<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Period Ended June 30, 1997
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period From to
------------- -------------
COMMISSION FILE NUMBER: 0-20765
SUNRISE ASSISTED LIVING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 54-1746596
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
9401 LEE HIGHWAY, SUITE 300
FAIRFAX, VIRGINIA 22031
(Address of principal executive offices)
(703) 273-7500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
As of August 1, 1997, there were 18,695,750 shares of the Registrant's
Common Stock outstanding.
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<PAGE> 2
SUNRISE ASSISTED LIVING, INC.
FORM 10-Q
JUNE 30, 1997
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1997 and
December 31, 1996 3
Consolidated Statements of Operations for the three months
ended June 30, 1997 and 1996 and six months ended
June 30, 1997 and 1996 4
Consolidated Statements of Cash Flows for the six
months ended June 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 21
2
<PAGE> 3
SUNRISE ASSISTED LIVING, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
-----------------------------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $150,231 $101,811
Accounts receivable, less allowance of $1,169
and $927 2,279 1,522
Marketable securities - 8,322
Prepaid and other current assets 3,560 2,394
-------- --------
Total current assets 156,070 114,049
Property and equipment, net 301,819 216,711
Investment 5,750 5,750
Restricted cash and cash equivalents 2,313 1,720
Deferred financing costs, net 6,685 2,967
Other assets 4,560 1,642
-------- --------
Total assets $477,197 $342,839
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 14,956 $ 8,331
Deferred revenue 2,347 2,021
Other current liabilities 77 103
Current maturities of long-term debt 1,069 772
-------- --------
Total current liabilities 18,449 11,227
Notes payable to affiliated partnerships 131 1,421
Interests in unconsolidated partnerships and
minority interests 616 1,049
Long-term debt, less current maturities 270,032 143,318
-------- --------
Total liabilities 289,228 157,015
Preferred stock, $0.01 par value, 10,000,000 shares
authorized, no shares issued and outstanding - -
Common stock, $0.01 par value, 60,000,000 shares
authorized, 18,690,750 and 18,529,869 shares issued
and outstanding in 1997 and 1996 187 185
Contributed capital 202,907 201,274
Accumulated deficit (15,125) (15,635)
-------- --------
Total stockholders' equity 187,969 185,824
-------- --------
Total liabilities and stockholders' equity $477,197 $342,839
======== ========
</TABLE>
Note: The balance sheet at December 31, 1996 has been derived
from the audited financial statements at that date but does not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
See accompanying notes.
3
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SUNRISE ASSISTED LIVING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1997 1996 1997 1996
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenue:
Resident fees $17,763 $10,362 $33,716 $ 19,458
Management services income 892 900 1,483 1,542
---------- --------- ---------- ---------
18,655 11,262 35,199 21,000
Operating expenses:
Facility operating 11,248 6,543 21,396 12,608
Facility development and pre-rental 898 466 2,821 650
General and administrative 2,751 2,292 5,356 4,413
Depreciation and amortization 1,993 993 3,577 1,803
Facility lease 287 - 287 -
---------- --------- ---------- ---------
17,177 10,294 33,437 19,474
Income from operations 1,478 968 1,762 1,526
Other income (expense):
Interest income 1,502 423 2,921 700
Interest expense (2,665) (2,797) (4,266) (5,422)
---------- --------- ---------- ---------
Total other expense (1,163) (2,374) (1,345) (4,722)
Equity in earnings of unconsolidated partnerships
and minority interests 61 8 93 89
Unusual charge (Note 8) - (981) - (981)
---------- --------- ---------- ---------
Net income (loss) $ 376 $(2,379) $ 510 $ (4,088)
========== ========= ========== =========
Net income per share data:
- --------------------------
Primary:
Net income (loss) per common and common equivalent
share $ 0.02 $ (0.33) $ 0.03 $ (0.69)
========== ========= ========== =========
Weight average number of common and common
equivalent shares outstanding 19,555,495 8,725,356 19,577,546 7,625,366
========== ========= ========== =========
Fully Diluted:
Net income per common and common equivalent share $ 0.02 $ 0.03
========== ==========
Weighted average number of common and common
equivalent shares outstanding 19,679,488 19,819,211
========== ==========
</TABLE>
See accompanying notes.
4
<PAGE> 5
SUNRISE ASSISTED LIVING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Six months ended
June 30,
1997 1996
----------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 510 $ (4,088)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Equity in earnings of unconsolidated partnerships and minority
interests (93) (89)
Provision for bad debts 242 267
Accrued interest 573 -
Depreciation and amortization 3,577 1,803
Amortization of financing costs and discount on long-term debt 530 417
Changes in operating assets and liabilities:
(Increase) decrease:
Accounts receivable (999) (520)
Prepaid and other current assets (1,166) 602
Other assets (3,230) (226)
Increase (decrease):
Accounts payable and accrued expenses 1,294 661
Deferred revenue 326 68
Other liabilities (26) 947
-------- --------
Net cash provided by (used in) operating activities 1,538 (158)
INVESTING ACTIVITIES:
Increase in restricted cash and cash equivalents (1,003) (73)
Acquisition of interests in facilities (961) (19)
Investment in property and equipment (83,021) (33,942)
Purchases of investments - (50,270)
Proceeds from maturities of marketable securities 8,322 -
Distribution from investment in unconsolidated partnerships - 150
-------- --------
Net cash used in investing activities (76,663) (84,154)
FINANCING ACTIVITIES:
Dividends paid - (348)
Net proceeds from initial public offering of common stock - 104,340
Organization costs paid (328) (113)
Net proceeds from sale of Series B exchangeable preferred stock - 10,000
Redemption of series B exchangeable preferred stock - (10,000)
Net proceeds from exercised options 1,636 99
Distributions to partners - (390)
Net investment of minority interests - (41)
Additional borrowings under long-term debt 185,213 14,916
Repayment of long-term debt (58,147) (16,797)
Financing costs paid (3,536) (780)
Repayment of related party note payable (1,293) (114)
-------- --------
Net cash provided by financing activities 123,545 100,772
-------- --------
Net increase in cash and cash equivalents 48,420 16,460
-------- --------
Cash and cash equivalents at beginning of period 101,811 6,252
-------- --------
Cash and cash equivalents at end of period $150,231 $ 22,712
======== ========
</TABLE>
See accompanying notes.
5
<PAGE> 6
SUNRISE ASSISTED LIVING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements
have been prepared by the Company and include all normal recurring
adjustments which are, in the opinion of management, necessary for a
fair presentation of the results for the three- and six-month
periods ended June 30, 1997 and 1996 pursuant to the instructions to
Form 10-Q and Article 10 of Regulation S-X. Certain information and
footnote disclosures normally included in the financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and
regulations. These consolidated financial statements should be read
in conjunction with the Company's consolidated financial statements
and the notes thereto for the year ended December 31, 1996 included
in the Company's 1996 Annual Report to Stockholders. Operating
results for the three- and six-month period ended June 30, 1997 are
not necessarily indicative of the results that may be expected for
the entire year ending December 31, 1997. Unless the context
indicates otherwise, the Company means Sunrise Assisted Living, Inc.
and its consolidated subsidiaries.
Certain 1996 balances have been reclassified to conform with
the 1997 presentation.
2. LONG-TERM DEBT
Long-term debt was $271.1 million at June 30, 1997, excluding
notes payable to affiliated entities, compared to $144.1 million at
December 31, 1996. On June 6, 1997, the Company issued and sold
$150 million aggregate principal amount of 5 1/2% convertible
subordinated notes due 2002 (the "Notes"). The Notes bear interest
at 5 1/2% per annum from June 6, 1997, payable semiannually on June
15 and December 15 of each year, commencing December 15, 1997. The
conversion price is $37.1875 (equivalent to a conversion rate of
26.89 shares per $1,000 principal amount of the Notes). The Notes
will mature on June 15, 2002. The Notes are redeemable at the
option of the Company commencing June 15, 2000, at specified
premiums. The holders of the Notes may require the Company to
repurchase the Notes upon a Change of Control (as defined) of the
Company. The net proceeds to the Company from the sale of the
Notes, after deducting underwriting discounts and offering
expenses, were approximately $145.6 million. On June 10, 1997, the
Company used $57.7 million of the net proceeds to pay down floating
rate indebtedness from four financial institutions at a weighted
average interest rate of 8.4%. The Company also has renegotiated
interest rate reductions from LIBOR plus 2.75% to corresponding
U.S. Treasuries plus 1.00% on $15.7 million of credit facilities.
The Company has an $87.0 million dollar multi-property mortgage
(the "Multi-Property Mortgage"), collateralized by a blanket first
mortgage on all assets of a subsidiary of the Company, which
consists of 15 facilities. The Multi-Property Mortgage consists of
two separate debt classes: Class (A) in the amount of $65.0
million bears a fixed interest rate of 8.56% and is interest only
until the maturity date of May 31, 2001; Class (B) in the amount
of $22.0 million bears a variable interest rate. In June 1996, the
interest rate applicable to the floating rate debt was reduced from
LIBOR plus 5.75% to LIBOR plus 3.75% and effective March 4, 1997,
it was further reduced to LIBOR plus 1.75%.
6
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SUNRISE ASSISTED LIVING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
2. LONG-TERM DEBT (CONTINUED)
The Company has obtained a commitment (subject to certain
conditions including syndication) from a financial institution for a
$90.0 million line of credit for construction and interim loans to
finance the development of up to 10 assisted living facilities of a
wholly-owned subsidiary of the Company. As of June 30, 1997, the
Company had closed $61.8 million of the total commitment. The
Company guaranteed the repayment of all amounts outstanding under
this credit facility. The credit facility is for a term of five
years and is secured by cross-collateralized first mortgages on the
real property and improvements and first liens on all other assets
of the subsidiary. Advances under the facility bear interest at
rates from LIBOR plus 1.7% to LIBOR plus 2.5%. As part of this
credit facility, the Company has entered into a swap transaction
whereby effective during the period June 18, 1998 through June 18,
2001, outstanding advances of up to $19.0 million under this credit
facility, or other LIBOR floating rate debt, bear interest at a
fixed rate based on a fixed LIBOR base rate of 7.3%. On June 10,
1997, the Company paid down $31.9 million of the outstanding loan
balance using proceeds received from the sale of the Notes. As of
June 30, 1997, there were $700,000 of advances outstanding under
this facility and available credit remaining of $57.4 million.
A subsidiary of the Company has received a commitment for a
$51.0 million revolving construction credit facility. The Company
closed $32.1 million of the total commitment. The credit facility
provides for construction and interim loans to finance the
development of up to seven assisted living facilities. The Company
has agreed to guarantee the repayment of all amounts outstanding
under this credit facility. The credit facility is for a term of
five years and is secured by cross-collateralized first mortgages on
the real property and liens on receivables. Advances under the
credit facility bear variable interest rates based upon LIBOR plus
2.25% to LIBOR plus 2.60%. As of June 30, 1997, there were $4.7
million of advances outstanding under this facility.
The Company also has obtained a $13.0 million unsecured credit
facility to be used for development, acquisitions and working
capital needs. The credit facility is for a term of five years.
Advances under the facility bear interest at a rate per annum,
fluctuating daily, equal to (at the Company's choice) either 1.5%
plus the greater of (i) the lender's prime lending rate and (ii) the
Federal funds rate plus 0.5%, or the average LIBOR rate for one,
two, three, and six months, divided by one minus a reserve
percentage. The reserve percentage is that of maximum reserve
requirement for member banks of the Federal Reserve System in New
York City. The Company issued to the lender warrants to purchase a
total of 50,000 shares of common stock. The per share exercise
price of the warrants is $17.00. There were no amounts outstanding
under the unsecured credit facility at June 30, 1997.
3. STOCK OPTION PLANS
The Company has stock option plans providing for the grant of
incentive and non-qualified stock options to employees, directors,
consultants and advisors for a fixed number of shares with an
exercised price generally equal to the fair value of the shares at
the date of grant. The Company accounts for stock options grants in
accordance with APB Opinion No. 25, Accounting for Stock
7
<PAGE> 8
SUNRISE ASSISTED LIVING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
3. STOCK OPTION PLANS (CONTINUED)
Issued to the Employees and accordingly recognizes no compensation
expense for the stock option grants.
A summary of the Company's stock option activity and related
information as of June 30, 1997, are presented below:
<TABLE>
<CAPTION>
WEIGHTED-
SHARES AVERAGE
FIXED OPTIONS (000) EXERCISE PRICE
------------------------------- ----------------------------
<S> <C> <C>
Outstanding - December 31, 1996 2,557 $17.79
Granted 900 24.38
Exercised (161) 10.24
Forfeited (55) 22.83
------------------------------- ------
Outstanding - June 30, 1997 3,241
======
Exercisable - June 30, 1997 739
======
</TABLE>
The following table summarizes information about stock options
outstanding at June 30, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------------------------------------
Weighted- Weighted- Weighted
Range of Number Average Average Number Average
Exercise Prices Outstanding Remaining Exercise exercisable Exercise
(000) Contractual Life Price (000) Price
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 3.00 to 8.00 566 7.96 $ 6.32 369 $ 6.85
10.50 to 20.00 678 8.81 16.21 305 16.57
21.50 to 25.63 1,997 9.62 25.02 65 25.23
----------- -----------
$ 3.00 to 25.63 3,241 739
=========== ===========
</TABLE>
4. COMMITMENTS AND CONTINGENCIES
Pursuant to an acquisition in 1994 of certain assets, the
Company had unconditionally guaranteed any amounts required by three
related limited partnerships (the "LPs") to honor the LP's
commitments in 1997, to provide a guaranteed 9% return to the
limited partners and to repurchase the limited partnership interests
of the limited partners. During 1997, the Company paid $2.6 million
to satisfy and complete its guarantee. The guarantees were
considered to be contingent acquisition costs. As such, the
carrying value of the assets acquired in the exchange were increased
by the amount.
8
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SUNRISE ASSISTED LIVING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
4. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company's previously announced three-year growth objectives
include developing at least 55 new Sunrise model assisted living
facilities with an additional resident capacity of more than 4,500
by the end of 1999. To date, the Company has completed development
of 14 such facilities with a resident capacity of 1,276 (Rockville,
MD, Philadelphia, PA (3), Old Tappan, NJ, Morris Plains, NJ, Severna
Park, MD (2), Springfield, VA, Oakton, VA, Petaluma, CA, Blue Bell,
PA, Columbia, MD, and Raleigh, NC) and has 18 facilities currently
under construction with a resident capacity of 1,583. The Company
also has entered into contracts to purchase 30 additional sites and
to lease two additional sites. The Company is pursuing additional
development opportunities as market conditions warrant. In addition
to its construction and development plans, the Company also plans to
acquire up to eight additional facilities by the end of 1999 as
market conditions warrant.
5. ACQUISITIONS
On January 10, 1997, the Company entered into three purchase
and sale agreements, giving the Company the right to purchase three
properties in California for $17.6 million. One property was leased
by the Company on April 1, 1997 for a period of one year with an
option to purchase at the end of that lease, and a second property
that is currently under construction was acquired by the Company on
February 24, 1997 for a purchase price of $8.4 million. Because the
purchase and sale agreements are subject to, among other things, the
satisfactory completion by the Company of a financial, accounting,
regulatory and property due diligence review, there is no assurance
that the acquisition of the remaining properties will be
consummated.
On May 1, 1997, the Company purchased the minority 50% interest
held by an unrelated third party in the Raleigh facility. The
purchase price of approximately $1.0 million was based on a buy-out
schedule specified in the operating agreement of the limited
liability company that holds title to the property. The Raleigh
facility is now 100% owned by the Company.
On February 5, 1997, the Company acquired a 120-unit assisted
and independent living facility in Valencia, California. The
acquisition price was $13.8 million in cash. The pro forma
unaudited results of operations for the six-month periods ended June
30, 1997 and 1996, assuming consummation of each purchase as of
January 1, are as follows (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------
1997 1996
-------- ---------
<S> <C> <C>
Operating revenue $ 35,497 $ 22,638
Net income (loss) $ 592 $ (3,765)
Primary net income per weighted average common
share outstanding $ 0.03 -
Fully diluted net income per weighted average
common share outstanding $ 0.03 -
</TABLE>
9
<PAGE> 10
SUNRISE ASSISTED LIVING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
6. NET INCOME PER SHARE
In February 1997, the Financial Accounting Standards Board
issued Statement No. 128, Earnings per Share, which is required to
be adopted on December 31, 1997. At that time, the Company will be
required to change the method currently used to compute earnings per
share and to restate all prior periods. Under the new requirements
for calculating primary earnings per share, the dilutive effect of
outstanding stock options and warrants will be excluded. The impact
is expected to result in primary net income (loss) per share for the
three months ended June 30, 1997 and 1996 of $0.03 and $(0.28) per
share, respectively; and primary net income (loss) per share for the
six months ended June 30, 1997 and 1996 of $0.03 and $(0.57) per
share, respectively. The impact of statements 128 on the
calculation of fully diluted earnings per share for these quarters
is not expected to be material.
The Company's per share calculations are based upon the
weighted average number of shares of Common Stock outstanding.
Pursuant to the requirements of the Securities and Exchange
Commission (SEC) staff accounting bulletin No. 83, options to
purchase Common Stock issued at prices below the initial public
offering price during the twelve months immediately preceding the
initial filing of the registration statement relating to the
offering have been included in the computation of net loss per share
as if they were outstanding for all periods presented prior to the
offering (using the treasury method assuming repurchase of common
stock at the estimated offering price). Other shares issuable upon
the exercise of stock options or conversion of redeemable
convertible preferred stock have been excluded from the computation
because the effect of their inclusion would be anti-dilutive.
Subsequent to the Company's offering, options and warrants under the
treasury stock method and convertible subordinated notes under the
if-converted method are included to the extent they are dilutive.
7. UNUSUAL CHARGE
To avoid a possible change in the Company's ability to continue
to manage two facilities resulting from the reduction in the
ownership interest in the Company of Paul J. Klaassen, the Company's
Chairman of the Board, Chief Executive Officer and co-founder, and
Teresa M. Klaassen, the Company's Executive Vice President and
co-founder (collectively, the "Klaassens") following the Company's
June 1996 initial public offering, the Company made a $1,000,000
cash payment to the third-party limited partner in these two
facilities in June 1996. The payment was made in exchange for the
transfer to the Company by the third-party of additional 1%
partnership interests in each facility with a total book value of
$18,700 and the elimination of any requirement for the Klaassens to
maintain a specified ownership interest in the Company.
8. SUBSEQUENT EVENT
On August 4, 1997, the Company negotiated a 100 basis points
interest rate reduction on a $90 million credit line with a
financial institution.
10
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Management's discussion and analysis contains certain
forward-looking statements relating to the Company's development and
acquisition programs over the next three years that involve risks
and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking
statements as a result of certain factors, including, among others,
development and construction risks, acquisition risks, licensing
risks, business conditions, risks of downturns in economic
conditions generally, satisfaction of closing conditions and
availability of financing for development and acquisitions. Unless
the context suggests otherwise, references herein to the "Company"
or "Sunrise" means Sunrise Assisted Living, Inc. and its
subsidiaries.
OVERVIEW
The Company is a leading provider of assisted living services
to the elderly. The Company currently operates 48 facilities in 11
states with a capacity of approximately 4,300 residents, including
43 facilities owned by the Company or in which it has ownership
interests and five facilities managed for third parties. The
Company also operates two skilled nursing facilities owned by a
third party.
The Company reported net income of $0.4 million, or $0.02 per
share, on revenue of $18.7 million for the three months ended June
30, 1997, compared to a net loss of $2.4 million or $(0.33) per
share, on revenue of $11.3 million for the three months ended June
30, 1996, including an unusual charge of $1.0 million. Without the
one-time unusual charge, the Company's net loss for the three months
ended June 30, 1996 would have been $1.4 million. The Company
reported net income of $0.5 million, or $0.03 per share, on revenue
of $35.2 million for the six months ended June 30, 1997, compared to
a net loss of $4.1 million, or $(0.69) per share, on revenue of
$21.0 million for the six months ended June 30, 1996, including an
unusual charge of $1.0 million. Without the one-time unusual
charge, the Company's net loss for the six months ended June 30,
1996 would have been $3.1 million.
On June 6, 1997, the Company issued and sold $150.0 million
aggregate principal amount of 5 1/2% convertible subordinated notes
due 2002 (the "Notes"). The Notes bear interest at 5 1/2% per annum
from June 6, 1997, payable semiannually on June 15 and December 15
of each year, commencing December 15, 1997. The conversion price
is $37.1875 (equivalent to a conversion rate of 26.89 shares per
$1,000 principal amount of the Notes). The Notes will mature on
June 15, 2002. The Notes are redeemable at the option of the
Company commencing June 15, 2000, at specified premiums. The
holders of the Notes may require the Company to repurchase the
Notes upon a Change of Control (as defined) of the Company. The
net proceeds to the Company from the sale of the Notes, after
deducting underwriting discounts and offering expenses, were
approximately $145.6 million. On June 10, 1997, the Company used
$57.7 million of the net proceeds to pay down floating rate
indebtedness from four financial institutions at a weighted average
interest rate of 8.4%. The Company expects to use the balance of
the net proceeds to fund continued development of up to 41 new
Sunrise model facilities and up to eight planned acquisitions by
the end of 1999, as well as for working capital and general
corporate purposes. The Company also has renegotiated interest
rate reductions from LIBOR plus 2.75% to corresponding U.S.
Treasuries plus 1.00% on $15.7 million of credit facilities.
On May 1, 1997, the Company purchased the minority 50% interest
held by an unrelated third party in its Raleigh facility. The
purchase price of approximately $1.0 million was based on a buy-
11
<PAGE> 12
out schedule provided in the operating agreement of the limited
liability company that holds title to the property. The Raleigh
facility is now 100% owned by the Company.
On February 5, 1997, the Company acquired a 120-unit assisted
and independent living facility in Valencia, California. The
acquisition price was $13.8 million in cash. On January 10, 1997,
the Company entered into three purchase and sale agreements, giving
the Company the right to purchase three properties in California for
$17.6 million. One property was leased by the Company on April 1,
1997 for a period of one year with an option to purchase at the end
of that lease, and a second property that is currently under
construction was acquired by the Company on February 24, 1997 for a
purchase price of $8.4 million. Because the purchase and sale
agreements are subject to, among other things, the satisfactory
completion by the Company of a financial, accounting, regulatory and
property due diligence review, there is no assurance that the
acquisition of the remaining properties will be consummated.
On October 8, 1996, the Company completed its acquisition of
five properties located in the southeast United States for an
aggregate purchase price of $34.0 million in cash with no debt
assumed. The five facilities consist of 498 total units providing
primarily independent and assisted living services.
In addition to the acquisitions mentioned above, results for
the quarter and year to date ended June 30, 1997 include the
operations of thirteen Sunrise developed facilities with a combined
resident capacity of approximately 1,190 opened in 1996 and 1997:
<TABLE>
<CAPTION>
FACILITY LOCATION DATE OPENED
<S> <C> <C>
Sunrise of Raleigh Raleigh, NC February 1996
Sunrise of Blue Bell Blue Bell, PA October 1996
Sunrise of Columbia Columbia, MD December 1996
Sunrise of Hunter Mill Oakton, VA February 1997
Sunrise of Petaluma Petaluma, CA March 1997
Sunrise of Springfield Springfield, VA May 1997
Sunrise of Severna Park (2) facilities Severna , MD May 1997
Sunrise of Morris Plains Morris Plains, NJ May 1997
Sunrise of Old Tappan Old Tappan, NJ June 1997
Sunrise of Granite Run Granite Run, PA June 1997
Sunrise of Abington (2) facilities Abington, PA June 1997
</TABLE>
In addition, the Company opened a Sunrise model facility in
July 1997, in Rockville, MD.
The Company's previously announced three-year growth objectives
include developing at least 55 new Sunrise model assisted living
facilities with an additional resident capacity of more than 4,500
by the end of 1999. To date, the Company has completed development
of fourteen such facilities with a resident capacity of 1,276 and
has 18 facilities currently under construction with a resident
capacity of 1,583. The Company has also entered into contracts to
purchase 30 additional sites and to lease two additional sites. The
Company is pursing additional development opportunities as market
conditions warrant. In addition to its construction and development
plans, the Company also plans to acquire up to eight additional
facilities by the end of 1999 as market conditions warrant.
12
<PAGE> 13
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THE THREE MONTHS ENDED
JUNE 30, 1996
Operating Revenue. Operating revenue for the three months
ended June 30, 1997 increased 65.6% to $18.7 million from $11.3
million for the three months ended June 30, 1996 due primarily to
the growth in resident fees. Resident fees (including community
fees) and fees for Basic Care (assistance with activities of daily
living and other personalized support services), Assisted Living
Plus Care ("Plus Care") (additional specialized care and services to
residents with low acuity medical needs), and Alzheimer's Care
(specialized care and services to residents with Alzheimer's disease
or other forms of dementia) for the three months ended June 30, 1997
increased 71.4% to $17.8 million from $10.4 million in the three
months ended June 30, 1996. This increase was due primarily to the
inclusion, for the three months ended June 30, 1997, of additional
total revenue of $4.3 million generated from the operations of
acquired facilities and $3.1 million of total revenue generated from
the openings of thirteen Sunrise developed facilities. Average
resident occupancy for owned facilities operated by the Company for
at least 12 months or that have achieved stabilization of 95%
("Stabilized Facilities"), increased to 93.6% for the three months
ended June 30, 1997 from 91.8% for the three months ended June 30,
1996.
The average daily resident fee (excluding community fees) for
Stabilized Facilities decreased to $78 in the three months ended
June 30, 1997 from $81 in the three months ended June 30, 1996. This
decrease is due to the inclusion of acquired facilities with a
combined average daily resident fee (excluding community fees) of
$65 in the three months ended June 30, 1997. Acquired facilities
have a greater number of independent living units, which accounts
for the lower average resident fee at the acquired facilities.
Excluding acquired facilities, the average daily resident fee
(excluding community fees) increased to $84 in the three months
ended June 30, 1997 due to an increase in the Basic Care rate and an
increase in the number of residents receiving Plus care number and
Alzheimer's Care Services.
Management services income for the three months ended June 30,
1997 and 1996 remained constant at $0.9 million.
Operating Expenses. Operating expenses for the three months
ended June 30, 1997 increased by 66.9% to $17.2 million from $10.3
million for the three months ended June 30, 1996. The increase in
operating expenses for the quarter ended June 30, 1997 was
attributable primarily to the growth in facility operating,
development and pre-rental, general and administrative and
depreciation and amortization expenses.
Facility operating expenses for the three months ended June 30,
1997, increased 71.9% to $11.2 million from $6.5 million in the
three months ended June 30, 1996. As a percentage of operating
revenue, facility operating expenses in the three months ended June
30, 1997, increased to 60.3% from 58.1% in the three months ended
June 30, 1996. Of the $4.7 million increase, $4.8 million was
attributable to expenses from the operations of acquired and new
Sunrise developed facilities. Facility operating expenses at
existing facilities decreased $0.1 million.
Facility development and pre-rental expenses for the three
months ended June 30, 1997 increased $0.4 million to $0.9 million
from $0.5 million for the three months ended June 30, 1996. This was
due to a $0.3 million increase in facility start up costs, a $1.2
million increase in non-capitalized labor plus related development
costs offset, in part, by an increase in other capitalized expenses
of $1.1 million. There are 18 facilities currently under
construction compared to 11 facilities at June 30, 1996.
General and administrative expenses in the three months ended
June 30, 1997 increased 20.0% to $2.8 million from $2.3 million in
the three months ended June 30, 1996. As a percentage of operating
revenue, general and administrative expenses in the three months
ended June 30,
13
<PAGE> 14
1997, decreased to 14.7% from 20.4% in the three months ended June
30, 1996. The $0.5 million increase in general and administrative
expenses in the three months ended June 30, 1997 was related to a
$0.3 million increase in labor costs, primarily attributable to
hiring and training additional staff, and a $0.2 million increase in
other corporate expenses.
Depreciation and amortization in the three months ended June
30, 1997 compared to the three months ended in June 30, 1996
increased $1.0 million, or 100.7%, to $2.0 million primarily due to
acquisitions and the opening of new Sunrise developed facilities.
Facility lease expense represents rent expense on four
facilities that are leased but not owned by the Company. Three of
these facilities were developed by the Company and opened in the
second quarter of 1997. The Company leased the remaining facility
on April 1, 1997, and has the option to purchase the facility after
one year.
Other income (expense). Interest income increased to $1.5
million for the three months ended June 30, 1997 compared to $0.4
million for the three months ended June 30, 1996. This increase was
due primarily to the investment of funds received from the Company's
initial public offering and follow-on public offering completed
during 1996, as well as funds received from the Notes issued and
sold in June 1997. Interest expense decreased for the three months
ended June 30, 1997 to $2.7 million from $2.8 million for the three
months ended June 30, 1996. Of this decrease, $0.3 million was due
to the elimination of a 25% participation interest on the
Multi-Property Mortgage and reduction of the interest rate
applicable to $22.0 million outstanding variable rate indebtedness
offset by a $0.8 million increase of interest for additional
borrowings related to new Sunrise facilities in operation and $0.6
million accrued interest on the $150.0 million aggregate principal
amount of the Notes. Capitalized interest increased by $1.2 million
corresponding to the increase in the number of facilities developed
and currently under construction discussed above.
Net income (loss). Net income was $0.4 million for the three
months ended June 30, 1997 compared to a net loss of $2.4 million
for the three months ended June 30, 1996. The $2.8 million change
was primarily attributable to a $7.4 million increase in operating
revenue, a $1.2 million decrease in other expense and a $1.0
million increase from a one time unusual charge in 1996 offset by a
$6.8 million increase in operating expenses.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO THE SIX MONTHS ENDED JUNE
30, 1996
Operating Revenue. Operating revenue for the six months ended
June 30, 1997 increased 67.6% to $35.2 million from $21.0 million
for the six months ended June 30, 1996 due primarily to the growth
in resident fees. Resident fees for the six months ended June 30,
1997 increased 73.3% to $33.7 million from $19.5 million in the six
months ended June 30, 1996. This increase was due primarily to the
inclusion, for the six months ended June 30, 1997, of additional
total revenue of $8.2 million generated from the operations of eight
acquired facilities, $5.2 million of total revenue generated from
thirteen Sunrise model facilities opened in 1996 and 1997,
additional revenue generated by increases in the average daily rate
and average resident occupancy for owned facilities operated by the
Company for at least twelve months totaling $0.6 million and $0.2
million, respectively. Average resident occupancy for Stabilized
Facilities increased to 94.2% for the six months ended June 30, 1997
from 90.5% for the six months ended June 30, 1996.
