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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ALTERNATIVE LIVING SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 39-1771281
(State of incorporation or organization) (I.R.S. Employer Identification No.)
450 N. SUNNYSLOPE ROAD 53005
SUITE 300 (Zip code)
BROOKFIELD, WISCONSIN
(Address of principal executive offices)
Securities to be registered pursuant to Section 12(b) of the Act:
Name of each exchange on which each
Title of each class to be so registered class is to be registered
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Common Stock, $.01 par value per share American Stock Exchange, Inc.
Securities to be registered pursuant to Section 12(g) of the Act:
Not Applicable
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 1. Description of Registrant's Securities to be Registered.
The description of the Registrant's securities contained under the
caption "Description of Capital Stock" is incorporated herein by reference to
pages 70-72 of the Preliminary Prospectus dated as of July 26, 1996 filed as
part of Amendment No. 3 to the Registrant's Registration Statement on Form S-1
(Registration No. 333-04595), which was filed with the Securities and Exchange
Commission on July 29, 1996.
Item 2. Exhibits.
The exhibits filed herewith or incorporated herein by reference are
listed on the Exhibit Index at page 4 of this Form 8-A.
2
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
ALTERNATIVE LIVING SERVICES, INC.
Date: July 30, 1996 By: /s/ WILLIAM F. LASKY
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William F. Lasky, President and
Chief Executive Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential Page
at Which Found (or
Incorporated by
Description of Exhibit Reference)
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Exhibit 1 Form of Underwriting Agreement
Exhibit 4.1 Form of stock certificate for shares of
Common Stock, $.01 par value per share
Exhibit 4.2 Restated Certificate of Incorporation *
(incorporated by reference to Exhibit
3.1 to the Registrant's Registration
Statement on Form S-1 (No. 333-04595)
filed on May 28, 1996).
Exhibit 4.3 Restated Bylaws of the Registrant *
(incorporated by reference to Exhibit 3.2
to the Registrant's Registration Statement
on Form S-1 (No. 333-04595) filed on May 28, 1996).
</TABLE>
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* Incorporated herein by reference as indicated above.
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EXHIBIT 1
DRAFT OF 7/27/96
6,000,000 Shares
ALTERNATIVE LIVING SERVICES, INC.
Common Stock
UNDERWRITING AGREEMENT
________, 1996
NATWEST SECURITIES LIMITED
McDONALD & COMPANY SECURITIES, INC.
THE CHICAGO CORPORATION
As Representatives of the
several Underwriters
c/o NatWest Securities Limited
135 Bishopsgate
London EC2M 3XT
England
Ladies and Gentlemen:
ALTERNATIVE LIVING SERVICES, INC., a Delaware corporation (the
"Company"), and each of the selling stockholders listed on Schedule I hereto
(collectively, the "Selling Stockholders" and each individually, a "Selling
Stockholder") propose to sell to you and the other underwriters named in
Schedule II hereto (collectively, the "Underwriters"), for whom you are acting
as representatives (the "Representatives"), an aggregate of 6,000,000 shares
(the "Firm Shares") of the Company's common stock, $.01 par value (the "Common
Stock"), of which (i) 2,812,500 shares in the aggregate are to be sold by the
Selling Stockholders and (ii) 3,187,500 shares are to be issued and sold by the
Company. The Company and certain Selling Stockholders have also agreed to
grant to you and the other Underwriters an option (the "Option") to purchase up
to an additional 900,000 shares of Common Stock in the aggregate (the "Option
Shares") on the terms and for the purposes set forth in Section 1(b) hereto.
The Firm Shares and the Option Shares are hereinafter collectively referred to
as the "Shares." The Option Shares to be sold by the Selling Stockholders
indicated on Schedule I as being members of ALI (the "ALI Selling
Stockholders") are held of record by Alternative Living Investors, LLC
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("ALI"), which will liquidate prior to the Closing and distribute all shares of
Common Stock held by it to its members.
