock) or from any
event treated as such for income tax purposes or for any other reason. The Board
of Directors will also have the power to resolve any ambiguity or
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correct any error in the adjustments made pursuant to these provisions and its
actions in so doing shall be final and conclusive.
Fractional shares of Common Stock will not be issued upon conversion but,
in lieu thereof, the Company will pay a cash adjustment based upon market price.
The holders of Debt Securities of any series at the close of business on an
interest payment record date shall be entitled to receive the interest payable
on such Debt Securities on the corresponding interest payment date
notwithstanding the conversion thereof. Debt Securities surrendered for
conversion during the period from the close of business on any record date for
the payment of interest to the opening of business on the corresponding interest
payment date, however, must be accompanied by payment of an amount equal to the
interest payable on such interest payment date. Holders of Debt Securities of
any series who convert Debt Securities of such series on an interest payment
date will receive the interest payable by the Company on such date and need not
include payment in the amount of such interest upon surrender of such Debt
Securities for conversion. Except as set forth above, no payment or adjustment
is to be made on conversion for interest accrued on the Debt Securities of any
series or for dividends on shares of Common Stock.
OPTIONAL REDEMPTION
The Debt Securities of any series may be subject to redemption as permitted
or required by the terms of such Debt Securities on at least 30 days' prior
notice by mail.
SUBORDINATION
The indebtedness evidenced by the Debt Securities of any series may be
subordinated and junior in right of payment to the extent set forth in the
Indenture to the prior payment in full of amounts then due or thereafter created
on all Senior Indebtedness (as defined). The terms, if any, on which the Debt
Securities of any series may be subordinated and junior in right of payment to
the prior payment in full of amounts then due or thereafter created on all
Senior Indebtedness will be set forth in the Prospectus Supplement relating
thereto. No payment shall be made by the Company on account of principal of (or
premium, if any) or interest on the Debt Securities of any series or on account
of the purchase or other acquisition of Debt Securities of any series, if there
shall have occurred and be continuing a default with respect to any Senior
Indebtedness permitting the holders to accelerate the maturity thereof or with
respect to the payment of any Senior Indebtedness, and such default shall be the
subject of a judicial proceeding or the Company shall have received notice of
such default from any holder of Senior Indebtedness, unless and until such
default or event of default shall have been cured or waived or shall have ceased
to exist. By reason of these provisions, in the event of default on any Senior
Indebtedness, whether now outstanding or hereafter issued, payment of principal
of (and premium, if any) and interest on the Debt Securities of any series may
not be permitted to be made until such Senior Indebtedness is paid in full, or
the event of default on such Senior Indebtedness is cured or waived.
Upon any acceleration of the principal of the Debt Securities or any
distribution of assets of the Company upon any receivership, dissolution,
winding-up, liquidation, reorganization, or similar proceedings of the Company,
whether voluntary or involuntary, or in bankruptcy or insolvency, all amounts
due or to become due upon all Senior Indebtedness must be paid in full before
the holders of the Debt Securities of any series or the Trustee are entitled to
receive or retain any assets so distributed in respect of the Debt Securities.
By reason of this provision, in the event of insolvency, holders of the Debt
Securities of any series may recover less, ratably, than holders of Senior
Indebtedness.
"Senior Indebtedness" is defined to mean the principal, premium, if any,
and interest on, and all other amounts payable under or in respect of,
Indebtedness of the Company (other than Indebtedness owed to a subsidiary of the
Company, Indebtedness of the Company that is expressly pari passu with the Debt
Securities, or Indebtedness that is expressly subordinated to the Debt
Securities). There is no limit on the amount of Senior Indebtedness that the
Company may incur.
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"Indebtedness" with respect to any Person is defined to mean:
(i) all indebtedness for money borrowed whether or not evidenced by a
promissory note, draft, or similar instrument;
(ii) that portion of obligations with respect to any lease that is
properly classified as a liability on a balance sheet in accordance with
generally accepted accounting principles;
(iii) notes payable and drafts accepted representing extensions of
credit;
(iv) any balance owed for all or any part of the deferred purchase
price of property or services, which purchase price is due more than six
months from the date of incurrence of the obligation in respect thereof
(except any such balance that constitutes (a) a trade payable or an accrued
liability arising in the ordinary course of business or (b) a trade draft
or note payable issued in the ordinary course of business in connection
with the purchase of goods or services), if and to the extent such debt
would appear as a liability upon a balance sheet of such person prepared in
accordance with generally accepted accounting principles;
(v) tenant deposits;
(vi) any debt of others described in the preceding clauses (i) though
(v) that such person has guaranteed or for which it is otherwise liable;
and
(vii) any deferral, amendment, renewal, extension, supplement, or
refunding of any of the foregoing indebtedness described in any of the
preceding clauses (i) through (vi);
provided, however, that, in computing the "Indebtedness" of any Person, there
shall be excluded any particular indebtedness if, upon or prior to the maturity
thereof and at the time of determination of such indebtedness, there shall have
been deposited with a depositary in trust money (or evidence of indebtedness if
permitted by the instrument creating such indebtedness) in the necessary amount
to pay, redeem, or satisfy such indebtedness as it becomes due, and the amount
so deposited shall not be included in any computation of the assets of such
Person.
DIVIDENDS, DISTRIBUTIONS, AND ACQUISITIONS OF COMMON STOCK
The Company will not (i) declare or pay any dividend, or make any
distribution on its Common Stock to its shareholders (other than dividends or
distributions payable in Common Stock of the Company) or (ii) purchase, redeem,
or otherwise acquire or retire for value any of its Common Stock, or any
warrants, rights, or options to purchase or acquire any shares of its Common
Stock (other than the Debt Securities of any series or any other convertible
indebtedness of the Company that is neither secured nor subordinated to the Debt
Securities of any series), if at the time of such action an Event of Default has
occurred and is continuing or would exist immediately after such action. The
foregoing, however, will not prevent (i) the payment of any dividend within 60
days after the date of declaration when the payment would have complied with the
foregoing provision on the date of declaration; or (ii) the Company's retirement
of any of its Common Stock by exchange for, or out of the proceeds of the
substantially concurrent sale of, other Common Stock.
ADDITIONAL COVENANTS
Any additional covenants of the Company with respect to a series of the
Debt Securities will be set forth in the Prospectus Supplement relating thereto.
MODIFICATION OF THE INDENTURE
Under the Indenture, with certain exceptions, the rights and obligations of
the Company with respect to any series of Debt Securities and the rights of
Holders of such series may only be modified by the Company and the Trustee with
the consent of the Holders of at least a majority in principal amount of the
outstanding Debt Securities of such series. Without the consent of each Holder
of any Debt Securities affected, however,
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an amendment, waiver, or supplement may not (i) reduce the principal of, or rate
of interest on, any Debt Securities; (ii) change the stated maturity date of the
principal of, or any installment of interest on, any Debt Securities; (iii)
waive a default in the payment of the principal amount of, or the interest on,
or any premium payable on redemption of, any Debt Securities; (iv) change the
currency for payment of the principal of, or premium or interest on, any Debt
Securities; (v) impair the right to institute suit for the enforcement of any
such payment when due; (vi) adversely affect any right to convert any Debt
Securities; (vii) reduce the amount of outstanding Debt Securities necessary to
consent to an amendment, supplement, or waiver provided for in the Indenture; or
(viii) modify any provisions of the Indenture relating to the modification and
amendment of the Indenture or waivers of past defaults, except as otherwise
specified.
EVENTS OF DEFAULT, NOTICE, AND WAIVER
Except as otherwise set forth in the accompanying Prospectus Supplement,
the following is a summary of certain provisions of the Indenture relating to
Events of Default, notice, and waiver.
The following are Events of Default under the Indenture with respect to any
series of Debt Securities: (i) default in the payment of interest on the Debt
Securities of such series when due and payable, which continues for 30 days;
(ii) default in the payment of principal of (and premium, if any) on the Debt
Securities when due and payable, at maturity, upon redemption, or otherwise,
which continues for five Business Days; (iii) failure to perform any other
covenant of the Company contained in the Indenture or the Debt Securities of
such series that continues for 60 days after written notice as provided in the
Indenture; (iv) default under any bond, debenture or other Indebtedness (as
defined in the Indenture) of the Company or any subsidiary if (a) either (x)
such Event of Default results from the failure to pay any such Indebtedness at
maturity or (y) as a result of such Event of Default, the maturity of such
Indebtedness has been accelerated prior to its expressed maturity and such
acceleration shall not be rescinded or annulled or the accelerated amount paid
within ten days after notice to the Company of such acceleration, or such
Indebtedness having been discharged, and (b) the principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
in default for failure to pay principal or interest thereon, or the maturity of
which has been so accelerated, aggregates $10.0 million or more; and (v) certain
events of bankruptcy, insolvency, or reorganization relating to the Company.
If an Event of Default occurs and is continuing with respect to the Debt
Securities of any series, either the Trustee or the Holders of a majority in
aggregate principal amount of the outstanding Debt Securities of such series may
declare the Debt Securities due and payable immediately.
The Indenture provides that the Trustee will, within 90 days after the
occurrence of any Default or Event of Default with respect to the Debt
Securities of any series, give to the Holders of Debt Securities notice of all
uncured Defaults and Events of Default known to it, but the Trustee will be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of such Holders, except in the
case of a default in the payment of the principal of (or premium, if any) or
interest on any of the Debt Securities of such series.
The Indenture provides that the Holders of a majority in aggregate
principal amount of the Debt Securities of any series then outstanding may
direct the time, method, and place of conducting any proceedings for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee with respect to the Debt Securities of such series. The right of a
Holder to institute a proceeding with respect to the Indenture is subject to
certain conditions precedent including notice and indemnity to the Trustee, but
the Holder has an absolute right to receipt of principal of (and premium, if
any) and interest on such Holder's Debt Securities on or after the respective
due dates expressed in the Debt Securities, and to institute suit for the
enforcement of any such payments.
The Holders of a majority in principal amount of the outstanding Debt
Securities of any series then outstanding may on behalf of the Holders of all
Debt Securities of such series waive certain past defaults, except a default in
payment of the principal of (or premium, if any) or interest on any Debt
Securities of such series or in respect of certain provisions of the Indenture
that cannot be modified or amended without the consent of the Holder of each
outstanding Debt Security of such series affected thereby.
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The Company will be required to furnish to the Trustee annually a statement
of certain officers of the Company stating whether or not they know of any
Default or Events of Default and, if they have knowledge of a Default or Event
of Default, a description of the efforts to remedy the same.
CONSOLIDATION, MERGER, SALE, OR CONVEYANCE
The Indenture provides that the Company may merge or consolidate with, or
sell or convey all, or substantially all, of its assets to any other trust or
corporation, provided that (i) either the Company shall be the continuing
entity, or the successor entity (if other than the Company) shall be any entity
organized and existing under the laws of the United States or a state thereof or
the District of Columbia (although it may, in truth, be owned by a foreign
entity) and such entity shall expressly assume by supplemental indenture all of
the obligations of the Company under the Debt Securities of any series and the
Indenture; (ii) immediately after giving effect to such transactions, no Default
or Event of Default shall have occurred and be continuing; and (iii) the Company
shall have delivered to the Trustee an Officers' Certificate and opinion of
counsel, stating that the transaction and supplemental indenture comply with the
Indenture.
GLOBAL SECURITIES
The Debt Securities may be issued in whole or in part in global form (the
"Global Securities"). The Global Securities will be deposited with a depository
(the "Depository"), or with a nominee for a Depository, identified in the
Prospectus Supplement. In such case, one or more Global Securities will be
issued in a denomination or aggregate denominations equal to the portion of the
aggregate principal amount of outstanding Debt Securities to be represented by
such Global Security or Securities. Unless and until it is exchanged in whole or
in part for Debt Securities in definitive form, a Global Security may not be
transferred except as a whole by the Depository for such Global Security to a
nominee of such Depository or by a nominee of such Depository to such Depository
or another nominee of such Depository or by such Depository or any such nominee
to a successor for such Depository or a nominee of such successor.
The specific material terms of the depository arrangement with respect to
any portion of a series of Debt Securities to be represented by a Global
Security will be described in the Prospectus Supplement related thereto. The
Company anticipates that the following provisions will apply to all depository
arrangements.
So long as the Depository for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depository or such nominee as the
case may be, will be considered the sole owner or Holder of the Debt Securities
represented by such Global Security for all purposes under the Indenture;
provided, however, that for purposes of obtaining any consents or directions
required to be given by the Holders of the Debt Securities, the Company, the
Trustee, and its agents will treat a person as the holder of such principal
amount of Debt Securities as specified in a written statement of the Depository.
Principal, premium, if any, and interest payments, if any, on Debt
Securities represented by a Global Security registered in the name of a
Depository or its nominee will be made directly to the owners of beneficial
interests of such Global Security, except as may be limited by the terms of the
resolution of the Board of Directors of the Company that authorizes such series
of Debt Securities.
The Company expects that the depository for any Debt Securities represented
by a Global Security, upon receipt of any payment of principal, premium, if any,
or interest will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of such Depository. The
Company also expects that payments by participants will be governed by standing
instructions and customary practices, as is now the case with the securities
held for the accounts of customers registered in "street names," and will be the
responsibility of such participants.
If the Depository for any Debt Securities represented by a Global Security
is at any time unwilling or unable to continue as Depository and a successor
Depository is not appointed by the Company within 90 days, the Company will
issue each Debt Security in definitive form to the beneficial owners thereof in
exchange for such Global Security. In addition, the Company may at any time and
in its sole discretion determine not to
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have any of the Debt Securities of a series represented by one or more Global
Securities and, in such event, will issue Debt Securities of such series in
definitive form in exchange for all of the Global Security or Securities
representing such Debt Securities.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by and construed in
accordance with the laws of the State of New York.
25
<PAGE> 27
SELLING SHAREHOLDERS
The following table sets forth certain information with respect to the
maximum number of shares that may be offered for sale by the Selling
Shareholders, as well as the beneficial ownership of the Common Stock as of July
7, 1998 and as adjusted to reflect the sale of all of the Shareholder Shares
with respect to each of the Selling Shareholders. This table does not reflect
any changes in beneficial ownership that would result from the sale of shares of
Common Stock by the Company. Under the rules of the Commission, a person is
deemed to be a "beneficial owner" of a security if he or she has or shares the
power to vote or direct the voting of such security or the power to dispose of
or direct the disposition of such security. Accordingly, more than one person
may be deemed to be a beneficial owner of the same security. Certain of the
Shareholder Shares offered in connection with an underwritten Offering of shares
of Common Stock by the Company may be offered pursuant to an over-allotment
option granted to the underwriters. The applicable Prospectus Supplement will
supplement the information set forth in the following table when any portion of
the Shareholder Shares are offered in connection with an underwritten Offering
of shares of Common Stock by the Company.
<TABLE>
<CAPTION>
MAXIMUM SHARES BENEFICIALLY
SHARES BENEFICIALLY NUMBER OF OWNED AFTER THE SALE
OWNED PRIOR TO THE SHARES OF ALL THE SHAREHOLDER
OFFERINGS(1)(2) TO BE SOLD SHARES
------------------------ IN THE -----------------------
NAME NUMBER PERCENT OFFERINGS NUMBER PERCENT
- ---- --------- ------- --------------- ---------- --------
<S> <C> <C> <C> <C> <C>
EXECUTIVE OFFICERS:
W.E. Sheriff.......................................... 639,217(3)(4) 5.6 20,000(5) 619,217 5.4
Christopher J. Coates................................. 258,303(6) 2.3 21,860(7) 236,443 2.1
Tom G. Downs.......................................... 122,953(6) 1.1 30,360(7) 92,593 *
George T. Hicks....................................... 182,505(6) 1.6 37,860(7) 144,645 1.3
H. Todd Kaestner...................................... 191,910(6) 1.7 38,287(7) 153,623 1.3
Lee A. McKnight....................................... 118,968(6) 1.0 30,360(7) 88,608 *
James T. Money........................................ 186,918(6) 1.6 37,860(7) 149,058 1.3
DIRECTORS:
Robin G. Costa........................................ 1,443,259(8)(9) 12.6 48,222(10) 1,395,037 12.2
Lawrence J. Stuesser.................................. 72,547(11) * 7,547(12) 65,000 *
OTHER SELLING SHAREHOLDERS:
Joseph H. Baron....................................... 50,111 * 11,000 39,111 *
William H. Frist Annuity Trust -- 1997................ 329,677 2.9 50,000 279,677 2.4
Davis Hunt............................................ 14,560 * 3,000 11,560 *
Don Husi.............................................. 40,755 * 5,000 35,755 *
Sylvester I, L.P...................................... 14,804 * 14,804 -- --
</TABLE>
- ---------------
* Less than one percent.
(1) Pursuant to the rules of the Commission, shares of Common Stock that
certain persons presently have the right to acquire pursuant to the
conversion provisions of the Debentures ("Conversion Shares") are deemed
outstanding for the purpose of computing such person's percentage
ownership, but not deemed outstanding for the purpose of computing the
percentage ownership of the other persons shown in the table. Likewise,
shares subject to options held by directors and executive officers of the
Company that are exercisable within 60 days of the date hereof are deemed
outstanding for the purpose of computing such director's and executive
officer's beneficial ownership.
(2) Includes the following shares of Common Stock issuable upon the exercise of
options granted pursuant to the Company's 1997 Stock Incentive Plan which
the following persons are entitled to exercise within 60 days of the date
hereof: Mr. Sheriff, 20,000; Mr. Coates, 15,000; each of Messrs. Hicks,
Kaestner, and Money, 11,666; each of Ms. Costa and Mr. Stuesser, 5,000;
each of Messrs. Downs and McKnight, 6,666; and each of Messrs. Baron, Hunt,
and Husi, 3,333.
(3) Address: 111 Westwood Place, Suite 402, Brentwood, Tennessee 37027.
(4) Includes 324,519 shares, including 4,166 Conversion Shares, beneficially
owned by W.E. Sheriff Family Limited Partnership, of which Mr. Sheriff is a
general partner.
(5) All shares to be sold by W.E. Sheriff Family Limited Partnership. See Note
4.
(6) Includes 1,860 shares beneficially owned by Sylvester I, L.P. ("Sylvester
I") as to which such person holds a pecuniary interest.
(7) Includes up to 1,860 shares that may be sold by Sylvester I. See Note 6.
(8) Address: 3833 Cleghorn Avenue, Suite 400, Nashville, Tennessee 37215.
(9) Includes 1,372,037 shares beneficially owned by DMAR Limited Partnership
("DMAR"). Ms. Costa is a Vice President of Margaret Energy, Inc., the
general partner of DMAR. Also includes an aggregate of 18,000 shares
beneficially owned by trusts as to which Ms. Costa exercises voting and
dispositive power and 48,222 shares held by the estate of Dan W. Maddox
(the "Maddox Estate") as to which Ms. Costa is co-executor.
26
<PAGE> 28
(10) All shares to be sold by the Maddox Estate. See Note 9.
(11) Includes 67,547 shares beneficially owned by B&W Development Centers, Inc.,
a corporation of which Mr. Stuesser is a director and 50% shareholder.
(12) All shares to be sold by B&W Development Centers, Inc. See Note 11.
PLAN OF DISTRIBUTION
The Company may sell Securities in any of three ways: (i) directly to
investors; (ii) through underwriting syndicates represented by one or more
managing underwriters, or by one or more underwriters without a syndicate; or
(iii) through agents designated from time to time. The names of any underwriters
or agents of the Company involved in the sale of the Securities in respect of
which this Prospectus is being delivered and any applicable commissions or
discounts will be set forth in the Prospectus Supplement. The net proceeds to
the Company from each such sale will also be set forth in the Prospectus
Supplement.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments that the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may engage in transactions with or perform
services for the Company in the ordinary course of business.
The Shareholder Shares will be offered pursuant to this Prospectus and an
accompanying Prospectus Supplement only in connection with an underwritten
Offering of shares of Common Stock by the Company. Information relating to the
number of shares of Common Stock being sold by each Selling Shareholder and the
net proceeds to the Selling Shareholders will be set forth in the accompanying
Prospectus Supplement.
LEGAL MATTERS
The validity of the Securities offered from time to time hereby will be
passed upon for the Company and the Selling Shareholders by Bass, Berry & Sims
PLC, Nashville, Tennessee. H. Lee Barfield II, a member of Bass, Berry & Sims
PLC, is a director of the Company. Mr. Barfield and his wife and children
beneficially own 625,577 shares of Common Stock.
27
<PAGE> 29
EXPERTS
The Consolidated and Combined Financial Statements of American Retirement
Corporation and subsidiaries and American Retirement Communities, L.P. and its
consolidated entities as of December 31, 1997 and 1996, for each of the years
ended December 31, 1997 and 1996, for the three months ended March 31, 1995, and
the nine months ended December 31, 1995 have been incorporated by reference
herein and in the registration statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing. The report of KPMG Peat Marwick LLP covering the Consolidated and
Combined Financial Statements contains an explanatory paragraph that refers to a
change in the presentation of the cost basis of financial information for
periods subsequent to a purchase business combination effected on April 1, 1995.