The average daily resident fee (excluding community fees) for
Stabilized Facilities decreased to $79 in the six months ended June
30, 1997 from $82 in the six months ended June 30, 1996. The
decrease is due to the inclusion of acquired facilities with a
combined average daily resident
14
<PAGE> 15
fee (excluding community fees) of $65 in the six months ended June
30, 1996. Excluding acquired facilities, the average daily resident
fee (excluding community fees) increased to $85 in the six months
ended June 30, 1997 due to an increase in the Basic Care rate and an
increase in the number of residents receiving Plus Care and
Alzheimer's Care services.
Management services income for the six months ended June 30,
1997 and 1996 remained constant at $1.5 million.
Operating Expenses. Operating expenses for the six months
ended June 30, 1997 increased by 71.7% to $33.4 million from $19.5
million for the six months ended June 30, 1996. The increase in
operating expenses was attributable primarily to the growth in
facility operating, facility development and pre-rental and
depreciation and amortization expenses.
Facility operating expenses for the six months ended June 30,
1997 increased 69.7% to $21.4 million from $12.6 million in the six
months ended June 30, 1996. As a percentage of operating revenue,
facility operating expenses in the six months ended June 30, 1997
increased to 60.8% from 60.0% in the six months ended June 30,
1996. Of the $8.8 million increase, $8.6 million was attributable
to expenses from the operations of eight acquired and thirteen
developed facilities. The remaining balance was due to an increase
in labor costs at existing facilities.
Facility development and pre-rental expenses for the six
months ended June 30, 1997 increased $2.2 million to $2.8 million
from $0.6 million for the six months ended June 30, 1996. This was
due to a $1.2 million increase in facility pre-rental costs, a $2.7
million increase in non-capitalized labor and related development
costs offset, in part, by an increase in other capitalized expenses
of $1.7 million.
General and administrative expenses in the six months ended
June 30, 1997 increased 21.4% to $5.4 million from $4.4 million in
the six months ended June 30, 1996. As a percentage of operating
revenue, general and administrative expenses in the six months ended
June 30, 1997 decreased to 15.2% from 21.0% in the six months ended
June 30, 1996. Of the $1.0 million increase in general and
administrative expenses in the six months ended June 30, 1997, $0.6
million was related to labor costs, including $0.3 million
attributable to hiring and training additional staff and $0.3
million related to salary increases and benefits of existing
headquarters and regional office staff. The remaining $0.4
million was attributable to increases in various other corporate
expenses.
Depreciation and amortization in the six months ended June 30,
1997 compared to the six months ended in June 30, 1996 increased
$1.8 million, or 98.3%, to $3.6 million from $1.8 million primarily
due to the acquisition of facilities and the opening of thirteen
developed facilities.
Facility lease expense represents rent expense on four
facilities that are leased but not owned by the Company. Three of
these facilities were developed by the Company and opened in the
second quarter of 1997. The Company leased the remaining facility
on April 1, 1997, and has the option to purchase the facility after
one year.
Other income (expense). Interest income increased to $2.9
million for the six months ended June 30, 1997 compared to $0.7
million for the six months ended June 30, 1996. This increase was
due primarily to the investment of net proceeds received from the
Company's initial public offering and follow-on public offering
completed during 1996, as well as net proceeds received from the
issuance and sale of the Notes in June 1997. Interest expense
decreased for the six months ended June 30, 1997 to $4.3 million
from $5.4 million for the six months ended June 30,
15
<PAGE> 16
1996. Of this decrease, $0.7 million was due to the elimination of a
25% participation interest on the Multi-Property Mortgage and
reduction of the interest rate applicable to $22.0 million
outstanding variable rate indebtedness offset, in part, by a $1.4
million increase of interest for additional borrowings related to
new Sunrise facilities in operation and $0.6 million of accrued
interest on $150.0 million aggregate principal amount of the Notes.
Capitalized interest increased by $2.4 million corresponding to the
increase in the number of facilities developed and currently under
construction.
Net income (loss). The Company had net income of $0.5 million
for the six months ended June 30, 1997, compared to a net loss of
$4.1 million for the six months ended June 30, 1996. The $4.6
million change was primarily attributable to a $14.3 million
increase in resident fee revenue, a $3.3 million decrease in other
expense and a $1.0 million increase from a one time unusual charge
in 1996 offset by a $14.0 million increase in operating expenses.
LIQUIDITY AND CAPITAL RESOURCES
To date, the Company has financed its operations from long-term
borrowings, equity offerings and cash generated from operations. At
June 30, 1997, the Company had $271.1 million of outstanding debt
(excluding notes payable to affiliates) at a weighted average
interest rate of 6.7%. Of such amount, the Company had $229.0
million of fixed-rate debt (excluding a $1.6 million loan discount)
at a weighted average interest rate of 6.5%, and $42.1 million of
variable rate debt at a weighted average interest rate of 7.8%.
Increases in prevailing interest rates could increase the Company's
interest payment obligations relating to variable-rate debt.
On June 6, 1997, the Company issued and sold $150.0 million
aggregate principal amount of 5 1/2% convertible subordinated notes
due 2002 (the "Notes"). The Notes bear interest at 5 1/2% per annum
from June 6, 1997, payable semiannually on June 15 and December 15
of each year, commencing December 15, 1997. The conversion price
is $37.1875 (equivalent to a conversion rate of 26.89 shares per
$1,000 principal amount of the Notes). The Notes will mature on
June 15, 2002. The Notes are redeemable at the option of the
Company commencing June 15, 2000, at specified premiums. The
holders of the Notes may require the Company to repurchase the
Notes upon a Change of Control (as defined) of the Company. The
net proceeds to the Company from the sale of the Notes, after
deducting underwriting discounts and offering expenses, were
approximately $145.6 million. On June 10, 1997, the Company used
$57.7 million of the net proceeds to pay down floating rate
indebtedness from four financial institutions with a combined
weighted average interest rate of 8.4%. The Company expects to use
the balance of the net proceeds to fund continued development of up
to 41 new Sunrise model facilities and up to eight planned
acquisitions by the end of 1999 as well as for working capital and
general corporate purposes. The Company has also renegotiated
interest rate reductions from LIBOR plus 2.75% to corresponding
U.S. Treasuries plus 1.00% on $15.7 million of credit facilities.
At June 30, 1997, the Company had approximately $150.2 million
in unrestricted cash and cash equivalents, including $141.5 million
in high quality short-term investments (A1/P1 rated), $138.1 million
in net working capital, and $116.7 million of unused lines of
credit.
Working capital increased to $137.6 million at June 30, 1997,
compared to $102.8 million as of December 31, 1996, primarily due to
the proceeds of the Notes, offset by the Company's continued
investment in the development of Sunrise model facilities.
16
<PAGE> 17
Net cash provided by operating activities for the six months
ended June 30, 1997 was approximately $1.5 million as compared to
net cash used in operations of $0.2 million for the six months ended
June 30, 1996.
For the six months ended June 30, 1997, and 1996, the Company
used cash in investing activities of $76.7 million and $84.2
million, respectively. Investing activities included $83.0 million
and $33.9 million used for construction of assisted living
facilities for each period, respectively.
Net cash provided by financing activities was $123.5 million
and $100.8 million for the six months ended June 30, 1997, and 1996,
respectively. Cash provided by financing activities for the six
months ended June 30, 1997 included $185.2 million in additional
borrowings, which includes the Notes. Cash provided by financing
activities for the six months ended June 30, 1996 included net
proceeds from the Company's initial public offering of common stock.
The Company's previously announced three-year growth objectives
include developing at least 55 new Sunrise model assisted living
facilities with an additional resident capacity of more than 4,500
by the end of 1999. To date, the Company has completed development
of 14 such facilities with a resident capacity of 1,276 (Rockville,
MD, Philadelphia, PA (3), Old Tappan, NJ, Morris Plains, NJ, Severna
Park, MD (2), Springfield, VA, Oakton, VA, Petaluma, CA, Blue Bell,
PA, Columbia, MD, and Raleigh, NC) and has 18 facilities currently
under construction with a resident capacity of 1,583. The Company
has also entered into contracts to purchase 30 additional sites and
to lease two additional sites. The Company is pursuing additional
development opportunities as market conditions warrant. In addition
to its construction and development plans, the Company also plans to
acquire up to eight additional facilities by the end of 1999 as
market conditions warrant.
The Company currently estimates that the net proceeds to the
Company from the sale of the Notes, together with existing working
capital, financing commitments and financing expected to be
available, will be sufficient to fund its development and
acquisition programs for at least the next 18 months. The estimated
cost to complete and lease up the 41 remaining new Sunrise model
facilities targeted for completion by the end of 1999 is between
$305 million and $410 million. Additional financing will be
required to complete the Company's growth plans and to refinance
existing indebtedness if cash flows from operations do not increase
as a result of planned growth. There can be no assurance that such
financing will be available on acceptable terms.
The Company has obtained a commitment (subject to certain
conditions including syndication) from a financial institution for a
$90 million credit facility for construction and interim loans to
finance the development of up to 10 assisted living facilities by a
wholly owned subsidiary of the Company. To date, of this total
credit facility, the Company has closed $61.8 million. The Company
guaranteed the repayment of all amounts outstanding under this
credit facility. The credit facility is for a term of five years
and is secured by cross-collateralized first mortgages on the real
property and improvements and first liens on all other assets of the
subsidiary. Advances under the credit facility bear interest at
rates from LIBOR plus 1.7% to LIBOR plus 2.5%. As part of this
credit facility, the Company has entered into a swap transaction
whereby effective during the period June 18, 1998 through June 18,
2001, outstanding advances of up to $19.0 million under this credit
facility, or other LIBOR floating rate debt, bear interest at a
fixed rate based on a fixed LIBOR base rate of 7.3%. On June 10,
1997, the Company paid down $31.9 million of the outstanding loan
balance using proceeds received from the sale of the Notes. As of
June 30, 1997, there were $700,000 of advances outstanding under
this facility and available credit remaining of $57.4 million.
17
<PAGE> 18
A subsidiary of the Company has received a commitment for a
$51.0 million revolving construction credit facility. As of June
30, 1997, the Company had closed $32.1 million of the total
commitment. The credit facility provides for construction and
interim loans to finance the development of up to seven assisted
living facilities. The Company has agreed to guarantee the
repayment of all amounts outstanding under this credit facility.
The credit facility is for a term of five years and is secured by
cross-collateralized first mortgage on the real property and liens
on receivables. Advances under the credit facility bear variable
interest rates based upon LIBOR plus 2.25% to LIBOR plus 2.60%. As
of June 30, 1997, there were $2.3 million of advances outstanding
under this facility.
The Company also has a $13.0 million, five-year unsecured
credit facility to be used for development, acquisition and working
capital needs. There were no amounts outstanding under this credit
facility at June 30, 1997.
The Company's financing documents contain financial covenants
and other restrictions that (i) require the Company to meet certain
financial tests and maintain certain escrows of funds, (ii) require
that the Company's founders, Paul Klaassen and Teresa Klaassen,
maintain ownership of at least 15% of the Common Stock and that one
of them serves as Chairman of the Board and Chief Executive Officer
of the Company, (iii) require consent for changes in management or
control of the Company, (iv) limit, among other things, the ability
of the Company and certain of its subsidiaries to borrow additional
funds, dispose of assets and engage in mergers or other business
combinations, and (v) prohibit the Company from operating competing
facilities within certain distances from mortgaged facilities.
At June 30, 1997, the Company had stockholders' equity of
$188.0 million compared to stockholders' equity of $185.8 million at
December 31, 1996. The change resulted primarily from (i) adding
the receipt of net proceeds of $1.7 million from common shares
issued from the exercise of stock options granted, and (ii) adding
net income for the three months ended June 30, 1997 of $0.5 million.
At June 30, 1997, the Company had net operating loss carryforwards
for income tax purposes of approximately $16.0 million which expire
from 2010 through 2011.
SUBSEQUENT EVENT
On August 4, 1997, the Company negotiated a 100 basis points
interest rate reduction on a $90 million credit line with a
financial institution.
IMPACT OF CERTAIN ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board
issued Statement No. 128, Earnings per Share, which is required to
be adopted on December 31, 1997. At that time, the Company will be
required to change the method currently used to compute earnings per
share and to restate all prior periods. Under the new requirements
for calculating primary earnings per share, the dilutive effect of
outstanding stock options and warrants will be excluded. The impact
is expected to result in primary net income (loss) per share for the
three months ended June 30, 1997 and 1996 to $0.03 and $(0.28) per
share, respectively; and primary net income (loss) per share for the
six months ended June 30, 1997 and 1996 to $0.03 and $(0.57) per
share, respectively. The impact of Statement No. 128 on the
calculation of fully diluted earnings per share for these quarters
is not expected to be material.
18
<PAGE> 19
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On July 29, 1997, the Company announced the appointment of
David W. Faeder, Chief Financial Officer of the Company, to the
additional position of President of the Company. The Company also
announced that its wholly-owned management Company, Sunrise Assisted
Living Management, Inc., named the Company's Chief Operating
Officer, Timothy S. Smick, as its President. Messrs. Faeder and
Smick will continue to report to Company founder Paul J. Klaassen,
who remains Chairman and Chief Executive Officer of the Company, and
both will retain their respective titles of Chief Financial Officer
and Chief Operating Officer of the Company.
On July 29, 1997, the Company also announced that David G.
Bradley, chairman and owner of the Washington D.C.- based Advisory
Board Company, will join the Company's board of directors effective
August 1, 1997, replacing Darcy J. Moore. Darcy J. Moore, who
represented one of the venture capitalist that funded the Company's
earlier growth, has resigned from the Company's board of directors
effective August 1, 1997. Mr. Bradley's firm, the Advisory Board
Company, is a 600-person think tank and for-profit membership
association in Washington, D.C. The firm serves 3,000 of the
world's largest health systems, hospitals, pharmaceutical companies,
insurance companies and banks. Before founding the firm, Mr.
Bradley worked for the White House, the White House Conference on
Children and Youth and the Wall Street law firm of Craveth, Swaine &
Moore. He graduated with honors from Swarthmore College, received
an M.B.A. from Harvard Business School and holds a J.D. from
Georgetown University Law Center.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit No. Exhibit Name
4.1 Indenture dated as of June 6, 1997
between the Company and First Union
National Bank of Virginia, as
Trustee.
4.2 Registration Rights Agreement
dated as of June 6, 1997 among the
Company, Donaldson, Lufkin &
Jenrette Securities Corporation and
Alex Brown & Sons Incorporated.
11.1 Computation of Net Income Per Share
27 Financial Data Schedule, which is
submitted electronically to the
Securities and Exchange Commission
for information only and is not
filed.
19
<PAGE> 20
(b) REPORTS ON FORM 8-K
On June 13, 1997, the Company filed a Form 8-K with the
Securities and Exchange Commission announcing the closing on June 6,
1997 of the sale of $150.0 million aggregate principal amount of 5
1/2% convertible subordinated notes due June 15, 2002.
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUNRISE ASSISTED LIVING, INC.
(Registrant)
Date: August 14, 1997 /S/ David W. Faeder
--------------- -----------------------------
David W. Faeder
President and Chief Financial
Officer
Date: August 14, 1997 /S/ Larry E. Hulse
--------------- -----------------------------
Larry E. Hulse
Chief Accounting Officer
21
<PAGE> 22
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Exhibit Name Page
- ----------- ------------ ----
<S> <C> <C>
4.1 Indenture dated as of June 6, 1997 between 23
the Company and First Union National Bank
of Virginia, as Trustee.
4.2 Registration Rights Agreement dated as 120
of June 6, 1997 among the Company,
Donaldson, Lufkin & Jenrette Securities
Corporation and Alex Brown & Sons
Incorporated.
11.1 Computation of Net Income Per Share 140
27 Financial Data Schedule, which is
submitted electronically to the Securities
and Exchange Commission for information
only and is not filed.
</TABLE>
22
<PAGE> 1
EXHIBIT 4.1
================================================================================
SUNRISE ASSISTED LIVING, INC.,
ISSUER,
AND
FIRST UNION NATIONAL BANK OF VIRGINIA,
TRUSTEE
----------------------------
INDENTURE
Dated as of June 6, 1997
----------------------------
$150,000,000
5 1/2% Convertible Subordinated Notes due 2002
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . 1
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------
SECTION 1.2 Incorporation by Reference of TIA . . . . . . . . . . . . . . . . . . . . 9
---------------------------------
SECTION 1.3 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------------
ARTICLE II
THE SECURITIES . . . . . . . . . . . . . . . . 10
SECTION 2.1 Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---------------
SECTION 2.2 Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . 10
----------------------------
SECTION 2.3 Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . 11
--------------------------
SECTION 2.4 Paying Agent to Hold Assets in Trust . . . . . . . . . . . . . . . . . . 11
------------------------------------
SECTION 2.5 Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--------------------
SECTION 2.6 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------------------
SECTION 2.7 Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . 18
----------------------
SECTION 2.8 Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------------------
SECTION 2.9 Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------------------
SECTION 2.10 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 19
--------------------
SECTION 2.11 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------------
SECTION 2.12 Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
------------------
ARTICLE III
REDEMPTION . . . . . . . . . . . . . . . . . 21
SECTION 3.1 Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-------------------
SECTION 3.2 Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------
SECTION 3.3 Selection of Securities to Be Redeemed . . . . . . . . . . . . . . . . . 21
--------------------------------------
SECTION 3.4 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------------
SECTION 3.5 Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . 22
------------------------------
SECTION 3.6 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . 23
---------------------------
SECTION 3.7 Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . 23
---------------------------
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IV
COVENANTS . . . . . . . . . . . . . . . . . 24
SECTION 4.1 Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 24
---------------------
SECTION 4.2 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . 24
-------------------------------
SECTION 4.3 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-------------------
SECTION 4.4 Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . 25
---------------------------------
SECTION 4.5 Maintenance of Properties and Insurance . . . . . . . . . . . . . . . . . 25
---------------------------------------
SECTION 4.6 Compliance Certificate; Notice of Default . . . . . . . . . . . . . . . . 26
-----------------------------------------
SECTION 4.7 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-------
SECTION 4.8 Limitation on Status as Investment Company . . . . . . . . . . . . . . . 26
------------------------------------------
SECTION 4.9 Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . . . . . . 26
---------------------------------------
SECTION 4.10 Rule 144A Information Requirement. . . . . . . . . . . . . . . . . . . . 27
---------------------------------
ARTICLE V
SUCCESSOR CORPORATION . . . . . . . . . . . . . . 27
SECTION 5.1 Limitation on Merger, Sale or Consolidation . . . . . . . . . . . . . . . 27
-------------------------------------------
SECTION 5.2 Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . 28
---------------------------------
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . 28
SECTION 6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-----------------
SECTION 6.2 Acceleration of Maturity Date; Rescission and Annulment . . . . . . . . . 30
-------------------------------------------------------
SECTION 6.3 Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . 31
---------------------------------------------------------------
SECTION 6.4 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . 32
--------------------------------
SECTION 6.5 Trustee May Enforce Claims Without Possession of Securities . . . . . . . 32
-----------------------------------------------------------
SECTION 6.6 Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
----------
SECTION 6.7 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
-------------------
SECTION 6.8 Unconditional Right of Holders to Receive Principal, Premium,
-------------------------------------------------------------
Interest and Liquidated Damages . . . . . . . . . . . . . . . . . . . . . 34
-------------------------------
SECTION 6.9 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . 34
------------------------------
SECTION 6.10 Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . 34
----------------------------
SECTION 6.11 Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
------------------
SECTION 6.12 Waiver of Past Default . . . . . . . . . . . . . . . . . . . . . . . . . 35
----------------------
SECTION 6.13 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 35
---------------------
SECTION 6.14 Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . 35
----------------------------------
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE VII
TRUSTEE . . . . . . . . . . . . . . . . . . 36
SECTION 7.1 Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
-----------------
SECTION 7.2 Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
-----------------
SECTION 7.3 Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . 38
----------------------------
SECTION 7.4 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . 38
--------------------
SECTION 7.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
-----------------
SECTION 7.6 Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . 38
-----------------------------
SECTION 7.7 Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . 39
--------------------------
SECTION 7.8 Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 39
----------------------
SECTION 7.9 Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . . . . . . . 41
---------------------------------
SECTION 7.10 Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . 41
-----------------------------
SECTION 7.11 Preferential Collection of Claims Against Company . . . . . . . . . . . . 41
-------------------------------------------------
ARTICLE VIII
SATISFACTION AND DISCHARGE . . . . . . . . . . . . 41
SECTION 8.1 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . 41
---------------------------------------
SECTION 8.2 Repayment to the Company . . . . . . . . . . . . . . . . . . . . . . . . 42
------------------------
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS . . . . . . . . . . 42
SECTION 9.1 Supplemental Indentures Without Consent of Holders . . . . . . . . . . . 42
--------------------------------------------------
SECTION 9.2 Amendments, Supplemental Indentures and Waivers with Consent of Holders . 42
-----------------------------------------------------------------------
SECTION 9.3 Compliance with TIA . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
-------------------
SECTION 9.4 Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . 44
---------------------------------
SECTION 9.5 Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . 44
-------------------------------------
SECTION 9.6 Trustee to Sign Amendments, Etc. . . . . . . . . . . . . . . . . . . . . 45
--------------------------------
ARTICLE X
MEETINGS OF SECURITYHOLDERS
SECTION 10.1 Purposes for Which Meetings May Be Called . . . . . . . . . . . . . . . . 45
-----------------------------------------
SECTION 10.2 Manner of Calling Meetings . . . . . . . . . . . . . . . . . . . . . . . 45
--------------------------
SECTION 10.3 Calling of Meetings by the Company or Holders . . . . . . . . . . . . . . 46
---------------------------------------------
SECTION 10.4 Who May Attend and Vote at Meetings . . . . . . . . . . . . . . . . . . . 46
-----------------------------------
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 10.5 Regulations May Be Made by Trustee; Conduct of the Meeting;
------------------------------------------------------------
Voting Rights; Adjournment . . . . . . . . . . . . . . . . . . . . . . . 46
--------------------------
SECTION 10.6 Voting at the Meeting and Record to Be Kept . . . . . . . . . . . . . . . 47
-------------------------------------------
SECTION 10.7 Exercise of Rights of Trustee or Securityholders May Not Be Hindered or
-----------------------------------------------------------------------
Delayed by Call of Meeting . . . . . . . . . . . . . . . . . . . . . . . 47
--------------------------
ARTICLE XI
RIGHT TO REQUIRE REPURCHASE UPON A CHANGE OF CONTROL . . . . . . 48
SECTION 11.1 Repurchase of Securities at Option of the Holder Upon a Change of Control 48
-------------------------------------------------------------------------
ARTICLE XII
SUBORDINATION . . . . . . . . . . . . . . . 50
SECTION 12.1 Securities Subordinated to Senior Indebtedness . . . . . . . . . . . . . 50
----------------------------------------------
SECTION 12.2 No Payment on Securities in Certain Circumstances . . . . . . . . . . . . 50
-------------------------------------------------
SECTION 12.3 Securities Subordinated to Prior Payment of All Senior Indebtedness on
----------------------------------------------------------------------
Dissolution, Liquidation or Reorganization . . . . . . . . . . . . . . . 52
------------------------------------------
SECTION 12.4 Securityholders to Be Subrogated to Rights of Holders of Senior
---------------------------------------------------------------
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
------------
SECTION 12.5 Obligations of the Company Unconditional . . . . . . . . . . . . . . . . 53
----------------------------------------
SECTION 12.6 Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice . 54
-----------------------------------------------------------------------
SECTION 12.7 Application by Trustee of Assets Deposited with It . . . . . . . . . . . 54
--------------------------------------------------
SECTION 12.8 Subordination Rights Not Impaired by Acts or Omissions of the Company or
------------------------------------------------------------------------
Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . 54
------------------------------
SECTION 12.9 Securityholders Authorize Trustee to Effectuate Subordination of
----------------------------------------------------------------
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
----------
SECTION 12.10 Right of Trustee to Hold Senior Indebtedness . . . . . . . . . . . . . . 55
--------------------------------------------
SECTION 12.11 Article XII Not to Prevent Events of Default . . . . . . . . . . . . . . 55
--------------------------------------------
SECTION 12.12 No Fiduciary Duty of Trustee to Holders of Senior Indebtedness . . . . . 55
--------------------------------------------------------------
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C> <C>
ARTICLE XIII
CONVERSION OF SECURITIES . . . . . . . . . . . . . 56
SECTION 13.1 Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . 56
--------------------
SECTION 13.2 Exercise of Conversion Privilege . . . . . . . . . . . . . . . . . . . . 56
--------------------------------
SECTION 13.3 Fractional Interests . . . . . . . . . . . . . . . . . . . . . . . . . . 57
--------------------
SECTION 13.4 Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
----------------
SECTION 13.5 Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . 57
------------------------------
SECTION 13.6 Continuation of Conversion Privilege in Case of Reclassification,
-----------------------------------------------------------------
Change, Merger, Consolidation or Sale of Assets . . . . . . . . . . . . . 62
-----------------------------------------------
SECTION 13.7 Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . 63
------------------------
SECTION 13.8 Taxes on Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
-------------------
SECTION 13.9 Company to Provide Stock . . . . . . . . . . . . . . . . . . . . . . . . 64
------------------------
SECTION 13.10 Disclaimer of Responsibility for Certain Matters . . . . . . . . . . . . 65
------------------------------------------------
SECTION 13.11 Return of Funds Deposited for Redemption of Converted Securities . . . . 65
----------------------------------------------------------------
ARTICLE XIV
MISCELLANEOUS . . . . . . . . . . . . . . . 65
SECTION 14.1 TIA Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
------------
SECTION 14.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
-------
SECTION 14.3 Communications by Holders with Other Holders . . . . . . . . . . . . . . 66
--------------------------------------------
SECTION 14.4 Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . 66
--------------------------------------------------
SECTION 14.5 Statements Required in Certificate or Opinion . . . . . . . . . . . . . . 67
---------------------------------------------
SECTION 14.6 Rules by Trustee, Paying Agent, Registrar . . . . . . . . . . . . . . . . 67
-----------------------------------------
SECTION 14.7 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
--------------
SECTION 14.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
-------------
SECTION 14.9 No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . 68
---------------------------------------------
SECTION 14.10 No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . 68
--------------------------
SECTION 14.11 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
----------
SECTION 14.12 Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . . . 68
-------------------
SECTION 14.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
------------
SECTION 14.14 Table of Contents, Headings, Etc. . . . . . . . . . . . . . . . . . . . . 68
---------------------------------
SECTION 14.15 Qualification of Indenture . . . . . . . . . . . . . . . . . . . . . . . 68
--------------------------
SECTION 14.16 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 69
-------------------
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
v
<PAGE> 7
<TABLE>
<S> <C>
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
EXHIBIT A - FORM OF SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B - REPRESENTATION LETTER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C - FORM OF CONVERSION NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
vi
<PAGE> 8
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
- ------- ----------
<S> <C>
310(a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4). N.A.
(a)(5). 7.10
(b) 7.8;
7.10;
14.2
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.5
(b) 14.3
(c) 14.3
313(a) 7.6
(b)(1) N.A.
(b)(2) 7.6
(c) 7.6;
14.2
(d) 7.6
314(a) 4.6;
13.2
(b) N.A.
(c)(1) 2.2;
7.2;
14.4
(c)(2) 7.2;
14.4
(c)(3) N.A.
(d) N.A.
(e) 14.5
(f) N.A.
315(a) 7.1(b)
(b) 7.5;
7.6;
14.2
</TABLE>
vii
<PAGE> 9
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
- ------- ----------
<S> <C>
(c) 7.1(a)
(d) 2.8;
6.11;
7.1(b)(c)
(e) 6.14
316(a)(last sentence) 2.9
(a)(1)(A) 6.11
(a)(1)(B) 6.12
(a)(2) N.A.
(b) 6.12;
6.7
317(a)(1) 6.3
(a)(2) 6.4
(b) 2.4
318(a) 14.1
</TABLE>
- ----------
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
viii
<PAGE> 10
INDENTURE, dated as of June 6, 1997, between SUNRISE ASSISTED LIVING,
INC., a Delaware corporation (the "Company"), and FIRST UNION NATIONAL BANK OF
VIRGINIA, a national banking association, as Trustee.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's 5
1/2% Convertible Subordinated Notes due 2002:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
"Acceleration Notice" shall have the meaning specified in
Section 6.2.
"Affiliate" means any person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company. For purposes of this definition, the term "control" means the
power to direct the management and policies of a person, directly or through
one or more intermediaries, whether through the ownership of voting securities,
by contract, or otherwise.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar
Federal, state or foreign law for the relief of debtors.
"Beneficial Owner" for purposes of the definition of Change of
Control has the meaning attributed to it in Rules 13d-3 and 13d-5 under the
Exchange Act (as in effect on the Issue Date), whether or not applicable,
except that a "person" shall be deemed to have "beneficial ownership" of all
shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time or upon the
occurrence of certain events.
"Board of Directors" means, with respect to any person, the
Board of Directors of such person or any committee of the Board of Directors of
such person authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such person.
"Board Resolution" means, with respect to any person, a duly
adopted resolution of the Board of Directors of such person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in New York, New
York or Charlotte, North Carolina are authorized or obligated by law or
executive order to close.
<PAGE> 11
"Capitalized Lease Obligation" means, as to any Person, the
obligation of such Person to pay rent or other amounts under a lease to which
such Person is a party that is required to be classified and accounted for as a
capital lease obligation under GAAP.
"Capital Stock" means, with respect to any corporation, any
and all shares, interests, rights to purchase (other than convertible or
exchangeable Indebtedness), warrants, options, participations or other
equivalents of or interests (however designated) in stock issued by that
corporation.