The Company, ALI and the Selling Stockholders hereby confirm as
follows their respective agreements with the Representatives and the several
other Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the respective representations,
warranties and agreements of the Company and the Selling Stockholders herein
contained and subject to all the terms and conditions of this Agreement, (i)
the Company agrees to issue and sell to each Underwriter and each Underwriter,
severally and not jointly, agrees to purchase from the Company at a purchase
price of $[_____] per share, the number of Firm Shares set forth opposite the
name of such Underwriter in Column (1) of Schedule II hereto, plus such
additional number of Firm Shares which such Underwriter may become obligated to
purchase pursuant to Section 11 hereof, and (ii) each Selling Stockholder,
severally and not jointly, agrees to sell to each Underwriter and each
Underwriter, severally and not jointly, agrees to purchase from such Selling
Stockholder at the same purchase price per share, the number of Firm Shares set
forth opposite the name of such Underwriter in Column (2) of Schedule II,
multiplied by the number of Firm Shares set forth opposite the name of such
Selling Stockholder in Column (1) of Schedule I and divided by the total number
of Firm Shares to be sold by all Selling Stockholders, in each case subject to
such adjustments to eliminate any fractional shares as the Representatives in
their sole discretion shall make, plus such additional number of Firm Shares
which such Underwriter may become obligated to purchase pursuant to Section 11
hereof.
(b) Subject to all the terms and conditions of this
Agreement, (i) the Company grants the Option to the several Underwriters to
purchase, severally and not jointly, up to ________ Option Shares (the "Company
Option Shares") and (ii) each of the Selling Stockholders indicated on Schedule
I as participating in the Option (the "Option Selling Stockholders") severally
and not jointly, grants the Option to the several Underwriters to purchase,
severally and not jointly, up to the number of Option Shares set forth opposite
the name of such Selling Stockholder in Column (2) of Schedule I; such Option
Shares to be sold at the same price per share as the Underwriters shall pay for
the Firm Shares. The Option may be exercised only to cover over-allotments in
the sale of the Firm Shares by the Underwriters and may be exercised in whole
or in part at any time and from time to time on or before the 30th day after
the date of this Agreement (or on the next business day if the 30th day is not
a business day), upon notice (the "Option Shares Notice") in writing or by
telephone (confirmed in writing) by the Representatives to the Company and the
Selling Stockholders no later than 5:00 p.m., New York City time, at least
three and no more than five business days before the date specified for closing
in the Option Shares Notice (the "Option Closing Date") setting forth the
aggregate number of Option Shares to be purchased and the time and date for
such purchase. On the Option Closing Date, (i) each of the Option Selling
Stockholders will sell to the Underwriters the number of Option Shares set
forth opposite the name of such Selling Stockholder in Column (2) of Schedule I
multiplied by the number of Option Shares set forth in the Option Shares Notice
and divided by the maximum number of Option Shares, (ii) the Company will issue
and sell to the Underwriters the number of Option Shares stated in the
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Option Shares Notice to the extent such number exceeds [768,858] and (iii) each
Underwriter will purchase such percentage of the Option Shares as is equal to
the percentage of Firm Shares that such Underwriter is purchasing, as adjusted
by the Representatives in such manner as they deem advisable, in their sole
discretion, to allocate the Company Option Shares and the Option Shares to be
sold by the Option Selling Stockholders in a manner consistent with Section
1(a) and to avoid fractional shares.
2. Delivery and Payment. Delivery of the Firm Shares shall be
made to the Representatives for the accounts of the Underwriters against
payment of the purchase price by certified or official bank checks payable in
New York Clearing House (next-day) funds to the order of each of the Company
and the Custodian (as defined herein) on behalf of the Selling Stockholders
(the "Closing") at the offices of Jones, Day, Reavis & Pogue, [77 West Wacker,
Chicago, Illinois 60601]. Such payment shall be made at [9:00 a.m., Chicago
time,] on the third full business day following the date of this Agreement, or
at such other time on such other date, not later than seven business days after
the date of this Agreement, as may be agreed upon by the Company, the Selling
Stockholders and the Representatives (such date is hereinafter referred to as
the "Closing Date").