The Combined Financial Statements of Freedom Group, Inc. and subsidiaries
and Freedom Village of Holland, Michigan, a general partnership, as of December
31, 1997 and for the year then ended have been incorporated by reference herein
and in the registration statement in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
28
<PAGE> 30
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFERING
COVERED BY THIS PROSPECTUS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON. NEITHER THE DELIVERY
OF THIS PROSPECTUS OR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES
OTHER THAN THE SECURITIES TO WHICH IT RELATES, OR AN OFFER TO, OR SOLICITATION
OF, ANY PERSON IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 3
Risk Factors......................... 4
Forward-Looking Statements........... 10
The Company.......................... 11
Ratios of Earnings to Fixed
Charges............................ 12
Use of Proceeds...................... 12
Description of Capital Stock......... 13
Description of Debt Securities....... 19
Selling Shareholders................. 26
Plan of Distribution................. 27
Legal Matters........................ 27
Experts.............................. 28
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
AMERICAN RETIREMENT CORPORATION (LOGO)
SECURITIES
------------------------
PROSPECTUS
------------------------
, 1998
------------------------------------------------------
------------------------------------------------------
<PAGE> 31
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the aggregate estimated costs and expenses
of the Registrant based upon the number of Offerings currently contemplated to
be made under the Registration Statement.
<TABLE>
<S> <C>
SEC registration fee........................................ $ 103,250
NYSE fee.................................................... 65,000
Accounting fees and expenses................................ 250,000
Legal fees and expenses..................................... 500,000
Printing and engraving expenses............................. 400,000
Blue Sky fees and expenses.................................. 10,000
Transfer agent fees and expenses............................ 10,000
Trustee's Fees and Expenses................................. 20,000
Miscellaneous expenses...................................... 391,750
----------
Total............................................. $1,750,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Tennessee Business Corporation Act ("TBCA") provides that a corporation
may indemnify any director or officer against liability incurred in connection
with a proceeding if (i) the director or officer acted in good faith, (ii) the
director or officer reasonably believed, in the case of conduct in his or her
official capacity with the corporation, that such conduct was in the
corporation's best interest, or, in all other cases, that his or her conduct was
not opposed to the best interests of the corporation, and (iii) in connection
with any criminal proceeding, the director or officer had no reasonable cause to
believe that his or her conduct was unlawful. In actions brought by or in the
right of the corporation, however, the TBCA provides that no indemnification may
be made if the director or officer is adjudged to be liable to the corporation.
Similarly, the TBCA prohibits indemnification in connection with any proceeding
charging improper personal benefit to a director or officer, if such director or
officer is adjudged liable on the basis that a personal benefit was improperly
received. In cases where the director or officer is wholly successful, on the
merits or otherwise, in the defense of any proceeding instigated because of his
or her status as a director or officer of a corporation, the TBCA mandates that
the corporation indemnify the director or officer against reasonable expenses
incurred in the proceeding. Notwithstanding the foregoing, the TBCA provides
that a court of competent jurisdiction, upon application, may order that a
director or officer be indemnified for reasonable expense if, in consideration
of all relevant circumstances, the court determines that such individual is
fairly and reasonably entitled to indemnification, whether or not the standard
of conduct set forth above was met.
The Charter and Bylaws of the Company provide that the Company will
indemnify from liability, and advance expenses to, any present or former
director or officer of the Company to the fullest extent allowed by the TBCA, as
amended from time to time, or any subsequent law, rule, or regulation adopted in
lieu thereof. Additionally, the Charter provides that no director of the Company
will be personally liable to the Company or any of its shareholders for monetary
damages for breach of any fiduciary duty except for liability arising from (i)
any breach of a director's duty of loyalty to the Company or its shareholders,
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) any unlawful distributions, or (iv)
receiving any improper personal benefit.
The Company has purchased a directors and officers insurance policy
providing for $10.0 million in coverage for certain liabilities of the Company's
directors and officers. The policy expires in May 2000.
II-1
<PAGE> 32
The proposed form of the Underwriting Agreement to be filed as Exhibit 1 to
this Registration Statement contains certain provisions relating to the
indemnification of the Company and its controlling persons by the Underwriters
and relating to the indemnification of the Underwriters by the Company and its
controlling persons.
ITEM 16. EXHIBITS.
(a) The following exhibits are filed as part of the Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1 -- Form of Underwriting Agreement
2.1 -- Limited Partnership Agreement of American Retirement
Communities, L.P., dated February 7, 1995, as amended April
1, 1995*
2.2 -- Articles of Share Exchange between American Retirement
Communities, L.P., and American Retirement Corporation,
dated March 31, 1995 (including attached Plan and Agreement
of Share Exchange)*
2.3 -- Reorganization Agreement, dated February 28, 1997*
4.1 -- Specimen Common Stock certificate*
4.2 -- Article 8 of the Charter of the Registrant*
4.3 -- Form of Indenture between the Company and IBJ Schroder Bank
and Trust Company, as Trustee, relating to the 5 3/4%
Convertible Subordinated Debentures Due 2002 of the
Company**
4.4 -- Form of Indenture between the Company and a Trustee relating
to the Debt Securities that are, among other securities, the
subject of this Registration Statement
5 -- Opinion of Bass, Berry & Sims PLC***
12 -- Computation of ratios of earnings to fixed charges***
23.1 -- Consent of KPMG Peat Marwick LLP
23.2 -- Consent of KPMG Peat Marwick LLP
23.3 -- Consent of Bass, Berry & Sims PLC (included in Exhibit 5)
24 -- Power of Attorney (included on page II-4)***
99 -- Consent of Robert G. Roskamp
</TABLE>
- ---------------
* Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (Registration No. 333-23197).
** Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (Registration No. 333-34339).
*** Previously filed.
(b) Financial Statement Schedules
Not applicable
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore have
been omitted.
II-2
<PAGE> 33
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
provided, however, that clauses (1)(i) and (1)(ii) do not apply if this
Registration Statement is on Form S-3, and the information required to be
included in the post-effective amendment by those clauses is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Brentwood, State of Tennessee, on this 8th day of
July, 1998.
AMERICAN RETIREMENT CORPORATION
By: /s/ W.E. SHERIFF
------------------------------------
W.E. Sheriff
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ W.E. SHERIFF Chairman and Chief Executive July 8, 1998
- ----------------------------------------------------- Officer (Principal Executive
W.E. Sheriff Officer)
/s/ GEORGE T. HICKS Executive Vice President -- July 8, 1998
- ----------------------------------------------------- Finance, Chief Financial
George T. Hicks Officer (Principal Financial
and Accounting Officer)
* Director July 8, 1998
- -----------------------------------------------------
H. Lee Barfield II
* Director July 8, 1998
- -----------------------------------------------------
Jack O. Bovender, Jr.
* Director July 8, 1998
- -----------------------------------------------------
Frank M. Bumstead
* Director July 8, 1998
- -----------------------------------------------------
Christopher J. Coates
Director
- -----------------------------------------------------
Robin G. Costa
* Director July 8, 1998
- -----------------------------------------------------
Clarence Edmonds
* Director July 8, 1998
- -----------------------------------------------------
John A. Morris, Jr., M.D.
* Director July 8, 1998
- -----------------------------------------------------
Daniel K. O'Connell
</TABLE>
II-4
<PAGE> 35
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director July 8, 1998
- -----------------------------------------------------
Nadine C. Smith
* Director July 8, 1998
- -----------------------------------------------------
Lawrence J. Stuesser
* /s/ GEORGE T. HICKS
- -----------------------------------------------------
George T. Hicks, Attorney-in-fact
</TABLE>
II-5
<PAGE> 36
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1 -- Form of Underwriting Agreement
2.1 -- Limited Partnership Agreement of American Retirement
Communities, L.P., dated February 7, 1995, as amended April
1, 1995*
2.2 -- Articles of Share Exchange between American Retirement
Communities, L.P., and American Retirement Corporation,
dated March 31, 1995 (including attached Plan and Agreement
of Share Exchange)*
2.3 -- Reorganization Agreement, dated February 28, 1997*
4.1 -- Specimen Common Stock certificate*
4.2 -- Article 8 of the Charter of the Registrant*
4.3 -- Form of Indenture between the Company and IBJ Schroder Bank
and Trust Company, as Trustee, relating to the 5 3/4%
Convertible Subordinated Debentures Due 2002 of the
Company**
4.4 -- Form of Indenture between the Company and a Trustee relating
to the Debt Securities that are, among other securities, the
subject of this Registration Statement
5 -- Opinion of Bass, Berry & Sims PLC***
12 -- Computation of ratios of earnings to fixed charges***
23.1 -- Consent of KPMG Peat Marwick LLP
23.2 -- Consent of KPMG Peat Marwick LLP
23.3 -- Consent of Bass, Berry & Sims PLC (included in Exhibit 5)
24 -- Power of Attorney (included on page II-4)***
99 -- Consent of Robert G. Roskamp
</TABLE>
- ---------------
* Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (Registration No. 333-23197).
** Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (Registration No. 333-34339).
*** Previously filed.
<PAGE> 1
EXHIBIT 1
AMERICAN RETIREMENT CORPORATION
[__________ SHARES OF ____ STOCK*]
[_____________ $ AGGREGATE PRINCIPAL AMOUNT OF
_____ % ____ DUE _______*]
UNDERWRITING AGREEMENT
Dear Ladies and Gentlemen:
American Retirement Corporation, a Tennessee corporation (the
"Company"), proposes to issue and sell to the several Underwriters named in
Schedule 1 hereto (the "Underwriters"), for whom you have been duly authorized
to act as representative[s] (in such capacit [y] [ies], the
"Representative[s]"), [an aggregate of ____ shares of the Company's Stock, par
value $_____ per share (the "______ Stock") [$______ aggregate principal amount
of ____% __________ Due _____ (the "Debentures/Notes")] (the "Firm Securities").
The Company has also agreed to issue and sell pursuant to an option, subject to
the terms and conditions hereof, up to [___ additional shares of ______ Stock]
[$_________ aggregate principal amount of Debenture/Notes]. Any and all [shares
of ____ Stock] [Debentures/Notes] to be issued and sold pursuant to such option
are referred to herein as the "Option Securities," and the Firm Securities and
any Option Securities are collectively referred to herein as the "Securities."
[The Securities are to be issued pursuant to an indenture dated ______, (the
"Indenture") between the Company and __________, as Trustee (the "Trustee")].
[The Securities will be convertible at the option of the holder thereof at any
time prior to the close of business on any date fixed for redemption, unless
earlier redeemed, into shares of the Company's Common Stock, par value $0.01 per
share (the "Common Stock").] The Company hereby confirms its agreement with the
several Underwriters, as set forth below. If you are the only Underwriter[s],
all references herein to the Representative[s] shall be deemed to be the
Underwriters.
1. Agreements to Sell and Purchase.
(a) The Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters, severally and not jointly, agrees to
purchase from the Company, upon
<PAGE> 2
* Plus an option to purchase from the Company up to [____ shares] [$______
aggregate principal amount of ____% _______ Due ____] to cover over-allotments.
the basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, and at a
purchase price of [$______ per share,] [equal to ___% of the principal amount
thereof, together with accrued interest, if any, from __________, to the Firm
Closing Date (as hereinafter defined),] the [number] [aggregate principal
amount] of Firm Securities set forth opposite the name of such Underwriter in
Schedule1 hereto. The Company shall deliver, or cause to be delivered, to the
Representative[s] for the respective accounts of the Underwriters, one or more
certificates in definitive form for the Firm Securities that the several
Underwriters have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Representative[s]
request upon notice to the Company at least 48 hours prior to the Firm Closing
Date (as hereinafter defined), against payment by or on behalf of the
Underwriters of the purchase price therefor by certified or official bank check
or checks drawn upon or by a New York Clearing House bank and payable in next-
day funds to the order of the Company. Such delivery of and payment for the Firm
Securities shall be made at the offices of __________, located at ___________,
at 10:00 A.M. New York City time, _______ on __________, _________ or at such
other place, time or date as the Representative[s] and the Company may agree
upon or as the Representative[s] may determine pursuant to Section 9 hereof,
such time and date of delivery against payment being herein referred to as the
"Firm Closing Date". The Company will make such certificate or certificates for
the Firm Securities available for checking and packaging by the
Representative[s] at the offices in New York, New York of the Company's transfer
agent or registrar at least 24 hours prior to the Firm Closing Date.
(b) Solely for the purpose of covering any over-allotments in
connection with the distribution and sale of the Firm Securities as contemplated
by the Prospectus (as hereinafter defined), the Company hereby grants to the
several Underwriters an option to purchase, severally and not jointly, the
Option Securities. The purchase price to be paid for any Option Securities shall
be the same [price per share as the price per share for the Firm Securities sold
by the Company] [percentage of the principal amount thereof as] set forth above
in paragraph (a) of this Section 1. The option granted hereby may be exercised
as to all or any part of the Option Securities from time to time within thirty
days after the date of the Prospectus. The Underwriters shall not be under any
obligation to purchase any of the Option Securities prior to any exercise of
such option. The Representative[s] may from time to time exercise the option
granted hereby by giving notice in writing or by telephone (confirmed in
writing) to the Company setting forth the aggregate amount of Option Securities
as to which the several Underwriters are then exercising the option and the date
and time for delivery of and payment for such Option Securities. Any such date
of delivery shall be determined by the Representative[s] but shall not be
earlier than two business days or later than seven business days after such
exercise of the option and, in any event, shall not be earlier than the Firm
Closing Date. The time and date set forth in such notice, or such other time on
such other date as the Representative[s] and the Company may agree upon or as
the Representative[s] may determine pursuant to Section 8 hereof, is herein
called the "Option Closing Date" with respect to such Option Securities. Upon
exercise of the option as provided herein, the Company shall become obligated to
sell to each of the several Underwriters, and,
2
<PAGE> 3
subject to the terms and conditions herein set forth, each of the Underwriters
(severally and not jointly) shall become obligated to purchase from the Company
the same percentage of the total [number] [principal amount] of the Option
Securities as to which the several Underwriters are then exercising the option,
as such Underwriter is obligated to purchase of the aggregate [number]
[principal amount] of Firm Securities[.] [, as adjusted by the Representative[s]
in such manner as they deem advisable to avoid fractional Shares]. If the option
is exercised as to all or any portion of the Option Securities, one or more
certificates in definitive form for such Option Securities, and payment
therefor, shall be delivered on the related Option Closing Date in the manner,
and upon the terms and conditions, set forth in paragraph (a) of this Section 1,
except that reference therein to the Firm Securities an the Firm Closing Date
shall be deemed, for purposes of this paragraph (b), to refer to such Option
Securities and Option Closing Date, respectively.
(c) It is understood that [any] [either] [of] you,
individually and not as one of the Representative[s], may (but shall not be
obligated to) make payment on behalf of any Underwriter or Underwriters for any
of the Securities to be purchased by such Underwriter or Underwriters. No such
payment shall relieve such Underwriter or Underwriters from any of its or their
obligations hereunder.
2. Representations and Warranties. The Company represents and warrants
to, and agrees with, each of the several Underwriters that:
(i) The Company has filed with the Securities and Exchange Commission
(the "Commission") a "shelf" registration statement on Form S-3 (File No.
333-_____), which has become effective, relating to shares of Common Stock,
certain debt securities and shares of the Company's Preferred Stock, no par
value per share. The Company will promptly file with the Commission a supplement
to the form of prospectus included in such registration statement specifically
relating to the Securities pursuant to Rule 424 under the Securities Act of
1933, as amended (the "Act"). Such registration statement, as amended at the
date hereof, meets the requirements of Rule 415 under the Act. As used in this
Agreement, the term "Registration Statement" means such registration statement
as amended at the date hereof, including exhibits, financial statements,
schedules and documents incorporated by reference therein. The term "Basic
Prospectus" means the prospectus included in the Registration Statement. The
term "Prospectus" means the Basic Prospectus together with the prospectus
supplement specifically relating to the Securities as filed with the Commission
pursuant to such Rule 424. Any reference herein to the Registration Statement or
the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein as of the date hereof or the date of the
Prospectus, as the case may be, and any reference herein to any amendment or
supplement to the Registration Statement or the Prospectus shall be deemed to
refer to and include any documents filed after such date and through the date of
such amendment or supplement under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and so incorporated by reference. For purposes of
the preceding sentence, any reference to the "effective date" of an amendment to
a registration statement shall, if such amendment is effected by means of the
filing with the Commission under the Exchange Act of a document incorporated by
reference in such registration statement, be deemed to refer to the date on
which such document was so filed with the Commission.
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<PAGE> 4
(ii) When the Registration Statement or any amendment thereto
was declared effective, as of the date hereof, and at the time any amendment to
the Registration Statement filed after the date hereof becomes effective
(including the filing of any document incorporated by reference in the
Registration Statement), the Registration Statement (i) met, meets and will
meet, as the case may be, the requirements set forth in Rule 415(a)(1) under the
Act and complied, complies and will comply as the case may be, in all material
respects with said Rule, (ii) contained, contains and will contain, as the case
may be, all statements required to be stated therein in accordance with, and
complied, complies and will comply in all material respects with the
requirements of, the Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder and (iii) did not, does not and will
not, as the case may be, include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading. As of the date hereof, and when the Prospectus is filed with the
Commission pursuant to Rule 424(b), on the date when the Prospectus is otherwise
supplemented and on the Firm Closing Date and any Option Closing Date, the
Prospectus (as supplemented as of any such time), (i) contains and will contain,
as the case may be, all statements required to be stated therein in accordance
with, and complies and will comply in all material respects with the
requirements of, the Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder and (ii) does not and will not, as the
case may be, include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (b) do not apply to statements or
omissions made in the Prospectus or the Registration Statement or any amendment
or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representative[s] specifically for use therein.
(iii) The Company is a Tennessee corporation in good standing
under the laws of the State of Tennessee. Each of the subsidiaries of the
Company (the "Subsidiaries") has been duly organized and is validly existing in
good standing under the laws of its jurisdiction of organization; and each of
the Company and its Subsidiaries is duly qualified to transact business as a
foreign organization and is in good standing under the laws of all other
jurisdictions where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not result in a material liability or disability to the Company
and its Subsidiaries, taken as a whole.
(iv) The Company and each of its Subsidiaries have full power
(corporate and other) to own or lease their respective properties and conduct
their respective businesses as described in the Registration Statement and the
Prospectus; and the Company has full power (corporate and other) to enter into
this Agreement and to carry out all the terms and provisions hereof to be
carried out by it.
(v) The shares of capital stock owned by the Company which
have been issued by the Company's corporate Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable and are owned
beneficially by the Company free and clear of any security interests, liens,
encumbrances, equities or claims, except for pledges of such shares in
connection
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<PAGE> 5
with indebtedness included on the balance sheets of the Company and its
consolidated subsidiaries incorporated by reference into the Registration
Statement and the Prospectus.
(vi) The Company has an authorized capitalization as set forth
in the Prospectus. All of the issued shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and nonassessable.
[The Firm Securities have been duly authorized and at the Firm Closing Date,
after payment therefor in accordance herewith, will be validly issued, fully
paid and nonassessable.] [The Firm Securities have been duly authorized and the
Common Stock initially issuable upon conversion of the Firm Securities has been
duly authorized and reserved for issuance, and when the Indenture has been duly
executed and delivered by the Company and the Trustee (assuming the due
authorization, execution and delivery of the Indenture by the Trustee) and the
Firm Securities have been duly executed by the Company, authenticated by the
Trustee, and issued and delivered in accordance with their terms, the Firm
Securities will constitute valid and legally binding obligations of the Company
enforceable against the Company in accordance with their terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity, the Firm Securities will be convertible into Common Stock
in accordance with the terms of the Indenture, and the Common Stock initially
issuable upon such conversion of the Firm Securities, when issued and delivered
in accordance with the provisions of the Indenture, will be validly issued,
fully paid and nonassessable; and the Firm Securities will conform to the
description of the Firm Securities contained in the Prospectus.] No holders of
outstanding shares of capital stock of the Company are entitled as such to any
preemptive or other rights to subscribe for any of the Securities, and no
holders of securities of the Company are entitled to have such securities
registered under the Registration Statement, except where such rights have been
waived.
[(vii) The Indenture has been duly authorized and has been
duly qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and when the Indenture has been duly executed and delivered by
the Company and the Trustee (assuming the due authorization, execution and
delivery of the Indenture by the Trustee), the Indenture will constitute a valid
and legally binding instrument of the Company, enforceable against the Company
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general principles of equity.]
(viii) The shares of capital stock of the Company conform to
the description thereof incorporated by reference in the Prospectus.
(ix) The consolidated financial statements and schedules of
the Company and its consolidated subsidiaries incorporated by reference into the
Registration Statement and the Prospectus fairly present the financial
condition, results of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries as of the dates and periods therein
specified. Such financial statements and schedules have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise noted therein). The
selected financial data set forth in the Company's (i)
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<PAGE> 6
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and (ii)
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1998,
fairly present, on the basis stated in such Annual Report, the information
included therein.
(x) KPMG Peat Marwick LLP, who have audited certain financial
statements of the Company and its consolidated subsidiaries and delivered their
report with respect to the audited consolidated financial statements and
schedules incorporated in the Registration Statement and the Prospectus, are
independent public accountants as required by the Act, the Exchange Act and the
related published rules and regulations thereunder.
(xi) The execution and delivery of this Agreement has been
duly authorized by the Company and this Agreement has been duly executed and
delivered by the Company and is the valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights, to general principles
of equity and, with respect to indemnification, public policy.
(xii) No legal or governmental proceedings are pending to
which the Company or any of its Subsidiaries is a party or to which the property
of the Company or any of its Subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are not described
therein and no such proceedings have been threatened against the Company or any
of its Subsidiaries or with respect to any of their respective properties; and
no contract or other document is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement that is not described therein or filed as required.