"Cash" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Change of Control" means (i) an event or series of events as
a result of which any "person" or "group" (as such terms are used in Sections
13(d)(3) and 14(d) of the Exchange Act) (excluding the Company or any
wholly-owned subsidiary thereof) is or becomes, directly or indirectly, the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
whether or not applicable) of more than 50% of the combined voting power of the
then outstanding securities entitled to vote generally in elections of
directors, managers or trustees, as applicable, of the Company or any successor
entity ("Voting Stock"), (ii) the completion of any consolidation with or
merger of the Company into any other Person, or conveyance, transfer or lease
by the Company of all or substantially all of its assets to any Person, or any
merger of any other Person into the Company in a single transaction or series
of related transactions, and, in the case of any such transaction or series of
related transactions, the outstanding Common Stock of the Company is changed or
exchanged as a result, unless as to any such consolidation, merger, conveyance,
or transfer of lease the stockholders of the Company immediately before such
transaction own, directly or indirectly, immediately following such
transaction, at least a majority of the combined voting power of the
outstanding voting securities of the Person resulting from such transaction in
substantially the same proportion as their ownership of the Voting Stock
immediately before such transaction, or (iii) such time as the Continuing
Directors do not constitute a majority of the Board of Directors of the Company
(or, if applicable, a successor corporation to the Company); provided that a
Change of Control shall not be deemed to have occurred if either (x) the last
sale price of the Common Stock for any five Trading Days during the 10 Trading
Days immediately preceding the Change of Control is at least equal to 105% of
the Conversion Price in effect on such day, or (y) with respect to a merger or
consolidation otherwise constituting a Change of Control described in clause
(ii) above, at least 90% of the consideration (excluding cash payments for
dissenting and fractional shares) in such transaction or transactions consists
of common stock or securities convertible into common stock that are, or upon
issuance will be, traded on a United States national securities exchange or
approved for quotation on the Nasdaq National Market.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Company's common stock, par value
$.01 per share, or as such stock may be reconstituted from time to time.
"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to the Indenture, and thereafter means
such successor.
2
<PAGE> 12
"Continuing Director" means at any date a member of the
Company's Board of Directors (i) who was a member of such board on the Issue
Date or (ii) who was nominated or elected by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election or whose election to the Company's Board of Directors was recommended
or endorsed by at least a majority of the directors who were Continuing
Directors at the time of such nomination or election.
"Conversion Price" shall have the meaning specified in Section
13.4.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Date of Conversion" shall have the meaning specified in
Section 13.2.
"Default" means any event or condition that is, or after
notice or passage of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in
Section 2.12.
"Definitive Securities" means Securities that are in the form
of Security attached hereto as Exhibit A that do not include the information
called for by footnote 1 thereof.
"Depositary" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in Section 2.3
as the Depositary with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Disqualified Capital Stock" means, with respect to the
Company, Capital Stock of the Company that, by its terms or by the terms of any
security into which it is convertible, exercisable or exchangeable, is, or upon
the happening of an event or the passage of time would be, required to be
redeemed or repurchased (including at the option of the holder thereof) by the
Company, in whole or in part, on or prior to the Stated Maturity of the Notes,
provided that only the portion of such Capital Stock which is so convertible,
exercisable, exchangeable or redeemable or subject to repurchase prior to such
Stated Maturity shall be deemed to be Disqualified Capital Stock.
"Distribution Date" shall have the meaning specified in
Section 13.5.
"DTC" shall have the meaning specified in Section 2.3.
"Event of Default" shall have the meaning specified in Section
6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Expiration Time" shall have the meaning specified in Section
13.5.
3
<PAGE> 13
"GAAP" means United States generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board
("FASB") or in such other statements by such other entity as approved by a
significant segment of the accounting profession which are in effect in the
United States; provided, however, that for purposes of determining compliance
with covenants in the Indenture, "GAAP" means such generally accepted
accounting principles which are in effect as of the Issue Date.
"Global Security" means a Security that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 3
to the form of Security attached hereto as Exhibit A. There shall be separate
Global Securities, with separate CUSIP Numbers, to evidence interests (x) in
the Securities held by "qualified institutional buyers," as defined in Rule
144A under the Securities Act, and (y) by persons who acquired their interest
in the Securities in compliance with Regulation S under the Securities Act.
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.
"Indebtedness" of any person means, without duplication, (a)
all liabilities and obligations, contingent or otherwise, of any such person,
(i) in respect of borrowed money (whether or not the lender has recourse to all
or any portion of the assets of such person ), (ii) evidenced by credit or loan
agreements, bonds, notes, debentures or similar instruments (including, without
limitation, notes or similar instruments given in connection with the
acquisition or any business, properties or assets of any kind), (iii) evidenced
by bankers' acceptances or similar instruments issued or accepted by banks,
(iv) for the payment of money relating to a Capitalized Lease Obligation, or
(v) evidenced by a letter of credit or a reimbursement obligation of such
person with respect to any letter of credit; (b) all obligations of such person
issued or assumed as the deferred purchase price of property or services (but
excluding trade accounts payable or accrued liabilities arising in the ordinary
course of business); (c) all net obligations of such person under Interest Swap
and Hedging Obligations; (d) all liabilities of others of the kind described in
the preceding clause (a), (b) or (c) that such person has guaranteed or that is
otherwise its legal liability, or which is secured by a lien on property of
such person, and all obligations to purchase, redeem or acquire any Capital
Stock; and (e) any and all deferrals, renewals, extensions, modifications,
replacements, restatements, refinancings and refundings (whether direct or
indirect) of, or any indebtedness or obligations issued in exchange for, any
liability of the kind described in any of the preceding clauses (a), (b), (c)
or (d), or this clause (e), whether or not between or among the same parties.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof.
"Initial Purchasers" means Donaldson, Lufkin & Jenrette
Securities Corporation and Alex. Brown & Sons Incorporated.
"Interest Payment Date" means the stated due date of an
installment of interest on the Securities.
4
<PAGE> 14
"Interest Swap and Hedging Obligation" means the obligations
of any Person under any interest rate protection agreement, interest rate
future agreement, interest rate option agreement, interest rate swap agreement,
interest rate cap agreement or other interest rate hedge agreement, interest
rate collar agreement or other similar agreement or arrangement to which such
Person is a party or beneficiary.
"Issue Date" means the date of first issuance of the
Securities under this Indenture.
"Junior Securities" means any Qualified Capital Stock and any
Indebtedness of the Company that is fully subordinated in right of payment to
the Securities and has no scheduled installment of principal due, by
redemption, sinking fund payment or otherwise, on or prior to the Stated
Maturity of the Securities.
"Last Sale Price" shall have the meaning specified in Section
13.3.
"Legal Holiday" shall have the meaning specified in Section
14.7.
"Lien" means any mortgage, lien, pledge, charge, security
interest or other encumbrance of any kind, whether or not filed, recorded or
otherwise perfected under applicable law (including any conditional sale or
other title retention agreement and any lease deemed to constitute a security
interest and any option or other agreement to give any security interest).
"Liquidated Damages" shall have the meaning specified in the
Registration Rights Agreement.
"non-electing share" shall have the meaning specified in
Section 13.6.
"Non-Payment Default" shall have the meaning specified in
Section 12.2.
"Notice of Default" shall have the meaning specified in
Section 6.1(3), (4) or (5).
"Offer" shall have the meaning specified in Section 13.5.
"Officer" means, with respect to the Company, the Chief
Executive Officer, the President, any Executive Vice President, any Vice
President, the Chief Financial Officer, the Treasurer, the Controller, the
Secretary or any Assistant Secretary of the Company.
"Officers' Certificate" means, with respect to the Company, a
certificate signed by two Officers or by an Officer and an Assistant Secretary
of the Company and otherwise complying with the requirements of Section 2.2, if
applicable, and Sections 14.4 and 14.5.
"Opinion of Counsel" means a written opinion from legal
counsel, who may be an employee of or counsel to the Company, and who is
reasonably acceptable to the Trustee and which complies with the requirements
of Sections 14.4 and 14.5.
"Paying Agent" shall have the meaning specified in Section
2.3.
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"Payment Blockage Period" shall have the meaning specified in
Section 12.2.
"Payment Default" shall have the meaning specified in Section
12.2.
"Payment Notice" shall have the meaning specified in Section
12.2.
"Permitted Sale/Leaseback" means any sale by the Company or
any Subsidiary or Subsidiaries for fair value, as determined in good faith by
the Board of Directors of the Company, of all or substantially all of its
assets if the Company or any such Subsidiary simultaneously enters into an
agreement to operate such assets under a lease, management contract or similar
agreement with a term of at least 10 years.
"Person" or "person" means any corporation, individual,
limited liability company, joint stock company, joint venture, partnership,
unincorporated association, governmental regulatory entity, country, state or
political subdivision thereof, trust, municipality or other entity.
"principal" of any Indebtedness means the principal of such
Indebtedness plus, without duplication, any applicable premium, if any, on such
Indebtedness.
"property" means any right or interest in or to property or
assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible.
"Purchase Agreement" means that certain Purchase Agreement,
dated June 2, 1997, by and among the Company and the Initial Purchasers, as
such agreement may be amended, modified or supplemented from time to time in
accordance with the terms thereof.
"Purchased Shares" shall have the meaning specified in Section
13.5.
"Qualified Capital Stock" means any Capital Stock of the
Company that is not Disqualified Capital Stock.
"Record Date" means a Record Date specified in the Securities
whether or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to
be redeemed, means the date fixed for such redemption pursuant to Article III
of this Indenture and Paragraph 5 in the form of Security.
"Redemption Price," when used with respect to any Security to
be redeemed, means the redemption price for such redemption pursuant to
Paragraph 5 in the form of Security, which shall include, without duplication,
in each case, accrued and unpaid interest and Liquidated Damages, if any, to
and including the Redemption Date.
"Registrar" shall have the meaning specified in Section 2.3.
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"Registration Rights Agreement" means the Registration Rights
Agreement, dated the date hereof, by and among the Initial Purchasers and the
Company, as such agreement may be amended, modified or supplemented from time
to time in accordance with the terms thereof.
"Repurchase Date" shall have the meaning specified in Section
11.1.
"Repurchase Offer" shall have the meaning specified in Section
11.1.
"Repurchase Offer Period" shall have the meaning specified in
Section 11.1.
"Repurchase Price" shall have the meaning specified in Section
11.1.
"Repurchase Put Date" shall have the meaning specified in
Section 11.1.
"Restricted Security" means a Security, unless or until it has
been (i) disposed of in a transaction effectively registered under the
Securities Act or (ii) distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities" means, collectively, the 5 1/2% Convertible
Subordinated Notes due 2002, as supplemented from time to time in accordance
with the terms hereof, issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Securities Custodian" means the Trustee, as custodian with
respect to the Securities in global form, or any successor entity thereto.
"Senior Indebtedness" means all obligations of the Company to
pay the principal of, premium, if any, interest (including all interest
accruing subsequent to the commencement of any bankruptcy or similar
proceeding, whether or not a claim for post-petition interest is allowable as a
claim in any such proceeding) and rent payable on or in connection with, and
all fees, costs, expenses and other amounts accrued or due on or in connection
with, any Indebtedness of the Company, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed, guaranteed or in effect
guaranteed by the Company, unless the instrument creating or evidencing such
Indebtedness provides that such Indebtedness is not senior or superior in right
of payment to the Securities or which is pari passu with, or subordinated to,
the Securities; provided that in no event shall Senior Indebtedness include (a)
Indebtedness of the Company owed or owing to any Subsidiary of the Company or
any officer, director or employee of the Company or any Subsidiary of the
Company, (b) Indebtedness representing or with respect to any account payable
or other accrued current liability or obligation incurred in the ordinary
course of business in connection with the obtaining of materials or services or
(c) any liability for taxes owed or owing by the Company or any Subsidiary of
the Company.
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"Shelf Registration Statement" shall have the meaning
specified in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary which is a
"significant subsidiary" of the Company within the meaning of Rule 1.02(w) of
Regulation S-X promulgated by the Commission as in effect as of the date of the
Indenture.
"Special Record Date" for payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity," when used with respect to any Security,
means June 15, 2002.
"Subsidiary" with respect to any person, means (i) a
corporation a majority of whose Capital Stock with voting power normally
entitled to vote in the election of directors is at the time, directly or
indirectly, owned by such person, by such person and one or more Subsidiaries
of such person or by one or more Subsidiaries of such person, (ii) a
partnership in which such person or a Subsidiary of such person is, at the
time, a general partner and owns alone or together with one or more
Subsidiaries of such person a majority of the partnership interests, or (iii)
any other person (other than a corporation) in which such person, one or more
Subsidiaries of such person, or such person and one or more Subsidiaries of
such person, directly or indirectly, at the date of determination thereof has
at least majority ownership interest.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) as in effect on the date of the execution of this
Indenture unless otherwise specified herein.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday, other than any day on which securities are not traded on the Nasdaq
National Market (or, if the Common Stock is not admitted to trading thereon, on
the principal national securities exchange on which the Common Stock is at that
time listed or admitted to trading).
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.6 hereof.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
"Trust Officer" means any officer within the corporate trust
division (or any successor group) of the Trustee or any other officer of the
Trustee customarily performing functions similar to those performed by the
Persons who at that time shall be such officers, and also means, with respect
to a particular corporate trust matter, any other officer of the Trustee to
whom such trust matter is referred because of his knowledge of and familiarity
with the particular subject.
"U.S. Government Obligations" means direct non-callable
obligations of, or noncallable obligations guaranteed by, the United States of
America for the payment of which obligation or guarantee the full faith and
credit of the United States of America is pledged.
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"Voting Stock" means the combined voting power of the then
outstanding securities entitled to vote generally in election of directors,
managers or trustees, as applicable, of the Company or any successor entity.
SECTION 1.2 Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
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 SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or 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 and
any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule and
not otherwise defined herein have the meanings assigned to them thereby.
SECTION 1.3 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 GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and
words in the plural include the singular;
(5) provisions apply to successive events and
transactions;
(6) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision; and
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(7) references to Sections or Articles means
reference to such Section or Article in this Indenture, unless stated
otherwise.
ARTICLE II
THE SECURITIES
SECTION 2.1 Form and Dating.
The Securities and the Trustee's certificate of
authentication, in respect thereof, shall be substantially in the form of
Exhibit A hereto, which Exhibit is part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange rule or
usage. The Company shall approve the form of the Securities and any notation,
legend or endorsement on them. Any such notations, legends or endorsements not
contained in the form of Security attached as Exhibit A hereto shall be
delivered in writing to the Trustee. Each Security shall be dated the date of
its authentication.
The terms and provisions contained in the forms of Securities
shall constitute, and are hereby expressly made, a part of this Indenture and,
to the extent applicable, the Company and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and to
be bound thereby.
SECTION 2.2 Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one
Officer shall attest to, 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 was an Officer
at the time of such execution but no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless
and the Company shall nevertheless be bound by the terms of the Securities and
this Indenture.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security
but such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate the Securities for original
issue in the aggregate principal amount of up to $150,000,000 upon a written
order of the Company in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of Securities to be authenticated and the
date on which the Securities are to be authenticated. The aggregate principal
amount of Securities outstanding at any time may not exceed $150,000,000,
except as provided in Section 2.7; provided, that Securities in excess of
$130,000,000 shall not be issued other than pursuant to the over-allotment
option granted by the Company to the Initial Purchasers as provided in the
Purchase Agreement. Upon
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the written order of the Company in the form of an Officers' Certificate, the
Trustee shall authenticate Securities in substitution of Securities originally
issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Securities. Unless otherwise
provided in the appointment, 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,
any Affiliate of the Company, or any of their respective Subsidiaries.
Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
SECTION 2.3 Registrar and Paying Agent.
The Company shall maintain or cause to be maintained through
the Trustee an office or agency in the Borough of Manhattan, The City of New
York, where Securities may be presented for registration of transfer,
conversion or for exchange ("Registrar") and an office or agency where
Securities may be presented for payment ("Paying Agent") and where notices and
demands to or upon the Company in respect of the Securities may be served. The
Company may act as Registrar or Paying Agent. The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-Registrars and one or more additional Paying Agents. The
term "Paying Agent" includes any additional Paying Agent. The Company hereby
initially appoints the Trustee as Registrar, Paying Agent and conversion agent,
and the Trustee hereby initially agrees so to act.
The Company shall enter into an appropriate written agency
agreement with any Agent not a party to this Indenture, which agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Company shall promptly notify the Trustee in writing of the name and address of
any such Agent. If the Company fails to maintain a Registrar or Paying Agent,
the Trustee shall act as such.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Securities.
The Company initially appoints the Trustee to act as
Securities Custodian with respect to the Global Securities.
SECTION 2.4 Paying Agent to Hold Assets in Trust.
If the Company shall have one or more Paying Agents, it will,
prior to each due date for the payment of principal of, premium, if any,
interest on or Liquidated Damages with respect to, the Securities, deposit with
such Paying Agents Cash in an amount sufficient to make such payment, such
amount to be held in trust for the benefit of the Holders, and (unless such
Paying Agent is the Trustee) the Company shall promptly notify the Trustee of
its action or failure so to act.
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The Company shall require each Paying Agent other than the
Trustee to agree in writing that each Paying Agent shall hold in trust for the
benefit of Holders all assets held by the Paying Agent for the payment of
principal of, premium, if any, interest on or Liquidated Damages with respect
to, the Securities (whether such assets have been distributed to it by the
Company or any other obligor on the Securities), and shall notify the Trustee
in writing of any Default in making any such payment. If either of the Company
or a Subsidiary of the Company acts as Paying Agent, it shall, on or prior to
the due date for any such payment, segregate such assets and hold them as a
separate trust fund for the benefit of the Holders. The Company at any time
may require a Paying Agent to distribute all assets held by it to the Trustee
and account for any assets disbursed 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 distribute all assets held by it to the Trustee
and to account for any assets distributed. Upon distribution to the Trustee of
all assets that shall have been delivered by the Company to the Paying Agent,
the Paying Agent shall have no further liability for such assets.
SECTION 2.5 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. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee on or before the third Business Day preceding each
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 reasonably may
require of the names and addresses of Holders.
SECTION 2.6 Transfer and Exchange.
(a) Transfer and Exchange of Definitive
Securities. When Definitive Securities are presented to the Registrar or a
co-Registrar with a request:
(x) to register the transfer of such
Definitive Securities; or
(y) to exchange such Definitive Securities
for an equal principal amount of Definitive Securities of other authorized
denominations;
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or
accompanied by a written instrument of transfer in form reasonably
satisfactory to the Company and the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in
writing; and
(ii) in the case of a Definitive Security
that is a Transfer Restricted Security, shall be accompanied by the
following additional information and documents, as applicable:
(A) if such Definitive Security is being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification
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from such Holder to that effect (in substantially the form set
forth on the reverse of the Security); or
(B) if such Definitive Security is being
transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with Rule
144A under the Securities Act, a certification to that effect
(in substantially the form set forth on the reverse of the
Security); or
(C) if such Definitive Security is being
transferred in accordance with Regulation S under the
Securities Act, a certification to that effect (in
substantially the form set forth on the reverse of the
Security) and if either the Registrar or the Company so
requests, an Opinion of Counsel satisfactory to the Registrar
or the Company, as the case may be, to the effect that such
transfer is in compliance with the Securities Act;
(D) if such Definitive Security is being
transferred to an institutional investor that is an
"accredited investor" within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act, a certification to
that effect (in substantially the form set forth on the
reverse of the Security) accompanied by a certificate in the
form of Exhibit B to the Indenture to the Trustee and if
either the Registrar or the Company so requests, an Opinion of
Counsel satisfactory to the Registrar or the Company, as the
case may be, to the effect that such transfer is in compliance
with the Securities Act; or
(E) if such Definitive Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect (in substantially the form set
forth on the reverse of the Security) and if either the
Registrar or the Company so requests, an Opinion of Counsel
satisfactory to the Registrar or the Company, as the case may
be, to the effect that such transfer is in compliance with the
Securities Act.
(b) Restrictions on Transfer of a Definitive
Security for a Beneficial Interest in a Global Security. A Definitive Security
may not be exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the
Registrar of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer in form reasonably satisfactory to the Company and the
Registrar or Co-Registrar, duly executed by the Holder thereof or his attorney
duly authorized in writing, together with:
(i) if such Definitive Security is a
Transfer Restricted Security, certification, substantially in the form
set forth on the reverse of the Security, that such Definitive
Security is being transferred (x) to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act) in accordance with
Rule 144A under the Securities Act or (y) in accordance with
Regulation S under the Securities Act; and
(ii) whether or not such Definitive
Security is a Transfer Restricted Security, written instructions
directing the Registrar to make, or to direct the Securities
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Custodian to make, an endorsement on the Global Security to reflect an
increase in the aggregate principal amount of the Securities
represented by the applicable Global Security;
then the Registrar shall cancel such Definitive Security and cause, or direct
the Securities Custodian to cause, in accordance with the standing instructions
and procedures existing between the Depositary and the Securities Custodian,
the aggregate principal amount of Securities represented by the appropriate
Global Security to be increased accordingly. If no Global Securities are then
outstanding, the Company shall execute and, upon receipt of an authentication
order in the form of an Officer's Certificate, the Trustee shall authenticate
an appropriate new Global Security in the appropriate principal amount.
(c) Transfer and Exchange of Global Securities.
The transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depositary, in accordance with this Indenture
(including the restrictions on transfer set forth herein) and the procedures of
the Depositary therefor.
(d) Transfer of a Beneficial Interest in a Global
Security for a Definitive Security.
(i) Upon receipt by the
Registrar of written instructions or such other form of instructions
as is customary for the Depositary from the Depositary or its nominee
on behalf of any Person having a beneficial interest in a Global
Security and upon receipt by the Registrar of a written order or such
other form of instructions as is customary for the Depositary or the
Person designated by the Depositary as having such a beneficial
interest in a Transfer Restricted Security only, the following
additional information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by the Depositary as
being the Beneficial Owner, a certification from such person
to that effect (in substantially the form set forth on the
reverse of the Security); or
(B) if such beneficial interest is being
transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with Rule
144A under the Securities Act, a certification to that effect
from the transferor (in substantially the form set forth on
the reverse of the Security); or
(C) if such beneficial interest is being
transferred in accordance with Regulation S under the
Securities Act, a certification to that effect (in
substantially the form set forth on the reverse of the
Security) and if either the Registrar or the Company so
requests, an Opinion of Counsel satisfactory to the Registrar
or the Company, as the case may be, to the effect that such
transfer is in compliance with the Securities Act;
(D) if such beneficial interest is being
transferred to an institutional investor that is an
"accredited investor" within the meaning of Rule 501(a)(1),
(2), (3)
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or (7) under the Securities Act, a certification to that
effect (in substantially the form set forth on the reverse of
the Security) accompanied by a certificate in the form of
Exhibit B to the Indenture to the Trustee and if either the
Registrar or the Company so requests, an Opinion of Counsel
satisfactory to the Registrar or the Company, as the case may
be, to the effect that such transfer is in compliance with the
Securities Act; or
(E) if such beneficial interest is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from the transferee or transferor
(in substantially the form set forth on the reverse of the
Security) and if either the Registrar or the Company so
requests, an Opinion of Counsel satisfactory to the Registrar
or the Company, as the case may be, to the effect that such
transfer is in compliance with the Securities Act;
then the Registrar or the Securities Custodian, at the direction of the
Registrar, will cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of the applicable Global Security to be reduced and,
following such reduction, the Company will execute and, upon receipt of an
authentication order in the form of an Officers' Certificate, the Trustee will
authenticate and deliver to the transferee a Definitive Security.
(ii) Definitive Securities issued
in exchange for a beneficial interest in a Global Security pursuant to
subsection (d) this Section 2.6 shall be registered in such names and
in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee in writing. The Trustee shall deliver such
Definitive Securities to the persons in whose names such Securities
are so registered.
(e) Restrictions on Transfer and Exchange of
Global Securities. Notwithstanding any other provisions of this Indenture
(other than the provisions set forth in subsection (f) of this Section 2.6), a
Global Security may not be transferred as a whole except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Definitive Securities in
Absence of Depositary. If at any time:
(i) the Depositary for the Securities
notifies the Company and the Company notifies the Trustee in writing
that the Depositary is no longer willing or able to continue as
Depositary for the Global Securities and a successor Depositary for
the Global Securities is not appointed by the Company within 90 days
after delivery of such notice; or
(ii) the Company, in its sole discretion,
notifies the Trustee in writing that it elects to cause all Securities
under this Indenture to be in the form of Definitive Securities;
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then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive
Securities, will authenticate and deliver Definitive Securities, in an
aggregate principal amount equal to the principal amount of the Global
Securities, in exchange for such Global Securities.
(g) Legends.
(i) Except as permitted by the
following paragraph (ii), each Transfer Restricted Security
certificate evidencing the Global Securities and the Definitive
Securities (and all Securities issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the
following form:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THE SECURITIES EVIDENCED HEREBY BY ITS
ACCEPTANCE HEREOF AGREES THAT SUCH SECURITIES ARE "RESTRICTED
SECURITIES" WITHIN THE MEANING OF RULE 144 UNDER THE
SECURITIES ACT AND THAT IT AND ANY SUBSEQUENT HOLDER WILL NOT
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED PERSON OF
THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF SUCH SECURITY) EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) PURSUANT TO RULE 144A, FOR SO LONG AS
IT IS AVAILABLE, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR,"
WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER
THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT,
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OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR
FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND OTHER INFORMATION SATISFACTORY
TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY
IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE.
(ii) Upon any sale or transfer of
a Transfer Restricted Security (including any Transfer Restricted
Security represented by a Global Security) pursuant to Rule 144 under
the Securities Act or an effective registration statement under the
Securities Act:
(A) in the case of any Transfer
Restricted Security that is a Definitive Security or that is
represented by a Global Security, the Registrar shall permit
the Holder thereof to exchange such Transfer Restricted
Security for a Definitive Security that does not bear the
legend set forth above and rescind any restriction on the
transfer of such Transfer Restricted Security (1) in the case
of a sale or transfer pursuant to Rule 144 under the
Securities Act, after delivery of a customary opinion of
counsel satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act or (2) in
the case of a sale or transfer pursuant to an effective
registration statement under the Securities Act; and
(B) any such Transfer Restricted
Security represented by a Global Security shall not be subject
to the provisions set forth in (i) above (such sales or
transfers being subject only to the provisions of subsection
(c) of this Section 2.6 hereof).
(h) Cancellation and/or Adjustment of Global
Security. At such time as all beneficial interests in a Global Security have
either been exchanged for Definitive Securities, redeemed, repurchased or
cancelled, such Global Security shall be returned to or retained and cancelled
by the Registrar. At any time prior to such cancellation, if any beneficial
interest in a Global Security is exchanged for Definitive Securities, redeemed,
repurchased or cancelled, the principal amount of Securities represented by
such Global Security shall be reduced and an endorsement shall be made on such
Global Security, by the Registrar or the Securities Custodian, at the direction
of the Registrar, to reflect such reduction.
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(i) Obligations with respect to Transfers and
Exchanges of Definitive Securities and Global Securities.
(i) To permit registrations of
transfers and exchanges, the Company shall execute and the Trustee
shall authenticate Definitive Securities and Global Securities at the
Registrar's or co-Registrar's written request.
(ii) No service charge shall be
made for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax,
assessments, or similar governmental charge payable in connection
therewith (other than any such transfer taxes, assessments, or similar
governmental charge payable upon exchanges or transfers pursuant to
Section 2.10, 3.7, 9.5, or 11.1 (final paragraph)).
(iii) The Registrar or
co-Registrar shall not be required to register the transfer of or
exchange of (a) any Definitive Security selected for redemption in
whole or in part pursuant to Article III, except the unredeemed
portion of any Definitive Security being redeemed in part, or (b) any
Security for a period beginning 15 days before the mailing of a notice
of an offer to repurchase pursuant to Article XI hereof or the mailing
of a notice of redemption of Securities pursuant to Article III hereof
and ending at the close of business on the day of such mailing.
SECTION 2.7 Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if
the Holder of a Security claims and submits an affidavit or other evidence,
satisfactory to the Trustee, to the Trustee to the effect that the Security has
been lost, destroyed or wrongfully taken, the Company shall execute and, upon
receipt of an authentication order in the form of an Officer's Certificate, the
Trustee shall authenticate a replacement Security if the Trustee's requirements
are met. If required by the Trustee or the Company, such Holder must provide
an indemnity bond or other indemnity, sufficient in the judgment of both the
Company and the Trustee, to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Security is replaced. The Company
may charge such Holder for its reasonable, out-of-pocket expenses 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 discretion,
but subject to any conversion rights, may, instead of issuing a new Security,
pay such Security, upon satisfaction of the conditions set forth in the
preceding paragraph.
Every new Security issued pursuant to this Section 2.7 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and such new Security 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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The provisions of this Section 2.7 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies of any Holder with respect
to the replacement or payment of mutilated, destroyed, lost or stolen
Securities.
SECTION 2.8 Outstanding Securities.
Securities outstanding at any time are all the Securities that
have been authenticated by the Trustee (including any Security represented by a
Global Security) except those cancelled by the Registrar, those delivered to it
for cancellation, those reductions in the interest in a Global Security
effected by the Registrar hereunder and those described in this Section 2.8 as
not outstanding. A Security does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Security, except as provided
in Section 2.9.
If a Security is replaced pursuant to Section 2.7 (other than
a mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be
outstanding upon surrender of such Security and replacement thereof pursuant to
Section 2.7.
If on a Redemption Date the Paying Agent (other than the
Company or an Affiliate of the Company) holds Cash or U.S. Government
Obligations or if the Company (if the Company shall act as its own Paying
Agent) shall have set aside and segregated in trust Cash or U.S. Government
Obligations, sufficient to pay all of the principal and interest due on the
Securities payable on that date in accordance with Section 3.6 hereof and
payment of the Securities called for redemption is not otherwise prohibited
pursuant to Article XII hereof or otherwise, then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue.
SECTION 2.9 Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, amendment, supplement,
waiver or consent, Securities owned by the Company or an Affiliate of the
Company shall be disregarded, except that, for the purposes of determining
whether the Trustee shall be protected in relying on any such direction,
amendment, supplement, waiver or consent, only Securities that a Trust officer
having direct responsibility for the administration of this Indenture knows are
so owned shall be disregarded.
SECTION 2.10 Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Company reasonably and in good
faith considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as permanent Securities authenticated and delivered
hereunder.
SECTION 2.11 Cancellation.
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The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for transfer, exchange or payment.
The Trustee, or at the direction of the Trustee, the Registrar or the Paying
Agent, and no one else, shall cancel and, at the written direction of the
Company, shall dispose of all Securities surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.7, the Company may not issue new
Securities to replace Securities that have been paid or delivered to the
Trustee for cancellation. No Securities shall be authenticated in lieu of or
in exchange for any Securities cancelled as provided in this Section 2.11,
except as expressly permitted in the form of Securities and as permitted by
this Indenture.
SECTION 2.12 Defaulted Interest.
Interest on any Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
person in whose name that Security (or one or more predecessor Securities) is
registered at the close of business on the Record Date for such interest.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date plus, to the
extent lawful, any interest payable on the defaulted interest (collectively,
herein called "Defaulted Interest") shall forthwith cease to be payable to the
registered holder on the relevant Record Date, and such Defaulted Interest may
be paid by the Company, at its election in each case, as provided in clause (1)
or (2) below:
(1) The Company may elect to make
payment of any Defaulted Interest to the persons in whose names the
Securities (or their respective predecessor Securities) are registered
at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following manner.