To the extent the Option is exercised, delivery of the Option Shares
shall be made to the Representatives for the accounts of the Underwriters
against payment of the purchase price by the Underwriters (in the manner
specified above) (the "Option Closing") will take place at the offices
specified above for the Closing Date at the time and date (which may be the
Closing Date) specified in the Option Shares Notice (the "Option Closing Date").
Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection by the Representatives at least 24 hours prior to the
Closing Date or the Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection with the
issuance, sale and delivery of Shares by the Company to the respective
Underwriters shall be borne by the Company. The Company and the Selling
Stockholders will pay and save each Underwriter and any subsequent holder of
the Shares harmless from any and all liabilities with respect to or resulting
from any failure or delay in paying Federal or state stamp and other transfer
taxes, if any, which may be payable or determined to be payable in connection
with the original issuance, sale or delivery to such Underwriter of the Shares.
Certificates in negotiable form (endorsed in blank or accompanied by
stock powers in blank, with signatures appropriately guaranteed, and any funds
necessary for the purchase of stock transfer stamps) representing all of the
Shares to be sold by the Selling Stockholders have been placed (or, in the case
of the ALI Selling Stockholders, will be placed in accordance with Section 6(o)
hereof) in custody under a Custody Agreement (the "Custody Agreement") with
American Stock Transfer & Trust Company, as Custodian (the "Custodian"), and
each Selling
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Stockholder has duly executed and delivered a Power of Attorney (each a "Power
of Attorney") appointing William G. Petty, Jr., William F. Lasky and John W.
Kneen, and each of them, as such Selling Stockholder's attorneys-in-fact (the
"Attorneys-in-Fact") with authority to execute and deliver the Custody
Agreement and this Agreement on behalf of such Selling Stockholder, to
authorize the delivery of the Shares to be sold by such Selling Stockholder
hereunder and otherwise to act on behalf of such Selling Stockholder in
connection with the transactions contemplated by this Agreement and such
Custody Agreement. Each Selling Stockholder agrees that the shares represented
by the certificates held (or, in the case of ALI Selling Stockholders, to be
held) in custody for such Selling Stockholder under such Custody Agreement are
subject to the interests of the Underwriters hereunder and the arrangements
made by such Selling Stockholder for such custody, as well as the appointment
by such Selling Stockholder of the Attorneys-in-Fact, are irrevocable. Each
Selling Stockholder specifically agrees that its obligations hereunder shall
not be terminated, except as otherwise provided herein, by any act of such
Selling Stockholder, operation of law or otherwise, whether by the death or
incapacity of such Selling Stockholder, if an individual, or by the occurrence
of any other event. If any Selling Stockholder, if an individual, should die
or become incapacitated, or if any other such event should occur, before the
delivery of the Shares hereunder, certificates representing the shares held
(or, in the case of ALI Selling Stockholders,to be held) in custody for such
Selling Stockholder shall be delivered pursuant to the terms and conditions of
this Agreement and such Custody Agreement, and the actions taken by the
Attorneys-in-Fact pursuant to such Power of Attorney shall be as valid as if
such death, incapacity or other event had not occurred, whether or not the
Custodian or the Attorneys-in-Fact shall have received notice of such death,
incapacity or other event.
3. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter that:
(a) A registration statement on Form S-1 (Registration
No. 333-04595) relating to the Shares, including a preliminary prospectus
relating to the Shares and such amendments to such registration statement as
may have been made to the date of this Agreement, has been prepared by the
Company under the provisions of the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations (collectively referred to as the "Rules
and Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, and has been filed with, and declared effective by the Commission.
The Commission has not issued any order preventing or suspending the use of the
Prospectus (as defined below) or any Preliminary Prospectus (as defined below).