(xiii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its Subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, (B) there have been
no transactions entered into by the Company or any of its Subsidiaries, other
than those in the ordinary course of business, which are material with respect
to the Company and its Subsidiaries considered as one enterprise, and (C) there
has been no dividend or distribution of any kind declared, paid or made by the
Company on any of its shares of Common Stock.
(xiv) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the issuance of the
Common Stock issuable upon conversion of the Securities, the compliance by the
Company with the other provisions of this Agreement and the Indenture and the
consummation of the other transactions herein contemplated do not (i) require
the consent, approval, authorization, registration or qualification of or with
any governmental authority, except such as have been obtained and such as may be
required under state securities or blue sky laws or (ii) conflict with or result
in a breach or violation of any of the terms and provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, lease or other agreement
or instrument to which the Company or any of its Subsidiaries is a party
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<PAGE> 7
or by which the Company or any of its Subsidiaries or any of their respective
properties are bound, or the charter documents or by-laws of the Company or any
of its Subsidiaries, or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any arbitrator
applicable to the Company or any of its Subsidiaries.
(xv) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(xvi) The Company and each of its Subsidiaries have good and
marketable title to all real properties, and interests in real property,
described in the Prospectus (including the documents incorporated by reference
therein) as owned by each of them, in each case free and clear of all liens,
charges, encumbrances and restrictions except such as are described in the
Registration Statement or such as do not materially adversely affect the value
of such property or interests or interfere with the use made or proposed to be
made of such property or interests by the Company and each of its Subsidiaries;
the Company has obtained satisfactory confirmations, except as is otherwise
described in the Registration Statement, that the Company and each of its
Subsidiaries has the foregoing title to such real property and interests in real
property; and any real property and buildings held under lease by the Company or
any of its Subsidiaries, as the case may be, under valid, binding and
enforceable leases conforming to any applicable description thereof set forth in
or the documents incorporated by reference into the Registration Statement and
the Prospectus, with such exceptions as do not interfere with the use made and
proposed to be made of such property and buildings by the Company, its
Subsidiaries or any third party.
(xvii) No statement, representation, warranty or covenant made
by the Company in this Agreement or made in any certificate or document required
by this Agreement to be delivered to the Representative[s] was or will be, when
made, inaccurate, untrue or incorrect in any material respect.
(xviii) Neither the Company nor any of its directors, officers
or controlling persons has taken, directly or indirectly, any action intended,
or which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities.
[(xix) The Company has been advised by the New York Stock
Exchange that the Securities and the shares of Common Stock issuable upon
conversion of the Securities will be listed for trading on the New York Stock
Exchange upon official notice of issuance.]
(xx) Neither the Company nor any of its Subsidiaries is
involved in any material labor dispute nor, to the best knowledge of the
Company, is any such dispute threatened.
(xxi) Neither the Company nor any of its Subsidiaries nor, to
the Company's best knowledge, any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any Subsidiary of the
Company or received or retained any funds in
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<PAGE> 8
violation of any law, rule or regulation or of a character required to be
disclosed in the Prospectus.
(xxii) Any certificate signed by any officer of the Company
and delivered to the Representative[s] or to counsel for the Underwriters in
connection with the transactions contemplated by this Agreement shall be deemed
a representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
(xxiii) No default exists, and no event has occurred which,
with notice or lapse of time or both, would constitute a default in the due
performance and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their respective properties is bound or may be
affected in any material adverse respect with regard to property, business or
operations of the Company and its subsidiaries which would require disclosure in
the Registration Statement and the Prospectus.
3. Representations and Warranties of the Underwriters. Upon your
authorization of the release of the Firm Securities, the several Underwriters
propose to offer the Firm Securities for sale to the public upon the terms set
forth in the Prospectus.
4. Agreements. (a) The Company covenants and agrees with each of the
Underwriters that:
(i) Subject to the next sentence, the Company will file the
Prospectus with the Commission pursuant to Rule 424 under the Act. During any
time when a prospectus relating to the Securities is required to be delivered
under the Act, the Company (i) will comply with all requirements imposed upon it
by the Act[,] [and] the Exchange Act [and the Trust Indenture Act] and the
respective rules and regulations of the Commission thereunder to the extent
necessary to permit the continuance of sales of or dealings in the Securities in
accordance with the provisions hereof and of the Prospectus, as then amended or
supplemented, and (ii) will not file with the Commission the Prospectus, any
amendment or supplement to the Prospectus, or any amendment to the Registration
Statement, of which the Representative[s] shall not previously have been advised
and furnished with a copy a reasonable period of time prior to the proposed
filing and as to which filing the Representative[s] shall not have given their
consent. The Company will advise the Representative[s], promptly after receiving
notice thereof, of the time when (i) the Prospectus has been filed with the
Commission and (ii) any amendment to the Registration Statement has been filed
or declared effective or any amendment or supplement to the Prospectus has been
filed and will provide evidence satisfactory to the Representative[s] of each
such filing or effectiveness.
(ii) The Company will advise the Representative[s], promptly
after receiving notice or obtaining knowledge thereof, of (i) the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or any order
directed at any document incorporated by reference in the Registration Statement
or the Prospectus or any amendment or supplement thereto or any order preventing
or suspending the use of the Prospectus, (ii) the suspension of the
qualification of the Securities for
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<PAGE> 9
offering or sale in any jurisdiction, (iii) the institution, threatening or
contemplation of any proceeding for any such purpose or (iv) any request made by
the Commission for amending or supplementing the Registration Statement, for
amending the Prospectus or for additional information. The Company will use its
best efforts to prevent the issuance of any such stop order and, if any such
stop order is issued, to obtain the withdrawal thereof as promptly as possible.
(iii) The Company will arrange for the qualification of the
Securities for offering and sale under the securities or blue sky laws of such
jurisdictions as the Representative[s] may designate and will continue such
qualifications in effect for as long as may be necessary to complete the
distribution of the Securities; provided, however, that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction.
(iv) If, at any time when a prospectus relating to the
Securities 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 if for any other
reason it is necessary at any time to amend or supplement the Prospectus to
comply with the Act, the Exchange Act or the respective rules or regulations of
the Commission thereunder, the Company will promptly notify the
Representative[s] thereof and, subject to Section 4(a) hereof, will prepare and
file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment to the Basic Prospectus or the Prospectus
that corrects such statement or omission or effects such compliance.
(v) The Company will, without charge, provide (i) to the
Representative[s] and to counsel for the Underwriters, upon request, a signed
copy of the registration statement originally filed with respect to the
Securities and each amendment thereto (in each case including exhibits thereto),
(ii) to each Underwriter, a conformed copy of such registration statement and
each amendment thereto (in each case without exhibits thereto) and (iii) so long
as a prospectus relating to the Securities is required to be delivered under the
Act, as many copies of the Prospectus or any amendment or supplement thereto as
the Representative[s] may reasonably request.
(vi) The Company, as soon as practicable, will make generally
available to its security holders and to the Representative[s] a consolidated
earnings statement of the Company and its Subsidiaries (which need not be
audited) that satisfies the provisions of Section 11(a) of the Act and Rule 158
thereunder.
(vii) The Securities and the shares of Common Stock issuable
upon conversion of the Securities will be listed on the New York Stock Exchange,
subject to notice of issuance.
(viii) The Company and its executive officers will not,
directly or indirectly, offer, sell or otherwise dispose of any shares of Common
Stock or any securities convertible into or
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<PAGE> 10
exercisable or exchangeable for, or any rights to purchase or acquire, Common
Stock for a period of 90 days after the date hereof without the prior written
consent of the Representative[s].
(ix) The Company intends to use, the net proceeds from the
sale of the Securities sold by it hereunder as set forth under the "Use of
Proceeds" in the Prospectus.
5. Expenses. The Company will pay all costs and expenses incident to
the performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 10 hereof, including all costs and expenses incident to (i)
the printing or other production of all documents with respect to the
transactions, including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment thereto and
the Prospectus and any amendment or supplement thereto, this Agreement and any
blue sky memoranda, (ii) all arrangements relating to the delivery to the
Underwriters of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, accountants and any other experts or advisors
retained by the Company, (iv) preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Securities [and the Common Stock
issuable upon conversion of the Securities], including transfer agent's and
registrar's fees and the fees of the Trustee, (v) the qualification of the
Securities [and the Common Stock issuable upon conversion of the Securities]
under state securities and blue sky laws, including filing fees and fees and
disbursements of counsel for the Underwriters relating thereto, (vi) the filing
fees of the Commission relating to the Securities [and the Common Stock issuable
upon conversion of the Securities], [(vii) the listing of the Securities and the
Common Stock issuable upon conversion of the Securities on the New York Stock
Exchange] and (viii) expenses of Company personnel in connection with their
attendance at meetings with prospective investors in the Securities. If the sale
of the Securities provided for herein is not consummated because any condition
to the obligations of the Underwriters set forth in Section6 hereof is not
satisfied, because this Agreement is terminated pursuant to Section10 hereof or
because of any failure, refusal or inability on the part of the Company to
perform all obligations and satisfy all conditions on its part to be performed
or satisfied hereunder other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Securities. The Company shall not in any event be liable to any
of the Underwriters for the loss of anticipated profits from the transactions
covered by this Agreement.
6. Conditions to the Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy in all
material respects of the representations and warranties of the Company contained
herein as of the date hereof and as of the Firm Closing Date as if made on and
as of the Firm Closing Date, to the accuracy in all material respects of the
statements of the Company's officers made pursuant to the provisions hereof, to
the performance by the Company of its covenants and agreements hereunder and to
the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
in the manner and within the time period required by Rule 424(b) under the Act;
no stop order suspending the
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<PAGE> 11
effectiveness of the Registration Statement or any post-effective amendment
thereto and no order directed at any document incorporated by reference in the
Registration Statement or the Prospectus or any amendment or supplement thereto
shall have been issued and no proceedings for that purpose shall have been
instituted or threatened or, to the knowledge of the Company or the
Representative[s] , shall be contemplated by the Commission; and the Company
shall have complied with any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise).
(b) The Representative[s] shall have received opinions, dated
the Firm Closing Date, of ___________ [and/or] _________, to the effect that:
(i) the Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Tennessee. All of its
subsidiaries listed on Exhibit A to such counsel's opinion (the "Subsidiaries")
have been duly organized; and the Company and each of its Subsidiaries are
validly existing as organizations in good standing under the laws of their
respective jurisdictions of organization and are duly qualified to transact
business as foreign corporations and are in good standing under the laws of the
jurisdictions listed on Exhibit B to such counsel's opinion;
(ii) the Company and each of the Subsidiaries have corporate
power to own or lease their respective properties and conduct their respective
businesses as described in the Registration Statement and the Prospectus, and
the Company has corporate power to enter into this Agreement and to carry out
all the terms and provisions hereof to be carried out by it;
(iii) the issued shares of capital stock owned by the Company
which have been issued by each of the corporate Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable and are owned
beneficially by the Company free and clear, to the best knowledge of such
counsel, of any security interests, liens, encumbrances, equities or claims,
except for pledges of such shares in connection with indebtedness included on
the balance sheets of the Company and its consolidated Subsidiaries incorporated
by reference into the Registration Statement and the Prospectus;
(iv) the Company has an authorized capitalization as set forth in
the Prospectus; all of the issued shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable; [the Firm
Securities sold by the Company hereunder have been duly authorized by all
necessary corporate action of the Company and, when issued and delivered to and
paid for by the Underwriters pursuant to this Agreement, will be validly issued,
fully paid and nonassessable;] [the Firm Securities sold by the Company
hereunder have been duly authorized and the Common Stock initially issuable upon
conversion of the Firm Securities has been duly and validly authorized and
reserved for issuance, and when the indenture has been duly executed and
delivered by the Company and the Trustee and the Firm Securities have been duly
executed by the Company, authenticated by the Trustee, and issued and delivered
in accordance with their terms, the Firm Securities will then constitute valid
and legally binding obligations of the Company, enforceable against the Company
in accordance with their terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or
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<PAGE> 12
affecting creditors' rights and to general principles of equity, the Firm
Securities will be convertible into Common Stock in accordance with the terms of
the Indenture, and the Common Stock initially issuable upon such conversion,
when issued and delivered in accordance with the provisions of the Indenture,
will be validly issued, fully paid and nonassessable;] [the Securities and the
Common Stock issuable upon conversion of the Securities] have been duly
authorized for listing, subject to official notice of issuance, on the New York
Stock Exchange; to such counsel's best knowledge, no holders of outstanding
shares of capital stock of the Company are entitled as such to any preemptive or
other rights to subscribe for any of the Securities [or the Common Stock
issuable upon conversion of the Securities]; and to such counsel's best
knowledge, no holders of securities of the Company are entitled to have such
securities registered under the Registration Statement;
[(v) the Indenture has been duly authorized and has been duly
qualified under the Trust Indenture Act, and when the Indenture has been
executed and delivered by the Company and the Trustee (and assuming the due
authorization, execution and delivery of the Indenture by the Trustee) the
Indenture will constitute a valid and legally binding instrument, enforceable
against the Company in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general principles of equity;]
(vi) the description of the Common Stock incorporated by
reference into the Prospectus, insofar as such statements purport to summarize
certain provisions of the Common Stock, provides a fair summary of such
provisions, [and the description of the Securities in the Prospectus, insofar as
such statements purport to summarize certain provisions of the Securities,
provides a fair summary of such provisions];
(vii) the execution and delivery of this Agreement have been
duly authorized by all necessary corporate action of the Company and this
Agreement has been duly executed and delivered by the Company, and is the valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general principles of equity and except as
right to indemnity and contribution may be limited by federal or state
securities laws or the public policy underlying such laws;
(viii) to such counsel's knowledge, no legal or governmental
proceedings are pending to which the Company or any of the Subsidiaries is a
party or to which the property of the Company or any of the Subsidiaries is
subject that are required to be described in the Registration Statement or the
Prospectus and are not described therein, and, to the best knowledge of such
counsel, no such proceedings have been threatened against the Company or any of
the Subsidiaries or with respect to any of their respective properties; and to
such counsel's best knowledge, no contract or other document is required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement that is not described therein or filed as
required;
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<PAGE> 13
(ix) the issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, [the issuance of the
Common Stock issuable upon conversion of the Securities,] the compliance by the
Company with the other provisions of this Agreement and the Indenture and the
consummation of the other transactions herein contemplated do not (A) require
the consent, approval, authorization, registration or qualification of or with
any governmental authority, except such as have been obtained and such as may be
required under state securities or blue sky laws, or (B) conflict with or result
in a breach or violation of any of the terms and provisions of, or constitute a
default under, any material contract filed as an exhibit to the Registration
Statement or the charter documents or by-laws of the Company or any of the
Subsidiaries, or any statute or any judgment, decree, order, rule or regulation
of any court or other governmental authority or any arbitrator known to such
counsel and applicable to the Company or any of the Subsidiaries.
(x) 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 post-effective
amendment thereto and no order directed at any document incorporated by
reference in the Registration Statement or the Prospectus or any amendment or
supplement thereto has been issued, and no proceedings for that purpose have
been instituted or threatened or, to the best knowledge of such counsel, are
contemplated by the Commission.
(xi) the Company is not required to be registered under the
Investment Company Act of 1940, as amended; and
(xii) the registration statement originally filed with respect
to the Securities and each amendment thereto and the Basic Prospectus and the
Prospectus (in each case, including the documents incorporated by reference
therein but not including the financial statements and other financial and
statistical information contained therein, as to which such counsel need express
no opinion) comply as to form in all material respects with the applicable
requirements of the Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder.
In rendering any such opinion, such counsel may rely, as to matters off
act, to the extent such counsel deem proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
laws of jurisdictions in which such counsel are not admitted to practice, to the
extent satisfactory to counsel for the Underwriters, upon the opinion of local
counsel in such jurisdictions and in the case of the opinion described in
paragraph (i) above upon certificates of public officials. The foregoing opinion
shall also state that the Underwriters are justified in relying upon any such
opinion of such local counsel, and copies of the opinion of such local counsel
shall be delivered to the Representative[s] and counsel for the Underwriters.
In addition to the matters set forth above, such counsel shall also
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 auditors, your
representatives and your counsel, at which conferences the contents of
13
<PAGE> 14
the Registration Statement and the Prospectus and related matters were discussed
and although they are not passing upon, and do not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus (except as set forth therein) and have
not made any independent check or verification thereof, during the course of
such participation (relying as to the factual matters underlying the
determination of materiality to a large extent upon the statements of officers
or other representatives of the Company), no facts came to their attention that
caused them to believe that the Registration Statement, as of the Effective Date
and as of the date of such opinion, contained or contains any untrue statement
of a material fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus, as of its date and the date of such opinion, included or
includes any untrue statement of a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. It is understood that
such counsel will express no belief with respect to the financial statements,
the notes thereto and related schedules and other financial, numerical,
statistical and accounting data included or omitted from the Registration
Statement or the Prospectus [and will express no belief with respect to the
Statement of Eligibility and Qualification of the Trustee on Form T-1].
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment thereto at the date of such opinion.
(c) The Representative[s] shall have received an opinion,
dated the Firm Closing Date, of , counsel for the Underwriters, with respect to
the issuance and sale of the Firm Securities, the Registration Statement, the
Prospectus, and such other related matters as the Representative[s] may
reasonably require, and the Company shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling them to
pass upon such matters. In rendering such opinion, such counsel may rely as to
all matters of _________ law upon the opinion of ____________ referred to in
paragraph (b) above.
(d) The Representative[s] shall have received from KPMG Peat
Marwick LLP a letter or letters dated, respectively, the date hereof and the
Firm Closing Date, in form and substance satisfactory to the Representative[s],
to the effect that:
(i) they are independent accountants with respect to the
Company and its consolidated subsidiaries within the meaning of the Act, the
Exchange Act and the applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules examined by them and included in the Registration
Statement and the Prospectus comply in form and in all material respects with
the applicable accounting requirements of the Act, the Exchange Act and the
related published rules and regulations thereunder;
(iii) on the basis of a reading of the latest available
interim unaudited consolidated financial statements of the Company and its
consolidated subsidiaries, carrying out certain specified procedures (which do
not constitute an audit made in accordance with generally
14
<PAGE> 15
accepted auditing standards) that would not necessarily reveal matters of
significance with respect to the comments set forth in this paragraph (iii), a
reading of the minute books of the shareholders, the board of directors and any
committees thereof of the Company and each of its consolidated subsidiaries, and
inquiries of certain officials of the Company and its consolidated subsidiaries
who have responsibility for financial and accounting matters, nothing came to
their attention that caused them to believe that at a specific date not more
than five business days prior to the date of such letter, there were any changes
in the shares of capital stock or indebtedness of the Company and its
consolidated subsidiaries or any decreases in total assets, current assets or
shareholders' equity of the Company and its consolidated subsidiaries, in each
case compared with amounts shown on the _____________ consolidated balance sheet
included by incorporation by reference to the Company's Report on Form 10-Q for
the fiscal quarter ended ____________ in the Registration Statement and the
Prospectus, or for the period from ___________ to such specified date there were
any decreases, as compared with the corresponding period of the preceding fiscal
year, in net revenues, net income before income taxes or total or per share
amounts of net income of the Company and its consolidated subsidiaries, except
in all instances for changes, decreases or increases set forth in such letter or
as set forth in or contemplated in the Prospectus; and
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information that are derived from the general accounting records of
the Company and its consolidated subsidiaries and are included in its Quarterly
Report on Form 10-Q for the fiscal quarter ended, incorporated by reference in
the Registration Statement and the Prospectus, and have compared such amounts,
percentages and financial information with such records of the Company and its
consolidated subsidiaries and with information derived from such records and
have found them to be in agreement, excluding any questions of legal
interpretation.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representative[s] deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representative[s],
make it impractical or inadvisable to proceed with the purchase and delivery of
the Securities as contemplated by the Registration Statement, as amended as of
the date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (d) with respect to either letter referred to above shall include any
amendment thereto at the date of such letter.
(e) The Representative[s] shall have received certificate,
dated the Firm Closing Date, of the Chief Executive Officer and the Chief
Financial Officer of the Company to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm Closing Date;
the Registration Statement, as
15
<PAGE> 16
amended as of the Firm Closing Date, does not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading, and the Prospectus, as amended or
supplemented as of the Firm Closing Date, does not include any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; and the Company has performed all covenants and agreements
and satisfied all conditions on its part to be performed or satisfied at or
prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto and no order
directed at any document incorporated by reference in the Registration Statement
or any amendment thereto or the Prospectus has been issued, and no proceedings
for that purpose have been instituted or threatened or, to the best of the
Company's knowledge, are contemplated by the Commission; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement an the Prospectus, there has
not been any material adverse change, or any development involving a prospective
material adverse change (including without limitation a change in management or
control of the Company), in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and the
Subsidiaries, except in each case as described in or contemplated by the
Prospectus (exclusive of any amendment or supplement thereto after the date
hereof).
(f) On or before the Firm Closing Date, the
Representative[s] and counsel for the Underwriters shall have received such
further certificates, documents or other information as they may have reasonably
requested from the Company.