The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security and the date
of the proposed payment, and at the same time the Company shall
deposit with the Paying Agent an amount of Cash equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such Cash when deposited to
be held in trust for the benefit of the persons entitled to such
Defaulted Interest as provided in this clause (1). Thereupon the
Company, with the written consent of Trustee, shall fix a Special
Record Date for the payment of such Defaulted Interest which shall be
not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee, in
the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record
Date therefor to be mailed, first-class postage prepaid, to each
Holder at his address as it appears in the Security register not less
than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record
Date therefor having been mailed as aforesaid, such Defaulted Interest
shall be paid to the persons in whose names the Securities (or their
respective predecessor Securities) are registered on such Special
Record Date and shall no longer be payable pursuant to the following
clause (2).
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(2) The Company may make payment of any
Defaulted Interest in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Securities
may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.12, each
Security delivered under this Indenture upon transfer of or in exchange for or
in lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security.
ARTICLE III
REDEMPTION
SECTION 3.1 Right of Redemption.
Redemption of Securities, as permitted by any provision of
this Indenture, shall be made in accordance with Paragraph 5 of the Securities
and this Article III. The Company will not have the right to redeem any
Securities prior to June 15, 2000. On or after June 15, 2000, the Company will
have the right to redeem all or any part of the Securities at the Redemption
Prices specified in Paragraph 5 therein under the caption "Redemption," in each
case including accrued and unpaid interest and Liquidated Damages, if any, to,
but excluding, the Redemption Date.
SECTION 3.2 Notices to Trustee.
If the Company elects to redeem Securities pursuant to
Paragraph 5 of the Securities, it shall notify the Trustee in writing of the
Redemption Date, the redemption price and the principal amount of Securities to
be redeemed and whether it wants the Trustee to give notice of redemption to
the Holders.
If the Company elects to reduce the principal amount of
Securities to be redeemed pursuant to Paragraph 5 of the Securities by
crediting against any such redemption Securities it has not previously
delivered to the Trustee for cancellation, it shall so notify the Trustee in
writing of the amount of the reduction and deliver such Securities with such
notice.
The Company shall give each notice to the Trustee provided for
in this Section 3.2 at least 45 days before the Redemption Date (unless a
shorter notice shall be satisfactory to the Trustee). Any such notice may be
cancelled at any time prior to notice of such redemption being mailed to any
Holder and shall thereby be void and of no effect.
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SECTION 3.3 Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant
to Paragraph 5 thereof, the Trustee shall select the Securities to be redeemed
on a pro rata basis, by lot or by such other method as the Trustee shall
determine to be fair and appropriate and in such manner as complies with any
applicable depositary, legal and stock exchange or automated quotation system
requirements.
The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption and shall promptly notify
the Company in writing of the Securities selected for redemption and, in the
case of any Security selected for partial redemption, the principal amount
thereof to be redeemed. Securities in denominations of $1,000 may be redeemed
only in whole. The Trustee may select for redemption portions (equal to $1,000
or any integral multiple thereof) of the principal of Securities that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called
for redemption.
SECTION 3.4 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption
Date, the Company shall send a notice of redemption to the Trustee and each
Holder whose Securities are to be redeemed. At the Company's request, the
Trustee shall give the notice of redemption in the Company's name and at the
Company's expense. Each notice for redemption shall identify the Securities to
be redeemed and shall state:
(1) the Redemption Date, and that the
Securities called for redemption may not be converted after the fifth
Business Day prior to the Redemption Date;
(2) the Redemption Price, including the
amount of accrued and unpaid interest and Liquidated Damages, if any,
to be paid upon such redemption;
(3) the name, address and telephone
number of the Paying Agent;
(4) that Securities called for
redemption must be surrendered to the Paying Agent at the address
specified in such notice to collect the Redemption Price;
(5) that, unless (a) the Company
defaults in its obligation to deposit Cash with the Paying Agent in
accordance with Section 3.6 hereof or (b) such redemption payment is
prohibited pursuant to Article XII hereof or otherwise, interest on,
and Liquidated Damages with respect to, Securities called for
redemption cease to accrue on and after the Redemption Date and the
only remaining right of the Holders of such Securities is to receive
payment of the Redemption Price, including accrued and unpaid interest
and Liquidated Damages, if any, to, but excluding, the Redemption
Date, upon surrender to the Paying Agent of the Securities called for
redemption and to be redeemed;
(6) if any Security is being redeemed in
part, the portion of the principal amount, equal to $1,000 or any
integral multiple thereof, of such Security to be redeemed and that,
after the Redemption Date, and upon surrender of such Security, a new
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Security or Securities in aggregate principal amount equal to the
unredeemed portion thereof will be issued;
(7) if less than all the Securities are
to be redeemed, the identification of the particular Securities (or
portion thereof) to be redeemed, as well as the aggregate principal
amount of such Securities to be redeemed and the aggregate principal
amount of Securities to be outstanding after such partial redemption;
(8) the CUSIP number of the Securities
to be redeemed; and
(9) that the notice is being sent
pursuant to this Section 3.4 and pursuant to the redemption provisions
of Paragraph 5 of the Securities.
SECTION 3.5 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.4, Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price, including accrued and unpaid interest and
Liquidated Damages, if any, to the Redemption Date. Upon surrender to the
Trustee or Paying Agent, such Securities called for redemption shall be paid at
the Redemption Price, including accrued and unpaid interest and Liquidated
Damages, if any, to, but excluding, the Redemption Date; provided that if the
Redemption Date is after a regular Record Date and on or prior to the
corresponding Interest Payment Date, the accrued interest and Liquidated
Damages, if any, shall be payable to the Holder of the redeemed Securities
registered on the relevant Record Date; and provided, further, that if a
Redemption Date is a Legal Holiday, payment shall be made on the next
succeeding Business Day and no interest or Liquidated Damages shall accrue for
the period from such Redemption Date to such succeeding Business Day.
SECTION 3.6 Deposit of Redemption Price.
Prior to the Redemption Date, the Company shall deposit with
the Paying Agent (or, if the Company is acting as its own Paying Agent, on or
prior to the Redemption Date, set aside, segregate and hold in trust as
provided in Section 2.4) Cash sufficient to pay the Redemption Price of,
including accrued and unpaid interest on, and Liquidated Damages with respect
to, all Securities to be redeemed on such Redemption Date (other than
Securities or portions thereof called for redemption on that date that have
been delivered by the Company to the Trustee for cancellation). The Paying
Agent shall promptly return to the Company any Cash so deposited which is not
required for that purpose upon the written request of the Company.
If the Company complies with the preceding paragraph and the
other provisions of this Article III and payment of the Securities called for
redemption is not prohibited under Article XII or otherwise, interest and
Liquidated Damages on the Securities to be redeemed will cease to accrue on and
after the applicable Redemption Date, whether or not such Securities are
presented for payment. Notwithstanding anything herein to the contrary, if any
Security surrendered for redemption in the manner provided in the Securities
shall not be so paid upon surrender for redemption because of the failure of
the Company to comply with the preceding paragraph, Liquidated Damages shall
continue to accrue and be paid from the Redemption Date if so required pursuant
to Section 3 of the Registration
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Rights Agreement and interest shall continue to accrue and be paid from the
Redemption Date until such payment is made on the unpaid principal, and, to the
extent lawful, on any interest not paid on such unpaid principal, in each case
at the rate and in the manner provided in Section 4.1 hereof and the Security.
SECTION 3.7 Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part,
the Company shall execute and the Trustee shall authenticate and deliver to the
Holder, at the expense of the Company, without service charge to the Holder, a
new Security or Securities equal in principal amount to the unredeemed portion
of the Security surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Securities.
The Company shall pay the principal of, interest on, and
Liquidated Damages with respect to, the Securities on the dates and in the
manner provided in the Securities and the Registration Rights Agreement, as
applicable. An installment of principal of, interest on, or Liquidated Damages
with respect to, the Securities shall be considered paid on the date it is due
if the Trustee or Paying Agent holds for the benefit of the Holders (or if the
Company is acting as its own Paying Agent, the Company shall have set aside,
segregated and held in trust as provided in Section 2.4), on or before 10:00
a.m. New York City time on that date, Cash deposited and designated for and
sufficient to pay the installment.
The Company shall pay interest on overdue principal and on
overdue installments of interest at the rate specified in the Securities
compounded semi-annually, to the extent lawful.
On or prior to the effective date of this Indenture, the
Trustee shall establish a segregated non-interest bearing corporate trust
account (the "Payment Account") maintained by the Trustee for the benefit of
the Holders in which, at any time while the Trustee is Paying Agent, all
amounts paid to the Trustee for the benefit of the Holders in respect of the
Securities will be held and from which the Trustee (if the Trustee is Paying
Agent) shall make payments to the Holders in accordance with this Indenture and
the Securities. The Trustee and any agent of the Trustee shall have exclusive
control and sole right of withdrawal with respect to the Payment Account for
the purpose of making deposits in and withdrawals from the Payment Account in
accordance with this Indenture. All monies and other property deposited or
held from time to time in the Payment Account shall be held by the Trustee in
the Payment Account for the exclusive benefit of the Holders, subject to
subordination to Senior Indebtedness in accordance with Article 10 hereof.
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SECTION 4.2 Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration
of transfer or exchange and for conversion and where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be served.
The Company shall give prompt written notice to the Trustee of the location,
and any change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 14.2.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, The City of New York, for such purposes.
The Company shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency. The Company hereby initially designates the corporate trust
office of the Trustee in the Borough of Manhattan, The City of New York as such
office.
SECTION 4.3 Corporate Existence.
Subject to Article V, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate or other existence of each of its
Subsidiaries in accordance with the respective organizational documents of each
of them and the rights (charter and statutory) and corporate franchises of the
Company and each of its Subsidiaries; provided, however, that the Company shall
not be required to preserve, with respect to itself, any right or franchise,
and with respect to any of its Subsidiaries, any such existence, right or
franchise, if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of such entity.
SECTION 4.4 Payment of Taxes and Other Claims.
Except with respect to immaterial items, the Company shall,
and shall cause each of its Subsidiaries to, pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, (i) all taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon the Company
or any of its Subsidiaries or any of their respective properties and assets and
(ii) all lawful claims, whether for labor, materials, supplies, services or
anything else, which have become due and payable and which by law have or may
become a Lien upon the property and assets of the Company or any of its
Subsidiaries; provided, however, that neither the Company nor any Subsidiary
shall be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity
is being contested in good faith by appropriate proceedings and for which
disputed amounts adequate reserves have been established in accordance with
GAAP.
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SECTION 4.5 Maintenance of Properties and Insurance.
The Company shall cause all properties used or useful to the
conduct of its business and the business of each of its Subsidiaries and
material to the Company and its Subsidiaries, as the case may be, to be
maintained and kept in good condition, repair and working order (reasonable
wear and tear excepted) and supplied with all necessary equipment and shall
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in its reasonable good faith judgment may be
necessary, so that the business carried on in connection therewith may be
properly conducted at all times; provided, however, that nothing in this
Section 4.5 shall prevent the Company or any Subsidiary from discontinuing any
operation or maintenance of any of such properties, or disposing of any of
them, if such discontinuance or disposal is, in the judgment of the Company,
desirable in the conduct of the business of such entity.
The Company shall provide, or cause to be provided, for itself
and each of its Significant Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the reasonable,
good faith judgment of the Company is adequate and appropriate for the conduct
of the business of the Company and such Subsidiaries in a prudent manner, with
(except for self-insurance) reputable insurers or with the government of the
United States of America or an agency or instrumentality thereof, in such
amounts, with such deductibles, and by such methods as shall be customary, in
the reasonable, good faith judgment of the Company and adequate and appropriate
for the conduct of the business of the Company and such Subsidiaries in a
prudent manner for entities similarly situated in the industry, unless failure
to provide such insurance (together with all other such failures) would not
have a material adverse effect on the financial condition or results of
operations of the Company and such Subsidiaries taken as a whole.
SECTION 4.6 Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee
within 120 days after the end of its fiscal year an Officers' Certificate
complying with Section 314(a)(4) of the TIA and stating that a review of its
activities during the preceding fiscal year has been made under the supervision
of the signing Officers with a view to determining whether the Company has
kept, observed, performed and fulfilled its obligations under this Indenture
and further stating, as to each such Officer signing such certificate, whether
or not the signer knows of any failure by the Company to comply with any
conditions or covenants in this Indenture and, if such signor does know of such
a failure to comply, the certificate shall describe such failure with
particularity. The Officers' Certificate shall also notify the Trustee should
the relevant fiscal year end on any date other than the current fiscal year end
date.
(b) The Company shall, so long as any of the
Securities are outstanding, deliver to the Trustee, promptly upon becoming
aware of any Default, Event of Default or fact which would prohibit the making
of any payment to or by the Trustee in respect of the Securities, an Officers'
Certificate specifying such Default, Event of Default or fact and what action
the Company is taking or proposes to take with respect thereto. The Trustee
shall not be deemed to have knowledge of any Default, any Event of Default or
any such fact unless one of its Trust Officers receives notice thereof from the
Company or any of the Holders.
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SECTION 4.7 Reports.
Whether or not the Company is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
deliver or cause to be delivered to the Trustee and to each Holder and to
prospective purchasers of Securities identified to the Company by an Initial
Purchaser, within 15 days after it is or would have been required to file such
with the SEC, annual and quarterly consolidated financial statements
substantially equivalent to financial statements that would have been included
in reports filed with the SEC if the Company was subject to the requirements of
Section 13 or 15(d) of the Exchange Act, including, with respect to annual
information only, a report thereon by the Company's certified independent
public accountants as such would be required in such reports to the SEC and, in
each case, together with a management's discussion and analysis of financial
condition and results of operations which would be so required.
SECTION 4.8 Limitation on Status as Investment Company.
Neither the Company nor any of its Subsidiaries shall become
an "investment company" (as that term is defined in the Investment Company Act
of 1940, as amended), or otherwise become subject to regulation under the
Investment Company Act.
SECTION 4.9 Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law which would prohibit or forgive the Company from
paying all or any portion of the principal of, premium of, interest on, or
Liquidated Damages with respect to, the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect
the covenants or the performance of this Indenture; and (to the extent that it
may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
SECTION 4.10 Rule 144A Information Requirement.
If at any time there are Transfer Restricted Securities
outstanding and the Company shall cease to have a class of equity securities
registered under Section 12(g) of the Exchange Act or shall cease to be subject
to Section 15(d) of the Exchange Act, the Company shall furnish to the Holders
or beneficial holders of the Securities or the underlying Common Stock and
prospective purchasers of Securities or the underlying Common Stock designated
by the Holders of Transfer Restricted Securities, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act until such time as the Shelf Registration Statement has become
effective under the Securities Act. The Company shall also furnish such
information during the pendency of any suspension of effectiveness of the Shelf
Registration Statement.
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ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 Limitation on Merger, Sale or Consolidation.
(a) The Company shall not, directly or
indirectly, consolidate with or merge with or into another Person or sell,
lease, convey or transfer all or substantially all of its assets (other than to
a wholly-owned Subsidiary or Subsidiaries) whether in a single transaction or a
series of related transactions, to another Person or group of affiliated
Persons, unless (i) either (a) in the case of a merger or consolidation, the
Company is the surviving entity or (b) the resulting, surviving or transferee
entity is a corporation organized under the laws of the United States, any
state thereof or the District of Columbia and expressly assumes by supplemental
indenture all of the obligations of the Company in connection with the
Securities and the Indenture; and (ii) no Default or Event of Default shall
exist or shall occur immediately after giving effect to such transaction; and
(iii) the Company has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer
and, if a supplemental indenture is required, such supplemental indenture
comply with the Indenture and that all conditions precedent relating to such
transaction have been satisfied; provided, however, that the foregoing
limitation shall not be deemed to apply to a Permitted Sale/Leaseback.
(b) For purposes of clause (a) of this Section
5.1 and Section 13.6, the sale, lease, conveyance, assignment, transfer, or
other disposition of all or substantially all of the properties and assets of
one or more Subsidiaries of the Company, which properties and assets, if held
by the Company instead of such Subsidiaries, would constitute all or
substantially all of the properties and assets of the Company on a consolidated
basis, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.
SECTION 5.2 Successor Corporation Substituted.
Upon any consolidation or merger or any sale, lease,
conveyance or transfer of all or substantially all of the assets of the Company
in accordance with the foregoing, the successor corporation formed by such
consolidation or into which the Company is merged or to which such sale, lease,
conveyance or transfer is made, shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under the Indenture with the
same effect as if such successor corporation had been named therein as the
Company, and when a successor corporation duly assumes all of the obligations
of the Company pursuant hereto and pursuant to the Securities, the predecessor
shall be released from such obligations (except with respect to any obligations
that arise from or as a result of such transaction).
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ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1 Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be caused voluntarily or involuntarily or effected, without limitation,
by operation of law or pursuant to any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental body):
(1) failure to pay any installment of
interest on, or Liquidated Damages with respect to, the Securities as
and when the same becomes due and payable, or to perform any
conversion of the Securities required under this Indenture, and the
continuance of such failure for a period of 30 days, whether or not
such payment is prohibited by Article XII;
(2) failure to pay all or any part of
the principal of, or premium, if any on the Securities when and as the
same become due and payable at maturity, redemption, by acceleration
or otherwise, including, without limitation, failure to pay all or any
part of the Repurchase Price on the Repurchase Date in accordance with
Article XI, whether or not such payment is prohibited by Article XII;
(3) failure by the Company to observe or
perform any covenant or agreement contained in the Securities or this
Indenture (other than a default in the performance of any covenant or
agreement which is specifically dealt with elsewhere in this Section
6.1), and continuance of such failure for a period of 60 days after
there has been given, by registered or certified mail, to the Company
by the Trustee, or to the Company and the Trustee by Holders of at
least 25% in aggregate principal amount of the then outstanding
Securities, a written notice specifying such failure, requesting it to
be remedied and stating that such notice is a "Notice of Default"
hereunder;
(4) failure by the Company or any
Significant Subsidiary to pay principal, premium or interest when due
(after giving effect to any applicable period of grace) at maturity of
any Indebtedness (other than non-recourse obligations), in an amount
in excess of $10,000,000 and the continuance of such failure for 30
days after there has been given, by registered or certified mail, to
the Company or to the Trustee by the Holders of at least 25% in
aggregate principal amount of the then outstanding Securities, a
written notice specifying such default, requesting that it be remedied
and stating that such notice is a "Notice of Default" hereunder;
(5) default by the Company or any
Significant Subsidiary with respect to any Indebtedness (other than
non-recourse obligations), which default results in the acceleration
of Indebtedness having a principal amount in excess of $10,000,000
without such Indebtedness having been discharged or such acceleration
having been rescinded or annulled for 30 days after there has been
given, by registered or certified mail, to the Company or to the
Trustee by the Holders of at least 25% in aggregate principal amount
of the then outstanding
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Securities, a written notice specifying such default, requesting that
it be remedied and stating that such notice is a "Notice of Default"
hereunder;
(6) a decree, judgment, or order by a
court of competent jurisdiction shall have been entered adjudging the
Company or any of its Significant Subsidiaries as bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization of the Company or any of its Significant Subsidiaries
under any bankruptcy or similar law, and such decree, judgment, or
order shall have continued undischarged and unstayed for a period of
60 days; or a decree or order of a court of competent jurisdiction
over the appointment of a receiver, liquidator, trustee, or assignee
in bankruptcy or insolvency of the Company, any of its Significant
Subsidiaries, or of the property of any such Person, or for the
winding up or liquidation of the affairs of any such Person, shall
have been entered, and such decree, judgment, or order shall have
remained in force undischarged and unstayed for a period of 60 days;
(7) the Company or any of its
Significant Subsidiaries shall institute proceedings to be adjudicated
a voluntary bankrupt, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent
seeking reorganization under any bankruptcy or similar law or similar
statute, or shall consent to the filing of any such petition, or shall
consent to the appointment of a Custodian, receiver, liquidator,
trustee, or assignee in bankruptcy or insolvency of it or any of its
assets or property, or shall make a general assignment for the benefit
of creditors; or take any corporate action in furtherance of or to
facilitate, conditionally or otherwise, any of the foregoing; or
(8) final unsatisfied judgments not
covered by insurance, aggregating in excess of $10,000,000 at any one
time shall have been rendered against the Company or any of its
Significant Subsidiaries and not have been stayed, bonded or
discharged for a period (during which execution shall not be
effectively stayed) of 60 days (or, in the case of any such final
judgment which provides for payment over time, which shall so remain
unstayed, unbonded or undischarged beyond any applicable payment date
provided therein).
Notwithstanding the 60-day period and notice requirement
contained in Section 6.1(3) above, with respect to a default under Article XI
the 60-day period referred to in Section 6.1(3) shall be deemed to have begun
as of the date the Change of Control notice is required to be sent in the event
that the Company has not complied with the provisions of Section 11.1 and the
Trustee or Holders of at least 25% in principal amount of the outstanding
Securities thereafter give the Notice of Default referred to in Section 6.1(3)
to the Company and, if applicable, the Trustee; provided, however, that if the
breach or default is a result of a default in the payment when due of the
Repurchase Price on the Repurchase Date, such Event of Default shall be deemed,
for purposes of this Section 6.1, to arise no later than on the last Repurchase
Date.
SECTION 6.2 Acceleration of Maturity Date; Rescission and
Annulment.
If an Event of Default (other than an Event of Default
specified in Section 6.1(6) or (7) relating to the Company) occurs and is
continuing, then, and in every such case, unless the principal of all of the
Securities shall have already become due and payable, either the Trustee or the
Holders of not
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less than 25% in aggregate principal amount of then outstanding Securities, by
a notice in writing to the Company (and to the Trustee if given by Holders) (an
"Acceleration Notice"), may declare all of the principal of the Securities (or
the Repurchase Price if the Event of Default includes failure to pay the
Repurchase Price, determined as set forth below), including in each case
accrued interest thereon and Liquidated Damages with respect thereto, to be due
and payable immediately. If an Event of Default specified in Section 6.1(6) or
(7) relating to the Company occurs, all principal, accrued interest thereon and
Liquidated Damages with respect thereto will be immediately due and payable on
all outstanding Securities without any declaration or other act on the part of
Trustee or the Holders.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter provided in this Article VI, the Holders
of no less than a majority in aggregate principal amount of then outstanding
Securities, by written notice to the Company and the Trustee, may rescind, on
behalf of all Holders, any such declaration of acceleration if:
(1) the Company has paid or deposited
with the Trustee Cash sufficient to pay
(A) all overdue interest on, and
Liquidated Damages with respect to, all Securities,
(B) the principal of (and premium,
if any, applicable to) any Securities which would then be due
otherwise than by such declaration of acceleration, and
interest thereon at the rate borne by the Securities,
(C) to the extent that payment of
such interest is lawful, interest upon overdue interest and
Liquidated Damages at the rate borne by the Securities,
(D) all sums paid or advanced by
the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its
agents and counsel, and
(2) all Events of Default, other than
the non-payment of the principal of, premium, if any, interest on and
Liquidated Damages with respect to Securities that have become due
solely by such declaration of acceleration, have been cured or waived
as provided in Section 6.12, including, if applicable, any Event of
Default relating to the covenants contained in Section 11.1.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective against any Holder for any Event of Default or event which with
notice or lapse of time or both would be an Event of Default with respect to
any covenant or provision which cannot be modified or amended without the
consent of the Holder of each outstanding Security affected thereby, unless all
such affected Holders agree, in writing, to waive such Event of Default or
other event. No such waiver shall cure or waive any subsequent Default or
Event of Default or impair any right consequent thereon.
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SECTION 6.3 Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if an Event of Default in payment
of principal, premium, interest or Liquidated Damages specified in clause (1)
or (2) of Section 6.1 occurs and is continuing, the Company shall, upon demand
of the Trustee, pay to it, for the benefit of the Holders of such Securities,
the whole amount then due and payable on such Securities for principal, premium
(if any), interest, Liquidated Damages and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal (and
premium, if any), Liquidated Damages and on any overdue interest, at the rate
borne by the Securities, and, in addition thereto, such further amount as shall
be sufficient to cover the reasonable costs and expenses of collection,
including compensation to, and reasonable expenses, disbursements and advances
of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust in
favor of the Holders, may institute a judicial proceeding for the collection of
the sums so due and unpaid, may prosecute such proceeding to judgment or final
decree and may enforce the same against the Company or any other obligor upon
the Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy.
SECTION 6.4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Company or any other obligor upon
the Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal, interest or Liquidated
Damages) shall be entitled and empowered, by intervention in such proceeding or
otherwise to take any and all actions under the TIA, including
(1) to file and prove a claim for the
whole amount of principal (and premium, if any), interest and
Liquidated Damages owing and unpaid in respect of the Securities and
to file such 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 agent and counsel and any amounts due the
Trustee under Section 7.7) and of the Holders allowed in such judicial
proceeding, and
(2) to collect and receive any moneys or
other property payable or deliverable on any such claims and to
distribute the same in accordance with Section 6.6;
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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder 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,
to pay to the Trustee any amount due 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 7.7.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment, or composition affecting
the Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.5 Trustee May Enforce Claims Without Possession
of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust in favor of the Holders, and any
recovery of judgment shall, after provision for the payment of reasonable
compensation to, and reasonable expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the Holders of
the Securities in respect of which such judgment has been recovered.
SECTION 6.6 Priorities.
Any money collected by the Trustee pursuant to this Article VI
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal,
premium (if any), interest or Liquidated Damages, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant
to Section 7.7;
SECOND: To the holders of Senior Indebtedness of the Company
to the extent provided in Article XII;
THIRD: To the Holders in payment of the amounts then due and
unpaid for principal of, premium (if any), interest on and Liquidated Damages
with respect to, the Securities in respect or for the benefit of which such
money has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal,
premium (if any), interest and Liquidated Damages, respectively; and
FOURTH: The remainder, if any, to the Company.
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SECTION 6.7 Limitation on Suits.
No Holder of any Security shall have any right to institute or
order or direct the Trustee to institute any proceeding, judicial or otherwise,
with respect to this Indenture, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless
(A) such Holder has previously given
written notice to the Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in
principal amount of then outstanding Securities shall have made
written request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(C) such Holder or Holders have offered
to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities to be incurred or reasonably probable to be
incurred in compliance with such request;
(D) the Trustee for 60 days after its
receipt of such notice, request and offer of indemnity has failed to
institute any such proceeding; and
(E) 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 then
outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 6.8 Unconditional Right of Holders to Receive
Principal, Premium, Interest and Liquidated Damages, and to Convert.
Notwithstanding any other provision of this Indenture but
subject to the provisions of Article XII, the Holder of any Security shall have
the right, which is absolute and unconditional, to receive payment of the
principal of, and premium (if any), interest on and Liquidated Damages with
respect to, such Security when due (including, in the case of redemption, the
Redemption Price on the applicable Redemption Date, and in the case of the
Repurchase Price, on the applicable Repurchase Date) and to convert such
Security in accordance with Article XIII and to institute suit for the
enforcement of any such payment and right to convert, and such rights shall not
be impaired without the consent of such Holder.
SECTION 6.9 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in Section 2.7,
no right or remedy herein conferred upon or
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reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.10 Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any
Security to exercise any right or remedy arising upon any Event of Default
shall impair the exercise of any such right or remedy or constitute a waiver of
any such Event of Default. Every right and remedy given by this Article VI or
by law to the Trustee or to the Holders may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or by the Holders, as the
case may be.
SECTION 6.11 Control by Holders.
The Holder or Holders of no less than a majority in aggregate
principal amount of then outstanding Securities shall have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred upon the
Trustee, provided, that
(1) such direction shall not be in conflict with
any rule of law or with this Indenture,
(2) the Trustee shall not determine that the
action so directed would be unjustly prejudicial to the Holders not
taking part in such direction, and
(3) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction.
SECTION 6.12 Waiver of Past Default.
The Holder or Holders of not less than a majority in aggregate
principal amount of then outstanding Securities may, on behalf of all Holders,
prior to the declaration of acceleration of the maturity of the Securities,
waive any past default hereunder and its consequences, except a default
(A) in the payment of the principal of,
premium, if any, interest on, or Liquidated Damages with respect to,
any Security not yet cured, or
(B) in respect of a covenant or
provision hereof which, under Article IX, cannot be modified or
amended without the consent of the Holder of each outstanding Security
affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such
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waiver shall extend to any subsequent or other default or impair the exercise
of any right arising therefrom.
SECTION 6.13 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, 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, suffered or omitted to be taken by it as Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made
by such party litigant; but the provisions of this Section 6.13 shall not apply
to any suit instituted by the Company, to any suit instituted by the Trustee,
to any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% in aggregate principal amount of then outstanding
Securities, or to any suit instituted by any Holder for enforcement of the
payment of principal of, premium (if any), interest on or Liquidated Damages
with respect to, any Security on or after the respective Stated Maturity of
such Security (including, in the case of redemption, on or after the Redemption
Date).
SECTION 6.14 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein expressed.
SECTION 7.1 Duties of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the 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:
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(1) The Trustee need perform only those duties as
are specifically set forth in this Indenture and no others, and no
covenants or obligations shall be implied in or read into this
Indenture which are adverse to 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. However, the Trustee 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 7.1.
(2) The Trustee shall not be liable for any error
of 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 6.11.
(d) 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 to take or omit
to take any action under this Indenture or at the request, order or direction
of the Holders 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.
(e) Every provision of this Indenture that in any
way relates to the Trustee is subject to paragraphs (a), (b), (c), (d) and (f)
of this Section 7.1.
(f) The Trustee shall not be liable for interest
on any assets received by it except as the Trustee may agree in writing with
the Company. Assets held in trust by the Trustee need not be segregated from
other assets except to the extent required by law.
SECTION 7.2 Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may rely on 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.
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(b) Before the Trustee acts or refrains from
acting, it may consult with counsel and may require an Officers' Certificate or
an Opinion of Counsel, which shall conform to Sections 14.4 and 14.5. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such certificate or advice of counsel.
(c) The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct or negligence of any
agent appointed with due care.
(d) 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 conferred upon it by this Indenture.
(e) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, notice, request, direction, consent, order,
bond, debenture, or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit.
(f) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture at the
request, order or direction of any of the Holders, pursuant to the provisions
of this Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby.
(g) Unless otherwise specifically provided for in
this Indenture, any demand, request, direction or notice from the Company shall
be sufficient if signed by an Officer of the Company.
(h) The Trustee shall have no duty to inquire as
to the performance of the Company's covenants herein. In addition, the Trustee
shall not be deemed to have knowledge of any Default or Event of Default except
(i) any Event of Default occurring pursuant to Sections 6.1(1) or 6.1(2), or
(ii) any Default or Event of Default of which a Trust Officer having direct
responsibility for the administration of this Indenture shall have received
written notification or obtained actual knowledge. The Trustee shall promptly
notify the Company in writing of any Default or Event of Default of which the
Trustee has knowledge; provided that any failure to do so shall not affect any
rights of the Trustee or the Holders hereunder.
SECTION 7.3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company, any
of its Subsidiaries, or their respective Affiliates with the same rights it
would have if it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.
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SECTION 7.4 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities and it shall not be accountable
for the Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities, other than the Trustee's
certificate of authentication, or the use or application of any funds received
by a Paying Agent other than the Trustee.
SECTION 7.5 Notice of Default.
If a Default or an Event of Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the uncured Default or Event of Default within 90 days
after such Default or Event of Default occurs. Except in the case of a Default
or an Event of Default in payment of principal (or premium, if any) of,
interest on or Liquidated Damages with respect to, any Security (including the
payment of the Repurchase Price on the Repurchase Date and the payment of the
Redemption Price on the Redemption Date), the Trustee may withhold the notice
if and so long as a Trust Officer in good faith determines that withholding the
notice is in the interest of the Securityholders.
SECTION 7.6 Reports by Trustee to Holders.
Within 60 days after each July 15 beginning with the July 15
following the date of this Indenture, the Trustee shall, if required by law,
mail to each Securityholder a brief report dated as of such July 15 that
complies with TIA Section 313(a). The Trustee also shall comply with TIA
Sections 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if
the Securities become listed on any stock exchange or automatic quotation
system.
A copy of each report at the time of its mailing to
Securityholders shall be mailed to the Company and filed with the SEC, if
required by law, and each stock exchange, if any, on which the Securities are
listed.
SECTION 7.7 Compensation and Indemnity.
The Company agrees to pay to the Trustee from time to time
such compensation as the Company and the Trustee shall from time to time agree
in writing for all services rendered by it hereunder. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents,
accountants, experts and counsel.
The Company agrees to indemnify the Trustee (in its capacity
as Trustee) and each of its officers, directors, employees, attorneys-in-fact
and agents for, and hold it harmless against, any claim, demand, expense
(including but not limited to reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel), loss or liability incurred by it
without negligence, bad faith or willful misconduct on its part, arising out of
or in connection with the offering and sale of the
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Securities or the administration of this trust and its rights or duties
hereunder including the reasonable costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder and enforcing this indemnification
provision. The Trustee shall notify the Company promptly of any claim asserted
against the Trustee for which it may seek indemnity. The Company need not pay
for any settlement made without its written consent, which consent shall not be
unreasonably withheld. The Company need not reimburse any expense or indemnify
against any loss or liability to the extent incurred by the Trustee through its
negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section
7.7, the Company and the Holders agree that the Trustee shall have a lien prior
to the Securities on all assets held or collected by the Trustee, in its
capacity as Trustee, except assets held in trust to pay principal and premium,
if any, of or interest or Liquidated Damages on particular Securities pursuant
to Article III.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(6) or (7) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7 and any lien
arising hereunder shall survive the resignation or removal of the Trustee, the
discharge of the Company's obligations pursuant to Article VIII of this
Indenture and any rejection or termination of this Indenture under any
Bankruptcy Law.
SECTION 7.8 Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing.
The Holder or Holders of a majority in principal amount of then outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee
in writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if:
(a) the Trustee fails to comply with Section
7.10;
(b) the Trustee is adjudged bankrupt or
insolvent;
(c) a receiver, Custodian, or other public
officer takes charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of this Section 7.8.
If the instrument of acceptance by a successor Trustee
required by this Section 7.8 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of removal, the
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retiring Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. At any time within one year after a successor Trustee
appointed by the Company takes office, the Holder or Holders of a majority in
principal amount of then outstanding Securities may, with the Company's
consent, appoint a successor Trustee to replace such successor Trustee as so
appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the retiring Trustee provided for in
Section 7.7 have been paid, the retiring Trustee shall transfer all property
held by it as trustee to the successor Trustee, subject to the lien provided in
Section 7.7, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the Company or any Holder or
Holders of at least 10% in principal amount of then outstanding Securities 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 Holder
or Holders of at least 10% in principal amount of then outstanding Securities
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION 7.9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee, provided such
corporation shall be otherwise eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion
or consolidation to such authenticating Trustee may adopt such authentication
and deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
SECTION 7.10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA
Section 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 Section 310(b).
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SECTION 7.11 Preferential Collection of Claims Against
Company.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE VIII
SATISFACTION AND DISCHARGE
SECTION 8.1 Satisfaction and Discharge of Indenture.
The Company may terminate its obligations under this Indenture
(subject to the provisions of Section 7.7 and this Article VIII) when it shall
have delivered to the Trustee for cancellation all Securities theretofore
authenticated (other than any Securities which shall have been destroyed, lost
or stolen and which shall have been replaced or paid as provided in Article II
hereof) and the following conditions shall be satisfied:
(1) The Company has paid all sums payable under
the Indenture; and
(2) The Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel in the United
States, each stating that all conditions precedent have been complied with as
contemplated by this Section 8.1.
SECTION 8.2 Repayment to the Company.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, for the payment of the principal of, premium, if any,
interest on or Liquidated Damages with respect to any Security and remaining
unclaimed for two years after such principal, premium, if any, interest or
Liquidated Damages has become due and payable shall be paid to the Company on
its request; and the Holder of such Security shall thereafter look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money shall thereupon cease.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holder, the Company, when
authorized by Board Resolutions, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
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(1) to cure any ambiguity, defect, or
inconsistency, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent with the
provisions of this Indenture, provided, that such action pursuant to this
clause (1) does not adversely affect the rights of any Holder;
(2) to create additional covenants of the Company
for the benefit of the Holders, or to surrender any right or power herein
conferred upon the Company or to make any other change that does not adversely
affect the rights of any Holder, provided, that the Company has delivered to
the Trustee an Opinion of Counsel stating that such change pursuant to this
clause (2) does not adversely affect the rights of any Holder;
(3) to provide for collateral for or guarantors of
the Securities;
(4) to evidence the succession of another Person
to the Company and the assumption by any such successor of the obligations of
the Company herein and in the Securities in accordance with Article V; or
(5) to comply with the TIA.
SECTION 9.2 Amendments, Supplemental Indentures and
Waivers with Consent of Holders.
Subject to the last sentence of this paragraph, with the
consent of the Holders of not less than a majority in aggregate principal
amount of then outstanding Securities, by written act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by Board
Resolutions, and the Trustee may amend or supplement this Indenture or the
Securities or enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or the Securities or of modifying in
any manner the rights of the Holders under this Indenture or the Securities.
Subject to the last sentence of this paragraph, the Holder or Holders of not
less than a majority in aggregate principal amount of then outstanding
Securities may, in writing, waive compliance by the Company with any provision
of this Indenture or the Securities. Notwithstanding any of the above,
however, no such amendment, supplemental indenture or waiver shall, without the
consent of the Holder of each outstanding Security affected thereby:
(1) change the Stated Maturity of any Security or
reduce the principal amount thereof or the rate (or extend the time for
payment) of interest thereon or any premium payable upon the redemption
thereof, or change the place of payment where, or the coin or currency in
which, any Security or any premium or the interest thereon or Liquidated
Damages with respect thereto is payable, or impair the right to institute suit
for the enforcement of any such payment or the conversion of any Security on or
after the due date thereof (including, in the case of redemption, on or after
the Redemption Date), or reduce the Repurchase Price, or alter the terms of
this Indenture regarding a Repurchase Offer or redemption provisions in a
manner adverse to the Holders;
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(2) reduce the percentage in principal amount of
the outstanding Securities, the consent of whose Holders is required for any
such amendment, supplemental indenture or waiver provided for in the Indenture;
(3) adversely affect the right of such Holder to
convert Securities; or
(4) provide that other provisions of the
Indenture cannot be modified or waived without the consent of the Holder of
each outstanding Security affected thereby.
It shall not be necessary for the consent of the Holders under
this Section 9.2 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
9.2 becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture or
waiver.
After an amendment, supplement or waiver under this Section
9.2 or Section 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under
this Article IX, the Company may, but shall not be obligated to, offer to any
Holder who consents to such amendment, supplement or waiver, or (at the option
of the Company) to all Holders, consideration for consent to such amendment,
supplement or waiver.
SECTION 9.3 Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.4 Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security, even if notation of the consent
is not made on any Security. However, any such Holder or subsequent Holder may
revoke the consent as to his Security or portion of his Security by written
notice to the Company or the Person designated by the Company as the Person to
whom consents should be sent if such revocation is received by the Company or
such Person before the date on which the Trustee receives an Officers'
Certificate certifying that the Holders of the requisite principal amount of
Securities have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver.
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, which record date shall be the date so fixed
by the Company. If a record date is fixed, then notwithstanding the last
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sentence of the immediately preceding paragraph, those Persons who were Holders
at such record date, and only those Persons (or their duly designated proxies),
shall be entitled to revoke any consent previously given, whether or not such
Persons continue to be Holders after such record date. No such consent shall
be valid or effective for more than 90 days after such record date.
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 (4) of Section 9.2, in which case, the amendment,
supplement or waiver shall bind only each Holder of a Security who has
consented to it and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security;
provided, that any such waiver shall not impair or affect the right of any
Holder to receive payment of principal and premium of and interest on and
Liquidated Damages with respect to a Security, on or after the respective dates
set for such amounts to become due and payable as then expressed in such
Security, or to bring suit for the enforcement of any such payment on or after
such respective dates.
SECTION 9.5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee or require the Holder to put an appropriate notation on the
Security. 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 determines, the Company in exchange for the Security shall
issue and the Trustee shall authenticate a new Security that reflects the
changed terms. Any failure to make the appropriate notation or to issue a new
Security shall not affect the validity of such amendment, supplement or waiver.
SECTION 9.6 Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX; provided, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officer's Certificate
stating that the execution of any amendment, supplement or waiver authorized
pursuant to this Article IX is authorized or permitted by this Indenture and
that all conditions precedent have been satisfied.
ARTICLE X
MEETINGS OF SECURITYHOLDERS
SECTION 10.1 Purposes for Which Meetings May Be Called.
A meeting of Securityholders may be called at any time and
from time to time pursuant to the provisions of this Article X for any of the
following purposes:
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(a) to give any notice to the Company or to the
Trustee, or to give any directions to the Trustee, or to waive or to
consent to the waiving of any Default or Event of Default hereunder
and its consequences, or to take any other action authorized to be
taken by Securityholders pursuant to any of the provisions of Article
VI;
(b) to remove the Trustee or appoint a successor
Trustee pursuant to the provisions of Article VII;
(c) to consent to an amendment, supplement or
waiver pursuant to provisions of Section 9.2; or
(d) to take any other action (i) authorized to be
taken by or on behalf of the Holder or Holders of any specified
aggregate principal amount of the Securities under any other provision
of this Indenture, or authorized or permitted by law or (ii) which the
Trustee deems necessary or appropriate in connection with the
administration of this Indenture.
SECTION 10.2 Manner of Calling Meetings.
The Trustee may at any time call a meeting of Securityholders
to take any action specified in Section 10.1, to be held at such time and at
such place in the City of New York, New York or elsewhere as the Trustee shall
determine. Notice of every meeting of Securityholders, setting forth the time
and place of such meeting and in general terms the action proposed to be taken
at such meeting, shall be mailed by the Trustee, first-class postage prepaid,
to the Company and to the Holders at their last addresses as they shall appear
on the registration books of the Registrar, not less than 10 nor more than 60
days prior to the date fixed for a meeting.
Any meeting of Securityholders shall be valid without notice
if the Holders of all Securities then outstanding are present in Person or by
proxy, or if notice is waived before or after the meeting by the Holders of all
Securities outstanding, and if the Company and the Trustee are either present
by duly authorized representatives or have, before or after the meeting, waived
notice.
SECTION 10.3 Calling of Meetings by the Company or
Holders.
In case at any time the Company or the Holders of not less
than 10% in aggregate principal amount of the Securities then outstanding,
shall have requested the Trustee to call a meeting of Securityholders to take
any action specified in Section 10.1, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within 20 days after
receipt of such request, then the Company or the Holders of Securities in the
amount above specified may determine the time and place in the City of New
York, New York or elsewhere for such meeting and may call such meeting for the
purpose of taking such action, by mailing or causing to be mailed notice
thereof as provided in Section 10.2, or by causing notice thereof to be
published at least once in each of two successive calendar weeks (on any
Business Day during such week) in a newspaper or newspapers printed in the
English language, customarily published at least five days a week of a general
circulation in the City of New York, State of New York, the first such
publication to be not less than 10 nor more than 60 days prior to the date
fixed for the meeting.
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SECTION 10.4 Who May Attend and Vote at Meetings.
To be entitled to vote at any meeting of Securityholders, a
Person shall (a) be a registered Holder of one or more Securities, or (b) be a
Person appointed by an instrument in writing as proxy for the registered Holder
or Holders of Securities. The only Persons who shall be entitled to be present
or to speak at any meeting of Securityholders shall be the Persons entitled to
vote at such meeting and their counsel and any representatives of the Trustee
and its counsel and any representatives of the Company, and its counsel.
SECTION 10.5 Regulations May Be Made by Trustee; Conduct
of the Meeting; Voting Rights; Adjournment.
Notwithstanding any other provision of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
action by or any meeting of Securityholders, in regard to proof of the holding
of Securities and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, and submission and examination
of proxies, certificates and other evidence of the right to vote, and such
other matters concerning the conduct of the meeting as it shall think
appropriate. Such regulations may fix a record date and time for determining
the Holders of record of Securities entitled to vote at such meeting, in which
case those and only those Persons who are Holders of Securities at the record
date and time so fixed, or their proxies, shall be entitled to vote at such
meeting whether or not they shall be such Holders at the time of the meeting.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Securityholders as provided in Section 10.3, in which case
the Company or the Securityholders calling the meeting, as the case may be,
shall in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by vote of the Holders of a
majority in principal amount of the Securities represented at the meeting and
entitled to vote.
At any meeting each Securityholder or proxy shall be entitled
to one vote for each $1,000 principal amount of Securities held or represented
by him; provided, however, that no vote shall be cast or counted at any meeting
in respect of any Securities challenged as not outstanding and ruled by the
chairman of the meeting to be not then outstanding. The chairman of the
meeting shall have no right to vote other than by virtue of Securities held by
him or instruments in writing as aforesaid duly designating him as the proxy to
vote on behalf of other Securityholders. Any meeting of Securityholders duly
called pursuant to the provisions of Section 10.2 or Section 10.3 may be
adjourned from time to time by vote of the Holder or Holders of a majority in
aggregate principal amount of the Securities represented at the meeting and
entitled to vote, and the meeting may be held as so adjourned without further
notice.
SECTION 10.6 Voting at the Meeting and Record to Be
Kept.
The vote upon any resolution submitted to any meeting of
Securityholders shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy
and the principal amount of the Securities voted by the ballot. The permanent
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chairman of the meeting shall appoint two inspectors of votes, who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to such record the
original reports of the inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more Persons having knowledge of the facts, setting
forth a copy of the notice of the meeting and showing that such notice was
mailed as provided in Section 10.2 or published as provided in Section 10.3.
The record shall be signed and verified by the affidavits of the permanent
chairman and the secretary of the meeting and one of the duplicates shall be
delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
SECTION 10.7 Exercise of Rights of Trustee or
Securityholders May Not Be Hindered or Delayed by Call of Meeting.
Nothing contained in this Article X shall be deemed or
construed to authorize or permit, by reason of any call of a meeting of
Securityholders or any rights expressly or impliedly conferred hereunder to
make such call, any hindrance or delay in the exercise of any right or rights
conferred upon or reserved to the Trustee or to the Securityholders under any
of the provisions of this Indenture or of the Securities.
ARTICLE XI
RIGHT TO REQUIRE REPURCHASE UPON A CHANGE OF CONTROL
SECTION 11.1 Repurchase of Securities at Option of the
Holder Upon a Change of Control.
(a) In the event that a Change of Control occurs,
each Holder shall have the right, at such Holder's option, subject to the terms
and conditions of this Indenture, to require the Company to repurchase all or
any part of such Holder's Securities (provided, that the principal amount of
such Securities must be $1,000 or an integral multiple thereof) on a date to be
established by the Company (the "Repurchase Date") that is no later than 50
Business Days (as such date may be extended pursuant to clause (2) of
subsection (b) of this Section 11.1) after the occurrence of such Change of
Control, at a cash price (the "Repurchase Price") equal to 100% of the
principal amount thereof, together with accrued and unpaid interest to, but
excluding, the Repurchase Date.
(b) In the event that, pursuant to this Section
11.1, the Company shall be required to commence an offer to purchase Securities
(a "Repurchase Offer"), the Company shall follow the procedures set forth in
this Section 11.1 as follows:
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(1) the Repurchase Offer shall commence
within 25 Business Days following a Change of Control;
(2) the Repurchase Offer shall remain
open for 20 Business Days following its commencement, except to the
extent that a longer period is required by applicable law, but in any
case the Repurchase Offer must be completed and the Repurchase Date
must occur not more than 60 Business Days following the Change of
Control (the "Repurchase Offer Period");
(3) upon the expiration of a Repurchase
Offer, the Company shall purchase all Securities tendered in response
to the Repurchase Offer;
(4) if the Repurchase Date is on or
after an interest payment record date and on or before the related
Interest Payment Date and Damage Payment Date, any accrued interest
and Liquidated Damages will be paid to the Person in whose name a
Security is registered at the close of business on such record date,
and no additional interest or Liquidated Damages will be payable to
Securityholders who tender Securities pursuant to the Repurchase
Offer;
(5) the Company shall provide the
Trustee with notice of the Repurchase Offer at least 5 Business Days
before the commencement of any Repurchase Offer; and
(6) on or before the commencement of any
Repurchase Offer, the Company or the Trustee (upon the request and at
the expense of the Company) shall send, by first-class mail, a notice
to each of the Securityholders, which (to the extent consistent with
this Indenture) shall govern the terms of the Repurchase Offer and
shall state:
(i) that the Repurchase Offer
is being made pursuant to such notice and this Section 11.1 and that
all Securities, or portions thereof, tendered will be accepted for
payment;
(ii) the Repurchase Price
(including the amount of accrued and unpaid interest and Liquidated
Damages, if any), the Repurchase Date and the Repurchase Put Date;
(iii) that any Security, or
portion thereof, not tendered or accepted for payment will continue to
accrue interest and Liquidated Damages, if any;
(iv) that, unless the Company
defaults in depositing Cash with the Paying Agent in accordance with
the last paragraph of this clause (b) or such payment is prevented
pursuant to Article XII, any Security, or portion thereof, accepted
for payment pursuant to the Repurchase Offer shall cease to accrue
interest and Liquidated Damages after the Repurchase Date;
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(v) that Holders electing to
have a Security, or portion thereof, purchased pursuant to a
Repurchase Offer will be required to surrender the Security, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of
the Security completed, to the Paying Agent at the address specified
in the notice prior to the close of business on the earlier of (a) the
third Business Day prior to the Repurchase Date and (b) the third
Business Day following the expiration of the Repurchase Offer (such
earlier date being the "Repurchase Put Date");
(vi) that Holders will be
entitled to withdraw their election, in whole or in part, if the
Paying Agent receives, up to the close of business on the Repurchase
Put Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Securities
the Holder is withdrawing and a statement that such Holder is
withdrawing his election to have such principal amount of Securities
purchased; and
(vii) a brief description of
the events resulting in such Change of Control.
Any such Repurchase Offer shall comply with all applicable
provisions of Federal and state laws, including those regulating tender offers,
if applicable, and any provisions of this Indenture which conflict with such
laws shall be deemed to be superseded by the provisions of such laws.
On or before the Repurchase Date, the Company shall (i) accept
for payment Securities or portions thereof properly tendered pursuant to the
Repurchase Offer on or before the Repurchase Put Date, (ii) deposit with the
Paying Agent Cash sufficient to pay the Repurchase Price of all Securities or
portions thereof so tendered and (iii) deliver to the Trustee Securities so
accepted together with an Officers' Certificate listing the Securities or
portions thereof being purchased by the Company. The Paying Agent shall
promptly mail to Holders of Securities so accepted payment in an amount equal
to the Repurchase Price (together with accrued and unpaid interest and
Liquidated Damages, if any), and the Trustee shall promptly authenticate and
mail or deliver to such Holders a new Security or Securities equal in principal
amount to any unpurchased portion of the Securities surrendered. Any
Securities not so accepted shall be promptly mailed or delivered by the Company
to the Holder thereof The Company will publicly announce the results of the
Repurchase Offer on or as soon as practicable after the Repurchase Date.
ARTICLE XII
SUBORDINATION
SECTION 12.1 Securities Subordinated to Senior
Indebtedness.
The Company and each Holder, by its acceptance of Securities,
agree that (a) the payment of the principal of and interest on the Securities
and (b) any other payment in respect of the Securities, including on account of
the acquisition or redemption of the Securities by the Company and any premium
and Liquidated Damages (including, without limitation, pursuant to Article XI)
is
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subordinated, to the extent and in the manner provided in this Article XII, to
the prior payment in full of all Senior Indebtedness of the Company, whether
outstanding at the date of this Indenture or thereafter created, incurred,
assumed or guaranteed, and that these subordination provisions are for the
benefit of the holders of Senior Indebtedness.
This Article XII shall constitute a continuing offer to all
Persons who, in reliance upon such provisions, become holders of, or continue
to hold, Senior Indebtedness, and such provisions are made for the benefit of
the holders of Senior Indebtedness, and such holders are made obligees
hereunder and any one or more of them may enforce such provisions.
SECTION 12.2 No Payment on Securities in Certain
Circumstances.
(a) No payment may be made by the Company on
account of the principal of, premium, if any, interest on, or Liquidated
Damages with respect to, the Securities, or to acquire any of the Securities
(including repurchases of Securities at the option of the Holder pursuant to a
Repurchase Offer) for cash or property (other than Junior Securities), or on
account of the redemption provisions of the Securities, (i) upon the maturity
of any Senior Indebtedness of the Company by lapse of time, acceleration
(unless waived) or otherwise, unless and until all principal of, premium, if
any, and interest on such Senior Indebtedness are first paid in full (or such
payment is duly provided for), or (ii) in the event of default in the payment
of any principal of, premium, if any, or interest on any Senior Indebtedness of
the Company when it becomes due and payable, whether at maturity or at a date
fixed for prepayment or by declaration or otherwise (a "Payment Default"),
unless and until such Payment Default has been cured or waived or otherwise has
ceased to exist.
(b) Upon (i) the happening of an event of default
(other than a Payment Default) that permits, or would permit, with (w) the
passage or time, (x) the giving of notice, (y) the making of any payment in
respect of the Securities then required to be made, or (z) any combination
thereof (collectively, a "Non-Payment Default"), the holders of Senior
Indebtedness having a principal amount then outstanding in excess of $3,000,000
(or with respect to which Senior Indebtedness the holders are obligated to lend
the Company in excess of $3,000,000 principal amount) or their representative
immediately to accelerate its maturity and (ii) written notice of such
Non-Payment Default given to the Company and the Trustee by the holders of an
aggregate of at least $3,000,000 principal amount outstanding of such Senior
Indebtedness (or holders of commitments to lend an aggregate of at least
$3,000,000 principal amount of Senior Indebtedness) or their representative (a
"Payment Notice"), then, unless and until such Non-Payment Default has been
cured or waived or otherwise has ceased to exist, no payment (by set-off or
otherwise) may be made by or on behalf of the Company on account of the
principal of, premium, if any, interest on, or Liquidated Damages with respect
to, the Securities, or to acquire or repurchase any of the Securities for cash
or property, or on account of the redemption provisions of the Securities, in
any such case other than payments made with Junior Securities. Notwithstanding
the foregoing, unless (i) the Senior Indebtedness in respect of which such
Non-Payment Default exists has been declared due and payable in its entirety
within 179 days after the Payment Notice is delivered as set forth above (the
"Payment Blockage Period"), and (ii) such declaration has not been rescinded or
waived, at the end of the Payment Blockage Period, the Company shall be
required to pay all sums not paid to the Holders of the Securities during the
Payment Blockage Period due to the foregoing prohibitions and to resume all
other payments as and when due on the Securities. Not more than one Payment
Notice may be given in any 365-day period, irrespective of the
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number of defaults with respect to Senior Indebtedness during such period. In
no event, however, may the total number of days during which any Payment
Blockage Period or Payment Blockage periods are in effect exceed 179 days in
the aggregate during any consecutive 365-day period.
(c) In furtherance of the provisions of Section
12.1, in the event that, notwithstanding the foregoing provisions of this
Section 12.2, any payment or distribution of assets of the Company (other than
Junior Securities) shall be received by the Trustee or the Holders or any
Paying Agent at a time when such payment or distribution is prohibited by the
provisions of this Section 12.2, then such payment or distribution (subject to
the provisions of Section 12.7) shall be received and held in trust by the
Trustee or such Holder or Paying Agent for the benefit of the holders of Senior
Indebtedness of the Company, and shall be paid or delivered by the Trustee or
such Holders or such Paying Agent, as the case may be, to the holders of Senior
Indebtedness of the Company remaining unpaid or unprovided for or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness of the Company may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Senior Indebtedness of the
Company held or represented by each, for application to the payment of all
Senior Indebtedness of the Company in full after giving effect to any
concurrent payment and distribution to the holders of such Senior Indebtedness.
SECTION 12.3 Securities Subordinated to Prior Payment of
All Senior Indebtedness on Dissolution, Liquidation or Reorganization.
Upon any distribution of assets of the Company upon any
dissolution, winding up, total or partial liquidation or reorganization of the
Company, whether voluntary or involuntary, in bankruptcy, insolvency,
receivership or a similar proceeding or upon assignment for the benefit of
creditors or any marshalling of assets or liabilities:
(a) the holders of all Senior Indebtedness of the
Company shall first be entitled to receive payments in full (or have
such payment duly provided for) before the Holders are entitled to
receive any payment on account of the principal of, premium, if any,
interest on, and Liquidated Damages with respect to, the Securities
(other than Junior Securities);
(b) any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities (other than Junior Securities) to which the Holders or the
Trustee on behalf of the Holders would be entitled (by setoff or
otherwise), except for the provisions of this Article XII, shall be
paid by the liquidating trustee or agent or other Person making such a
payment or distribution directly to the holders of Senior Indebtedness
of the Company or their representative to the extent necessary to make
payment in full of all such Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the
foregoing, any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities (other than
Junior Securities), shall be received by the Trustee or the Holders or
any Paying Agent (or, if the Company or any Affiliate of the Company
is acting as its own Paying
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Agent, money for any such payment or distribution shall be segregated
or held in trust) on account of the principal of, premium, if any,
interest on and Liquidated Damages with respect to, the Securities
before all Senior Indebtedness of the Company is paid in full, such
payment or distribution (subject to the provisions of Section 12.7)
shall be received and held in trust by the Trustee or such Holder or
Paying Agent for the benefit of the holders of such Senior
Indebtedness, or their respective representative, ratably according to
the respective amounts of such Senior Indebtedness held or represented
by each, to the extent necessary to make payment as provided herein of
all such Senior Indebtedness remaining unpaid after giving effect to
all concurrent payments and distributions and all provisions therefor
to or for the holders of such Senior Indebtedness, but only to the
extent that as to any holder of such Senior Indebtedness, as promptly
as practical following notice from the Trustee to the holders of such
Senior Indebtedness that such prohibited payment has been received by
the Trustee, Holder(s) or Paying Agent (or has been segregated as
provided above), such holder (or a representative therefor) notifies
the Trustee of the amounts then due and owing on such Senior
Indebtedness, if any, held by such holder and only the amounts
specified in such notices to the Trustee shall be paid to the holders
of such Senior Indebtedness.
SECTION 12.4 Securityholders to Be Subrogated to Rights of
Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness of
the Company as provided herein, the Holders of Securities shall be subrogated
to the rights of the holders of such Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on the Securities shall be paid in full, and for the
purpose of such subrogation no such payments or distributions to the holders of
such Senior Indebtedness by the Company, or by or on behalf of the Holders by
virtue of this Article XII, which otherwise would have been made to the Holders
shall, as between the Company and the Holders, be deemed to be payment by the
Company or on account of such Senior Indebtedness, it being understood that the
provisions of this Article XII are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and the holders
of such Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article XII shall
have been applied, pursuant to the provisions of this Article XII, to the
payment of amounts payable under Senior Indebtedness of the Company, then the
Holders shall be entitled to receive from the holders of such Senior
Indebtedness any payments or distributions received by such holders of Senior
Indebtedness in excess of the amount sufficient to pay all amounts payable
under or in respect of such Senior Indebtedness in full.
SECTION 12.5 Obligations of the Company Unconditional.
Nothing contained in this Article XII or elsewhere in this
Indenture or in the Securities is intended to or shall impair as between the
Company and the Holders, the obligation of each such Person, which is absolute
and unconditional, to pay to the Holders the principal of, premium, if any,
interest on, and Liquidated Damages with respect to, the Securities 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 and creditors of
the Company other than the holders of the Senior Indebtedness, nor shall
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anything herein or therein prevent the Trustee or any Holder from exercising
all remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article XII, of the
holders of Senior Indebtedness in respect of cash, property or securities of
the Company received upon the exercise of any such remedy. Notwithstanding
anything to the contrary in this Article XII or elsewhere in this Indenture or
in the Securities, upon any distribution of assets of the Company referred to
in this Article XII, the Trustee, subject to the provisions of Sections 7.1 and
7.2, and the Holders shall be entitled to rely upon any order or decree made by
any court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders for the purpose of ascertaining the Persons entitled
to participate in such distribution, the holders of the 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 XII so long as such court has been apprised of the
provisions of, or the order, decree or certificate makes reference to, the
provisions of this Article XII. Nothing in this Article XII shall apply to the
claims of, or payments to, the Trustee under or pursuant to Sections 6.6 and
7.7.
SECTION 12.6 Trustee Entitled to Assume Payments Not
Prohibited in Absence of Notice.