(g) Prior to the commencement of the offering of the
Securities, the Securities shall have been accepted for listing on the New York
Stock Exchange and the Common Stock issuable upon conversion of the Securities
shall have been accepted for listing on the New York Stock Exchange, subject to
notice of issuance.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representative[s] and
counsel for the Underwriters. The Company shall furnish to the Representative[s]
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representative[s] and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Option Securities shall be subject, in their discretion, to each of
the foregoing conditions to purchase the Firm Securities, except that all
references to the Firm Securities and the Firm Closing Date shall be deemed to
refer to such Option Securities and the related Option Closing Date,
respectively.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act against any losses, claims,
16
<PAGE> 17
damages or liabilities to which such Underwriter or such controlling person may
become subject under the Act, the Exchange Act 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 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the registration statement originally filed with
respect to the Securities or any amendment thereto, the Prospectus or any
amendment thereto 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 Securities or the Common Stock issuable upon conversion of the
Securities 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 such
registration statement or any amendment thereto, the Prospectus or any amendment
or supplement thereto, or any Application as 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 controlling person for
any legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating, defending against 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 arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement or
any amendment thereto, the Prospectus or any amendment or supplement thereto, or
any Application in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representative[s]
specifically for use therein and provided, further, that the Company will not be
liable to any underwriter or any person controlling such underwriter with
respect to any such untrue statement or omission made in any preliminary
supplemental Prospectus that is corrected in the supplemental Prospectus (or any
amendment or supplement thereto) if the person asserting any such loss, claim,
damage or liability purchased Securities from such Underwriter but was not sent
or given a copy of the supplemental Prospectus (as amended or supplemented),
other than the document incorporated by reference therein, at or prior to the
written confirmation of the sale of such Securities to such person in any case
where such delivery of the supplemental Prospectus (as amended or supplemented)
as required by the Act, unless such failure to deliver the supplemental
Prospectus (as amended or supplemented) was the result of noncompliance by the
Company with Section 4(a)(v). This indemnity agreement will be in addition to
any liability which the Company may 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 such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an
17
<PAGE> 18
unconditional release of such Underwriter and each such controlling person from
all liability arising out of such claim, action, suit or proceeding.
(a) Each Underwriter will indemnify and hold harmless the Company, each
of its directors, each of its officers 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 against any losses, claims, damages
or liabilities to which the Company and any such director, officer or
controlling person may become subject under the Act, the Exchange Act 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 any material fact contained in the Registration
Statement or any amendment thereto, the Prospectus or any amendment or
supplement thereto, or any Application or (ii) the omission or the alleged
omission to state therein a material fact required to be stated in the
Registration Statement or any amendment thereto, the Prospectus or any amendment
or supplement thereto, or any Application 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 Representative[s]
specifically 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. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have.
(b) Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 7. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, 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 7 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
18
<PAGE> 19
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 Representative[s]
in the case of paragraph (a) of this Section 7, representing the indemnified
parties under such paragraph (a) who are parties to such action or actions) or
(ii) the indemnifying party has authorized 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 7 in
which case the indemnified party may effect such a settlement without such
consent.
In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 7 is unavailable or insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) 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 Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
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). 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 (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the Underwriters. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters, the parties' relative intents,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in the
circumstances. The Company and the Underwriters agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take into account
the equitable considerations referred to in the first sentence of this paragraph
(d). Notwithstanding any other provision of this paragraph (d), no Underwriter
shall be obligated to make contributions hereunder that in the aggregate exceed
the total underwriting discounts received by it with respect to the Securities
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, and no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
hereunder are several in proportion to their respective
19
<PAGE> 20
underwriting obligations and not joint, and contributions among Underwriters
shall be governed by the provisions of the Agreement Among Underwriters. For
purposes of this paragraph (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
shall 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, each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, shall have the same
rights to contribution as the Company.
8. Default of Underwriters. If one or more Underwriters default in
their obligations to purchase Firm Securities or Option Securities hereunder and
the aggregate [number] [principal amount] of such Securities that such
defaulting Underwriter or Underwriters agreed but failed to purchase is ten
percent or less of the aggregate [number] [principal amount] of Firm Securities
or Option Securities to be purchased by all of the Underwriters at such time
hereunder, the other Underwriters may make arrangements satisfactory to the
Representatives[s] for the purchase of such Securities by other persons (who may
include one or more of the non-defaulting Underwriters, including the
Representative[s]), 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 Securities or Option Securities that
such defaulting Underwriter or Underwriters agreed but failed to purchase. If
one or more Underwriters so default with respect to an aggregate [number]
[principal amount] of Securities that is more than ten percent of the aggregate
number principal amount of Firm Securities or Option Securities, as the case may
be, to be purchased by all of the Underwriters at such time hereunder, and if
arrangements satisfactory to the Representative[s] 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 the Representative[s]) of the
Securities 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 10 hereof. In the event of any default
by one or more Underwriters as described in this Section 8, the
Representative[s] 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 1
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 Securities or Option Securities, as the case may be. As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 8. Nothing herein shall relieve any defaulting
Underwriter from liability for its default.
9. 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 7 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 5 and 7 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
20
<PAGE> 21
10. Termination. This Agreement may be terminated with respect to the
Firm Securities or any Option Securities in the sole discretion of the
Representative[s] by notice to the Company given prior to the Firm Closing Date
or the related Option Closing Date, respectively, in the event that the Company
obligations and satisfy all conditions on its part to be performed or satisfied
hereunder at or prior thereto or, if at or prior to the Firm closing Date or
such Option Closing Date, respectively, the Representative[s] determine in their
sole discretion that:
(i) trading in the Securities or trading in the Common Stock
shall have been suspended by the Commission or trading in securities generally
on the New York Stock Exchange shall have been suspended or minimum or maximum
prices shall have been established for the Common Stock on such exchange;
(ii) a banking moratorium shall have been declared by New York
or United States authorities; or
(iii) there shall have been (A) an outbreak or escalation of
hostilities between the United States or any foreign power, (B) an outbreak or
escalation of any other insurrection or armed conflict involving the United
States or (C) any other calamity or crisis having an effect on the financial
markets that makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the securities as contemplated by the Registration
Statement.
11. Information Supplied by Underwriters. The statements set forth the
last paragraph on the front cover page and under the heading "Underwriting" in
the Prospectus (to the extent such statements relate to the Underwriters)
constitute the only information furnished by any Underwriter through the
Representative[s] to the Company for the purposes of Sections 2 and 7(b) hereof.
The Underwriters confirm that such statements (to such extent) are correct.
12. Notices. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be mailed or delivered or telegraphed and
confirmed in writing to _________, if sent to the Company, shall be mailed,
delivered or telegraphed and confirmed in writing to the Company at 115 Westwood
Place, Suite 402, Brentwood, Tennessee 37027; Attn.: President.
13. Successors. This Agreement shall inure to the benefit of and shall
be binding upon the several Underwriters, the Company and its 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 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 7 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 7 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
21
<PAGE> 22
of Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of
Securities from any Underwriter shall be deemed a successor because of such
purchase.
14. 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.
15. 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.
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company and each
of the several Underwriters.
Very truly yours,
AMERICAN RETIREMENT CORPORATION
By:
------------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
REPRESENTATIVE[s]
as Representative[s] of the several Underwriters
By:
-------------------------------
Name:
Title:
22
<PAGE> 23
SCHEDULE 1
UNDERWRITER ' S COMMITMENTS
Number Aggregate Principle Amount of
Firm Securities to be Purchased from the
Underwriter's Company
Total:
---------------
===============
23
<PAGE> 1
Exhibit 4.4
AMERICAN RETIREMENT CORPORATION
INDENTURE
Dated as of __________
----------------------------------
AS TRUSTEE
Providing for Issuance of Securities in Series
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
SECTION 1.01 Definitions............................................................1
SECTION 1.02 Other Definitions......................................................4
SECTION 1.03 Incorporation by Reference to Trust Indenture Act......................5
SECTION 1.04 Rules of Construction..................................................5
ARTICLE 2
THE SECURITIES
SECTION 2.01 Forms Generally........................................................6
SECTION 2.02 Amount Unlimited; Issuable in Series...................................6
SECTION 2.03 Execution and Authentication...........................................8
SECTION 2.04 Registrar and Agents...................................................8
SECTION 2.05 Paying Agent to Hold Money in Trust....................................9
SECTION 2.06 Transfer and Exchange..................................................9
SECTION 2.07 Replacement Securities................................................11
SECTION 2.08 Outstanding Securities................................................12
SECTION 2.09 Temporary Securities..................................................12
SECTION 2.10 Cancellation..........................................................12
SECTION 2.11 Defaulted Interest....................................................13
SECTION 2.12 Securityholder Lists..................................................13
SECTION 2.13 Persons Deemed Owners.................................................13
SECTION 2.14 CUSIP Number..........................................................13
SECTION 2.15 Provisions in Global Security.........................................14
ARTICLE 3
REDEMPTION
SECTION 3.01 Right of Redemption...................................................15
SECTION 3.02 Selection of Securities to be Redeemed................................15
SECTION 3.03 Notice of Redemption by the Company...................................16
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 3.04 Effect of Notice of Redemption........................................17
SECTION 3.05 Deposit of Redemption Price...........................................17
SECTION 3.06 Securities Redeemed in Part...........................................17
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of the Securities.............................................17
SECTION 4.02 Commission Reports....................................................17
SECTION 4.03 Waiver of Stay, Extension or Usury Laws...............................18
SECTION 4.04 Notice of Default.....................................................18
SECTION 4.05 Compliance Certificates...............................................18
SECTION 4.06 Limitation on Dividends and Other Distributions.......................18
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When Company May Merge, etc...........................................19
SECTION 5.02 Successor Corporation or Trust Substituted............................19
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.....................................................20
SECTION 6.02 Acceleration..........................................................21
SECTION 6.03 Other Remedies........................................................22
SECTION 6.04 Waiver of Defaults and Events of Default..............................22
SECTION 6.05 Control by Majority...................................................22
SECTION 6.06 Rights of Holders to Receive Payment..................................22
SECTION 6.07 Collection Suit by Trustee............................................23
SECTION 6.08 Trustee May File Proofs of Claim......................................23
SECTION 6.09 Priorities............................................................24
SECTION 6.10 Undertaking for Costs.................................................24
SECTION 6.11 Limitations on Suits..................................................24
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 7
TRUSTEE
SECTION 7.01 Duties of Trustee.....................................................25
SECTION 7.02 Rights of Trustee.....................................................26
SECTION 7.03 Individual Rights of Trustee..........................................27
SECTION 7.04 Trustee's Disclaimer..................................................27
SECTION 7.05 Notice of Defaults....................................................27
SECTION 7.06 Reports by Trustee to Holders.........................................27
SECTION 7.07 Compensation and Indemnity............................................28
SECTION 7.08 Replacement of Trustee................................................28
SECTION 7.09 Successor Trustee by Merger, etc......................................29
SECTION 7.10 Eligibility; Disqualification.........................................29
SECTION 7.11 Preferential Collection of Claims Against Company.....................30
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01 Satisfaction, Discharge and Defeasance of the Securities..............30
SECTION 8.02 Satisfaction and Discharge of Indenture...............................31
SECTION 8.03 Survival of Certain Obligations.......................................31
SECTION 8.04 Application of Trust Money............................................31
SECTION 8.05 Paying Agent to Repay Monies Held.....................................32
SECTION 8.06 Return of Unclaimed Monies............................................32
SECTION 8.07 Reinstatement.........................................................32
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.01 Supplemental Indentures Without Consent of Holders....................33
SECTION 9.02 Supplemental Indentures with Consent of Holders.......................33
SECTION 9.03 Compliance with Trust Indenture Act...................................35
SECTION 9.04 Revocation and Effect of Consents.....................................35
SECTION 9.05 Notation on or Exchange of Securities.................................35
SECTION 9.06 Effect of Supplemental Indentures.....................................35
SECTION 9.07 Reference in Securities to Supplemental Indentures....................36
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE 10
CONVERSION OF SECURITIES
SECTION 10.01 Right of Conversion; Conversion Price................................36
SECTION 10.02 Issuance of Shares on Conversion.....................................37
SECTION 10.03 No Adjustment for Interest or Dividends..............................37
SECTION 10.04 Adjustment of Conversion Price.......................................38
SECTION 10.05 Notice of Adjustment of Conversion Price.............................40
SECTION 10.06 Notice of Certain Corporate Action...................................40
SECTION 10.07 Taxes on Conversions.................................................42
SECTION 10.08 Fractional Shares....................................................42
SECTION 10.09 Cancellation of Converted Securities.................................42
SECTION 10.10 Provisions in Case of Consolidation, Merger or Sale of Assets........42
SECTION 10.11 Disclaimer by Trustee of Responsibility for Certain Matters..........43
ARTICLE 11
SUBORDINATION; SENIORITY
SECTION 11.01 Securities Subordinated to Senior Indebtedness.......................43
SECTION 11.02 Company Not to Make Payments with Respect to Junior Securities
in Certain Circumstances.............................................44
SECTION 11.03 Subrogation of Junior Securities.....................................46
SECTION 11.04 Authorization by Holders of Junior Securities........................47
SECTION 11.05 Notices to Trustee...................................................47
SECTION 11.06 Trustee's Relation to Senior Indebtedness............................48
SECTION 11.07 No Impairment of Subordination.......................................48
SECTION 11.08 Article 11 Not To Prevent Events of Default..........................48
SECTION 11.09 Paying Agents other than the Trustee.................................48
SECTION 11.10 Securities Senior to Subordinated Indebtedness.......................49
ARTICLE 12
SINKING FUND
SECTION 12.01 Mandatory and Optional Sinking Fund Payments.........................49
SECTION 12.02 Satisfaction of Sinking Fund Payments with Securities................49
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<S> <C> <C>
SECTION 12.03 Redemption of Securities for Sinking Funds...........................50
ARTICLE 13
MISCELLANEOUS
SECTION 13.01 Trust Indenture Act Controls.........................................50
SECTION 13.02 Notices..............................................................50
SECTION 13.03 Communications by Holders with Other Holders.........................51
SECTION 13.04 Certificate and Opinion as to Conditions Precedent...................52
SECTION 13.05 Statements Required in Certificate and Opinion.......................52
SECTION 13.06 Rules by Trustee and Agents..........................................52
SECTION 13.07 Record Date..........................................................52
SECTION 13.08 Legal Holidays.......................................................53
SECTION 13.09 Governing Law........................................................53
SECTION 13.10 No Adverse Interpretation of Other Agreements........................53
SECTION 13.11 No Recourse Against Others...........................................53
SECTION 13.12 Successors...........................................................53
SECTION 13.13 Multiple Counterparts................................................53
SECTION 13.14 Table of Contents, Headings, etc.....................................53
SECTION 13.15 Severability.........................................................53
</TABLE>
-v-
<PAGE> 7
CROSS-REFERENCE TABLE
AMERICAN RETIREMENT CORPORATION
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture
- --------------- ---------
<S> <C>
ss.310(a)(1).......................................................7.10
(a)(2)....................................................7.10
(a)(3)....................................................Not Applicable
(a)(4)....................................................Not Applicable
(a)(5)....................................................7.10
(b).......................................................7.08; 7.10
(c).......................................................Not Applicable
ss.311(a)..........................................................7.11
(b).......................................................7.11
(c).......................................................Not Applicable
ss.312(a)..........................................................2.12
(b).......................................................13.03
(c).......................................................13.03
ss.313(a)..........................................................7.06
(b)(1)....................................................Not Applicable
(b)(2)....................................................7.06
(c).......................................................7.06; 13.02
(d).......................................................7.06
ss.314(a)..........................................................4.02; 13.02
(b).......................................................Not Applicable
(c)(1)....................................................13.04
(c)(2)....................................................13.04
(c)(3)....................................................Not Applicable
(d).......................................................Not Applicable
(e).......................................................13.05
(f).......................................................Not Applicable
ss.315(a)..........................................................7.01(b)
(b).......................................................7.05; 13.02
(c).......................................................7.01(a)
(d).......................................................7.01(c); 6.05
(e).......................................................6.10
ss.316(a)(last sentence)...........................................13.06
(a)(1)(A).................................................6.05
(a)(1)(B).................................................6.04
(a)(2)....................................................Not Applicable
(b).......................................................6.06
(c).......................................................13.07
ss.317(a)(1).......................................................6.07
(a)(2)....................................................6.08
(b).......................................................2.05
ss.318(a)..........................................................11.01
(b).......................................................Not Applicable
(c).......................................................Not Applicable
</TABLE>
- ----------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.
-vi-
<PAGE> 8
INDENTURE dated as of __________ between American Retirement
Corporation, a Tennessee corporation ("Company"), and _______________________
("Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its securities (hereinafter called the
"Securities") evidencing its unsecured indebtedness, to be issued in one or more
fully registered series.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
To set forth or to provide for the establishment of the terms and
conditions upon which the Securities are and are to be authenticated, issued and
delivered, and in consideration of the premises and the purchase of Securities
by the Holders thereof, it is mutually covenanted and agreed as follows, for the
equal and proportionate benefit of all Holders of the Securities or of a series
thereof, as the case may be:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities or by agreement
or otherwise.
"Agent" means any Registrar, Paying Agent, Conversion Agent,
co-registrar or agent for service of notices and demands.
"Bankruptcy Law" means Title 11 of the U.S. Code or any similar Federal
or State law for the relief of debtors.
"Board of Directors of the Company" means the Board of Directors of the
Company or any committee of the Board.
"Board Resolution" means a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of
Directors of the Company and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means a day that is not a Legal Holiday.
<PAGE> 9
"Capital Stock" means any and all shares or other equivalents (however
designated) of capital stock, including all common stock and all preferred
stock.
"Closing Price" means with respect to the shares of common stock of the
Company on any day, (i) the last reported sales price regular way or, in case no
such reported sale takes place on such day, the average of the reported closing
bid and asked prices regular way, in either case on the New York Stock Exchange,
or (ii) if the shares of common stock are not listed or admitted to trading on
the New York Stock Exchange, the last reported sales price regular way, or in
case no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, on the principal national securities
exchange on which the shares of common stock are listed or admitted to trading,
or (iii) if the shares of common stock are not listed or admitted to trading on
any national securities exchange, the average of the closing bid and asked
prices as furnished by any New York Stock Exchange member firm selected from
time to time by the Company for that purpose.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at ____________________________________.
"Custodian" means any receiver, trustee, liquidator or similar official
under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Depositary" means, with respect to the Securities of any series issued
in whole or in part in the form of a Global Security, the Person designated as
Depositary by the Company pursuant to Section 2.02 until a successor Depositary
shall have become such pursuant to the applicable procedures of this Indenture,
and thereafter "Depositary" shall mean or include each Person who is then a
Depositary hereunder, and if at any time there is more than one Depositary with
respect to the Securities of any such series, "Depositary" shall mean the
Depositary with respect to the Securities of that series.
"Dollar" or "$" means the lawful money of the United States of America.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Global Security" means a Security in the form prescribed in Section
2.15 evidencing all or part of a Securities, issued to the Depositary for such
series or its nominee, and registered in the name of such Depositary or nominee.
-2-
<PAGE> 10
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Indebtedness," as applied to any Person, means, without duplication
(i) all indebtedness for borrowed money whether or not evidenced by a promissory
note, draft or similar instrument, (ii) that portion of obligations with respect
to leases that is properly classified as a liability on a balance sheet in
accordance with generally accepted accounting principles, (iii) notes payable
and drafts accepted representing extensions of credit, (iv) any balance owed for
all or any part of the deferred purchase price of property or services, which
purchase price is due more than six months from the date of incurrence of the
obligation in respect thereof (except any such balance that constitutes (a) a
trade payable or an accrued liability arising in the ordinary course of business
or (b) a trade draft or note payable issued in the ordinary course of business
in connection with the purchase of goods or services), if and to the extent such
debt would appear as a liability upon a balance sheet of such Person prepared in
accordance with generally accepted accounting principles, and (v) any deferral,
amendment, renewal, extension, supplement or refunding of any of the foregoing
indebtedness; provided, however, that, in computing the "Indebtedness" of any
Person, there shall be excluded any particular indebtedness if, upon or prior to
the maturity thereof and at the time of determination of such indebtedness,
there shall have been deposited with a depository in trust money (or evidences
of indebtedness if permitted by the instrument creating such indebtedness) in
the necessary amount to pay, redeem or satisfy such indebtedness as it becomes
due, and the amount so deposited shall not be included in any computation of the
assets of such Person.
"Indenture" means this Indenture as originally executed or, if amended
or supplemented as provided in Article 9, as amended or supplemented from time
to time.
"Officer" means the Chairman of the Board, the Chief Executive Officer,
the President, any Senior Vice President, the Treasurer, the Secretary or the
Controller of the Company.
"Officers' Certificate" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer, Assistant Secretary or Assistant
Controller of the Company. See Sections 13.04 and 13.05.
"Opinion of Counsel" means a written opinion from Bass, Berry & Sims
PLC, or such other counsel as is acceptable to Trustee. The counsel may be an
employee of or counsel to the Company or the Trustee. See Sections 13.04 and
13.05.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Principal" of a Security means the principal of the Security plus,
when appropriate, the premium, if any, on the Security.
"Redemption Date" when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture.
-3-
<PAGE> 11
"Redemption Price", when used with respect to any Security to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
as specified in such Security.
"Senior Indebtedness" means the principal, premium, if any, and unpaid
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for post-filing interest is allowed in such proceeding), fees, charges,
expenses, reimbursement and indemnification obligations, and all other amounts
payable under or in respect of Indebtedness of the Company for money borrowed,
whether any such Indebtedness exists as of the date of this Indenture or shall
hereafter be created, incurred, assumed or guaranteed (other than (i)
Indebtedness owed to a subsidiary of the Company, (ii) Indebtedness which is
expressly pari passu to the Securities, (iii) Subordinated Indebtedness, or (iv)
the Company's 5 3/4 % Convertible Subordinated Debentures due 2002).