The Trustee shall not at any time be charged with knowledge of
the existence of any facts which would prohibit the making of any payment to or
by the Trustee unless and until a Trust Officer having direct responsibility
for the administration of this Indenture or any Paying Agent shall have
received, no later than one Business Day prior to such payment, written notice
thereof from the Company or from one or more holders of Senior Indebtedness or
from any representative therefor and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Sections 7.1 and 7.2, shall
be entitled in all respects conclusively to assume that no such fact exists.
SECTION 12.7 Application by Trustee of Assets Deposited
with It.
Amounts deposited in trust with the Trustee pursuant to and in
accordance with this Indenture shall be for the sole benefit of Securityholders
and, to the extent allocated for the payment of Securities, shall not be
subject to the subordination provisions of this Article XII. Otherwise, any
deposit of assets with the Trustee or the Agent (whether or not in trust) for
the payment of principal of or interest on any Securities shall be subject to
the provisions of Sections 12.1, 12.2, 12.3 and 12.4; provided that, if prior
to one Business Day preceding the date on which by the terms of this Indenture
any such assets may become distributable for any purpose (including, without
limitation, the payment of either principal of or interest on any Security) the
Trustee or such Paying Agent shall not have received with respect to such
assets the written notice provided for in Section 12.6, then the Trustee or
such Paying Agent shall have full power and authority to receive such assets
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 on or
after such date.
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SECTION 12.8 Subordination Rights Not Impaired by Acts or
Omissions of the Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior
Indebtedness to enforce subordination provisions contained in this Article XII
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act, in good faith,
by any such holder, or by any noncompliance by the Company with the terms of
this Indenture, regardless of any knowledge thereof which any such holder may
have or be otherwise charged with. The holders of Senior Indebtedness may
extend, renew, modify or amend the terms of the Senior Indebtedness or any
security therefor and release, sell or exchange such security and otherwise
deal freely with the Company, all without affecting the liabilities and
obligations of the parties to this Indenture or the Holders.
SECTION 12.9 Securityholders Authorize Trustee to
Effectuate Subordination of Securities.
Each Holder of the Securities by his acceptance thereof
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provisions
contained in this Article XII and to protect the rights of the Holders pursuant
to this Indenture, and appoints the Trustee his attorney-in-fact for such
purpose, including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors of
the Company), the immediate filing of a claim for the unpaid balance of his
Securities in the form required in said proceedings and cause said claim to be
approved. If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Indebtedness
or their representative are or is hereby authorized to have the right to file
and are or is hereby authorized to file an appropriate claim for and on behalf
of the Holders of said Securities. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to vote in respect of the claim of any Securityholder in any
such proceeding.
SECTION 12.10 Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth
in this Article XII 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 this Indenture shall be construed to deprive the Trustee of any of its
rights as such holder.
SECTION 12.11 Article XII Not to Prevent Events of Default.
The failure to make a payment on account of principal of,
premium, if any, interest on, or Liquidated Damages with respect to, the
Securities by reason of any provision of this Article XII shall not be
construed as preventing the occurrence of a Default or an Event of Default
under Section
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6.1 or in any way prevent the Holders from exercising any right hereunder other
than the right to receive payment on the Securities.
SECTION 12.12 No Fiduciary Duty of Trustee to Holders of
Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness, and shall not be liable to any such holders
(other than for its willful misconduct or negligence) if it shall in good faith
mistakenly pay over or distribute to the Holders of Securities or the Company
or any other Person, cash, property or securities to which any holders of
Senior Indebtedness shall be entitled by virtue of this Article XII or
otherwise. Nothing in this Section 12.12 shall affect the obligation of any
other such Person to hold such payment for the benefit of, and to pay such
payment over to, the holders of Senior Indebtedness or their representative.
ARTICLE XIII
CONVERSION OF SECURITIES
SECTION 13.1 Conversion Privilege.
Subject to and upon compliance with the provisions of this
Article XIII, at the option of the Holder thereof, any Security may at any time
commencing on the 90th day following the latest date of the initial issuance of
the Securities under this Indenture and ending as of the close of business on
the Stated Maturity, be converted, in whole, or in part in multiples of $1,000
principal amount, into fully paid and non-assessable shares of Common Stock
issuable upon conversion of the Securities, at the conversion price in effect
at the Date of Conversion, unless such Security or some portion thereof shall
have been called for redemption or delivered for repurchase prior to such date
and no default is made in making due provision for the payment of the
redemption price in accordance with the terms of this Indenture, in which case,
with respect to such Security or portion thereof as has been so called for
redemption or delivered for repurchase, such Security or portion thereof may be
so converted until and including, but not after, the close of business on the
Business Day prior to the Redemption Date or Repurchase Date, as applicable,
for such Security, unless the Company subsequently fails to pay the applicable
Redemption Price or Repurchase Price, as the case may be.
SECTION 13.2 Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of
any Security to be converted shall surrender such Security to the Company at
any time during usual business hours at its office or agency maintained for the
purpose as provided in this Indenture, accompanied by a fully executed written
notice, in substantially the form set forth on the reverse of the Security,
that the Holder elects to convert such Security or a stated portion thereof
constituting a multiple of $1,000 principal amount, and, if such Security is
surrendered for conversion during the period between the close of business on
any Record Date and the opening of business on the next following Interest
Payment Date and has not been called for redemption on a Redemption Date which
occurs within such period, accompanied (except in the case of the Interest
Payment Date occurring on June 15, 2000) also
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by payment of an amount equal to the interest payable on such Interest Payment
Date on the principal amount of the Security being surrendered for conversion,
notwithstanding such conversion. Such notice of conversion shall also state
the name or names (with address) in which the certificate or certificates for
shares of Common Stock shall be issued. Securities surrendered for conversion
shall (if reasonably required by the Company or the Trustee) be duly endorsed
by, or be accompanied by a written instrument or instruments of transfer in
form satisfactory to the Company duly executed by, the Holder or his attorney
duly authorized in writing. As promptly as practicable after the receipt of
such notice and the surrender of such Security as aforesaid, the Company shall,
subject to the provisions of Section 13.8 hereof, issue and deliver at such
office or agency to such Holder, or on his written order, a certificate or
certificates for the number of full shares of Common Stock issuable on such
conversion of Securities in accordance with the provisions of this Article XIII
and Cash, as provided in Section 13.3 hereof, in respect of any fraction of a
share of Common Stock otherwise issuable upon such conversion. Such conversion
shall be deemed to have been effected immediately prior to the close of
business on the date (herein called the "Date of Conversion") on which such
Security shall have been surrendered as aforesaid, and the person or persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become on the
Date of Conversion the holder or holders of record of the shares represented
thereby; provided, however, that any such surrender on any date when the stock
transfer books of the Company shall be closed shall cause the person or persons
in whose name or names the certificate or certificates for such shares are to
be issued to be deemed to have become the record holder or holders thereof for
all purposes at the opening of business on the next succeeding day on which
such stock transfer books are open but such conversion shall nevertheless be at
the conversion price in effect at the close of business on the date when such
Security shall have been so surrendered with the conversion notice. In the
case of conversion of a portion, but less than all, of a Security, the Company
shall as promptly as practicable execute, and the Trustee shall authenticate
and deliver to the Holder thereof, at the expense of the Company, a Security or
Securities in the aggregate principal amount of the unconverted portion of the
Security surrendered. Except as otherwise expressly provided in this
Indenture, no payment or adjustment shall be made for interest accrued on any
Security (or portion thereof) converted or for dividends or distributions on
any Common Stock issued upon conversion of any Security.
SECTION 13.3 Fractional Interests.
No fractions of shares or scrip representing fractions of
shares shall be issued upon conversion of Securities. If more than one
Security shall be surrendered for conversion at one time by the same holder,
the number of full shares which shall be issuable upon conversion thereof shall
be computed on the basis of the aggregate principal amount of the Securities so
surrendered. If any fraction of a share of Common Stock would, except for the
foregoing provisions of this Section 13.3, be issuable on the conversion of any
Security or Securities, the Company shall make payment in lieu thereof in an
amount of Cash equal to the value of such fraction computed on the basis of the
last sale price of the Common Stock as reported on the New York Stock Exchange
(or if not listed for trading thereon, then on the principal national
securities exchange or on the principal automated
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quotation system on which the Common Stock is listed or admitted to trading) at
the close of business on the Date of Conversion or if no such sale takes place
on such day, the last sale price for such day shall be the average of the
closing bid and asked prices regular way on the New York Stock Exchange (or if
not listed for trading thereon, on the principal national securities exchange
or on the principal automated quotation system on which the Common Stock is
listed or admitted to trading) for such day (any such last sale price being
hereinafter referred to as the "Last Sale Price"). If on such Trading Day the
Common Stock is not quoted by any such organization, the fair value of such
Common Stock on such day, as reasonably determined in good faith by the Board
of Directors of the Company, shall be used.
SECTION 13.4 Conversion Price.
The conversion price per share of Common Stock issuable upon
conversion of the Securities (herein called the "Conversion Price") shall
initially be $37.1875 (or $37.1875 in principal amount of Securities for each
such share of Common Stock).
SECTION 13.5 Adjustment of Conversion Price.
The Conversion Price shall be subject to adjustment from time
to time as follows:
(a) In case the Company shall make or pay a
dividend or make a distribution in shares of Common Stock on any class
of Capital Stock of the Company, the Conversion Price in effect
immediately following the record 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 such date and the denominator
shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution. An
adjustment made pursuant to this subsection (a) shall become effective
immediately, except as provided in subsections (i) and (j) below,
after such record date.
(b) In case the Company shall (1) subdivide its
outstanding shares of Common Stock into a greater number of shares or
(2) combine or reclassify its outstanding shares of Common Stock into
a smaller number of shares, the Conversion Price in effect immediately
following the effectiveness of such action shall be adjusted by
multiplying such Conversion Price by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding immediately
prior to such subdivision or combination and the denominator shall be
the number of shares outstanding immediately after giving effect to
such subdivision or combination. An adjustment made pursuant to this
subsection (b) shall become effective immediately, except as provided
in subsections (i) and (j) below, after the effective date of a
subdivision or combination.
(c) In case the Company shall issue rights,
options or warrants to all or substantially all holders of Common
Stock entitling them to subscribe for or purchase shares of Common
Stock at a price per share less than the then current market price per
share of the Common Stock (as determined pursuant to subsection (g)
below) on the record date fixed for determination of the stockholders
entitled to receive such rights, option or warrants, the Conversion
Price in effect immediately following such record date shall be
adjusted to a price, computed to the nearest cent, so that the same
shall equal the price determined by multiplying:
(i) such Conversion Price by a
fraction, of which
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(ii) the numerator shall be (A)
the number of shares of Common Stock outstanding on such
record date plus (B) the number of shares which the aggregate
offering price of the total number of shares so offered for
subscription or purchase would purchase at such current market
price (determined by multiplying such total number of shares
by the exercise price of such rights, options or warrants and
dividing the product so obtained by such current market
price), and of which
(iii) the denominator shall be (A)
the number of shares of Common Stock outstanding on such
record date plus (B) the number of additional shares of Common
Stock which are so offered for subscription or purchase.
Such adjustment shall become effective immediately, except as
provided in subsections (i) and (j) below, after the record date for
the determination of holders entitled to receive such rights, options
or warrants; provided, however, that if any such rights, options or
warrants issued by the Company as described in this subsection (c) are
only exercisable upon the occurrence of certain triggering events,
then the Conversion Price will not be adjusted as provided in this
subsection (c) until such triggering events occur.
(d) In case the Company or any Subsidiary of the
Company shall distribute to all or substantially all holders of Common
Stock, any of its assets, evidences of indebtedness, cash or
securities (other than (x) dividends or distributions exclusively in
cash, (y) any dividend or distribution for which an adjustment is
required to be made in accordance with subsection (a) or (c) above, or
(z) any distribution of rights or warrants subject to subsection (l)
below) then in each such case the Conversion Price in effect
immediately following the record date fixed for the determination of
the stockholders entitled to such distribution shall be adjusted so
that the same shall equal the price determined by multiplying such
Conversion Price by a fraction of which the numerator shall be the
then current market price per share of the Common Stock (determined as
provided in subsection (g) below) on such record date less the then
fair market value (as reasonably determined in good faith by the Board
of Directors of the Company) of the portion of the assets so
distributed applicable to one share of Common Stock, and of which the
denominator shall be such current market price per share of the Common
Stock. Such adjustment shall become effective immediately, except as
provided in subsections (i) and (j) below, after the record date for
the determination of stockholders entitled to receive such
distribution.
(e) In case the Company or any Subsidiary of the
Company shall make any distribution consisting exclusively of cash
(excluding any cash portion of distributions for which an adjustment
is required to be made in accordance with subsection (d) above, or
cash distributed upon a merger or consolidation to which Section 13.6
applies) to all or substantially all holders of Common Stock in an
aggregate amount that, combined together with (i) all other such
all-cash distributions made within the then preceding 12 months in
respect of which no adjustment pursuant to this subsection (e) has
been made and (ii) any cash and the fair market value of other
consideration paid or payable in respect of any tender or exchange
offer by the Company or any of its Subsidiaries for Common Stock
concluded within the preceding 12 months in respect of which no
adjustment has been made, exceeds 15% of the Company's
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market capitalization (defined as being the product of the then
current market price of the Common Stock (determined as provided in
subsection (g) below) times the number of shares of Common Stock then
outstanding) on the record date fixed for the determination of the
stockholders entitled to such distribution, in each such case the
Conversion Price immediately following such record date shall be
adjusted so that the same shall equal the price determined by
multiplying such Conversion Price by a fraction of which the numerator
shall be the then current market price per share of the Common Stock
on such record date less the amount of the cash and/or fair market
value (as reasonably determined in good faith by the Board of
Directors of the Company) of other consideration so distributed
applicable to one share of Common Stock, and of which the denominator
shall be such current market price per share of the Common Stock.
Such adjustment shall become effective immediately, except as provided
in subsections (i) and (j) below, after the record date for the
determination of stockholders entitled to receive such distribution.
(f) In case the Company or any Subsidiary of the
Company shall complete a tender or exchange offer for all or any
portion of the Common Stock (any such tender or exchange offer being
referred to as an "Offer") that involves an aggregate consideration
having a fair market value as of the expiration of such Offer (the
"Expiration Time") that, together with (i) any cash and the fair
market value of any other consideration payable in respect of any
other tender or exchange offer, as of the expiration of such other
tender or exchange offer, expiring within the 12 months preceding the
expiration of such Offer and in respect of which no Conversion Price
adjustment pursuant to this subsection (f) has been made and (ii) the
aggregate amount of any all-cash distributions referred to in
subsection (e) of this Section 13.5 to all holders of Common Stock
within the 12 months preceding the expiration of such Offer for which
no conversion price adjustment pursuant to such subsection (e) has
been made, exceeds 15% of the product of the then current market price
per share (determined as provided in subsection (g) below) of the
Common Stock on the Expiration Time times the number of shares of
Common Stock outstanding (including any tendered shares) on the
Expiration Time, the Conversion Price in effect immediately following
such Expiration Time shall be reduced by multiplying such Conversion
Price by a fraction of which the numerator shall be (i) the product of
the then current market price per share (determined as provided in
subsection (g) below) of the Common Stock on the Expiration Time times
the number of shares of Common Stock outstanding (including any
tendered shares) on the Expiration Time minus (ii) the fair market
value of the aggregate consideration payable to stockholders based on
the acceptance (up to any maximum specified in the terms of the Offer)
of all shares validly tendered and not withdrawn as of the Expiration
Time (the shares deemed so accepted being referred to as the
"Purchased Shares") and the denominator shall be the product of (i)
such current market price per share on the Expiration Time times (ii)
such number of outstanding shares on the Expiration Time less the
number of Purchased Shares, such reduction to become effective
immediately prior to the opening of business on the day following the
Expiration Time.
For purposes of this subsection (f), the fair market value of
any consideration with respect to an Offer shall be reasonably
determined in good faith by the Board of Directors of the Company and
described in a Board Resolution.
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(g) For the purpose of any computation under
subsections (c), (d), (e) and (f) above, the current market price per
share of Common Stock on any date shall be deemed to be the average of
the Last Sale Prices of a share of Common Stock for the five
consecutive Trading Days selected by the Company commencing not more
than 20 Trading Days before, and ending not later than, the earlier of
the date in question and the date before the "`ex' date," with respect
to the issuance, distribution or Offer requiring such computation. If
on any such Trading Day the Common Stock is not quoted by any
organization referred to in the definition of Last Sale Price in
Section 13.3, the fair value of the Common Stock on such day, as
reasonably determined in good faith by the Board of Directors of the
Company, shall be used. For purposes of this paragraph, the term
"`ex' date," when used with respect to any issuance, distribution or
payments with respect to an Offer, means the first date on which the
Common Stock trades regular way on the New York Stock Exchange (or if
not listed or admitted to trading thereon, then on the principal
national securities exchange or the Nasdaq Stock Market's National
Market if the Common Stock is listed or admitted to trading thereon)
without the right to receive such issuance, distribution or Offer.
(h) In addition to the foregoing adjustments in
subsections (a), (b), (c), (d), (e) and (f) above, the Company from
time to time and to the extent permitted by applicable Law, shall be
permitted to reduce the Conversion Price by any amount for any period
of at least 20 Business Days, in which case the Company shall give at
least 15 days notice of such reduction, if the Board of Directors has
made a determination that such reduction would be in the best
interests of the Company, which determination shall be conclusive.
The Company, at its option, shall be permitted to make such other
reductions in the Conversion Price, in addition to those set forth
above in subsections (a), (b), (c), (d), (e), (f) and the first
sentence of this subsection (h), as the Board of Directors deems
advisable to avoid or diminish any income tax to holders of Common
Stock resulting from any dividend or distribution of stock (or rights
to acquire stock) or from any event treated as such a dividend or
distribution for United States federal income tax purposes.
(i) In any case in which this Section 13.5 shall
require that an adjustment be made immediately following a record
date, the Company may elect to defer the effectiveness of such
adjustment (but in no event until a date later than the effective time
of the event giving rise to such adjustment), in which case the
Company shall, with respect to any Security converted after such
record date and on and before such adjustment shall have become
effective (i) defer paying any Cash payment pursuant to Section 13.3
hereof or issuing to the Holder of such Security the number of shares
of Common Stock and other capital stock of the Company (or other
assets or securities) issuable upon such conversion in excess of the
number of shares of Common Stock and other Capital Stock of the
Company issuable thereupon only on the basis of the Conversion Price
prior to adjustment, and (ii) not later than five Business Days after
such adjustment shall have become effective, pay to such Holder the
appropriate Cash payment pursuant to Section 13.3 hereof and issue to
such Holder the additional shares of Common Stock and other Capital
Stock of the Company issuable on such conversion.
(j) No adjustment in the Conversion Price shall
be required unless such adjustment would require an increase or
decrease of at least 1.0% of the Conversion Price; provided, that any
adjustments which by reason of this subsection (j) are not required to
be
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<PAGE> 71
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Article XIII shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the
case may be.
(k) Whenever the Conversion Price is adjusted as
herein provided, the Company shall promptly (i) file with the Trustee
and each conversion agent an Officers' Certificate setting forth the
Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment, which certificate
shall be conclusive evidence of the correctness of such adjustment,
and (ii) mail or cause to be mailed a notice of such adjustment to
each holder of Securities at his address as the same appears on the
registry books of the Company.
(l) In the event that the Company distributes
rights or warrants (other than those referred to in subsection (c)
above) pro rata to holders of Common Stock, so long as any such rights
or warrants have not expired or been redeemed by the Company, the
Company shall make proper provision so that the Holder of any Note
surrendered for conversion will be entitled to receive upon such
conversion, in addition to the shares of Common Stock issuable upon
such conversion (the "Conversion Shares"), a number of rights or
warrants to be determined as follows: (i) if such conversion occurs
on or prior to the date for the distribution to the holders of rights
or warrants of separate certificates evidencing such rights or
warrants (the "Distribution Date"), the same number of rights or
warrants to which a holder of a number of shares of Common Stock equal
to the number of Conversion Shares is entitled at the time of such
conversion in accordance with the terms and provisions of and
applicable to the rights or warrants, and (ii) if such conversion
occurs after such Distribution Date, the same number of rights or
warrants to which a holder of the number of shares of Common Stock
into which the principal amount of such Note so converted was
convertible immediately prior to such Distribution Date would have
been entitled on such Distribution Date in accordance with the terms
and provisions of and applicable to the rights or warrants.
SECTION 13.6 Continuation of Conversion Privilege in Case
of Reclassification, Change, Merger, Consolidation or Sale of Assets.
If any of the following shall occur, namely: (a) any
reclassification or change of outstanding shares of Common Stock issuable upon
conversion of the Securities (other than a change in par value, or from par
value to no par value, or from no par value, to par value, or as a result of a
subdivision or combination), (b) any consolidation or merger of the Company
with or into any other Person, or the merger of any other Person with or into
the Company (other than a merger which does not result in any reclassification,
change, conversion, exchange or cancellation of outstanding shares of Common
Stock) or (c) any sale, transfer or conveyance of all or substantially all of
the assets of the Company (other than a Permitted Sale/Leaseback), then the
Company, or such successor or purchasing entity, as the case may be, shall, as
a condition precedent to such reclassification, change, consolidation, merger,
sale or conveyance, execute and deliver to the Trustee a supplemental indenture
providing that the Holder of each Security then outstanding shall have the
right to convert such Security only into the kind and amount of shares of stock
and other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale, transfer or conveyance
by a holder of the number of shares of Common Stock issuable upon conversion of
such Security
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<PAGE> 72
immediately prior to such reclassification, change, consolidation, merger,
sale, transfer or conveyance assuming such holder of Common Stock of the
Company failed to exercise his rights of an election, if any, as to the kind or
amount of securities, cash and other property receivable upon such
reclassification, change, consolidation, merger, sale, transfer or conveyance
(provided that if the kind or amount of securities, cash, and other property
receivable upon such reclassification, change, consolidation, merger, sale,
transfer or conveyance is not the same for each share of Common Stock of the
Company held immediately prior to such reclassification, change, consolidation,
merger, sale, transfer or conveyance in respect of which such rights of
election shall not have been exercised ("non-electing share"), then for the
purpose of this Section 13.6 the kind and amount of securities, cash and other
property receivable upon such reclassification, change, consolidation, merger,
sale, transfer or conveyance by each non-electing share shall be deemed to be
the kind and amount so receivable per share by a plurality of the non-electing
shares). Such supplemental indenture shall provide for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments provided for
in this Article XIII. If, in the case of any such consolidation, merger, sale
or conveyance, the stock or other securities and property (including cash)
receivable thereupon by a holder of shares of Common Stock includes shares of
stock or other securities and property (including cash) of a corporation other
than the successor or purchasing corporation, as the case may be, in such
consolidation, merger, sale or conveyance, then such supplemental indenture
shall also be executed by such other corporation and shall contain such
additional provisions to protect the interests of the Holders of the Securities
as the Board of Directors of the Company shall reasonably consider necessary by
reason of the foregoing. The provisions of this Section 13.6 shall similarly
apply to successive consolidations, mergers, sales or conveyances.
Notice of the execution of each such supplemental indenture
shall be mailed to each Holder of Securities at his address as the same appears
on the registry books of the Company.
Neither the Trustee nor any conversion agent shall be under
any responsibility to determine the correctness of any provisions contained in
any such supplemental indenture relating either to the kind or amount of shares
of stock or securities or property (including cash) receivable by Holders of
Securities 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, but, subject to the provisions of
Article VIII hereof, may accept as conclusive evidence of the correctness of
any such provisions, and shall be protected in relying upon, the Officers'
Certificate (which the Company shall be obligated to file with the Trustee
prior to the execution of any such supplemental indenture) with respect
thereto.
SECTION 13.7 Notice of Certain Events.
In case:
(a) the Company shall declare a dividend (or any
other distribution) payable to the holders of Common Stock (other than cash
dividends);
(b) the Company shall authorize the granting to
the holders of Common Stock of rights, warrants or options to subscribe for or
purchase any shares of stock of any class or of any other rights;
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<PAGE> 73
(c) the Company shall authorize any
reclassification or change of the Common Stock (including a subdivision or
combination of its outstanding shares of Common Stock), or any consolidation or
merger to which the Company is a party and for which approval of any
stockholders of the Company is required, or the sale or conveyance of all or
substantially all the property or business of the Company;
(d) there shall be proposed any voluntary or
involuntary dissolution, liquidation or winding-up of the Company; or
(e) the Company or any of its Subsidiaries shall
complete an Offer;
then, the Company shall cause to be filed at the office or agency maintained
for the purpose of conversion of the Securities as provided in Section 13.2
hereof, and shall cause to be mailed to each Holder of Securities, at his
address as it shall appear on the registry books of the Company, at least 20
days before the date hereinafter specified (or the earlier of the dates
hereinafter specified, in the event that more than one date is specified), a
notice stating the date on which (1) a record is expected to be taken for the
purpose of such dividend, distribution, rights, warrants or options or Offer,
or if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution, rights, warrants
or options or to participate in such Offer are to be determined, or (2) such
reclassification, change, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding-up is expected to become effective and the date, if any
is to be fixed, as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reclassification, change,
consolidation, merger, sale, conveyance, dissolution, liquidation or
winding-up.
SECTION 13.8 Taxes on Conversion.
The Company will pay any and all documentary, stamp or similar
taxes payable to the United States of America or any political subdivision or
taxing authority thereof or therein in respect of the issue or delivery of
shares of Common Stock on conversion of Securities pursuant thereto; provided,
however, that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issue or delivery of shares
of Common Stock in a name other than that of the Holder of the Securities to be
converted and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery 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. The Company extends no protection with respect to any other
taxes imposed in connection with conversion of Securities.
SECTION 13.9 Company to Provide Stock.
The Company shall reserve, free from pre-emptive rights, out
of its authorized but unissued shares, sufficient shares to provide for the
conversion of the Securities from time to time as such Securities are presented
for conversion, provided, that nothing contained herein shall be construed to
preclude the Company from satisfying its obligations in respect of the
conversion of Securities by delivery of repurchased shares of Common Stock
which are held in the treasury of the Company.
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<PAGE> 74
If any shares of Common Stock to be reserved for the purpose
of conversion of Securities hereunder require registration with or approval of
any governmental authority under any Federal or state law before such shares
may be validly issued or delivered upon conversion, then the Company covenants
that it will in good faith and as expeditiously as possible use its best
efforts to secure such registration or approval, as the case may be, provided,
however, that nothing in this Section 13.9 shall be deemed to limit in any way
the obligations of the Company provided in this Article XIII.
Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value, if any, of the Common
Stock, the Company will take all corporate action which may, in the Opinion of
Counsel, be necessary in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock at such adjusted
Conversion Price.
The Company covenants that all shares of Common Stock which
may be issued upon conversion of Securities will upon issue be fully paid and
non-assessable by the Company and free of preemptive rights.
SECTION 13.10 Disclaimer of Responsibility for Certain
Matters.
Neither the Trustee nor any agent of the Trustee shall at any
time be under any duty or responsibility to any Holder of Securities to
determine whether any facts exist which may require any adjustment of the
Conversion Price, or with respect to the Officers' Certificate referred to in
Section 13.5, 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. Neither
the Trustee nor any agent of the Trustee shall be accountable with respect to
the validity or value (or the kind or amount) of any shares of Common Stock, or
of any securities or property (including cash), which may at any time be issued
or delivered upon the conversion of any Security; and neither the Trustee nor
any conversion agent makes any representation with respect thereto. Neither
the Trustee nor any agent of the Trustee shall be responsible for any failure
of the Company to issue, register the transfer of or deliver any shares of
Common Stock or stock certificates or other securities or property (including
cash) upon the surrender of any Security for the purpose of conversion or,
subject to Article VIII hereof, to comply with any of the covenants of the
Company contained in this Article XIII.
SECTION 13.11 Return of Funds Deposited for Redemption of
Converted Securities.
Any funds which at any time shall have been deposited by the
Company or on its behalf with the Trustee or any other Paying Agent for the
purpose of paying the principal of and interest on any of the Securities and
which shall not be required for such purposes because of the conversion of such
Securities, as provided in this Article XIII, shall after such conversion be
repaid to the Company by the Trustee or such other Paying Agent.
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with the duties imposed by operation of the TIA, the imposed duties,
whether or not this Indenture has been qualified under the TIA, shall control.
SECTION 14.2 Notices.
Any notices or other communications to the Company or the
Trustee required or permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery, by telex, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Company:
Sunrise Assisted Living, Inc.
9401 Lee Highway
Suite 300
Fairfax, Virginia 22031
Attention: General Counsel
Telecopy: (703) 273-7500
if to the Trustee:
First Union National Bank of Virginia
Corporate Trust Department
901 E. Cary Street, 2nd Floor
Richmond, Virginia 23219
Attention: Patricia Welling
Telecopy: (804) 788-9661
Any party by notice to each other party may designate
additional or different addresses as shall be furnished in writing by such
party. Any notice or communication to any party shall be deemed to have been
given or made as of the date so delivered, if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and
five Business Days after mailing if sent by registered or certified mail,
postage prepaid (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 him by first class mail or other equivalent means at his address
as it appears on the registration books of the Registrar and shall be
sufficiently given to him if so mailed within the time prescribed.
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<PAGE> 76
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.
SECTION 14.3 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Trustee, the Registrar and any other Person
shall have the protection of TIA Section 312(c).
SECTION 14.4 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 (in form and
substance reasonably satisfactory to the Trustee) 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 (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 14.5 Statements Required in Certificate or
Opinion.
Each certificate or opinion 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 each such Person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an Opinion of Counsel
may rely on an Officers' Certificate or certificates of public officials.
SECTION 14.6 Rules by Trustee, Paying Agent, Registrar.
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The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Paying Agent or Registrar may make reasonable
rules for its functions.
SECTION 14.7 Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which
banking institutions in New York, New York are authorized or obligated by law
or executive order to close. If a payment date is a Legal Holiday at such
place, payment may be made at such place on the next succeeding day that is not
a Legal Holiday, and no interest shall accrue for the intervening period.
SECTION 14.8 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.
SECTION 14.9 No Adverse Interpretation of Other
Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 14.10 No Recourse Against Others.
No direct or indirect partner, employee, stockholder, director
or officer, as such, past, present or future of the Company or any successor
corporation, shall have any personal liability in respect of the obligations of
the Company under the Securities or this Indenture by reason of his, her or its
status as such partner, stockholder, employee, director or officer. Each
Securityholder by accepting a Security waives and releases all such liability.
Such waiver and release are part of the consideration for the issuance of the
Securities.
SECTION 14.11 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 14.12 Duplicate Originals.