"Subordinated Indebtedness" means the principal, premium, if any, and
interest on any Indebtedness of the Company which by its terms is expressly
subordinated in right of payment to the Securities.
"Subsidiary" means a corporation the majority of whose voting stock is
owned by the Company or a subsidiary of the Company. Voting stock is Capital
Stock having voting power under ordinary circumstances to elect directors.
"Trust Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any senior vice president, any
vice-president, any assistant vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier, any assistant
cashier, any Trust Officer or assistant Trust Officer, the controller or any
assistant controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer of the Trustee to whom such matter is referred because of his knowledge
of and familiarity with the particular subject.
"United States" means the United States of America.
SECTION 1.02 Other Definitions.
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Company Order" 2.03
"Conversion Agent" 2.04
"conversion price" 10.01
"current market price" 10.04
"Event of Default" 6.01
"Junior Securities" 11.01
"Legal Holiday" 13.08
"mandatory sinking fund payments" 12.01
</TABLE>
-4-
<PAGE> 12
<TABLE>
<S> <C>
"Market Price" 3.01
"optional sinking fund payments" 12.01
"Paying Agent" 2.04
"Payment or Distribution" 11.01
"Redemption Price" 3.01
"Registrar" 2.04
"Rule 13e-3 Transaction" 10.06
"Securities" Recitals
"TIA" 1.03
"U.S. Government Obligations" 8.01
</TABLE>
SECTION 1.03 Incorporation by Reference to Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture
Act of 1939 (the "TIA"), the provision is incorporated by reference in and made
a part of this Indenture. The following TIA terms used in this Indenture have
the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any
other obligor on the indenture securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rules have
the meanings assigned to them therein.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with United States generally accepted accounting principles
in effect as of the time as to which such accounting principles are to be
applied;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and in the plural include
the singular.
-5-
<PAGE> 13
ARTICLE 2
THE SECURITIES
SECTION 2.01 Forms Generally.
The Securities of each series shall be in substantially the form
(including any global form that is not inconsistent with this Indenture) as
shall be established from time to time by or pursuant to a Board Resolution or
in one or more indentures supplemental hereto, in each case with such variations
as are required or permitted by this Indenture (including such other provisions
as are necessary to reflect the global form of any Security, and the designation
of a Depositary for such Global Security) and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
of any securities exchange or to conform to general usage, all as may be
determined by the officers executing such Securities as evidenced by their
execution of the Securities.
SECTION 2.02 Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series:
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other
Securities);
(2) the limit, if any, upon the aggregate principal amount
of the Securities of the series which may be authenticated and
delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of the series
pursuant to this Indenture);
(3) the date or dates on which the principal of (and
premium, if any, on) the Securities of the series is payable;
(4) the rate or rates, if any, at which the Securities of
the series shall bear interest (or the method of determining such
rate or rates), the date or dates from which such interest shall
accrue, date or dates on which such interest shall be payable and
the record date or dates for the interest payable;
(5) the place or places where the principal of (and premium,
if any) and interest on Securities of the series shall be
payable;
-6-
<PAGE> 14
(6) the period or periods within which or the date or dates
on which, if any, the price or prices at which and the terms and
conditions upon which Securities of the series may be redeemed,
in whole or in part, at the option of the Company;
(7) the obligation, if any, of the Company to redeem, repay
or purchase Securities of the series pursuant to any sinking fund
or analogous provisions or at the option of a Securityholder
thereof and the period or periods within which, the price or
prices at which and the terms and conditions upon which
Securities of the series shall be redeemed, repaid or purchased,
in whole or in part, pursuant to such obligation;
(8) the price at which Securities of any one series are or
may be converted into shares of Capital Stock of the Company;
(9) the period during which such conversion right may be
exercised and any other terms or conditions of such conversion;
(10) if other than the principal amount thereof, the portion
of the principal amount of Securities of the series which shall
be payable upon declaration of acceleration of the maturity
thereof;
(11) whether any Securities of the series are to be issued
in whole or in part in the form of one or more Global Securities
and, if so, the Depositary for such Global Security or Securities
(which Depositary shall be, if then required by applicable law or
regulation, a clearing agency registered under the Exchange Act
and any other applicable statute or regulation) and whether
beneficial owners of interests in such Global Security or
Securities may exchange such interests for Securities of such
series and any authorized form and denomination of such
Securities and the circumstances under which any such exchanges
may occur (if other than in the manner provided in Section 2.06);
(12) the identity of each Paying Agent, Conversion Agent and
Registrar (each as defined in Section 2.04) for the Securities of
such series; and
(13) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to such Board Resolution and set forth in such Officers' Certificate or in any
such indenture supplemental hereto.
If any of the terms of a series of Securities are established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery to the Trustee
of the Officers' Certificate or supplemental indenture setting forth the
-7-
<PAGE> 15
terms of the series.
SECTION 2.03 Execution and Authentication.
Two Officers shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be impressed, affixed, imprinted
or reproduced on the Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall
nevertheless be valid.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security. Such signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate Securities for original issue upon
written order or orders of the Company signed by two Officers or by an Officer
and an Assistant Treasurer of the Company (a "Company Order").
The Trustee may appoint an authenticating agent to authenticate
Securities. An authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate.
The Securities may be issued in registered form without coupons.
The Securities shall be issuable only in denominations of $1,000 principal
amount and any integral multiple thereof.
The Trustee shall inform the Depositary with respect to the Securities
of any series that the Trustee has endorsed pursuant to the provisions of
Section 2.15.
SECTION 2.04 Registrar and Agents.
The Company shall maintain an office or agency where Securities of any
series may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities of any series may be
presented for payment ("Paying Agent"), an office or agency where Securities of
any series may be presented for conversion ("Conversion Agent") and an office or
agency where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Registrar shall keep a register
of the Securities of each series and of their transfer and exchange. The Company
may have one or more co-registrars, one or more additional Paying Agents and one
or more additional Conversion Agents. The Company or any Subsidiary may act as
Paying Agent and/or Conversion Agent. The term "Paying Agent" includes any
additional paying agent and the term "Conversion Agent" includes any additional
conversion agent.
The Company may change any Paying Agent, Registrar, Conversion Agent or
-8-
<PAGE> 16
Co-Registrar on sixty (60) days' prior written notice to the Trustee. The
Company shall notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar, Paying Agent, Conversion
Agent or agent for service of notices and demands, or fails to give the
foregoing notice, the Trustee shall act as such.
The Company and the Trustee initially appoint the Trustee as Registrar,
Paying Agent, Conversion Agent and agent for service of notices and demands.
SECTION 2.05 Paying Agent to Hold Money in Trust.
Prior to each due date of the principal of, premium if any, and
interest on any Securities of any series, the Company shall deposit with each
Paying Agent a sum sufficient to pay such principal, premium, if any, and
interest so becoming due. The Company shall require each Paying Agent other than
the Trustee to agree in writing that it will hold in trust for the benefit of
Holders of Securities of any series or the Trustee all money held by the Paying
Agent for the payment of principal of, premium if any, or interest on the
Securities of such series and to notify the Trustee in writing of any default by
the Company (or any other obligor on the Securities of such series) in making
any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall
on or before each due date of the principal of, premium, if any, or interest on
any Securities of any series segregate the money and hold it as a separate trust
fund. The Company at any time may require a Paying Agent to pay all money held
by it to the Trustee and the Trustee may at any time during the continuance of
any payment default, upon written request to a Paying Agent, require such Paying
Agent to forthwith pay to the Trustee all sums so held in trust by such Paying
Agent. Upon doing so, the Paying Agent (other than the Company or a Subsidiary
thereof) shall have no further liability for the money.
SECTION 2.06 Transfer and Exchange.
(a) When a Security of any series is presented to the Registrar or a
co-registrar with a request to register the transfer, the Registrar or
co-registrar shall register the transfer as requested and when Securities of any
series are presented to the Registrar or a co-registrar with a request to
exchange them for a like aggregate principal amount of Securities of such series
in other authorized denominations, the Registrar shall make the exchange as
requested, provided that every Security presented or surrendered for
registration or transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Registrar duly executed by the Holder thereof or his attorney-in-fact duly
authorized in writing. To permit registrations of transfers and exchanges, the
Company shall issue and the Trustee or any authenticating agent shall
authenticate Securities of such series at the Registrar's or co-registrar's
written request. No service charge shall be made for any registration of
transfer or exchange of Securities but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto, but this provision shall not apply to any exchange pursuant to
Section 2.09, 3.06, 9.05 or 10.02 not involving any transfer.
Unless and until a Global Security is exchanged in whole or in part for
Securities in definitive form in accordance with the provisions of this
Indenture, a Global Security may not be
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<PAGE> 17
transferred, except as a whole, by the Depositary to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or nominee. Unless otherwise provided as
contemplated by Section 2.02 of this Indenture, the Depositary may not sell,
assign, transfer or otherwise convey any beneficial interest in a Global
Security evidencing all or part of the Securities of such series unless such
beneficial interest is in an amount equal to an authorized denomination for
Securities of such series.
At the option of the Holder, Securities of any series may be exchanged
for other Securities of such series of any authorized denominations and of a
like aggregate principal amount, upon surrender to the Registrar or a
co-registrar of the Securities to be exchanged. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, the Securities which the Holder
making the exchange is entitled to receive.
(b) The Registrar shall not be required (i) to issue, register the
transfer of, or exchange Securities of any series during a period beginning at
the opening of business 15 days before the day of any selection of Securities of
such series for redemption under Section 3.02 and ending at the close of
business on the day of selection, (ii) to register the transfer or exchange of
any Security of any series so selected for redemption in whole or in part,
except the unredeemed portion of any Security being redeemed in part, or (iii)
to register the transfer or exchange of any Securities of any series during a
period beginning at the opening of business 15 days before the day of any
selection of Securities of such series for redemption under Section 3.02 and
ending at the close of business on the day interest is to be paid on Securities
of such series.
(c) If at any time the Depositary for any Securities of a series issued
in the form of one or more Global Securities notifies the Company that it is
unwilling or unable to continue as Depositary for such Securities or if at any
time the Depositary for the Securities of such series shall no longer be
eligible under Section 2.02 of this Indenture, the Company shall appoint a
successor Depositary with respect to such Securities. If a successor Depositary
for such Securities is not appointed by the Company within ninety (90) days
after the Company receives such notice or becomes aware of such ineligibility,
the Company's election to issue Global Securities pursuant to Section 2.02 shall
no longer be effective with respect to such Securities and the Company will
execute, and the Trustee, upon receipt of a Company Order for the authentication
and delivery of definitive Securities of such series, will authenticate
Securities of such series in definitive form, in authorized denominations, in an
aggregate principal amount equal to the principal amount of the Global Security
or Securities in exchange for such Global Security or Securities and deliver
such definitive Securities to the Securityholders of such series.
The Company may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more Global Securities
shall no longer be represented by such Global Security or Securities. The
Company shall notify the Depositary and the Trustee of the date and time of such
exchange in a Company Order. The Depositary shall surrender the Global
Securities to the Trustee as the Company's agent for such purpose as shall be
specified in the Company Order. The Company will execute, and the Trustee, upon
receipt of a Company
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Order for the authentication and delivery of definitive Securities of such
series, will authenticate and deliver, Securities of such series in definitive
form, in authorized denominations, and in an aggregate principal amount equal to
the principal amount of the Global Security or Securities in exchange for such
Global Security or Securities.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 2.02 of this Indenture, any Global Security shall be
exchangeable only as provided in this paragraph. If the owners of beneficial
interests in a Global Security of any series are entitled to exchange such
interests for Securities of such series, as may be specified in accordance with
Section 2.02 of this Indenture, then without unnecessary delay upon receipt of
notice therefrom so specified as contemplated by Section 2.02 of this Indenture
but in any event not later than one business day prior to the earliest date on
which such interests may be so exchanged, the Company shall deliver to the
Trustee definitive Securities of such series, in authorized denominations, and
in aggregate principal amount equal to the principal amount of such Global
Security, executed by the Company. On or after the earliest date on which such
interests may be so exchanged, such Global Security shall be surrendered by the
Depositary as shall be specified in the Company Order with respect thereto to
the Trustee, as the Company's agent for such purpose, to be exchanged, in whole
or from time to time in part, for definitive Securities of such series, without
charge, and the Trustee shall authenticate and deliver, in exchange for each
portion of such Global Securities, a like aggregate principal amount of
definitive Securities of the same series in authorized denominations as the
portion of such Global Securities to be so exchanged; provided, however, that no
such exchanges may occur for a period of 15 days immediately preceding the date
notice is received by the Company requesting such changes.
SECTION 2.07 Replacement Securities.
If a mutilated Security of any series is surrendered to the Trustee or
if the Holder of a Security of any series presents evidence to the satisfaction
of the Company and the Trustee that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security of such series if the requirements of the Trustee and the
Company are met. An indemnity bond may be required by the Company or the Trustee
that is sufficient in the judgment of the Company to protect the Company and is
sufficient in the judgment of the Trustee to protect the Trustee or any Agent
from any loss which it may suffer if a Security of such series is replaced. The
Company may charge for its expense in replacing a Security.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its sole discretion
may, instead of issuing a new Security, pay or authorize the payment or convert
or authorize the conversion of such Security.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
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SECTION 2.08 Outstanding Securities.
Securities of any series outstanding at any time are all Securities of
such series authenticated by the Trustee except for those canceled by it, those
delivered to it for cancellation and those described in this Section 2.08 as not
outstanding.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding until the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company or a Subsidiary) holds on a
Redemption Date or maturity date money deposited with it by or on behalf of the
Company sufficient to pay the principal of and accrued interest on Securities of
any series payable on that date, then on and after that date such Securities
cease to be outstanding and interest on them ceases to accrue.
A Security does not cease to be outstanding because the Company or an
Affiliate holds the Security.
SECTION 2.09 Temporary Securities.
Until definitive Securities of any series are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities of
such series. Temporary Securities of any series shall be substantially in the
form of definitive Securities of such series but may have non-material
variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities of any series in exchange for temporary
Securities of such series upon written order of the Company signed by two
Officers. Until so exchanged, temporary Securities of any series represent the
same rights as definitive Securities of such series. Upon request of the
Trustee, the Company shall provide a certificate to the effect that the
temporary Securities of any series meet the requirements of the second sentence
of this Section 2.09.
SECTION 2.10 Cancellation.
The Company at any time may deliver Securities of any series to the
Trustee for cancellation. The Registrar, the Paying Agent and the Conversion
Agent shall forward to the Trustee any Securities surrendered to them for
transfer, exchange, payment or conversion. The Trustee shall cancel all
Securities surrendered for transfer, exchange, payment or conversion and destroy
canceled Securities in accordance with its customary destruction procedures and
deliver a certificate of such destruction to the Company unless the Company; by
written order signed by two officers of the Company, directs the Trustee in
writing prior to such destruction to deliver canceled Securities to the Company.
Subject to Sections 2.07, 3.06 and the second paragraph of Section 10.02, the
Company may not issue Securities to replace Securities that it has previously
paid or delivered to the Trustee for cancellation or that a Securityholder has
converted pursuant to Article 10 hereof.
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SECTION 2.11 Defaulted Interest.
If the Company defaults in a payment of interest on Securities of any
series, it shall pay the defaulted interest to the Persons who are Holders of
the Securities of such series on a subsequent special record date. After the
deposit by the Company with the Trustee of money sufficient to pay such
defaulted interest, the Trustee shall fix the record date and payment date. Each
such special record date shall be not less than 10 days prior to such payment
date. Each such payment date shall be not more than 60 days after the deposit by
the Company of money to pay the defaulted interest. At least 15 days before the
special record date, the Company shall mail to each Holder of a Security of such
series a notice that states the special record date, the payment date, and the
amount of defaulted interest to be paid. The Company may pay defaulted interest
in any other lawful manner if, after prior notice to the Trustee, such payment
shall be deemed operationally practicable by the Trustee.
SECTION 2.12 Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders of Securities of each series. If the Trustee is not the Registrar, the
Company or other obligor, if any, shall furnish to the Trustee at least seven
Business Days prior to each semiannual interest payment date and at such other
times as the Trustee may request in writing a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of Holders
of Securities of each series upon which the Trustee may conclusively rely. The
Trustee may destroy any such list upon receipt of a replacement list. The Paying
Agent will solicit from each Securityholder a certification of social security
number or taxpayer identification number in accordance with its customary
practice and as required by law, unless the Paying Agent is in possession of
such certification. Each Paying Agent is authorized to impose back-up
withholding with respect to payments to be made to Securityholders to the extent
required by law.
SECTION 2.13 Persons Deemed Owners.
Prior to presentment of a Security of any series for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security and neither the Company, the Trustee nor any agent of the Company
or the Trustee shall be affected by notice to the contrary.
SECTION 2.14 CUSIP Number.
The Company may use a "CUSIP" number when issuing Securities of any
series, and if so, the Trustee may use the CUSIP number in notices of redemption
or exchange as a convenience to Holders of Securities of such series; provided,
that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in the notice or on the
Securities, and that reliance may be placed only on the other identification
numbers printed on the Securities.
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SECTION 2.15 Provisions in Global Security.
(a) If Securities of a series are issuable in whole or in part as
Global Securities, as may be specified in accordance with Section 2.02 of this
Indenture, then in accordance with any such Global Security, such Global
Security may represent such of the outstanding Securities of such series as
shall be specified therein and may also provide that it represents the aggregate
principal amount of outstanding Securities from time to time endorsed thereon
and that the aggregate principal amount of outstanding Securities represented
thereby may from time to time be reduced to reflect exchanges. Global Securities
may be permanent or temporary. Any endorsement of a Global Security to reflect
the amount, or any increase or decrease in the principal amount, of outstanding
Securities represented thereby shall be made by the Trustee in such manner and
upon instructions given by such Person or Persons as shall be specified therein
or in the Company Order to be delivered to the Trustee and the Depositary
pursuant to Section 2.03 or Section 2.09. Subject to the provisions of Section
2.03 and, if applicable, Section 2.09, the Depositary shall deliver and
redeliver any permanent Global Security in the manner and upon written
instructions given by the Person or Persons specified therein or in the
applicable Company Order.
(b) Notwithstanding the other provisions of this Indenture, unless
otherwise specified in accordance with Section 2.02, payment of principal of
(and premium, if any) and interest, if any, on any permanent Global Securities
shall be made directly to owners of beneficial interest of such Global Security.
(c) Notwithstanding the provisions of Section 2.13 of this Indenture,
the Company, the Trustee and any agent of the Company or the Trustee shall treat
the owners of beneficial interest of such Global Security as the Holders of such
principal amounts of outstanding Securities represented by a Global Security as
shall be specified in writing by the Depositary and delivered to the Company and
the Trustee with respect to such Global Security only for purposes of obtaining
any consents or directions required to be given by the Holders pursuant to this
Indenture.
(d) Unless otherwise provided as contemplated by Section 2.02, a Global
Security of any series shall provide, in addition to the provisions established
pursuant to Sections 2.01, 2.02 and 2.15(a) through (c), that the Depositary
will not sell, assign, transfer or otherwise convey any beneficial interest in
such Global Security unless such beneficial interest is in an amount equal to an
authorized denomination for Securities of such series, and the Depository, by
accepting such Global Security, agrees to be bound by such provision. Any Global
Security shall also contain such other provisions as are necessary to reflect
the global form of such Security and the designation of a Depositary for such
Global Security.
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ARTICLE 3
REDEMPTION
SECTION 3.01 Right of Redemption.
(a) The Company may, at its option, redeem Securities of any series as
permitted or required by the terms of such Securities, which redemption shall be
made in accordance with the terms of such Securities and this Article. The
purchase price for Securities of any series redeemed pursuant to the immediately
preceding sentence (the "Redemption Price") shall be equal to the lesser of (i)
the Market Price on the date the Company mails the notice of redemption required
under Section 3.03 and (ii) 100% of the principal amount thereof, in each case
together with accrued interest, if any. For purposes of the preceding sentence,
the "Market Price" means, with respect to the Securities of any series on any
day, (x) the last reported sale price regular way or, in case no such reported
sale takes place on such day, the average of the reported closing bid and asked
prices regular way, in either case on the New York Stock Exchange, or (y) if the
Securities of such series are not listed or admitted to trading on the New York
Stock Exchange, the last reported sale price regular way, or in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way, on the principal national securities exchange on
which the Securities of such series are listed or admitted to trading, or (z) if
the Securities of such series are not listed or admitted to trading on any
national securities exchange, the average of the closing bid and asked prices as
furnished by any New York Stock Exchange member firm selected from time to time
by the Company for that purpose. The election of the Company to redeem any
Securities pursuant to this Section shall be evidenced by a Board Resolution.
The Company shall, at least 45 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and, in the case of any redemption at the
election of the Company of less than all the Securities of any series, of the
principal amount of Securities of that series to be redeemed.
(b) If the Company wants to redeem the Securities of any series
pursuant to the redemption provisions of the Securities of such series, it shall
notify the Trustee of the Redemption Date and the principal amount of Securities
of such series to be redeemed. The notice shall be in writing and accompanied by
an Officers' Certificate stating that the redemption complies with the
provisions of this Indenture and the provisions of the applicable Board
Resolution, if any, and in the Securities of such series.