All parties may sign any number of copies or counterparts of
this Indenture. Each signed copy or counterpart shall be an original, but all
of them together shall represent the same agreement.
SECTION 14.13 Severability.
In case any one or more of the provisions in this Indenture or
in the Securities shall be held invalid, illegal or unenforceable, in any
respect for any reason, the validity, legality and
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<PAGE> 78
enforceability of any such provision in every other respect and of the
remaining provisions shall not in any way be affected or impaired thereby, it
being intended that all of the provisions hereof shall be enforceable to the
full extent permitted by law.
SECTION 14.14 Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and headings of
the Articles and the 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 14.15 Qualification of Indenture.
The Company shall qualify this Indenture under the TIA in
accordance with the terms and conditions of the Registration Rights Agreement
and shall pay all costs and expenses (including attorneys' fees for the Company
and the Trustee) incurred in connection therewith, including, but not limited
to, costs and expenses of qualification of the Indenture and the Securities and
printing this Indenture and the Securities. The Trustee shall be entitled to
receive from the Company any such Officers' Certificates, Opinions of Counsel
or other documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 14.16 Registration Rights.
Certain Holders of the Securities are entitled to certain
registration rights with respect to such Securities pursuant to, and subject to
the terms of, the Registration Rights Agreement.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
SUNRISE ASSISTED LIVING, INC., a Delaware corporation
By: /s/ PAUL J. KLAASSEN
----------------------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
FIRST UNION NATIONAL BANK OF VIRGINIA, a national
banking association, as Trustee
By: /s/ PATRICIA A. WELLING
----------------------------------------------------
Name: Patricia A. Welling
----------------------------------------
Title: Vice President
----------------------------------------
<PAGE> 80
EXHIBIT A
[FORM OF SECURITY]
SUNRISE ASSISTED LIVING, INC.
5 1/2% CONVERTIBLE SUBORDINATED NOTE
DUE 2002
No.
CUSIP No.
------------
$
-------
Sunrise Assisted Living, Inc., a Delaware corporation
(hereinafter called the "Company," which term includes any successors under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to _____, or registered assigns, the principal sum of _____ Dollars, on June
15, 2002.
Interest Payment Dates: June 15 and December 15; commencing
December 15, 1997.
Record Dates: June 1 and December 1.
Reference is made to the further provisions of this Security
on the reverse side, which will, for all purposes, have the same effect as if
set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to
be duly executed under its corporate seal.
SUNRISE ASSISTED LIVING, INC.,
a Delaware corporation
[Seal]
By:
-------------------------------------
Name:
Title:
Attest:
-------------------------
Secretary
A-1
<PAGE> 81
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned Indenture.
First Union National Bank of Virginia, as Trustee
By
---------------------------------
Authorized Signatory
Dated:
A-2
<PAGE> 82
SUNRISE ASSISTED LIVING INC.
5 1/2% CONVERTIBLE SUBORDINATED NOTE
DUE 2002
Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Company or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.(1)
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION.(2)
THE HOLDER OF THE SECURITIES EVIDENCED HEREBY BY ITS ACCEPTANCE HEREOF
AGREES THAT SUCH SECURITIES ARE "RESTRICTED SECURITIES" WITHIN THE
MEANING OF RULE 144 UNDER THE SECURITIES ACT AND THAT IT AND ANY
SUBSEQUENT HOLDER WILL NOT OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION
DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED PERSON
OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY) EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) PURSUANT TO RULE 144A, FOR SO LONG AS IT IS
AVAILABLE, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE
- --------------
(1.) This schedule should only be added if the Security is issued in
global form paragraph.
(2.) This paragraph should be included only for the Transfer Restricted
Securities.
A-3
<PAGE> 83
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT,
(E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR," WITHIN THE MEANING OF
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE
FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE.(3)
1. Interest.
Sunrise Assisted Living, Inc., a Delaware corporation
(hereinafter called the "Company," which term includes any successors under the
Indenture hereinafter referred to), promises to pay interest on the principal
amount of this Security at the rate of 5 1/2% per annum. To the extent it is
lawful, the Company promises to pay interest on any interest payment due but
unpaid on such principal amount at a rate of 5 1/2% per annum compounded
semi-annually.
The Company will pay interest semi-annually on June 15 and
December 15 of each year (each, an "Interest Payment Date"), commencing
December 15, 1997. Interest on the Securities will accrue from the most recent
date to which interest has been paid or, if no interest has been paid on the
Securities, from June 6, 1997. Interest will be computed on the basis of a
360-day year consisting of twelve 30-day months.
2. Method of Payment.
The Company shall pay interest on the Securities (except
defaulted interest) to the Persons who are the registered Holders at the close
of business on the Record Date immediately preceding the Interest Payment Date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. Any such interest not so punctually paid, and defaulted interest
relating thereto, may be paid to the Persons who are registered Holders at the
close of business on a Special Record Date for the payment of such defaulted
interest, as more fully provided in the Indenture referred to
- ---------------------
(3.) This paragraph should be included only for the Transfer Restricted
Securities.
A-4
<PAGE> 84
below. Except as provided below, the Company shall pay principal and interest
in such coin or currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts ("U.S.
Legal Tender"). The Securities will be payable as to principal, premium,
interest and Liquidated Damages at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or at the option of the Company, payment of principal, premium, interest and
Liquidated Damages may be made by check mailed to the Holders at their
addresses set forth in the registry of Holders, and provided that payment by
wire transfer of immediately available funds will be required with respect to
principal of, premium and interest on and Liquidated Damages with respect to
Global Securities and all other Securities the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent.
3. Paying Agent and Registrar.
Initially, First Union National Bank of Virginia (the
"Trustee") will act as Paying Agent, Registrar and conversion agent. The
Company may change any Paying Agent, Registrar or co-Registrar or conversion
agent without notice to the Holders. The Company or any of its Subsidiaries
may act as Paying Agent, Registrar or co-Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as
of June 6, 1997 (the "Indenture"), between the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act, as in effect on the date of the Indenture. The Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and said Act for a statement of them. The Securities are general
unsecured obligations of the Company limited in aggregate principal amount to
$150,000,000.
5. Redemption.
The Securities may be redeemed in whole or from time to time
in part at any time on and after June 15, 2000, at the option of the Company,
at the Redemption Price (expressed as a percentage of principal amount) set
forth below with respect to the indicated Redemption Date, in each case, plus
any accrued but unpaid interest and Liquidated Damages to, but excluding, the
Redemption Date. The Securities may not be so redeemed prior to June 15, 2000.
<TABLE>
<CAPTION>
If redeemed during
the 12-month period
beginning June 15 Redemption Price
----------------- ----------------
<S> <C>
2000 . . . . . . . . . . . . . . . . . . 102.20%
2001 . . . . . . . . . . . . . . . . . . 101.10%
</TABLE>
Any such redemption will comply with Article III of the
Indenture.
A-5
<PAGE> 85
6. Notice of Redemption.
Notice of redemption will be sent by first class mail, postage
prepaid, at least 30 days and not more than 60 days prior to the Redemption
Date to the Holder of each Security to be redeemed at such Holder's last
address as then shown upon the registry books of the Registrar. Securities may
be redeemed in part in multiples of $1,000 only.
Except as set forth in the Indenture, from and after any
Redemption Date, if monies for the redemption of the Securities called for
redemption shall have been deposited with the Paying Agent on such Redemption
Date and payment of the Securities called for redemption is not prohibited
under Article XII of the Indenture, the Securities called for redemption will
cease to bear interest and the only right of the Holders of such Securities
will be to receive payment of the Redemption Price, plus any accrued and unpaid
interest and Liquidated Damages, if any, to the Redemption Date.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may
register the transfer of, or exchange Securities in accordance with, the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any Securities selected for redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the
owner of it for all purposes.
9. Unclaimed Money.
If money for the payment of principal, interest or Liquidated
Damages remains unclaimed for two years, the Trustee and the Paying Agent(s)
will pay the money back to the Company at its written request. After that, all
liability of the Trustee and such Paying Agent(s) with respect to such money
shall cease.
10. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented, and any existing Default or Event of Default or
compliance with any provision may be waived, with the written consent of the
Holders of a majority in aggregate principal amount of the Securities then
outstanding. Without notice to or consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Securities to, among other things,
cure any ambiguity, defect or inconsistency, or make any other change that does
not adversely affect the rights of any Holder of a Security.
A-6
<PAGE> 86
11. Conversion Rights.
Subject to the provisions of the Indenture, the Holders have
the right to convert the principal amount of the Securities into fully paid and
nonassessable shares of Common Stock of the Company at the initial conversion
price per share of Common Stock of $37.1875 (or $37.1875 in principal amount of
Securities for each such share of Common Stock), or at the adjusted conversion
price then in effect, if adjustment has been made as provided in the Indenture,
upon surrender of the Security to the Company, together with a fully executed
notice in substantially the form attached hereto and, if required by the
Indenture, an amount equal to accrued interest payable on such Security.
12. Ranking.
Payment of principal, premium, if any, interest on and
Liquidated Damages with respect to the Securities is subordinated, in the
manner and to the extent set forth in the Indenture, to the prior payment in
full of all Senior Indebtedness.
13. Repurchase at Option of Holder Upon a Change of Control.
If there is a Change of Control, the Company shall be required
to offer to purchase on the Repurchase Date all outstanding Securities at a
purchase price equal to 100% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, to, but excluding, the
Repurchase Date. Holders of Securities will receive a Repurchase Offer from
the Company prior to any related Repurchase Date and may elect to have such
Securities purchased by completing the form entitled "Option of Holder to Elect
Purchase" appearing below.
14. Successors.
When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
15. Defaults and Remedies.
If an Event of Default occurs and is continuing (other than as
Event of Default relating to certain events of bankruptcy, insolvency or
reorganization), then in every such case, unless the principal of all of the
securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable immediately in the manner and
with the effect provided in the Indenture. Holders of Securities may not
enforce the Indenture or the Securities except as provided in the Indenture.
The Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Securities. Subject to certain limitations, Holders of a
majority in aggregate principal amount of the Securities then outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Securities notice of any continuing Default or Event
of Default (except a Default in payment of principal, interest or Liquidated
Damages), if it determines that withholding notice is in their interest.
A-7
<PAGE> 87
16. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates as if it were not the Trustee.
17. No Recourse Against Others.
No stockholder, director, officer or employee, as such, past,
present or future, of the Company or any successor corporation shall have any
personal liability in respect of the obligations of the Company under the
Securities or the Indenture by reason of his, her or its status as such
stockholder, director, officer or employee. Each Holder of a Security 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.
18. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other side
of this Security.
19. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of
a Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
20. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company will cause CUSIP
numbers to be printed on the Securities as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
21. Additional Rights of Holders of Transfer Restricted Securities.
In addition to the rights provided to Holders of Securities
under the Indenture, Holders of Securities shall have all the rights set forth
in the Registration Rights Agreement.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement. Request may be made to:
Sunrise Assisted Living, Inc.
9401 Lee Highway, Suite 300
Fairfax, Virginia 22031
A-8
<PAGE> 88
Attention: General Counsel
A-9
<PAGE> 89
[FORM OF] ASSIGNMENT
I or we assign this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
- -------------------------
and irrevocably appoint __________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Dated: Signed:
--------------- ---------------------------------------
- --------------------------------------------------------------------------------
(Sign exactly as name appears on
the other side of this Security)
A-10
<PAGE> 90
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Article XI of the Indenture, check the box: [ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Article XI of the Indenture, state the
amount you want to be purchased: $________
Date: Signature:
---------------- -----------------------------------
(Sign exactly as your name appears on
the other side of this Security)
A-11
<PAGE> 91
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES(4)
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global authorized officer of
Principal Amount Principal Amount of this Security following Trustee or
Date of of this Global Global such decrease (or Securities
Exchange Security Security increase) Custodian
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- ------------------------
(4.) This schedule should only be added if the Security is issued in
global form.
A-12
<PAGE> 92
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: ____% CONVERTIBLE SUBORDINATED NOTES DUE 2002 OF SUNRISE ASSISTED LIVING,
INC.
This Certificate relates to $______ principal amount of Securities held in
*_____ book-entry or * ______ definitive form by _____ (the "Transferor").
1. The Transferor:*
[ ] (a) has requested the Trustee by written order to deliver in
exchange for its beneficial interest in the Global Security held by the
Depositary a Security or Securities in definitive, registered form of
authorized denominations and an aggregate principal amount equal to its
beneficial interest in such Global Security (or the portion thereof indicated
above); or
[ ] (b) has requested the Trustee by written order to exchange or
register the transfer of a Security or Securities.
2. In connection with any such request and in respect of each
such Security, the Transferor does hereby certify that Transferor is familiar
with the Indenture relating to the above-captioned Securities and as provided
in Section 2.6 of such Indenture, the transfer of this Security does not
require registration under the Securities Act because:*
[ ] (a) Such Security is being acquired for the Transferor's own
account, without transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section
2.6(d)(i)(A) of the Indenture).
[ ] (b) Such Security is being transferred to a person who the
Transferor reasonably believes is a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) purchasing for its own account or for
the account of a qualified institutional buyer over which it exercises sole
investment discretion that is aware that the transfer is being made in reliance
on Rule 144A (in satisfaction of Section 2.6(a)(ii)(B), Section 2.6(b)(i)(x) or
Section 2.6(d)(i)(B) of the Indenture).
- --------------------
* Check applicable box.
A-13
<PAGE> 93
[ ] (c) Such Security is being transferred in accordance with
Regulation S under the Securities Act (in satisfaction of Section
2.6(a)(ii)(C), Section 2.6(b)(i)(y) or Section 2.6(d)(i)(C) of the Indenture).
An Opinion of Counsel, if so requested by the Company or the Trustee, to the
effect that such transfer is in compliance with the Securities Act accompanies
this Certificate (in satisfaction of Section 2.6(a)(ii)(C) or Section
2.6(d)(i)(C) of the Indenture).
[ ] (d) Such Security is being transferred to an institutional
investor that is an "accredited investor" within the meaning of Rule
501(a)(1),(2),(3) or (7) under the Securities Act which delivers a certificate
in the form of Exhibit B to the Indenture to the Trustee (in satisfaction of
Section 2.6(a)(ii)(D) or Section 2.6(d)(i)(D) of the Indenture). An Opinion of
Counsel, if so requested by the Company or the Trustee, to the effect that such
transfer is in compliance with the Securities Act accompanies this Certificate
(in satisfaction of Section 2.6(a)(ii)(D) or Section 2.6(d)(i)(D) of the
Indenture).
[ ] (e) Such Security is being transferred in reliance on and in
compliance with another exemption from the registration requirements of the
Securities Act. An Opinion of Counsel, if so requested by the Company or the
Trustee, to the effect that such transfer is in compliance with the Securities
Act accompanies this Certificate (in satisfaction of Section 2.6(a)(ii)(E) or
Section 2.6(d)(i)(E) of the Indenture).
- -------------------------------------------------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-------------------------------
Date:
-------------------------------------
3. Affiliation with the Company [check if applicable]
[ ] (a) The undersigned represents and warrants that it is,
or at some time during which it held this Security
was, an Affiliate of the Company.
(b) If 3(a) above is checked and if the undersigned was
not an Affiliate of the Company at all times during
which it held this Security, indicate the periods
during which the undersigned was an Affiliate of the
Company: ________________________________.
(c) If 3(a) above is checked and if the Transferee will
not pay the full purchase price for the transfer of
this Security on or prior to the date of transfer
indicate when such purchase price will be paid:
________________________________.
A-14
<PAGE> 94
TO BE COMPLETED BY TRANSFEREE IF 2(b) ABOVE IS CHECKED AND THE TRANSFEROR IS
NOT A QUALIFIED INSTITUTIONAL BUYER:
The undersigned represents and warrants that it is a
"qualified institutional buyer" as defined in Rule 144A under the Securities
Act of 1933, as amended, and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information.
Dated:
--------------- ---------------------------------
NOTICE: To be executed by
an officer.
TO BE COMPLETED BY TRANSFEREE IF 2(c) ABOVE IS CHECKED:
The undersigned represents and warrants that it is
not a "U.S. Person" (as defined in Regulation S under the Securities Act of
1933, as amended).
Dated:
--------------- ---------------------------------
NOTICE: To be executed by
an officer.
If none of the boxes under Section 2 of this certificate is checked or if any
of the above representations required to be made by the Transferee is not made,
the Registrar shall not be obligated to register this Security in the name of
any person other than the Holder hereof.
THE UNDERSIGNED HEREBY AGREES THAT, UNLESS THE BOX ABOVE UNDER ITEM 3(a) IS
CHECKED, THE UNDERSIGNED SHALL BE DEEMED TO HAVE REPRESENTED THAT IT IS NOT NOR
HAS IT BEEN AT ANY TIME DURING WHICH IT HELD THIS SECURITY AN AFFILIATE, AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE
COMPANY.
Dated:
--------------- ---------------------------------
NOTICE: The signature of the Holder
to this assignment must correspond
with the name as written upon the face
of this Security particular, without
alteration or enlargement or any
change whatsoever.
EXHIBIT B
INVESTOR LETTER OF REPRESENTATION
A-15
<PAGE> 95
Sunrise Assisted Living, Inc.
c/o the Trustee
Ladies and Gentlemen:
This letter is delivered by the undersigned to
request a transfer of $_____ principal amount of the 5 1/2% Convertible
Subordinated Notes due 2002 (the "Notes") of Sunrise Assisted Living, Inc. (the
"Company"). The Notes are described in that certain Offering Memorandum (the
"Offering Memorandum") dated June 2, 1997 relating to the offering of the
Notes. We acknowledge receipt of the Offering Memorandum and acknowledge that
we have read the Offering Memorandum, have had access to such financial and
other information and have been afforded the opportunity to ask such questions
of representatives of the Company and receive answers thereto, as we deem
necessary in connection with our decision to purchase the Notes.
Upon transfer the Notes would be registered in the
name of the undersigned:
Name:
------------------------------------------------
Address:
---------------------------------------------
Taxpayer ID Number:
----------------------------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933, as amended (the "Securities Act")),
purchasing for our own account or for the account of such an
institutional "accredited investor," and we are acquiring the
Notes for investment purposes and not with a view to, or for
offer or sale in connection with any distribution in violation
of the Securities Act and we have such knowledge and
experience in financial and business matters as to be capable
of evaluating the merits and risk of our investment in the
Notes and invest in or purchase securities similar to the
Notes in the normal course of our business, and we, and any
accounts for which we are acting, are each able to bear the
economic risk of our or its investment. We confirm that
neither the Company nor any person acting on its behalf has
offered to sell the Notes by, and that we have not been made
aware of the offering of the Notes by, any form of general
solicitation or general advertising, including, but not
limited to, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar
media or broadcast over television or radio.
2. We understand that the Notes and the Common
Stock issuable upon conversion of the Notes (the Notes and
such Common Stock are collectively referred to herein as
"Restricted Securities") have not been registered under the
Securities Act and, unless so registered, may not be sold
except as permitted in the following sentence. We agree on
our own behalf and on behalf of any investor account for which
we are purchasing Notes are "restricted securities" within the
meaning of Rule 144 under the Securities Act and to offer,
sell or otherwise transfer such Notes prior to the date which
is two years after the later of the date of original issue (or
any predecessor thereto) (the "Resale Restriction Termination
Date") only (a) to the Company, (b) pursuant to a registration
statement that has been declared effective under the
Securities Act, (c)
C-1
<PAGE> 96
pursuant to Rule 144A under the Securities Act, for so long as
it is available, to a person we reasonably believe is a
qualified institutional buyer under Rule 144A under the
Securities Act (a "QIB") that purchases for its own account or
for the account of a QIB and to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) pursuant
to offers and sales that occur outside the United States
within the meaning of Regulation S under the Securities Act,
(e) to an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is purchasing for its own account or for
the account of an institutional "accredited investor," in each
case, with respect to the Notes, or (f) pursuant to any other
available exemption from the registration requirements of the
Securities Act, subject in each of the foregoing cases to any
requirement of law that the disposition of our property or the
property of such investor account or accounts be at all times
within our or their control and in compliance with any
applicable state securities laws. The foregoing restrictions
on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the
Notes is proposed to be made pursuant to clause (e) above
prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee
substantially in the form of this letter to the Company and
the trustee (the "Trustee") under the indenture, dated as of
June 6, 1997, between the Company and the Trustee relating to
the Notes, which shall provide, among other things, that the
transferee is an institutional "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act and that it is acquiring such Notes for
investment purposes and not for distribution in violation of
the Securities Act. Each purchaser acknowledges that the
Company and the Trustee reserve the right prior to any offer,
sale or other transfer, prior to the Resale Restriction
Termination Date of the Restricted Securities pursuant to
clause (d), (e) or (f) above to require the delivery of an
opinion of counsel, certifications and/or other information
satisfactory to the Company and the Trustee.
3. We understand that the Notes will be in the form
of definitive physical certificates bearing the legend set
forth in clause (4) in the "Notice to Investors" section of
the Offering Memorandum.
We acknowledge that you, the Initial Purchasers and
others will rely upon our confirmations, acknowledgments and agreements set
forth herein, and we agree to notify you promptly in writing if any of our
representations and warranties herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
-------------------------
- --------------------------------------------------------------------------------
By:
-------------------
- --------------------------------------------------------------------------------
C-1
<PAGE> 97
EXHIBIT C
FORM OF CONVERSION NOTICE
To: Sunrise Assisted Living, Inc.
The undersigned owner of this Security hereby: (i)
irrevocably exercises the option to convert this Security, or the portion
hereof below designated, for shares of Common Stock of Sunrise Assisted Living,
Inc. in accordance with the terms of this Indenture referred to in this
Security and (ii) directs that such shares of Common Stock deliverable upon the
conversion, together with any check in payment for fractional shares and any
Security(ies) representing any unconverted principal amount hereof, be issued
and delivered to the registered holder hereof unless a different name has been
indicated below. If shares are to be delivered registered in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto. Any amount required to be paid by the
undersigned on account of interest accompanies this Security.
Dated
-------------------
- --------------------------------------------------------------------------------
Signature
Fill in for registration of shares if to be
delivered, and of Securities if to be issued, otherwise than to and in the name
of the registered holder.
- --------------------------------------------------------------------------------
Social Security or other
Taxpayer Identifying Number
- -----------------------------------
(Name)
- -----------------------------------
(Street Address)
- -----------------------------------
(City, State and Zip Code)
(Please print name and address)
Principal amount to be
converted: (if less than all)
$
--------------------------------------------
C-1
<PAGE> 1
EXHIBIT 4.2
5 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2002
REGISTRATION RIGHTS AGREEMENT
DATED AS OF JUNE 6, 1997
BY AND AMONG
SUNRISE ASSISTED LIVING, INC.
AS THE COMPANY,
AND
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
AND
ALEX. BROWN & SONS
INCORPORATED
AS THE INITIAL PURCHASERS
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into as
of June 6, 1997, by and among Sunrise Assisted Living, Inc., a Delaware
corporation (the "Company"), and Donaldson, Lufkin & Jenrette Securities
Corporation and Alex. Brown & Sons Incorporated (collectively, the "Initial
Purchasers").
This Agreement is made pursuant to the Purchase Agreement,
dated June 2, 1997, among the Company and the Initial Purchasers (the "Purchase
Agreement"). In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide the registration rights
contained in this Agreement to the Initial Purchasers and to their respective
direct and indirect transferees. The execution of this Agreement is a
condition to the closing of the transactions contemplated by the Purchase
Agreement.
The parties hereby agree as follows:
I. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Advice: As defined in the last paragraph of Section 4 hereof.
Affiliate of any specified person shall mean any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this
definition, "control," when used with respect to any person, means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise
and the terms "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
Agreement: This Registration Rights Agreement, as the same
may be amended, supplemented or modified from time to time in accordance with
the terms hereof.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
Closing Date: The Closing Date as defined in the Purchase
Agreement.
Common Stock: Common Stock, $.01 par value per share, of the
Company.
Company: Sunrise Assisted Living, Inc., a Delaware
corporation, and any successor corporation thereto.
controlling person: As defined in Section 6(a) hereof.
<PAGE> 3
Damage Payment Date: Each of the semi-annual interest payment
dates provided in the Indenture.
Effectiveness Period: As defined in Section 2(a) hereof.
Effectiveness Target Date: The 180th day following the
Closing Date.
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC pursuant thereto.
Filing Date: The 90th day after the Closing Date.
Holder: Each registered holder of any Transfer Restricted
Securities.
Indemnified Person: As defined in Section 6(a) hereof.
Indenture: The Indenture, dated the date hereof, between the
Company and the Trustee thereunder, pursuant to which the Notes are being
issued, as amended, modified or supplemented from time to time in accordance
with the terms thereof.
Initial Purchasers: As defined in the preamble hereof.
Liquidated Damages: As defined in Section 3(a) hereof.
Notes: Up to $150,000,000 aggregate principal amount of 5
1/2% Convertible Subordinated Notes due 2002 of the Company being issued (or
authorized to be issued) pursuant to the Indenture.
Paying Agent: As defined in the Indenture.
Proceeding: An action, claim, suit or proceeding (including,
without limitation, an investigation or partial proceeding, such as a
deposition), whether commenced or threatened.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated pursuant to the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Transfer Restricted
Securities covered by such Registration Statement, and all other amendments and
supplements to any such prospectus, including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by
reference, if any, in such prospectus.
Registration Default: As defined in Section 3(a) hereof.
Registration Statement: Any registration statement of the
Company that covers any of the Transfer Restricted Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference, if any, in such
registration statement.
2
<PAGE> 4
Rule 144: Rule 144 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 144A: Rule 144A promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 158: Rule 158 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 174: Rule 174 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 415: Rule 415 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 424: Rule 424 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations promulgated by the SEC thereunder.
Shelf Registration Statement: As defined in Section 2 hereof.
Special Counsel: Any special counsel to the holders of
Transfer Restricted Securities, for which holders of Transfer Restricted
Securities will be reimbursed pursuant to Section 5 hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Transfer Restricted Securities: The Notes and the shares of
Common Stock into which the Notes are convertible, upon original issuance
thereof, and at all times subsequent thereto, until, in the case of any such
Note or share, the earliest of (i) the date on which it has been registered
effectively pursuant to the Securities Act and disposed of in accordance with
the Registration Statement relating to it, (ii) the date on which either such
Note or the shares of Common Stock issued upon conversion of such Note are
distributed to the public pursuant to Rule 144 (or any similar provisions then
in effect) or are salable pursuant to Rule 144(k) promulgated by the SEC
pursuant to the Securities Act or (iii) the date on which it ceases to be
outstanding.
Trustee: First Union National Bank, the trustee under the
Indenture.
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<PAGE> 5
underwritten registration or underwritten offering: A
registration in connection with which securities of the Company are sold to an
underwriter for reoffering to the public pursuant to an effective Registration
Statement.
2. Shelf Registration
(a) The Company agrees to file with the SEC as promptly
as practicable after the Closing Date, but in no event later than the Filing
Date, a Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415 covering all of the Transfer Restricted Securities (the
"Shelf Registration Statement"). The Shelf Registration Statement shall be on
Form S-3 under the Securities Act or another appropriate form permitting
registration of such Transfer Restricted Securities for resale by the Holders
in the manner or manners reasonably designated by them (including, without
limitation, one or more underwritten offerings). The Company shall use all
reasonable efforts, as described in Section 4, to cause the Shelf Registration
Statement to be declared effective pursuant to the Securities Act as promptly
as practicable following the filing thereof, but in no event later than the
Effectiveness Target Date, and to keep the Shelf Registration Statement
continuously effective under the Securities Act for 24 months after the Closing
Date (the "Effectiveness Period"), or such shorter period ending when either
(1) all Transfer Restricted Securities covered by the Shelf Registration
Statement have been sold in the manner set forth in the Shelf Registration
Statement or (2) there cease to be outstanding any Transfer Restricted
Securities.
(b) Supplements and Amendments. The Company shall use
all reasonable efforts to keep the Shelf Registration Statement continuously
effective by supplementing and amending the Shelf Registration Statement if
required by the rules, regulations or instructions applicable to the
registration form used for such Shelf Registration Statement, if required by
the Securities Act, or if reasonably requested by the holders of a majority of
the Transfer Restricted Securities (on a fully converted basis) covered by such
Shelf Registration Statement or by any underwriter of such Transfer Restricted
Securities.
(c) Suspension of Shelf Registration Statement.
Notwithstanding anything to the contrary in this Section 2, but subject to
compliance with Section 3, the Company may, by delivering written notice to the
Holders, prohibit offers and sales of Transfer Restricted Securities pursuant
to the Shelf Registration Statement at any time if (A) (i) The Company is in
possession of material non-public information, (ii) the Company determines
(based on advice of counsel) that such prohibition is necessary in order to
avoid a requirement to disclose such material non-public information and (iii)
the Company determines in good faith that disclosure of such material
non-public information would not be in the best interests of the Company and
its stockholders or (B) (i) the Company has made a public announcement relating
to an acquisition or business combination transaction including the Company
and/or one or more of its subsidiaries that is material to the Company and its
subsidiaries taken as a whole and (ii) the Company determines in good faith
that (x) offers and sales of Transfer Restricted Securities pursuant to the
Shelf Registration Statement prior to the consummation of such transaction (or
such earlier date as the Company shall determine) is not in the best interests
of the Company and its stockholders or (y) that it would be impracticable at
the time to obtain any financial statements relating to such acquisition or
business combination transaction that would be required to be set forth in the
Shelf Registration Statement; provided, however, that upon (i) the public
disclosure by the Company of the material non-public information described in
clause (A) of this paragraph or (ii) the abandonment or termination of, or the
availability of the required financial statements with respect
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<PAGE> 6
to, a transaction described in clause (B) of this paragraph, the suspension of
the use of the Shelf Registration Statement pursuant to this Section 2(c) shall
cease and the Company shall promptly comply with Section 4(b) hereof.
3. Liquidated Damages
(a) The Company and the Initial Purchasers agree that the
Holders of Transfer Restricted Securities will suffer damages if the Company
fails to fulfill its obligations pursuant to Section 2 and Section 4(b) hereof
and that it would not be possible to ascertain the extent of such damages.
Accordingly, in the event of such failure by the Company to fulfill such
obligations, the Company hereby agrees to pay liquidated damages ("Liquidated
Damages") to each Holder of Transfer Restricted Securities under the
circumstances and to the extent set forth below:
(i) if the Shelf Registration Statement has not
been filed with the SEC on or prior to the Filing Date; or
(ii) if the Shelf Registration Statement is not
declared effective by the SEC on or prior to the Effectiveness
Target Date; or
(iii) the Shelf Registration Statement has been
declared effective by the SEC and thereafter ceases to be
effective or the Prospectus contained therein ceases to be
usable (including as a result of a suspension of the use of
the Shelf Registration Statement as described in Section 2(c)
hereof) for a period of time that exceeds 90 days in any
period of 365 consecutive days.