The Company shall give each notice provided for in this Section 3.01 in
writing and at least 45 but not more than 90 days before the Redemption Date or
such other period as the Company and the Trustee may agree.
SECTION 3.02 Selection of Securities to be Redeemed.
If any part of a series of Securities is to be redeemed, the Trustee
shall select the
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Securities of such series to be redeemed pro rata or by lot. The Trustee shall
promptly notify the Company of the Securities of such series to be so called for
redemption. The Trustee shall make the selection from Securities of such series
outstanding and not previously called for redemption. The Trustee may select for
redemption portions of the principal of Securities that have denominations
larger than $1,000 principal amount. Securities and portions of them it selects
shall be in principal amounts of $1,000 or multiples thereof. Provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption. The Trustee's selection of Securities for
redemption by any method authorized by this Section 3.02 shall be conclusively
deemed reasonable.
SECTION 3.03 Notice of Redemption by the Company.
At least 30 days but not more than 60 days before a Redemption Date
with respect to Securities of any series, the Company shall mail a notice of
redemption by first-class mail to each Holder of Securities of such series to be
redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent and the
Conversion Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption
price;
(5) that interest on Securities called for redemption ceases
to accrue on and after the Redemption Date;
(6) if any Security is being redeemed in part, the portion
of the principal amount of such Security to be redeemed and
that, after the Redemption Date, upon surrender of such
Security, a new Security or Securities of the same series in
principal amount equal to the unredeemed portion thereof
will be issued; and
(7) any conversion rights with respect to the Securities and
the applicable procedures required to be followed in
connection with a conversion of Securities.
At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. If a CUSIP number
is listed in such notice or printed on the Security, the notice shall state that
no representation is made as to the correctness or accuracy of such CUSIP
number.
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SECTION 3.04 Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the applicable Redemption Date and at the applicable
Redemption Price. Upon surrender to the Paying Agent, such Securities shall be
paid at the Redemption Price, plus accrued interest to the Redemption Date.
SECTION 3.05 Deposit of Redemption Price.
On or before the Redemption Date with respect to any series of
Securities, the Company shall deposit with the Paying Agent (or if the Company
or a Subsidiary is the Paying Agent, shall segregate and hold in trust or cause
such Subsidiary to segregate and hold in trust) in immediately available funds
money sufficient to pay the Redemption Price of and accrued interest on all
Securities of such series to be redeemed on that date. The Trustee or the Paying
Agent shall return to the Company any money so received not required for that
purpose.
SECTION 3.06 Securities Redeemed in Part.
Upon surrender of a Security of any series that is redeemed in part,
the Trustee shall authenticate for the Holder, at the expense of the Company, a
new Security of such series equal in principal amount to the unredeemed portion
of the Security surrendered. If a Global Security is so surrendered, such new
Security so issued shall be a new Global Security.
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of the Securities.
The Company shall pay the principal of, premium, if any, and interest
on the Securities of any series on the dates and in the manner provided in the
Securities of such series and this Indenture. An installment of principal,
premium, if any, or interest shall be considered paid on the date it is due if
the Trustee or Paying Agent (other than the Company or a Subsidiary) holds on
that date money designated for and sufficient to pay the installment. The
Company shall pay interest on overdue principal and premium, if any, at the rate
borne by the Security; it shall pay interest, including post-petition interest
in the event of a proceeding under the Bankruptcy Laws, on overdue installments
of interest at the same rate to the extent lawful.
SECTION 4.02 Commission Reports.
The Company shall file with the Trustee, promptly after it files them
with the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the Commission may by rules and regulations prescribe) which the Company is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act. The Company shall also comply with the other
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provisions of TIA ss.314(a).
So long as the Securities remain outstanding, the Company shall cause
its annual reports to stockholders (containing audited financial statements) and
any other financial reports furnished by it to stockholders to be mailed to the
Holders at their addresses appearing in the register of Securities maintained by
the Registrar.
SECTION 4.03 Waiver of Stay, Extension or Usury Laws.
The Company expressly waives (to the extent that it may lawfully do so)
any stay or extension law or any usury law or other law that would prohibit or
forgive the Company from paying all or any portion of the principal of (premium,
if any) or interest on Securities of any series as contemplated herein, wherever
enacted, now or at any time hereafter in force, or that may affect the covenants
or the performance of this Indenture.
SECTION 4.04 Notice of Default.
The Company will, so long as any Securities of any series are
outstanding, deliver to the Trustee, within 10 days of becoming aware of any
Default or Event of Default in the performance of any covenant, agreement or
condition in this Indenture, an Officers' Certificate specifying such Default or
Event of Default.
SECTION 4.05 Compliance Certificates.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company (which as of the date hereof is December 31),
a written statement signed by the principal executive officer, principal
financial officer or principal accounting officer of the Company, stating, as to
each signer thereof, that
(1) a review of the activities of the Company during such year and of
performance under this Indenture has been made under his supervision and
(2) to the best of his knowledge, based on such review, the Company has
kept, observed, performed and fulfilled in all material respects each and every
condition and covenant contained in this Indenture throughout such year, or, if
there has been a default in the fulfillment of any such condition or covenant,
specifying each such default known to him and the nature and status thereof.
The Company will give the Trustee written notice of a change in the
fiscal year of the Company, within a reasonable time after such change is
effected.
SECTION 4.06 Limitation on Dividends and Other Distributions.
The Company will not declare or pay any dividends or make any
distribution to holders of its Capital Stock (other than dividends or
distributions payable in Capital Stock of the Company), or purchase, redeem or
otherwise acquire or retire for value any of its Capital Stock or permit any
Subsidiary to purchase, redeem or otherwise acquire or retire for value any of
the
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Company's Capital Stock if at the time of any of the aforementioned actions
an Event of Default has occurred and is continuing or would exist immediately
after giving effect to such action.
Notwithstanding the foregoing, the provisions of this Section 4.06 will
not prevent (i) the payment of any dividend within 60 days after the date of
declaration when the payment would have complied with the foregoing provisions
on the date of declaration; or (ii) the retirement of any share of the Company's
Capital Stock by exchange for, or out of the proceeds of the substantially
concurrent sale (other than to a Subsidiary) of, other shares of its Capital
Stock.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When Company May Merge, etc.
The Company shall not consolidate with or merge into, or transfer all
or substantially all of its assets to, another Person in any transaction in
which the Company is not the continuing or surviving entity unless (i) the
resulting, surviving or transferee Person (or the parent corporation of such
Person in the case of a triangular merger) is a corporation or trust which
assumes by supplemental indenture all the obligations of the Company under the
Securities of each series and this Indenture; (ii) such corporation or trust is
organized and existing under the laws of the United States, a State thereof or
the District of Columbia although it in turn may be owned by a foreign entity;
(iii) immediately after giving effect to such transaction no Default or Event of
Default shall have happened and be continuing, and the Officers' Certificate
referred to in the following clause reflects that such Officers are not aware of
any such Default or Event of Default that shall have happened and be continuing,
and (iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture comply with this Indenture,
and thereafter all obligations of the Company shall terminate.
SECTION 5.02 Successor Corporation or Trust Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.01,
the successor corporation or trust formed by such consolidation or into which
the Company is merged (or the parent corporation of such successor or surviving
corporation in the case of a triangular merger in which the Company is a
constituent corporation) or to which such transfer is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation or trust
has been named as the Company herein.
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ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
An "Event of Default" occurs if, with respect to any series of
Securities:
(1) the Company defaults in the payment of interest on any
Security of such series when the same becomes due and payable and
the default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of
(and premium, if any, on) any Security of such series when the
same becomes due and payable at maturity, upon redemption or
otherwise, and the default continues for five Business Days;
(3) the Company fails to comply with any of its other
agreements in the Securities of such series or this Indenture and
the default continues for the period and after the notice
specified in the last paragraph of this Section 6.01;
(4) there shall be a default under any bond, debenture, note
or other evidence of Indebtedness or under any mortgage,
indenture or other instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness of
the Company or any Subsidiary, whether any such Indebtedness now
exists or shall hereafter be created, if (a) either (i) such
event of default results from the failure to pay any such
Indebtedness at maturity or (ii) as a result of such event of
default, the maturity of such Indebtedness has been accelerated
prior to its stated maturity and such acceleration shall not be
rescinded or annulled or the accelerated amount paid within ten
days after notice to the Company of such acceleration, or such
Indebtedness having been discharged and (b) the principal amount
of such Indebtedness, together with the principal amount of any
other such Indebtedness in default for failure to pay principal
or interest thereon, or the maturity of which has been so
accelerated, aggregates $10,000,000 or more;
(5) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order for relief against
it in an involuntary case or proceeding,
(C) consents to the appointment of a Custodian of it or
for all or
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substantially all of its property, or
(D) makes a general assignment for the benefit of
its creditors; or
(6) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary
case or proceeding,
(B) appoints a Custodian of the Company or for all or
substantially all of its property, or
(C) orders the liquidation of the Company,
and the order or decree remains unstayed and in effect for
90 days;
provided, however, that a default under this Section 6.01 is
not an Event of Default with respect to any series of
Securities if a specified event is either applicable to a
particular series other than such series or it is
specifically deleted or modified in the supplemental
indenture creating such series of Securities or in the form
of Security for such series.
A default under clause (3) is not an Event of Default with respect to
any series of Securities until the Trustee notifies the Company, or the Holders
of a majority in principal amount of the Securities of such series then
outstanding notify the Company and the Trustee in writing, of the default and
the Company does not cure the default within 60 days after receipt of such
notice. The notice must specify the default, demand that it be remedied and
state that the notice is a "Notice of Default." The Trustee shall give such
notice to the Company only if directed to do so in writing by the Holders of a
majority in principal amount of the Securities then outstanding. Such notice by
the Trustee shall not be deemed to be a certification by the Trustee as to
whether an Event of Default has occurred.
SECTION 6.02 Acceleration.
If an Event of Default occurs and is continuing with respect
to any series of Securities, the Trustee by notice to the Company, or the
Holders of a majority in principal amount of the Securities of such series then
outstanding by notice to the Company and the Trustee, may declare to be due and
payable immediately the principal amount of the Securities of such series plus
accrued interest to the date of acceleration. Upon any such declaration, such
amount shall be due and payable immediately, and upon payment of such amount all
of the Company's obligations with respect to the Securities of such series,
other than obligations under Section 7.07, shall terminate. The Holders of a
majority in principal amount of the outstanding Securities of such series by
written notice to the Trustee may rescind an acceleration and its consequences
if (x) all existing Events of Default with respect to the Securities of such
series, other than the non-payment of the principal of the Securities of such
series, which have become
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due solely by such declaration of acceleration, have been cured or waived, (y)
to the extent the payment of such interest is lawful, interest on overdue
installments of interest and overdue principal which has become due otherwise
than by such declaration of acceleration, has been paid, and (z) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction. The Trustee may rely upon such notice of rescission without any
independent investigation as to the satisfaction of conditions (x), (y) and (z).
SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy by proceeding at law or in equity to collect the payment of
principal (and premium, if any) or interest on the Securities of such series or
to enforce the performance of any provision of the Securities of such series or
this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04 Waiver of Defaults and Events of Default.
Subject to Section 9.02, the Holders of a majority in principal amount
of the Securities of any series then outstanding, on behalf of the Holders of
the Securities of such series, by written notice to the Trustee may waive a
Default or Event of Default with respect to the Securities of such series and
its consequences. When a Default or Event of Default is waived with respect to
the Securities of any series, it is cured and ceases.
SECTION 6.05 Control by Majority.
The Holders of a majority in principal amount of the Securities of any
series then outstanding may direct in writing the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on it with respect to the Securities of such
series. The Trustee, however, may refuse to follow any direction that conflicts
with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Securityholders or that may involve the
Trustee in personal liability or for which the Trustee does not have adequate
indemnification pursuant to Section 7.01(e); provided, that, the Trustee may
take any other action deemed proper by the Trustee which is not inconsistent
with such direction.
SECTION 6.06 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security of any series to receive payment of principal of, premium,
if any, and interest on such Security, on or after the respective due dates
expressed in such Security, or to bring suit for the enforcement of any such
payment on or after such respective dates, is absolute and unconditional
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and shall not be impaired or affected without the consent of the Holder.
Notwithstanding any other provision of this Indenture (other than
Section 3.01), the right of any Holder of any Security to convert such Security
or to bring suit for the enforcement of such right shall not be impaired or
affected without the written consent of the Holder.
SECTION 6.07 Collection Suit by Trustee.
If an Event of Default with respect to any series of Securities in
payment of interest or principal (and premium, if any) specified in Section
6.01(1) or (2) occurs and is continuing, or an acceleration pursuant to Section
6.02 occurs and is continuing, the Trustee may recover judgment in its own name
and as trustee of an express trust against the Company or any other obligor on
the Securities of such series for the whole amount of unpaid principal (and
premium, if any) and accrued interest remaining unpaid on the Securities of such
series, together with interest on overdue principal (and premium, if any) and to
the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate borne by the Securities of
such series and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.08 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Holders of
Securities of any series allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Securities of any series), its creditors
or its property and shall be entitled and empowered to collect and receive any
monies or other property payable or deliverable on any such claims and to
distribute the same. Any Custodian in any such judicial proceeding is hereby
authorized by each Securityholder to make such payments to the Trustee, and in
the event that the Trustee shall consent to the making of such payments directly
to the Holders of Securities of any series, to pay to the Trustee any amount due
to it for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07. To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof out of the estate in any such
proceeding, shall be denied for any reason, payment of the same shall be secured
by a lien on, and shall be paid out of, any and all distributions, dividends,
money, securities and other properties which the Securityholders may be entitled
to receive in such proceeding whether in liquidation or under any plan or
reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan or reorganization, arrangement, adjustment or composition affecting the
Securities of any series or the rights of any Holder thereof, or to authorize
the Trustee to vote in respect of the claim of any Securityholder in any
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such proceedings.
SECTION 6.09 Priorities.
If the Trustee collects any money pursuant to this Article 6 with
respect to the Securities of any series, it shall pay out the money in the
following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of any Senior Indebtedness as required by
Article 11; and
THIRD: to Holders of Securities of such series for amounts due and
unpaid on the Securities of such series for principal of
(and premium, if any) and interest, ratably, without
preference or priority of any kind, according to the amounts
due and payable on the Securities of such series for
principal (and premium, if any) and interest, respectively;
and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders of Securities of any series pursuant to this Section 6.09.
SECTION 6.10 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorney's fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.10 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.06 or a suit by Holders of more than 10% in principal
amount of the Securities of any series then outstanding or a suit by any holder
of Senior Indebtedness.
SECTION 6.11 Limitations on Suits.
Subject to Section 6.06, a Holder of any series of Securities may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder has given the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal amount of such
series of Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or
expenses;
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(4) The Trustee does not comply with the request within 60 days
after receipt of the notice, request and offer of indemnity; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60 day period by the Holders of
a majority in principal amount of such series of Securities then
outstanding.
A Holder of any Security may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
ARTICLE 7
TRUSTEE
SECTION 7.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise its rights and powers vested in it by this Indenture and use the
same degree of care and skill in their exercise as a prudent Person would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied covenants
or obligation shall be read into this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. The Trustee,
however, shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
(2) The Trustee shall not be liable for any error in judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.05.
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(4) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) Subject to subsection (c), the Trustee may refuse to perform any
duty or exercise any right or power unless, subject to the provisions of the
TIA, it receives indemnity satisfactory to it against any loss, liability,
expense or fee.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02 Rights of Trustee.
(1) The Trustee may rely on and shall be protected in acting or
refraining from acting upon any document believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both, which shall conform to
Section 13.05. The Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on such Officers' Certificate or Opinion of
Counsel.
(3) The Trustee may act through agents or attorneys and shall not be
responsible for the misconduct or negligence of such agents or attorneys
appointed with due care and shall not be responsible for their supervision.
(4) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights
or powers.
(5) The Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by the Trustee
hereunder in good faith and reliance thereon.
(6) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders of Securities of any series pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction.
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SECTION 7.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities of any series and may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. The Trustee, however, is
subject to Sections 7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities of any series, it shall not be accountable for
the Company's use of the proceeds from the Securities of any series, and it
shall not be responsible for any statement of the Company in the Indenture or
any statement in the Securities of any series other than its certificate of
authentication or in any document used in the sale of the Securities of any
series other than any statement in writing provided by the Trustee expressly for
use in such document.
SECTION 7.05 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
actually known to the Trustee with respect to the Securities of any series, the
Trustee shall mail to each Holder of Securities of such series notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a default in payment of principal of, premium, if any, or interest on any
Security, the Trustee may withhold the notice if and so long as a committee of
its Trust Officers in good faith determines that withholding the notice is in
the interests of Holders of Securities of such series. Notwithstanding anything
to the contrary expressed in this Indenture, the Trustee shall not be deemed to
have knowledge of any Event of Default hereunder unless and until a Trust
Officer shall have actual knowledge thereof, or shall have received written
notice thereof from the Company at its Corporate Trust Office. The Trustee shall
not be deemed to have actual knowledge of an Event of Default hereunder, except
in the case of an Event of Default under Sections 6.01(1) or 6.01(2) (provided
that the Trustee is the Paying Agent), until a Trust Officer receives written
notice thereof from the Company or any Securityholder that such an Event of
Default has occurred.
SECTION 7.06 Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with May 15 of the first
year in which Securities are outstanding hereunder, the Trustee, if required by
the provisions of TIA ss.313(a), shall mail to each Securityholder a brief
report dated as of May 15 of such year that complies with TIA ss.313(a). The
Trustee also shall comply with TIA ss.313(b) and ss.313(c).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the Commission and each stock exchange on which the
Securities of any series are listed. The Company agrees to notify the Trustee in
writing whenever the Securities of any series become listed or delisted on or
from any stock exchange.
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SECTION 7.07 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust). The Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it. Such expenses may
include, but shall not be limited to, the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless
against, any loss or liability incurred by it in connection with the acceptance
or administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the Securities or the
exercise or performance of any of its powers or duties hereunder. The Trustee
shall notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity and the Company may elect by written notice to the
Trustee to assume the defense of any such claim at the Company's expense with
counsel reasonably satisfactory to the Trustee.
The Company need not reimburse the Trustee for any expense or indemnify
it against any loss or liability incurred by it through the Trustee's
negligence, bad faith or willful misconduct. The Company shall not be liable for
any settlement of any claim or action effected without the Company's consent. To
secure the Company's payment obligations in this Section, the Trustee shall have
a lien prior to the Securities on all money or property held or collected by the
Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01 occurs, the expenses and the compensation for
the services are intended to constitute expenses of administration under any
applicable bankruptcy or comparable law.
SECTION 7.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign with respect to any series of Securities by so
notifying the Company. The Holders of a majority in principal amount of the
Securities of any series then outstanding may remove the Trustee with respect to
such series of Securities by so notifying the Trustee and may appoint a
successor Trustee with respect to such series of Securities with the Company's
written consent. The Company may remove the Trustee with respect to any series
of Securities (or, if clause (4) applies, with respect to all series) if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
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(4) the Trustee otherwise becomes incapable of acting with
respect to any series of Securities.
If the Trustee resigns or is removed with respect to any series of
Securities or if a vacancy exists in the office of Trustee with respect to any
series of Securities for any reason, the Company shall promptly appoint a
successor Trustee with respect to such series.
If a successor Trustee with respect to any series of Securities does
not take office within 45 days after the retiring Trustee with respect to such
series resigns or is removed, the retiring Trustee, the Company or the Holders
of a majority in principal amount of the Securities of such series then
outstanding may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment with respect to any series of Securities to the retiring Trustee and
to the Company. Immediately after that, the retiring Trustee shall, upon payment
of its fees and expenses, transfer all property held by it as Trustee with
respect to such series to the successor Trustee, subject to the lien provided
for in Section 7.07, the resignation or removal of the retiring Trustee shall
become effective with respect to such series, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture with
respect to such series. Notwithstanding the replacement of the Trustee with
respect to any series of Securities pursuant to this Section 7.08, the Company's
obligations under Section 7.07 shall continue for the benefit of the retiring
Trustee with respect to expenses and liabilities incurred by it and compensation
earned by it prior to such replacement or otherwise with respect to the
Securities of such series or the Indenture. A successor Trustee with respect to
any series of Securities shall mail notice of its succession to each Holder of
Securities of such series.
SECTION 7.09 Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust assets to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss.310(a)(1), (2) and (5). The Trustee shall have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA
ss.310(b), including the optional provision permitted by the second sentence of
TIA ss.310(b)(9). The provisions of TIA ss. 310 shall also apply to the Company
as obligor of the Securities.
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SECTION 7.11 Preferential Collection of Claims Against Company.
The Trustee is subject to TIA ss.311(a), excluding any creditor
relationship listed in TIA ss.311(b). A Trustee who has resigned or been removed
shall be subject to TIA ss.311(a) to the extent indicated therein. The
provisions of TIA ss. 311 shall also apply to the Company as obligor of the
Securities.
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01 Satisfaction, Discharge and Defeasance of the Securities.
The Company shall be deemed to have paid and discharged the entire
indebtedness on the Securities of any series after the date of the deposit
referred to in paragraph (a) below, the provisions of this Indenture shall no
longer be in effect in respect of the Securities of such series, and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of such indebtedness; provided that the
following conditions shall have been satisfied:
(a) the Company has deposited or caused to be deposited with
the Trustee irrevocably as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of all
Securities of such series, with reference to this Section 8.01, (i) money or
(ii) U.S. Government Obligations or (iii) a combination thereof, sufficient, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge the entire indebtedness on all the Securities of such series for
principal, premium, if any, and interest, if any, to the maturity date of such
series of Securities as such principal, premium, if any, or interest becomes due
and payable in accordance with the terms of this Indenture and the Securities;
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company in connection with all of the Securities of any
series, including all fees and expenses of the Trustee; and
(c) the Company has delivered to the Trustee an Officers'
Certificate stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of the entire indebtedness on the Securities
and the discharge of this Indenture and the termination of the Company's
obligations hereunder have been complied with.
"U.S. Government Obligations" means direct, non-callable obligations
of, or non-callable obligations guaranteed by, the United States of America for
the timely payment of which obligation or guarantee the full faith and credit of
the United States of America is pledged.
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SECTION 8.02 Satisfaction and Discharge of Indenture.
In addition to its rights under Section 8.01, the Company may terminate
all of its obligations under this Indenture when:
(a) all of the Securities of each series theretofore
authenticated and delivered (other than (A) Securities which have been
destroyed, lost or stolen and which have been replaced or paid as provided in
Section 2.07 hereof and (B) Securities for whose payment money has theretofore
been deposited with the Trustee or the Paying Agent in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 2.05 and Section 8.06 hereof) have been
delivered to the Trustee for cancellation; and
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company in connection with the outstanding Securities,
including all fees and expenses of the Trustee.
SECTION 8.03 Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this Indenture
pursuant to Section 8.01, the respective obligations of the Company specified in
Sections 2.04, 2.05, 2.06, 2.07, 2.12, 4.01, 7.07, 8.05, 8.06, 8.07 and in
Article 10 shall survive until the Securities are no longer outstanding, and
after the Securities are no longer outstanding, or upon compliance with Section
8.02, only the obligations of the Company in such Sections 7.07 and 8.06 shall
survive. Nothing contained in this Article Eight shall abrogate any of the
obligations or duties of the Trustee under this Indenture.
SECTION 8.04 Application of Trust Money.
(a) Subject to the provisions of Section 8.06, all money and U.S.
Government Obligations deposited with the Trustee for the Securities of any
series pursuant to Section 8.01 or Section 8.02, and all money received by the
Trustee in respect of U.S. Government Obligations deposited with the Trustee for
the Securities of any series pursuant to Section 8.01 or Section 8.02 shall be
held in trust and reinvested by the Trustee in U.S. Government Obligations in
accordance with the Company's written instructions and applied by the Trustee in
accordance with the provisions of the Securities of such series and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal, premium, if any,
and interest, if any, on the Securities of such series; but such money need not
be segregated from other funds except to the extent required by law.
(b) The Trustee shall deliver or pay to the Company from time to time
upon the Company's written request any U.S. Government Obligations, or money
held by it as provided in Section 8.01 or Section 8.02 which, in the written
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are then
in excess of the amount thereof which then would have been required to be
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deposited for the purpose for which such U.S. Government Obligations, or money
were deposited or received.
SECTION 8.05 Paying Agent to Repay Monies Held.
Upon the satisfaction and discharge of this Indenture with respect to
the Securities of any series, all monies then held by any Paying Agent for the
benefit of Securities of such series under the provisions of this Indenture
shall, upon written demand of the Company, be repaid to it or paid to the
Trustee, and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
SECTION 8.06 Return of Unclaimed Monies.
Any monies deposited with or paid to the Trustee or any Paying Agent
for the Securities of any series, or then held by the Company in trust, for the
payment of any principal, premium, if any, and interest, if any, on the
Securities of any series and not applied but remaining unclaimed by the Holders
of the Securities of such series for two years after the date upon which the
principal of and interest, if any, on the Securities of such series, as the case
may be, shall have become due and payable, shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Company by such Trustee or any Paying Agent on written
demand by the Company or (if then held by the Company) shall be discharged from
such trust; and the Holders of the Securities of such series entitled to receive
such payment shall thereafter look only to the Company for the payment thereof;
provided, however, that, before being required to make any such repayment, such
Trustee may, or shall at the written request of the Company, at the expense of
the Company, cause to be published once in an authorized newspaper in the same
city in which the place of payment with respect to the Securities of such series
shall be located and in an authorized newspaper in the City of New York, or mail
to each such Holder, a notice (in such form as may be deemed appropriate by such
Trustee) that said monies remain unclaimed and that, after a date named therein,
any unclaimed balance of said monies then remaining will be returned to the
Company.
SECTION 8.07 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations with respect to the Securities of any series in
accordance with Section 8.01 by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's obligations
under this Indenture and the Securities of such series shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.01 until such
time as the Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with Section 8.04; provided, however, that
if the Company has made any payment of interest on or principal of any
Securities of any series because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
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ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.01 Supplemental Indentures Without Consent of Holders.
The Company, when authorized by Board Resolution, and the Trustee at
any time and from time to time, may amend this Indenture or enter into one or
more indentures supplemental hereto, to be in a form satisfactory to the Trustee
without notice to or consent of any Securityholder for any of the following
purposes:
(1) to comply with Section 5.01; or
(2) to provide for uncertificated Securities in addition to or in place
of certificated Securities; or
(3) to add to the covenants of the Company, for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be for
the benefit of less than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of such series), or to
surrender any right or power herein conferred upon the Company; or
(4) to add any Events of Default (and if such Events of Default are to
be applicable to less than all series of Securities, stating that such Events of
Default are expressly being included solely to be applicable to such series); or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only when
there is no Security outstanding of any series created prior to the execution of
such supplemental indenture which is entitled to the benefit of such provision;
or
(6) to establish the form or terms of Securities of any series as
permitted by Sections 2.01 and 2.02; or
(7) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with any provision of this
Indenture, provided such other provisions shall not adversely affect the
interests of the Holders of Securities of any series in any material respect.
SECTION 9.02 Supplemental Indentures with Consent of Holders.
With the written consent of the Holders of not less than a majority in
aggregate principal amount of the Securities of each series at the time
outstanding affected by such supplemental indenture, the Company, when
authorized by Board Resolution, and the Trustee may amend this Indenture or from
time to time and at any time enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act of 1939
as in force at
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the date of the execution thereof) for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Indenture
or of any supplemental indenture, except as otherwise permitted by Section 9.01,
or of modifying in any manner the rights of the Holders of the Securities of
each such series. Subject to Section 9.04, without the consent of each Holder of
Securities of any series affected, however, an amendment, supplement or waiver,
including a waiver pursuant to Section 6.04, may not:
(1) extend the fixed maturity of any Securities, or reduce the
principal amount thereof or premium, if any, or reduce the rate or extend the
time of payment of interest thereon, without the consent of the Holder of each
Security so affected;
(2) reduce the aforesaid percentage of Securities of each series, the
consent of the Holders of which is required for any such supplemental indenture,
without the consent of the Holders of all Securities then outstanding affected
thereby;
(3) waive (except, unless theretofore cured) a default in the payment
of the principal of (and premium, if any on), interest on or redemption amounts
with respect to any Security;
(4) make any Security payable in money other than that stated in the
Security;
(5) make any change in Sections 6.04, 6.06 or 9.02 (this sentence);
(6) make any change that adversely affects the right to convert any
Security; or
(7) make any change in Article 11 that adversely affects the rights
of any Securityholder.
Upon the request of the Company, accompanied by a copy of a Board
Resolution certified by the Secretary or an Assistant Secretary of the Company
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Securityholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
It shall not be necessary for the consent of the Securityholders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent shall approve
the substance thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Company
shall mail a notice, setting forth in general terms the substance of such
supplemental indenture, to all Holders of Securities of each series so affected
as the names and addresses of such Holders shall appear on the registry books.
Any failure of the Company so to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such supplemental
indenture.
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SECTION 9.03 Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Securities shall
comply with the TIA as then in effect.
SECTION 9.04 Revocation and Effect of Consents.
Subject to this Indenture, each amendment, supplement or waiver
evidencing other action shall become effective in accordance with its terms.
Until an amendment, supplement or waiver becomes effective, a consent to it by a
Holder of a Security of any series is a continuing consent by the Holder even if
notation of the consent is not made on any Security. Any such Holder or
subsequent Holder, however, may revoke the consent as to his Security or portion
of a Security, if the Trustee receives the notice of revocation before the date
the amendment, waiver or other action becomes effective.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies) and only those
Persons, shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such Persons continue to
be Holders after such record date. No consent shall be valid or effective for
more than 90 days after such record date unless consent from Holders of the
principal amount of Securities of any series then outstanding required hereunder
for such amendment, supplement or waiver to be effective shall have also been
given and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (6) of Section 9.02. In that case the amendment, supplement or
waiver shall only bind the Holders of a Security or portion of a Security of the
same series.
SECTION 9.05 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security
of any series, the Trustee may request the Holder of the Security of such series
to deliver it to the Trustee. The Trustee may place an appropriate notation on
the Security about the changed terms and return it to the Holder. Alternatively,
if the Company or the Trustee so determine, the Company in exchange for the
Security of such series shall issue and the Trustee shall authenticate a new
Security of such series that reflects the changed terms the cost and expense of
which will be borne by the Company.
SECTION 9.06 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities of any applicable series theretofore or
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thereafter authenticated and delivered hereunder shall be bound thereby.
SECTION 9.07 Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Board of Directors of the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Securities
outstanding of such series.
ARTICLE 10
CONVERSION OF SECURITIES
SECTION 10.01 Right of Conversion; Conversion Price.
If provided in the Board Resolution or supplemental indenture with
respect to such series of Securities, the Holder of any Security or Securities
of a particular series shall have the right, at his option, at any time after
such date as determined by such Board Resolution or supplemental indenture and
before the close of business on such date as determined by such Board Resolution
or supplemental indenture (except that, with respect to any Security or portion
of a Security of such series which shall be called for redemption, such right
shall terminate at the close of business on the date fixed for redemption of
such Security or portion of a Security unless the Company shall default in
payment due upon redemption thereof), to convert, subject to the terms and
provisions of this Article 10 and any other terms or provisions set forth in
such Board Resolution or supplemental indenture, the principal of any Security
or Securities of such series or any portion thereof which is $1,000 principal
amount or an integral multiple thereof into shares of common stock of the
Company or Securities of another series of Securities, initially at the
conversion price per share specified in the Securities of such series; or, in
case an adjustment of such price has taken place pursuant to the provisions of
Section 10.04, then at the price as last adjusted (such price or adjusted price
being referred to herein as the "conversion price"), upon surrender of the
Security or Securities, the principal of which is so to be converted,
accompanied by written notice of conversion duly executed, to the Company, at
any time during usual business hours at the office or agency maintained by it
for such purpose, and, if so required by the Conversion Agent or Registrar,
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Conversion Agent or Registrar duly executed by the Holder or
his duly authorized representative in writing. For convenience, the conversion
of any portion of the principal of any Security or Securities into shares of
common stock of the Company or other Securities is hereinafter sometimes
referred to as the conversion of such Security or Securities.
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SECTION 10.02 Issuance of Shares on Conversion.
As promptly as practicable after the surrender, as herein provided, of
any Security or Securities of any series for conversion, the Company shall
deliver or cause to be delivered at its said office or agency, to or upon the
written order of the Holder of the Security or Securities so surrendered,
certificates representing the number of fully paid and nonassessable shares of
common stock of the Company or Securities of another series of the Company into
which such Security or Securities may be converted in accordance with the
provisions of this Article 10. Such conversion shall be deemed to have been made
as of the close of business on the date that such Security or Securities shall
have been surrendered for conversion by delivery thereof with a written notice
of conversion duly executed, so that the rights of the Holder of such Security
or Securities as a Securityholder shall cease at such time and, subject to the
following provisions of this paragraph, the Person or Persons entitled to
receive the shares of common stock or Securities of another series upon
conversion of such Security or Securities shall be treated for all purposes as
having become the record holder or holders of such shares of common stock or
Securities of another series at such time and such conversion shall be at the
conversion price in effect at such time; provided, however, that with respect to
shares of the Company's common stock, no such surrender on any date when the
stock transfer books of the Company shall be closed shall be effective to
constitute the Person or Persons entitled to receive the shares of common stock
upon such conversion as the record holder or holders of such shares of common
stock on such date, but such surrender shall be effective to constitute the
Person or Persons entitled to receive such shares of common stock as the record
holder or holders thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open; such conversion
shall be at the conversion price in effect on the date that such Security or
Securities shall have been surrendered for conversion by delivery thereof, as if
the stock transfer books of the Company had not been closed. The Company shall
give or cause to be given to the Trustee written notice whenever the stock
transfer books of the Company shall be closed.
Upon Conversion of any Security of any series which is converted in
part only, the Company shall execute and the Trustee shall authenticate and
deliver to or on the order of the Holder thereof, at the expense of the Company,
a new Security or Securities of such series of authorized denominations in
principal amount equal to the unconverted portion of such Security.
SECTION 10.03 No Adjustment for Interest or Dividends.
No payment or adjustment in respect of interest on the Securities of
any series or dividends on the shares of common stock shall be made upon the
conversion of any Security or Securities; provided, however, that if a Security
of any series or any portion thereof shall be converted subsequent to any
regular record date and on or prior to the next succeeding interest payment
date, the interest falling due on such interest payment date shall be payable on
such interest payment date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name such Security is registered at the close of business on
such regular record date and Securities surrendered for conversion during the
period from the close of business on any regular record date to the opening of
business on the corresponding interest payment date must be accompanied by
payment of an
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amount equal to the interest payable on such interest payment date.
SECTION 10.04 Adjustment of Conversion Price.
(1) With respect to any series of Securities that is convertible into
shares of the Company's common stock, in case the Company shall pay or make a
dividend or other distribution on any class of Capital Stock of the Company in
shares of common stock, the conversion price for any series of Securities in
effect at the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such conversion price by a fraction
of which the numerator shall be the number of shares of common stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day following
the date fixed for such determination.
(2) With respect to any series of Securities that is convertible into
shares of the Company's common stock, in case the Company shall issue rights or
warrants to all or substantially all holders of its shares of common stock
entitling them to subscribe for or purchase shares of common stock at a price
per share (or having a conversion price per share) less than the current market
price per share (determined as provided in paragraph (6) of this Section) of the
shares of common stock on the date fixed for the determination of stockholders
entitled to receive such rights or warrants, the conversion price for any series
of Securities in effect at the opening of business on the day following the date
fixed for such determination shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of shares of
common stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of common stock which the aggregate of
the subscription price of the total number of shares of common stock so offered
for subscription or purchase would purchase at such current market price and the
denominator shall be the number of shares of common stock outstanding at the
close of business on the date fixed for such determination plus the number of
shares of common stock so offered for subscription or purchase, such reduction
to become effective immediately after the opening of business on the day
following the date fixed for such determination. In the event that all of the
shares of common stock subject to such rights or warrants have not been issued
when such rights or warrants expire, then the conversion price shall promptly be
readjusted to the conversion price which would then be in effect had the
adjustment upon the issuance of such rights or warrants been made on the basis
of the actual number of shares of common stock issued upon the exercise of such
rights or warrants. For the purposes of this paragraph (2), the number of shares
of common stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of common stock. The Company
will not issue any rights or warrants in respect of shares of common stock held
in the treasury of the Company.
(3) With respect to any series of Securities that is convertible into
shares of the Company's common stock, in case the outstanding shares of common
stock shall be subdivided
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into a greater number of shares, the conversion price for any series of
Securities in effect at the opening of business on the day following the day
upon which such subdivision becomes effective shall be proportionately reduced,
and, conversely, in case outstanding shares of common stock shall each be
combined into a smaller number of shares, the conversion price for any series of
Securities in effect at the opening of business on the day following the day
upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(4) With respect to any series of Securities that is convertible into
shares of the Company's common stock, in case the Company shall, by dividend or
otherwise, distribute to all or substantially all holders of shares of common
stock evidences of indebtedness or assets (including securities, but excluding
(i) any rights or warrants referred to in paragraph (2) of this Section, (ii)
any dividend or distribution not prohibited by Section 4.06 hereof and (iii) any
dividend or distribution referred to in paragraph (1) of this Section), the
conversion price for any series of Securities shall be adjusted so that the same
shall equal the price determined by multiplying the conversion price in effect
immediately prior to the close of business on the day fixed for the
determination of shareholders entitled to receive such distribution by a
fraction of which the numerator shall be the current market price per share
(determined as provided in paragraph (6) of this Section) of the shares of
common stock on the date fixed for such determination less the then fair market
value as determined by the Board of Directors of the Company (whose
determination shall be conclusive and described in a resolution of the Board of
Directors of the Company filed with the Trustee) of the portion of the assets or
evidences of indebtedness so distributed allocable to one share of common stock
and the denominator shall be such current market price per share of the shares
of common stock, such adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for the determination of
stockholders entitled to receive such distribution.
(5) With respect to any series of Securities that is convertible into
shares of the Company's common stock, in case the shares of common stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or a stock dividend described
in paragraph (1) or paragraph (3) of this Section, or a consolidation, merger or
sale of assets described in Section 10.10), then and in each such event the
Holders of Securities of any series shall have the right thereafter to convert
such Securities into the kind and amount of shares of stock and other securities
and property receivable upon such reorganization, reclassification or other
change, by holders of the number of shares of common stock into which such
Securities might have been converted immediately prior to such reorganization,
reclassification or change.
(6) For the purpose of any computation under paragraphs (2) and (4) of
this Section, the current market price per share of common stock on any date
shall be deemed to be the average of the Closing Prices for the 15 consecutive
Business Days selected by the Company commencing not more than 30 and not less
than 20 Business Days before the date in question.
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(7) No adjustment in the conversion price for the Securities of any
series shall be required unless such adjustment (plus any adjustments not
previously made by reason of this paragraph (7)) would require an increase or
decrease of at least 1% in such price; provided, however, that any adjustments
which by reason of this paragraph (7) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this paragraph (7) shall be made to the nearest cent.
(8) The Company may, but shall not be required to, make such reductions
in the conversion price for the Securities of any series, in addition to those
required by paragraph (1), (2), (3) and (4) of this Section, as the Board of
Directors of the Company considers to be advisable in order to avoid or diminish
any income tax to any holders of shares of common stock resulting from any
dividend or distribution of stock or issuance of rights or warrants to purchase
or subscribe for stock or from any event treated as such for income tax purposes
or for any other reasons. The Company's Board of Directors of the Company shall
have the power to resolve any ambiguity or correct any error in the adjustments
made pursuant to this Section 10.04 and its actions in so doing shall be final
and conclusive.
(9) The adjustments provided for in this Section 10.04 shall be made
successively whenever any event listed above shall occur.
SECTION 10.05 Notice of Adjustment of Conversion Price.
Whenever the conversion price for the Securities of any series is
adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price in
accordance with Section 10.04 and shall prepare an Officers' Certificate setting
forth the adjusted conversion price and showing the facts upon which such
adjustment is based and the computation thereof, and such certificate shall
forthwith be filed at each office or agency maintained for the purpose of
conversion of Securities pursuant to Section 2.04 and with the Trustee; and
(b) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall as soon as
practicable be mailed by the Company to all Holders of Securities of such series
at their last addresses as they shall appear in the Security Register.
(c) If the conversion price is adjusted and the Company fails
to file an Officers' Certificate with the Trustee as provided by Section
10.05(a) and the Trustee is acting as the Conversion Agent, the Trustee shall be
entitled to rely conclusively on the conversion price set forth in the Officer's
Certificate most recently received by the Trustee (or as set forth in this
Indenture if the conversion price shall not have been adjusted).
SECTION 10.06 Notice of Certain Corporate Action.
(1) In case:
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(a) the Company shall authorize the granting to holders of its
shares of common stock of rights or warrants entitling them to subscribe for or
purchase any shares of Capital Stock of any class or of any other rights; or
(b) of any reclassification of the shares of common stock of
the Company, or of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Securities of any series pursuant to Section 2.04
and shall cause to be mailed to all Holders of Securities of such series that
are convertible into shares of the Company's common stock at their last
addresses as they shall appear in the Security Register, at least 20 days (or 10
days in any case specified in clause (a) or (b) above) prior to the applicable
record date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which the Holders
of shares of common stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of shares of common stock of record shall be
entitled to exchange their shares of common stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up. Such notice shall also state
whether such transaction will result in any adjustment in the conversion price
applicable to the Securities of such series and, if so, shall state what the
adjusted conversion price will be and when it will become effective. Neither the
failure to give the notice required by this Section, nor any defect therein, to
any particular Holder shall affect the sufficiency of the notice or the legality
or validity of any such dividend, distribution, right, warrant,
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding-up, or the vote on any action authorizing such with
respect to the other Holders.
(2) In case the Company or any Affiliate of the Company shall propose
to engage in a "Rule 13e-3 Transaction" as defined in the Commission's Rule
13e-3 under the Exchange Act, the Company shall, no later than the date on which
any information with respect to such Rule 13e-3 Transaction is first required to
be given to the Commission or any other Person pursuant to such Rule 13e-3,
cause to be mailed to all Holders at their last addresses as they shall appear
in the Security Register, a copy of all information required to be given to the
holders of the Company's Capital Stock pursuant to such Rule 13e-3. The
information required to be given under this paragraph shall be in addition to
and not in lieu of any other information required to be given by the Company
pursuant to this Section 10.06 or any other provision of the Securities or this
Indenture.
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SECTION 10.07 Taxes on Conversions.