(any of the foregoing, a "Registration Default") then the Company shall pay
Liquidated Damages to each Holder of Transfer Restricted Securities during the
first 90-day period immediately following the occurrence of such Registration
Default in an amount equal to $.05 per week per $1,000 principal amount of
Notes and, if applicable, $.00186 per week per share (subject to adjustment in
the event of stock splits, stock recombinations, stock dividends and the like)
of Common Stock constituting Transfer Restricted Securities held by such Holder
for each week or portion thereof that the Registration Default continues. The
amount of such Liquidated Damages will increase by an additional $.05 per week
per $1,000 principal amount of Notes and, if applicable, by $.00186 per week
per share (subject to adjustment as set forth above) of Common Stock
constituting Transfer Restricted Securities for each subsequent 90-day period
until all Registration Defaults have been cured; provided, however, that
Liquidated Damages shall not at any time exceed $.25 per week per $1,000
principal amount of Notes or, if applicable, $.0093 per week per share (subject
to adjustment as set forth above) of Common Stock constituting Transfer
Restricted Securities. Following the cure of all Registration Defaults
relating to any Transfer Restricted Securities, the accrual of Liquidated
Damages with respect to such Transfer Restricted Securities will cease. A
Registration Default under clause (i) above shall be cured on the date that the
Shelf Registration Statement is filed with the SEC; a Registration Default
under clause (ii) above shall be cured on the date that the Shelf Registration
Statement is declared effective by the SEC; and a Registration Default under
clause (iii) above shall be cured on the date the Shelf Registration Statement
is declared effective or the Prospectus contained therein again becomes usable.
(b) The Company shall notify the Trustee within one
Business Day after each and every date on which a Registration Default occurs.
On each Damage Payment Date,
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<PAGE> 7
Liquidated Damages shall be paid by the Company to the Holders of Transfer
Restricted Securities as of the immediately preceding Interest Record Date (as
defined in the Indenture) specified in the Indenture in the same manner
interest is paid to Holders of Notes pursuant to the Indenture. Each
obligation to pay Liquidated Damages shall be deemed to commence accruing on
the date of the applicable Registration Default and to cease accruing when all
Registration Defaults have been cured. In no event shall the Company pay
Liquidated Damages in excess of the applicable maximum weekly amount set forth
above, regardless of whether one or multiple Registration Defaults exist (e.g.,
subject to increase as set forth above for each subsequent 90-day period,
Liquidated Damages shall equal $.05 per week per $1,000 principal amount of
Notes during the first 90-day period immediately following the occurrence of
the first Registration Default regardless of whether additional Registration
Defaults occur during such 90-day period).
4. Registration Procedures
In connection with the Company's registration obligations
pursuant to Section 2 above, the Company shall as expeditiously as possible:
(a) No fewer than five Business Days prior to the initial
filing of a Registration Statement or Prospectus and no fewer than two Business
Days prior to the filing of any amendment or supplement thereto (other than any
document that would be incorporated or deemed to be incorporated therein by
reference), furnish to the Holders of the Transfer Restricted Securities, their
Special Counsel and the managing underwriters, if any, copies of all such
documents proposed to be filed, which documents (other than those incorporated
or deemed to be incorporated by reference) will be subject to the review of
such Holders, their Special Counsel and such underwriters, if any, and cause
the officers and directors of the Company, counsel to the Company and
independent certified public accountants to the Company to respond to such
inquiries as shall be necessary in connection with such Registration Statement,
in the reasonable opinion of Special Counsel and such underwriters, to conduct
a reasonable investigation within the meaning of the Securities Act.. The
Company shall not file any such Registration Statement or related Prospectus or
any amendments or supplements thereto (other than any document that would be
incorporated or deemed to be incorporated in the Registration Statement by
reference) to which the Holders of a majority of the Transfer Restricted
Securities, their Special Counsel, or the managing underwriters, if any, shall
reasonably object on a timely basis; provided, that the Company may assume, for
the purposes of this subparagraph (a), that objections to the inclusion of
information specifically requested to be included in the Registration Statement
by the staff of the SEC, or in the opinion of counsel to the Company required
to be in the Registration Statement, or specifically required by the Securities
Act or other applicable law, shall not be deemed to be reasonable.
(b) Prepare and file with the SEC such amendments,
including post-effective amendments, to each Registration Statement as may be
necessary, subject to Section 2(c) hereof, to keep such Registration Statement
continuously effective for the applicable time period; cause, subject to
Section 2(c) hereof, the Prospectus and any document incorporated or deemed to
be incorporated therein by reference to be supplemented or amended, and file,
subject to Section 2(c) hereof, any other required document so that, as
thereafter delivered such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and comply with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Transfer Restricted Securities covered by such
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<PAGE> 8
Registration Statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such Registration
Statement as so amended or in such Prospectus as so supplemented;
(c) Notify the Holders of Transfer Restricted Securities
to be sold or their Special Counsel and the managing underwriters, if any,
promptly (and in the case of an event specified by clause (i)(A) of this
paragraph in no event fewer than two Business Days prior to such filing), and
(if requested by any such person), confirm such notice in writing, (i)(A) when
a Prospectus or any Prospectus supplement or post-effective amendment is
proposed to be filed, and, (B) with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the SEC or any other Federal or state governmental authority for
amendments or supplements to a Registration Statement or related Prospectus or
for additional information, (iii) of the issuance by the SEC, any state
securities commission, any other governmental agency or any court of any stop
order, order or injunction suspending or enjoining the use or the effectiveness
of a Registration Statement or the initiation of any proceedings for that
purpose, (iv) if at any time any of the representations and warranties of the
Company contained in any agreement (including any underwriting agreement)
contemplated by Section 4(l) hereof cease to be true and correct in all
material respects, (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Transfer Restricted Securities for sale in any jurisdiction, or
the initiation or threatening of any Proceeding for such purpose, and (vi) of
the happening of any event that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in such Registration Statement, Prospectus
or documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that, in the case of the Prospectus, it will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(d) Use all reasonable efforts to avoid the issuance of,
or, if issued, obtain the withdrawal of any order enjoining or suspending the
use or effectiveness of a Registration Statement or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Transfer Restricted Securities for sale in any jurisdiction, at the earliest
practicable moment;
(e) If requested by the managing underwriters, if any, or
the Holders of a majority of the Transfer Restricted Securities (on a fully
converted basis) being sold in connection with such offering, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters, if any, and such Holders reasonable
request should be included therein relating to the terms of the sale of the
Transfer Restricted Securities of such Holder in the Prospectus, and (ii) make
all required filings of such Prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received notification of
the matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided, however, that the Company shall not be required to take
any action pursuant to this Section 4(e) that would, in the opinion of counsel
for the Company, violate applicable law;
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<PAGE> 9
(f) Furnish to each Holder of Transfer Restricted
Securities, their Special Counsel and each managing underwriter, if any,
without charge, at least one conformed copy of each Registration Statement and
each amendment thereto, including financial statements (but excluding
schedules, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits, unless requested in writing by such Holder, counsel
or managing underwriter);
(g) Deliver to each Holder of Transfer Restricted
Securities, their Special Counsel, and the underwriters, if any, without
charge, as many copies of the Prospectus or Prospectuses and each amendment or
supplement thereto as such persons reasonably request; and the Company hereby
consents, subject to Section 4(p) hereof, to the use of such Prospectus and
each amendment or supplement thereto by each of the selling Holders of Transfer
Restricted Securities and the underwriters, if any, in connection with the
offering and sale of the Transfer Restricted Securities covered by such
Prospectus and any amendment or supplement thereto;
(h) Prior to any public offering of Transfer Restricted
Securities, use all reasonable efforts to register or qualify or cooperate with
the Holders of Transfer Restricted Securities to be sold, the underwriters, if
any, and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Transfer Restricted Securities for offer and sale under the securities or Blue
Sky laws of such jurisdictions within the United States as any Holder or
underwriter reasonably requests in writing; keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the applicable
Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is
not then so qualified or to take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
subject the Company to any tax in any such jurisdiction where it is not then so
subject;
(i) In connection with any sale or transfer of Transfer
Restricted Securities that will result in such securities no longer being
Transfer Restricted Securities, cooperate with the Holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company and to enable such
Transfer Restricted Securities to be in such denominations and registered in
such names as the managing underwriters, if any, or Holders may request at
least two Business Days prior to any sale of Transfer Restricted Securities;
(j) Use all reasonable efforts to cause the offering of
the Transfer Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or authorities
within the United States as may require such registration or approval, except
as may be required as a consequence of the nature of such selling Holder's
business, in which case the Company will cooperate in all reasonable respects
with the filing of such Registration Statement and the granting of such
approvals as may be necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such Transfer Restricted
Securities; provided, however, that the Company shall not be required to
register the Transfer Restricted Securities in any jurisdiction that would
subject it to general service of process in any
8
<PAGE> 10
such jurisdiction where it is not then so subject or subject the Company to any
tax in any such jurisdiction where it is not then so subject or to require the
Company to qualify to do business in any jurisdiction where it is not then so
qualified;
(k) Prior to the effective date of the first Registration
Statement relating to the Transfer Restricted Securities, provide a CUSIP
number for the Transfer Restricted Securities;
(l) Enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in underwritten
offerings) and take all such other reasonable actions in connection therewith
(including those reasonably requested by the managing underwriters, if any, or
the Holders of a majority of the Transfer Restricted Securities (on a fully
converted basis) being sold) in order to expedite or facilitate the disposition
of such Transfer Restricted Securities, and in such connection, if an
underwriting agreement is entered into, (i) make such representations and
warranties to the underwriters, if any, with respect to the business of the
Company and its subsidiaries (including with respect to businesses or assets
acquired or to be acquired by any of them), and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings, and
confirm the same if and when requested; (ii) obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriters, if
any), addressed to each of the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Special Counsel and
underwriters; (iii) use all reasonable efforts to obtain customary "cold
comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data is, or is
required to be, included in the Registration Statement), addressed (where
reasonably possible) to the selling Holders of Transfer Restricted Securities
and each of the underwriters, if any, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings; (iv) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and procedures
no less favorable to the selling Holders of Transfer Restricted Securities and
the underwriters, if any, than those set forth in Section 6 hereof (or such
other provisions and procedures acceptable to Holders of a majority of the
Transfer Restricted Securities (on a fully converted basis) covered by such
Registration Statement and the managing underwriters); and (v) deliver such
documents and certificates as may be reasonably requested by the managing
underwriters, if any, to evidence the continued validity of the representations
and warranties made pursuant to clause (i) of this Section 4(l) and to evidence
compliance with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company;
(m) Make available for inspection by a representative of
the Holders of not less than 50% of the Transfer Restricted Securities (on a
fully-converted basis) being sold, any underwriter participating in any such
disposition of Transfer Restricted Securities, if any, and any Special Counsel,
consultant or accountant retained by such selling Holders or underwriter, at
the offices where normally kept, during reasonable business hours, all
financial and other records, pertinent corporate documents and properties of
the Company and its subsidiaries as they may reasonably request (including with
respect to business and assets acquired or to be acquired to the extent that
such information is available to the Company), and cause the officers,
directors, agents and employees of the Company and its subsidiaries (including
with respect to business and assets
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<PAGE> 11
acquired or to be acquired to the extent that such information is available to
the Company) to supply all information in each case reasonably requested by any
such representative, underwriter, attorney, consultant or accountant in
connection with such Registration Statement, provided, however, that such
persons shall first agree in writing with the Company that any information that
is reasonably and in good faith designated by the Company in writing as
confidential at the time of delivery of such information shall be kept
confidential by such persons, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, (ii) disclosure of such information is
required by law (including any disclosure requirements pursuant to Federal
securities laws in connection with the filing of any Registration Statement or
the use of any Prospectus), (iii) such information becomes generally available
to the public other than as a result of a disclosure or failure to safeguard by
any such person or (iv) such information becomes available to any such person
from a source other than the Company and such source is not bound by a
confidentiality agreement;
(n) Cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement relating to
the Transfer Restricted Securities; and in connection therewith, cooperate with
the trustee under the Indenture and the holders of the Transfer Restricted
Securities to effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA; and
execute, and use all reasonable efforts to cause such trustee to execute, all
customary documents as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC to enable the Indenture
to be so qualified in a timely manner;
(o) Make generally available to its security holders
earning statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder, no later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period
is a fiscal year) (i) commencing at the end of any fiscal quarter in which
Transfer Restricted Securities are sold to underwriters in a firm commitment or
reasonable efforts underwritten offering and (ii) if not sold to underwriters
in such an offering, commencing on the first day of the first fiscal quarter
after the effective date of a Registration Statement, which statement shall
cover said period, consistent with the requirements of Rule 158; and
(p) concurrently with the effectiveness of the first
Registration Statement (i) list all Notes and Common Stock covered by such
Registration Statement on any securities exchange on which the Common Stock is
then listed or (ii) authorize for quotation the Notes on the Nasdaq Small Cap
Market and the Common Stock covered by such Registration Statement on the
Nasdaq National Market if the Common Stock is then so authorized for quotation.
The Company may require each seller of Transfer Restricted
Securities as to which any registration is being effected to furnish to the
Company such information regarding the distribution of such Transfer Restricted
Securities as is required by law to be disclosed in the applicable Registration
Statement and the Company may exclude from such registration the Transfer
Restricted Securities of any seller who unreasonably fails to furnish such
information within a reasonable time after receiving such request. Each Seller
of Transfer Restricted Securities will furnish to the Company information
concerning sales made pursuant to the Registration Statement. Each such Holder
agrees, by the acquisition of Transfer Restricted Securities, and agrees to
confirm such agreement in writing upon request of the Company, to notify the
Company as promptly as practicable of any inaccuracy or change in information
previously furnished by such Holder to the Company or of the occurrence of any
event as a result
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<PAGE> 12
of which any Prospectus relating to such registration contains or would contain
an untrue statement of material fact regarding such Holder or such Holder's
intended method of distribution of such Transfer Restricted Securities, or
omits to state any material fact regarding such Holder or such Holder's
intended method of distribution of such Transfer Restricted Securities, or
omits to state any material fact regarding such Holder or such Holder's
intended method of distribution of such Transfer Restricted Securities,
necessary to make the statement therein, in light of the circumstances then
existing, not misleading and promptly to furnish to the Company any additional
information required to correct and update any previously furnished information
or required so that such Prospectus shall not contain, with respect to such
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances then existing, not
misleading.
If any such Registration Statement refers to any Holder by
name or otherwise as the holder of any securities of the Company, then such
Holder shall have the right to require (i) the insertion therein of language,
in form and substance reasonably satisfactory to such Holder, to the effect
that the holding by such Holder of such securities is not to be construed as a
recommendation by such Holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such
Holder will assist in meeting any future financial requirements of the Company,
or (ii) in the event that such reference to such Holder by name or otherwise is
not required by the Securities Act or any similar Federal statute then in
force, the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
Each Holder of Transfer Restricted Securities agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company pursuant to Section 2(c) hereof or of the happening of
any event of the kind described in Section 4(c)(ii), 4(c)(iii), 4(c)(v) or
4(c)(vi) hereof, such Holder will forthwith discontinue disposition of such
Transfer Restricted Securities covered by such Registration Statement or
Prospectus until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(b) hereof, or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus and, if so directed by the
Company, such Holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such Holder's possession of
the Prospectus covering such Transfer Restricted Securities at the time of
receipt of such notice.
5. Registration Expenses
(a) All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by it whether
or not any Registration Statement is filed or becomes effective and whether or
not any securities are issued or sold pursuant to any Registration Statement.
The fees and expenses referred to in the foregoing sentence shall include,
without limitation, (i) all registration and filing fees (including, without
limitation, fees and expenses (A) with respect to filings required to be made
with the National Association of Securities Dealers, Inc., (B) in compliance
with securities or Blue Sky laws (including, without limitation and in addition
to that provided for in (b) below, reasonable fees and disbursements of counsel
for the underwriters or Special Counsel for the Holders in connection with Blue
Sky qualifications of the Transfer Restricted Securities and determination of
the eligibility of the
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<PAGE> 13
Transfer Restricted Securities for investment under the laws of such
jurisdictions as the managing underwriters, if any, or Holders of a majority
(on a fully converted basis) of Transfer Restricted Securities may designate))
and (C) the fees payable in connection with the listing of the Notes in
accordance with Section 4(p) hereof, (ii) printing expenses (including, without
limitation, expenses of printing certificates for Transfer Restricted
Securities in a form eligible for deposit with The Depository Trust Company and
of printing Prospectuses if the printing of Prospectuses is requested by the
managing underwriters, if any), (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company and Special
Counsel for the Holders (plus any local counsel, deemed appropriate by the
Holders of a majority of the Transfer Restricted Securities on a
fully-converted basis), in accordance with the provisions of Section 5(b)
hereof, (v) fees and disbursements of all independent certified public
accountants referred to in Section 4(m)(iii) (including, without limitation,
the expenses of any special audit and "cold comfort" letters required by or
incident to such performance), (vi) Securities Act liability insurance, if the
Company so desires such insurance, and (vii) fees and expenses of all other
persons retained by the Company. In addition, the Company shall pay its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit, and the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange.
Notwithstanding the foregoing, the Holders of the Transfer Restricted
Securities being registered shall pay all commissions, placement agent fees and
underwriting discounts and commissions attributable to the sale of such
Transfer Restricted Securities and the fees and disbursements of any counsel or
other advisors or experts retained by such Holders (severally or jointly),
other than Special Counsel.
(b) In connection with any registration hereunder, the
Company shall reimburse the Holders of the Transfer Restricted Securities being
registered in such registration for the reasonable fees and disbursements of
not more than one firm of attorneys representing the selling Holders (in
addition to any local counsel), which firm, if any, shall be chosen by the
Holders of a majority of the Transfer Restricted Securities (on a fully
converted basis).
6. Indemnification
(a) The Company agrees to indemnify and hold harmless (i)
each Initial Purchaser, (ii) each Holder of Transfer Restricted Securities,
(iii) each person, if any, who controls (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) any of the foregoing (any
of the persons referred to in this clause (iii) being hereinafter referred to
as a "controlling person"), and (iv) the respective officers, directors,
partners, employees, representatives and agents of the Initial Purchasers, each
Holder of Transfer Restricted Securities, or any controlling person (any person
referred to in clause (i), (ii), (iii) or (iv) may hereinafter be referred to
as an "Indemnified Person"), from and against any and all losses, claims,
damages, liabilities and judgments caused by any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement,
preliminary Prospectus or in any amendment or supplement thereto, or caused by
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein (in the case of
any Prospectus or preliminary Prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except insofar as
such losses, claims, damages, liabilities or judgments are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Indemnified Person furnished in writing to the
Company by or on behalf of such Indemnified Person expressly for use therein;
12
<PAGE> 14
provided that the foregoing indemnity with respect to any preliminary
Prospectus shall not inure to the benefit of any Indemnified Person from whom
the person asserting such losses, claims, damages, liabilities and judgments
purchased securities if such untrue statement or omission or alleged untrue
statement or omission made in such preliminary Prospectus is eliminated or
remedied in the Prospectus and a copy of the Prospectus shall not have been
furnished to such person in a timely manner due to the wrongful action or
wrongful inaction of such Indemnified Person; provided that the Company has
delivered the Prospectus to such Indemnified Person in requisite quantity on a
timely basis to permit such delivery or sending. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(b) In case any action shall be brought against any
Indemnified Person, based upon any Registration Statement, any preliminary
prospectus or the Prospectus or any amendment or supplement thereto and with
respect to which indemnity may be sought against the Company, such Indemnified
Person shall promptly notify the Company in writing and the Company shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Person and payment of all fees and expenses.
Any Indemnified Person shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Person, unless (i)
the employment of such counsel shall have been specifically authorized in
writing by the Company, (ii) the Company shall have failed to assume the
defense and employ counsel or (iii) the named parties to any such action
(including any impleaded parties) include both such Indemnified Person and the
Company, and such Indemnified Person shall have been advised by counsel that
there may be one or more legal defenses available to it which are different
from or additional to those available to the Company (in which case the Company
shall not have the right to assume the defense of such action on behalf of such
Indemnified Person, it being understood, however, that the Company shall not,
in connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all such Indemnified Persons, which firm shall be designated in writing by such
Indemnified Persons, and that all such fees and expenses shall be reimbursed as
they are incurred). The Company shall not be liable for any settlement of any
such action effected without its written consent, but if settled with its
written consent, it agrees to indemnify and hold harmless any Indemnified
Person from and against any loss or liability by reason of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(c) In connection with any Registration Statement in
which a Holder of Transfer Restricted Securities is participating, such Holder
of Transfer Restricted Securities agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers and any
person controlling the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, to the same extent as the foregoing indemnity
from the Company to each Holder but only with reference to information relating
to such Holder furnished in writing by or on behalf of such Indemnified Person
expressly for use in such Registration Statement, the Prospectus or any
preliminary prospectus. In case any action shall be brought against the
Company, any of its directors, any such officer or any person controlling the
Company based on such Registration Statement, the Prospectus or any preliminary
prospectus and in respect of which
13
<PAGE> 15
indemnity may be sought against any Holder, the Holder shall have the rights
and duties given to the Company (except that if the Company shall have assumed
the defense thereof, such Holder shall not be required to do so, but may employ
separate counsel therein and participate in defense thereof but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person),
and the Company, its directors, any such officers and any person controlling
the Company shall have the rights and duties given to the Holder, by Section
6(b) hereof. This indemnity agreement will be in addition to any other
liability which such Holder may otherwise have.
(d) If the indemnification provided for in this Section 6
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and judgments in such proportion as is appropriate
to reflect the relative fault of the Company and each such Indemnified Person
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Company and each such
Indemnified Person shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Company or such Indemnified Person and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 6(d) were
determined by pro rata allocation (even if the Indemnified Persons were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 6, no
Indemnified Person shall be required to contribute any amount in excess of the
amount by which the proceeds received by it in connection with the sale of
Transfer Restricted Securities pursuant to this Agreement exceeds the amount of
any damages which such Indemnified Person has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Indemnified Persons' obligations to contribute pursuant to this Section 6(d)
are several in proportion to the respective amount of Transfer Restricted
Securities included in any such Registration Statement by each Indemnified
Person and not joint.
7. Rules 144 and 144A
The Company shall file the reports required to be filed by it
under the Securities Act and the Exchange Act in a timely manner and, if at any
time it is not required to file such reports but in the past had been required
to or did file such reports, it will, upon the request of any holder of
Transfer Restricted Securities, make available other information as required
by, and so
14
<PAGE> 16
long as necessary to permit, sales of its Transfer Restricted Securities
pursuant to Rule 144 and Rule 144A. Notwithstanding the foregoing, nothing in
this Section 7 shall be deemed to require the Company to register any of its
securities pursuant to the Exchange Act.
8. Underwritten Registrations
(a) If any of the Transfer Restricted Securities covered
by any Shelf Registration Statement are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority (on a
fully converted basis) of such Transfer Restricted Securities included in such
offering, subject to the consent of the Company (which will not be unreasonably
withheld or delayed).
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
(b) Each Holder of Transfer Restricted Securities agrees,
if requested (pursuant to a timely written notice) by the managing underwriters
in an underwritten offering or placement agent in a private offering of the
Company's securities, not to effect any private sale or distribution (including
a sale pursuant to Rule 144(k) and Rule 144A, but excluding non-public sales to
any of its affiliates, officers, directors, employees and controlling persons
of any of the Notes, in the case of an offering of the Company's debt
securities, or the Common Stock, in the case of an offering of the Company's
equity securities), during the period ending 90 days after the closing date of
the underwritten offering.
(c) The Initial Purchasers and all Holders of Transfer
Restricted Securities agree that, notwithstanding any other term or provision
hereof, the Company shall not be required to enter into any agreements
(including underwriting agreements) or take any other actions contemplated by
Section 4(1) hereof unless requested in writing by the holders of at least 50%
of the Transfer Restricted Securities (on a fully converted basis) sold to the
Initial Purchasers pursuant to the Purchase Agreement.
The foregoing provisions shall not apply to any Holder of
Transfer Restricted Securities if such Holder is prevented by applicable
statute or regulation from entering into any such agreement.
9. Miscellaneous
(a) Remedies. In the event of a breach by the Company,
or by a holder of Transfer Restricted Securities, of any of their obligations
under this Agreement, each holder of Transfer Restricted Securities or the
Company, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company and each holder of Transfer
Restricted Securities agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the
15
<PAGE> 17
event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company shall not
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the holders of Transfer Restricted Securities in
this Agreement or otherwise conflicts with the provisions hereof.
(c) No Piggyback on Registrations. The Company shall not
grant to any of its security holders (other than the Holders of Transfer
Restricted Securities in such capacity) the right to include any of its
securities in any Shelf Registration Statement other than Transfer Restricted
Securities.
(d) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, without the written consent of the Holders
of a majority of the then outstanding Transfer Restricted Securities (on a
fully converted basis); provided, however, that, for the purposes of this
Agreement, Transfer Restricted Securities that are owned, directly or
indirectly, by either the Company or an Affiliate of the Company shall not be
deemed outstanding. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders of Transfer Restricted Securities whose
securities are being sold pursuant to a Registration Statement and that does
not directly or indirectly affect the rights of other Holders of Transfer
Restricted Securities may be given by Holders of a majority of the Transfer
Restricted Securities (on a fully converted basis) being sold by such Holders
pursuant to such Registration Statement; provided, however, that the provisions
of this sentence may not be amended, modified, or supplemented except in
accordance with the provisions of the immediately preceding sentence.
(e) Notices. All notices and other communications
provided for herein shall be made in writing by hand-delivery, next-day air
courier, certified first-class mail, return receipt requested, telex or
telecopy:
(i) if to the Company, as provided in the
Purchase Agreement,
(ii) if to the Initial Purchasers, as provided in
the Purchase Agreement, or
(iii) if to any other person who is then the
registered Holder of any Transfer Restricted
Securities, to the address of such Holder as
it appears in the Note or Common Stock
register of the Company.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; one Business Day after being timely delivered to a
next-day air courier; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; and when receipt is
acknowledged by the recipient's telecopier machine, if telecopied.
(f) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and permitted assigns of
each of the parties and shall inure to the benefit of each Holder of Transfer
Restricted Securities. The Company may not assign its rights
16
<PAGE> 18
or obligations hereunder without the prior written consent of each Holder of
Transfer Restricted Securities. Notwithstanding the foregoing, no transferee
shall have any of the rights granted under this Agreement until such transferee
shall acknowledge its rights and obligations hereunder by a signed written
statement of such transferee's acceptance of such rights and obligations.
(g) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same Agreement.
17
<PAGE> 19
(h) Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, as applied to contracts made
and performed within the State of New York without regard to principles of
conflicts of law.
(i) Severability. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
(j) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. All references made in this Agreement to "Section" and
"paragraph" refer to such Section or paragraph of this Agreement, unless
expressly stated otherwise.
(k) Attorneys' Fees. In any action or proceeding brought
to enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the
court, shall be entitled to recover its reasonable attorneys' fees in addition
to any other available remedy.
18
<PAGE> 20
IN WITNESS WHEREOF, the parties have caused this Registration
Rights Agreement to be duly executed as of the date first written above.
SUNRISE ASSISTED LIVING, INC.
By: /s/ PAUL J. KLAASSEN
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
The foregoing Registration Rights Agreement is
hereby confirmed and accepted as of the date
first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
ALEX. BROWN & SONS INCORPORATED
By: Donaldson, Lufkin & Jenrette Securities Corporation
By: /s/ W. PATRICK MCMULLAN III
---------------------------------------------------------
Name: W. Patrick McMullan III
-------------------------------------------------------
Title: Managing Director
------------------------------------------------------
19
<PAGE> 1
EXHIBIT 11.1 COMPUTATION OF NET INCOME (LOSS) PER SHARE (IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
--------------------------------------------
Primary: 1997 1996 1997 1996
-------- ------- -------- -------- --------
<S> <C> <C>
Weighted average common shares
outstanding 18,674 8,364 18,618 7,192
Net effect of dilutive stock options and
warrants-based on the treasury stock
method using average market price 881 361 960 433
------- -------- -------- --------
Totals 19,555 8,725 19,578 7,625
======= ======== =======- ========
Net income (loss) $ 376 $(2,379) $ 510 $(4,088)
Dividends preference attributable to Series
A Convertible Preferred stock (Note 1) - (358) - (858)
Dividends attributable to Series B
Exchangeable Preferred Stock (Note 2) - (165) - (347)
------- -------- -------- --------
Net income (loss) attributable to common shares $ 376 $(2,902) $ 510 $(5,293)
======= ======== =======- ========
Per share amount $ 0.02 $ (0.33) $ 0.03 $ (0.69)
======= ======== =======- ========
Fully diluted:
--------------
Weighted average common shares
outstanding 18,674 18,618
Net effect of dilutive stock options and
warrants-based on the treasury stock
method using quarter-end market price which is
greater than average market price 1,005 1,201
------- --------
Totals 19,679 19,819
======= ========
Net income attributable to common shares $ 376 $ 510
======= ========
Per share amount $ 0.02 $ 0.03
======= ========
</TABLE>
Note 1 - The dividend preference was eliminated upon conversion of Series A
Convertible Preferred Stock into Common Stock upon completion of the
Company's initial public offering on June 5, 1996.
Note 2 - The Series B Exchangeable Stock was redeemed in full on June 5, 1996
using a portion of the net proceeds from the initial public offering.
140
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 150,231
<SECURITIES> 0
<RECEIVABLES> 3,448
<ALLOWANCES> 1,169
<INVENTORY> 0
<CURRENT-ASSETS> 156,070
<PP&E> 323,204
<DEPRECIATION> 21,385
<TOTAL-ASSETS> 477,197
<CURRENT-LIABILITIES> 18,449
<BONDS> 270,032
0
0
<COMMON> 187
<OTHER-SE> 187,782
<TOTAL-LIABILITY-AND-EQUITY> 447,197
<SALES> 0
<TOTAL-REVENUES> 35,199
<CGS> 0
<TOTAL-COSTS> 33,437
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 242
<INTEREST-EXPENSE> 4,266
<INCOME-PRETAX> 510
<INCOME-TAX> 0
<INCOME-CONTINUING> 510
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 510
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