The Company will pay any and all stamp or similar taxes that may be
payable in respect of the issuance or delivery of shares of common stock or
Securities of another series on conversion of Securities pursuant hereto. The
Company shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of shares of
common stock in a name other than that of the Holder of the Security or
Securities to be converted, and no such issuance or delivery shall be made
unless and until the Person requesting such issuance has paid to the Company the
amount of any such tax, or has established to the satisfaction of the Company
that such tax has been paid.
SECTION 10.08 Fractional Shares.
No fractional shares or scrip representing fractional shares shall be
issued upon any conversion of Securities. If any such conversion would otherwise
require the issuance of a fractional share an amount equal to such fraction
multiplied by the current market price per share of common stock (determined as
provided in paragraph (6) of Section 10.04) on the day of conversion shall be
paid to the Holder in cash by the Company.
SECTION 10.09 Cancellation of Converted Securities.
All Securities delivered for conversion shall be delivered to the
Trustee or the Conversion Agent to be canceled by or at the direction of the
Trustee or the Conversion Agent, which shall dispose of the same as provided in
Section 2.10.
SECTION 10.10 Provisions in Case of Consolidation, Merger or Sale of Assets.
(1) In case of any consolidation of the Company with, or merger of the
Company into, any other corporation or trust, or in case of any merger of
another corporation or trust into the Company (other than a consolidation or
merger which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of common stock of the Company), or in case
of any sale or transfer of all or substantially all of the assets of the
Company, the corporation or trust formed by such consolidation or resulting from
such merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security of any series then outstanding shall have the right thereafter,
during the period such Security shall be convertible as specified in Section
10.01 to convert such Security only into the kind and amount of securities, cash
and other property receivable upon such consolidation, merger, sale or transfer
by a holder of the number of shares of common stock of the Company into which
such Security might have been converted immediately prior to such consolidation,
merger, sale or transfer. Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Article. The above provisions of this
Section shall similarly apply to successive consolidations, mergers, sales or
transfers.
(2) The Trustee shall not be under any responsibility to determine the
correctness of any
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provisions contained in any such supplemental indenture relating either to the
kind or amount of shares of stock or securities or property receivable by
Holders upon the conversion of their Securities after any such reclassification,
change, consolidation, merger, sale or conveyance or to any adjustment to be
made with respect thereto.
SECTION 10.11 Disclaimer by Trustee of Responsibility for Certain Matters.
The Trustee shall not at any time be under any duty or responsibility
to any Holder of Securities of any series to determine whether any facts exist
which may require any adjustment of the conversion price for such series, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. The Trustee shall not be
accountable with respect to the validity, value, kind or amount of any shares of
common stock, or of any securities or property, which may at any time be issued
or delivered upon the conversion of any Security; and it makes no representation
with respect thereto. The Trustee shall not be responsible for any failure of
the Company to issue, transfer or deliver any shares of common stock or stock
certificates or other securities or property upon the surrender of any Security
for the purpose of conversion or, subject to Section 7.01, to comply with any of
the covenants of the Company contained in this Article.
ARTICLE 11
SUBORDINATION; SENIORITY
SECTION 11.01 Securities Subordinated to Senior Indebtedness.
(a) Securities of any series which by their terms are subordinated and
junior in right of payment of the principal of, premium, if any, and interest
(all of the foregoing, a "Payment or Distribution") on such Securities ("Junior
Securities") to the prior payment in full of any Senior Indebtedness whether
outstanding on the date hereof or hereafter created, incurred, assumed or
guaranteed, shall comply with the provisions of this Article 11, and each Holder
of Junior Securities of such series by his acceptance thereof likewise agrees.
A Payment or Distribution shall include any asset of any kind or
character, and may consist of cash, securities or other property, by set-off or
otherwise, and shall include, without limitation, any purchase, redemption or
other acquisition of Junior Securities of the series or the making of any
deposit of funds or securities pursuant to this Indenture (including, without
limitation, any deposit pursuant to Article 8 hereof).
(b) The Senior Indebtedness of the Company shall continue to be Senior
Indebtedness and entitled to the benefit of these subordination provisions
irrespective of any amendment, modification or waiver of any term of any
instrument relating to refinancing of the Senior Indebtedness.
(c) All the provisions of this Indenture and the Junior Securities of
any series shall be
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subject to the provisions of this Article 11 so far as they may be applicable
thereto, except that nothing in this Article 11 shall apply to claims for, or
payments to, the Trustee under or pursuant to Section 7.07.
(d) No right of any holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time or in any way be affected or
impaired by any failure to act on the part of the Company, any Paying Agent, the
Holders of the Junior Securities of any series, the Trustee or the holders of
the Senior Indebtedness, or by any noncompliance by the Company, any Paying
Agent, the Holders of the Junior Securities of any series or the Trustee with
any of the terms, provisions and covenants of the Securities or this Indenture,
regardless of any knowledge thereof that any such holder of Senior Indebtedness
may have or be otherwise charged with.
(e) In the event that the Junior Securities of any series are declared
due and payable before their expressed maturity because of the occurrence of a
default hereunder, the Company will give prompt notice in writing of such
happening to the holders of Senior Indebtedness.
SECTION 11.02 Company Not to Make Payments with Respect to Junior Securities
in Certain Circumstances.
No Payment or Distribution shall be made by the Company, the Trustee or
the Paying Agent on account of principal of (or premium, if any) or interest on
the Junior Securities of any series, whether upon stated maturity, upon
redemption or acceleration, or otherwise, or on account of the purchase or other
acquisition of Junior Securities of such series, whether upon stated maturity,
upon redemption or acceleration, or otherwise, if there shall have occurred and
be continuing a default with respect to any Senior Indebtedness permitting the
acceleration thereof or with respect to the payment of any Senior Indebtedness
and (a) such default is the subject of a judicial proceeding or (b) notice of
such default in writing or by telegram has been given to the Company by any
holder or holders of any Senior Indebtedness, unless and until the Company shall
have received written notice from such holder or holders that such default or
event of default shall have been cured or waived or shall have ceased to exist.
Upon any acceleration of the principal of the Junior Securities of any
series or any payment by the Company or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding up or liquidation or reorganization of the
Company, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full in cash, or payment thereof
provided for to the satisfaction of the holders thereof, before any Payment or
Distribution is made on account of the redemption price or principal of (and
premium, if any) or interest on the Junior Securities of such series; and
(subject to the power of a court of competent jurisdiction to make other
equitable provision, which shall have been determined by such court to give
effect to the rights conferred in this Article upon the Senior Indebtedness and
the holders thereof with respect to the Junior Securities of such series or the
Holders thereof or the Trustee, by a lawful plan of reorganization or
readjustment under applicable law) upon any such dissolution or winding up or
liquidation or reorganization, any Payment or Distribution by the Company or
distribution of assets of the
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Company of any kind or character, whether in cash, property or securities, to
which the Holders of the Junior Securities of any series or the Trustee would be
entitled except for the provisions of this Article, shall be paid by the Company
or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such Payment or Distribution directly to the holders of Senior
Indebtedness of the Company or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing any Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all Senior Indebtedness in
full in cash, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness, before any Payment or Distribution is
made to the Holders of the Securities of such series or to the Trustee, except
that the Trustee will have a lien for the payment of its fees and expenses.
In the event that, notwithstanding the foregoing, any Payment or
Distribution by the Company of any kind or character, whether in cash, property
or securities, prohibited by the foregoing, shall be received by the Trustee or
the Holders of the Junior Securities of any series before all Senior
Indebtedness is paid in full in cash, or provision is made for such payment to
the satisfaction of the holders thereof, and if such fact shall then have been
or thereafter be made known to a Trust Officer of the Trustee or, as the case
may be, such Holder, then and in such event such Payment or Distribution shall
be paid over or delivered to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, for application
to the payment of all Senior Indebtedness remaining unpaid to the extent
necessary to pay all Senior Indebtedness in full in cash, after giving effect to
any concurrent Payment or Distribution to or for the holders of such Senior
Indebtedness, and, until so delivered, the same shall be held in trust by any
Holder of a Junior Security as the property of the holders of Senior
Indebtedness.
The consolidation of the Company with, or the merger of the Company
into, another Person or the liquidation or dissolution of the Company following
the conveyance or transfer of its property as an entirety, or substantially as
an entirety, to another corporation upon the terms and conditions provided in
Article Five shall not be deemed a dissolution, winding up, liquidation or
reorganization for the purposes of this Section if such other Person shall, as a
part of such consolidation, merger, conveyance or transfer, comply with the
conditions stated in Article Five. Nothing in this Section shall apply to claims
of, or payments to, the Trustee under or pursuant to Section 7.07.
The holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Holders of the Junior Securities
of any series, without incurring responsibility to the Holders of the Junior
Securities of such series and without impairing or releasing the obligations of
the Holders of the Junior Securities of such series hereunder to the holders of
Senior Indebtedness: (i) change the manner, place or terms of payment or change
or extend the time of payment of, or renew or alter, Senior Indebtedness, or
otherwise amend in any manner Senior Indebtedness or any instrument evidencing
the same or any agreement under which Senior Indebtedness is outstanding; (ii)
sell, exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing Senior Indebtedness; (iii) release any Person
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liable in any manner for the collection of Senior Indebtedness; and/or (iv)
exercise or refrain from exercising any rights against the Company and any other
Person.
SECTION 11.03 Subrogation of Junior Securities.
Subject to the payment in full in cash of all amounts then due (whether
by acceleration of the maturity thereof or otherwise) on account of all Senior
Indebtedness at the time outstanding, the Holders of the Junior Securities of
any series shall be subrogated to the rights of the holders of Senior
Indebtedness to receive Payments or Distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal of (and premium, if any) and interest on the Securities shall be paid
in full; and, for the purposes of such subrogation, no Payments or Distributions
to the holders of Senior Indebtedness to which the Holders of the Junior
Securities of any series or the Trustee would be entitled except for the
provisions of this Article, and no payments over pursuant to the provisions of
this Article to the holders of Senior Indebtedness by Holders of the Junior
Securities of any series or the Trustee, shall, as between the Company, the
Company's creditors other than holders of Senior Indebtedness, and the Holders
of the Junior Securities of such series, be deemed to be a payment by the
Company to or on account of the Senior Indebtedness. It is understood that the
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Junior Securities of any
series, on the one hand, and the holders of Senior Indebtedness, on the other
hand.
Nothing contained in this Article or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of the
Securities of each series, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities of any series the
principal of (and premium, if any) and interest on the Securities of such series
as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the Holders of
the Junior Securities of any series and creditors of the Company other than the
holders of Senior Indebtedness, nor shall anything herein or therein prevent the
Trustee or the Holder of any Junior Security of any series from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article of the holders of
Senior Indebtedness in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 7.01, and the
Holders of the Junior Securities of any series shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which any
dissolution, winding up, liquidation or reorganization proceedings are pending,
or certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the Junior Securities of such series, for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
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SECTION 11.04 Authorization by Holders of Junior Securities.
Each holder of a Junior Security of any series by his acceptance
thereof authorizes and directs the Trustee on his behalf to take such action as
may be necessary or appropriate to effectuate, as between the Holder of the
Junior Security and the holders of Senior Indebtedness, the subordination
provided in this Article and appoints the Trustee his attorney-in-fact for any
and all such purposes including, without limitation, to execute, verify, deliver
and file any proofs of claim which any holder of Senior Indebtedness may at any
time require in order to prove and realize upon any rights or claims pertaining
to the Securities and to effectuate the full benefit of the subordination
contained herein. Upon failure of the Trustee so to do, any such holder of
Senior Indebtedness shall be deemed to be irrevocably appointed the agent and
attorney-in-fact of the Holder to execute, verify, deliver and file any such
proofs of claim.
SECTION 11.05 Notices to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to it which would prohibit the making of any payment of moneys to or by
the Trustee in respect of the Junior Securities of any series pursuant to the
provisions of this Article. Notwithstanding the provisions of this Article or
any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment of moneys to or by the Trustee in respect of the Junior Securities of
any series pursuant to the provisions of this Article, unless and until a Trust
Officer of the Trustee shall have received at its Corporate Trust Office written
notice thereof from the Company or a holder or holders of Senior Indebtedness or
from any trustee or agent therefor; and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of Section 7.01, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if a Trust Officer of the Trustee shall not have received at least three
Business Days prior to the date upon which by the terms hereof any such moneys
may become payable for any purpose (including, without limitation, the payment
of the principal of (premium, if any) or interest on any Junior Security of any
series) with respect to such moneys the notice provided for in this Section,
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have the full power and authority to receive such moneys and to apply the
same to the purpose for which they were received and shall not be affected by
any notice to the contrary which may be received by it within three Business
Days prior to such date.
The Trustee shall be entitled to rely conclusively on the delivery to
it of a written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior Indebtedness or a trustee or agent
on behalf of any such holder. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any
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payment to such Person pending judicial determination as to the right of such
Person to receive such payment.
SECTION 11.06 Trustee's Relation to Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article in respect of any Senior Indebtedness at any
time held by it, to the same extent as any other holder of Senior Indebtedness,
and nothing in Section 7.11 or elsewhere in this Indenture shall deprive the
Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not owe any fiduciary
duty to the holders of Senior Indebtedness and shall not be liable to any such
holder if it shall mistakenly pay over or distribute to Holders of the Junior
Securities of any series or the Company or any other Person money or assets to
which any holder of Senior Indebtedness shall be entitled by virtue of this
Article or otherwise.
SECTION 11.07 No Impairment of Subordination.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company,
the Trustee or the Holder of any of the Securities of any series or by any act,
or failure to act, in good faith, by any such holder of Senior Indebtedness, or
by any noncompliance by the Company, the Trustee or the Holder of any of the
Securities of any series with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with.
SECTION 11.08 Article 11 Not To Prevent Events of Default.
The failure to make a payment on account of principal of (premium, if
any) or interest on the Junior Securities of any series by reason of any
provision in this Article 11 shall not be construed as preventing the occurrence
of an Event of Default with respect to such series under Section 6.01.
SECTION 11.09 Paying Agents other than the Trustee.
In any case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 11 shall in such case (unless the context
shall otherwise require) be construed as extending to and including such Paying
Agent within its meaning as fully for all intents and purposes as if such Paying
Agent were named in this Article 11 in addition to or in place of the Trustee.
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SECTION 11.10 Securities Senior to Subordinated Indebtedness.
The indebtedness represented by the Securities of any series will be
senior and prior in right of payment to all Subordinated Indebtedness, to the
extent and in the manner provided in such Subordinated Indebtedness.
ARTICLE 12
SINKING FUND
SECTION 12.01 Mandatory and Optional Sinking Fund Payments.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of any series, except as otherwise permitted or
required by any form of Security of a series issued pursuant to this Indenture.
The minimum amounts of any sinking fund payments provided for by the
terms of Securities of any series are herein referred to as "mandatory sinking
fund payments", and any payments in excess of those minimum amounts provided for
by the terms of Securities of that series are herein referred to as "optional
sinking fund payments". If provided for by the terms of the Securities of any
series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 12.02. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of that series.
SECTION 12.02 Satisfaction of Sinking Fund Payments with Securities.
The Company may, in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of any series, as provided for by the
terms of that series (1) deliver to the Holders of outstanding Securities of
that series (other than any of such Securities previously called for redemption
or any of such Securities by mandatory sinking fund payment in respect of which
cash shall have been released to the Company), (2) apply as a credit Securities
of that series which have been redeemed either at the election of the Company
pursuant to the terms of that series of Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, provided that no Securities of such series have been previously so
credited and (3) apply as a credit Securities of that series which have been
converted or exchanged into shares of the Company's common stock or Securities
of another series pursuant to the terms of that series of Securities, provided
that such series of Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly. If as a result of the delivery or credit of Securities of any
series in lieu of cash payments pursuant to this Section, the principal amount
of Securities of that series to be redeemed in order to exhaust the aforesaid
cash payment shall be less than $100,000, the Trustee need not call Securities
of that series for redemption, except upon the request of the Company,
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and such cash payment shall be held by the Trustee or a Paying Agent and applied
to the next succeeding sinking fund payment, provided, however, that the Trustee
or such Paying Agent shall at the request of the Company from time to time pay
over and deliver to the Company any cash payment so being held by the Trustee or
such Paying Agent upon delivery by the Company to the Trustee of Securities of
that series purchase by the Company having an unpaid principal amount equal to
the cash payment requested to be released to the Company.
SECTION 12.03 Redemption of Securities for Sinking Funds.
Not less than 60 days prior to each mandatory sinking fund payment date
for any series of Securities, the Company will deliver to the Trustee an
Officers' Certificate specifying the amount of the mandatory sinking fund
payment for that series pursuant to the terms of that series, the portion
thereof, if any, which is to be satisfied by payment of cash and the portion
thereof, if any, which is to be satisfied by delivery or credit of Securities
pursuant to Section 12.02 hereof, and the optional amount, if any, to be added
in cash to the mandatory sinking fund payment, and will also deliver to the
Trustee any Securities to be so credited and not theretofore delivered. If such
Officers' Certificate shall specify an optional amount to be added in cash to
the mandatory sinking fund payment, the Company shall thereupon be obligated to
pay the amount therein specified. Not less than 30 days before each such sinking
fund payment date the Trustee shall select the Securities to be redeemed upon
such sinking fund payment date in the manner specified in Section 3.02 hereof
and cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 3.03 hereof.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provisions shall control.
SECTION 13.02 Notices.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
or first class mail, postage prepaid (except that any notice by the Trustee to
the Company of a default or an Event of Default under this Indenture shall be by
registered or certified mail, postage prepaid, return receipt requested), or by
a nationally-recognized overnight express courier service (which notices or
communications shall be deemed received the business day after the receipt
thereof by such service), addressed as follows:
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if to the Company:
American Retirement Corporation
111 Westwood Place
Suite 402
Brentwood, Tennessee 37027
Attention: Chief Executive Officer
Telephone: (615) 221-2250
Facsimile: (615) 221-2269
if to the Trustee:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
Attention:
------------------------
Telephone:
------------------------
Facsimile:
------------------------
The Company or the Trustee by notice to the other may designate additional or
different addresses as shall be furnished in writing by either party. Any notice
or communication to the Company or the Trustee shall be deemed to have been
given or made as of the date so delivered if personally delivered, and five (5)
calendar days after mailing if sent by registered or certified mail (except that
a notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to the address of such Securityholder as it appears on the registration books of
the Registrar and shall be sufficiently given if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice, as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
If the Company mails any notice or communication to Securityholders, it
shall mail a copy to the Trustee and all Agents at the same time.
SECTION 13.03 Communications by Holders with Other Holders.
Securityholders of any series may communicate pursuant to TIA ss.312(b)
with other
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Securityholders of such series with respect to their rights under this Indenture
or the Securities of such series. The Company, the Trustee, the Registrar and
anyone else shall have the protection of TIA ss.312(c).
SECTION 13.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the statements set
forth in Section 13.05) stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(2) an Opinion of Counsel (which shall include the statements set forth
in Section 13.05) stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
SECTION 13.05 Statements Required in Certificate and Opinion.
Each Officers' Certificate and Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(1) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such Person,
such covenant or condition has been complied with.
SECTION 13.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Registrar, Paying Agent or Conversion Agent may make
reasonable rules for its functions.
SECTION 13.07 Record Date.
Whenever the Company or the Trustee solicits an act of Securityholders
of any series, the Company or the Trustee may fix in advance of the solicitation
of such act a date as the record date for determining Securityholders of such
series entitled to perform said act. The record date shall be not more than 15
days prior to the date fixed for the solicitation of said act.
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SECTION 13.08 Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banks or
trust companies in the city in which either the Trustee or the Company is
located are not required to be open. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
SECTION 13.09 Governing Law.
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND THE
SECURITIES WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 13.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 13.11 No Recourse Against Others.
No stockholder, director or officer, as such, past, present or future,
of the Company or of any successor corporation or trust shall have any liability
for any obligation of the Company under the Securities or the Indenture or for
any claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder of a Security of any series by accepting a Security waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
SECTION 13.12 Successors.
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture shall
bind its successor.
SECTION 13.13 Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of them together
represent the same agreement.
SECTION 13.14 Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 13.15 Severability.
In case any provision in this Indenture or in the Securities of any
series shall be invalid,
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illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby, and a
Holder shall have no claim therefor against any party hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
AMERICAN RETIREMENT CORPORATION
By:
---------------------------------
Name:
Title:
TRUSTEE
By:
---------------------------------
Authorized Officer
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<PAGE> 1
Exhibit 23.1
ACCOUNTANTS' CONSENT
The Board of Directors
American Retirement Corporation:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
Our report refers to a change in the presentation of the cost basis of financial
information for periods subsequent to a purchase business combination effected
on April 1, 1995.
/S/ KPMG PEAT MARWICK LLP
Nashville, Tennessee
July 8, 1998
<PAGE> 1
Exhibit 23.2
ACCOUNTANTS' CONSENT
The Board of Directors and Stockholders
Freedom Group, Inc. and Subsidiaries:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/S/ KPMG PEAT MARWICK LLP
St. Petersburg, Florida
July 8, 1998
<PAGE> 1
Exhibit 99
CONSENT OF ROBERT G. ROSKAMP
The undersigned, Robert G. Roskamp, hereby consents to being named as
a person to be appointed a director of American Retirement Corporation (the
"Company") in the Company's Registration Statement on Form S-3 and any
preliminary prospectus or prospectus to be filed in connection therewith.
/s/ Robert G. Roskamp
---------------------------------------
Robert G. Roskamp