Copies of such registration statement and amendments and of each related
Preliminary Prospectus have been delivered to the Representatives. A final
prospectus relating to the Shares containing information permitted to be
omitted at the time of effectiveness by Rule 430A will be filed by the Company
with the Commission in accordance with Rule 424(b) of the Rules and Regulations
promptly after execution and delivery of this Agreement. The term
"Registration Statement" means the registration statement as amended at the
time it became effective (the "Effective Date"), including all financial
statements and schedules and all exhibits and any information contained in any
final prospectus filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations or in a term sheet described in Rule 434 of the Rules and
Regulations in accordance with Section 6 hereof and deemed to be included
therein as of the Effective Date by Rule 430A of the Rules and Regulations.
The term
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"Preliminary Prospectus" as used herein means a preliminary prospectus relating
to the Shares included at any time as part of the foregoing registration
statement or any amendment thereto before it became effective under the Act and
any prospectus filed with the Commission by the Company pursuant to Rule 424(a)
of the Rules and Regulations. The term "Prospectus" means the prospectus
relating to the Shares as first filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations.
(b) On the Effective Date, the date that any Preliminary
Prospectus was filed with the Commission, the date the Prospectus is first
filed with the Commission pursuant to Rule 424(b), at all times subsequent to
and up to and including the Closing Date and the Option Closing Date and when
any post-effective amendment to the Registration Statement becomes effective or
any amendment or supplement to the Prospectus is filed with the Commission, the
Registration Statement, each Preliminary Prospectus and the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment or supplement thereto), including the financial statements
included in the Prospectus, complied or will comply, as the case may be, with
all applicable provisions of the Act and the Rules and Regulations and
contained or will contain, as the case may be, all statements required to be
stated therein in accordance with the Act and the Rules and Regulations. On
the Effective Date and when any post-effective amendment to the Registration
Statement becomes effective, no part of the Registration Statement or any such
amendment contained or will contain, as the case may be, any untrue statement
of a material fact or omitted or will omit, as the case may be, to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. At the Effective Date, the date the
Prospectus or any amendment or supplement to the Prospectus is filed with the
Commission and at the Closing Date and the Option Closing Date, the Prospectus
did not or will not, as the case may be, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The foregoing representations and warranties in this Section 3(b)
do not apply to any statements or omissions made in reliance on and in
conformity with information relating to any Underwriter furnished in writing to
the Company by the Representatives specifically for inclusion in the
Registration Statement or Prospectus or any amendment or supplement thereto.
The Company has not distributed, and, prior to the later to occur of (i) the
Closing Date or, if later, the Option Closing Date and (ii) completion of the
distribution of the Shares, will not distribute any offering material in
connection with the offering or sale of the Shares other than the Registration
Statement, the Preliminary Prospectus, the Prospectus or any other materials,
if any, permitted by the Act.
(c) The Company's subsidiaries are listed on Schedule III
hereto (the "Existing Subsidiaries"). Except with respect to the Existing
Subsidiaries and except as described in the Registration Statement and
Prospectus, the Company does not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation or
have any equity interest in any firm, partnership, joint venture, association
or other entity. The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of the Existing
Subsidiaries and each of [the ALS-East entities] (the "ALS-East Entities") and,
together with the Existing Subsidiaries, the "Subsidiaries"), all of the equity
interests of which will be purchased by the Company with the net proceeds to it
of the offering, is duly
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organized, validly existing and in good standing under the laws of the state of
its incorporation or formation. The Company and each of the Subsidiaries has
full corporate or other power and authority to conduct all the activities
conducted by it, to own or lease all the properties and assets owned or leased
by it and to conduct its business as described in the Registration Statement
and the Prospectus. The Company and each of its Subsidiaries is duly licensed
or qualified to do business and in good standing as a foreign corporation or
partnership, as the case may be, in all jurisdictions in which the nature of
the activities conducted by it or the character of the properties and assets
owned or leased by it makes such licensing or qualification necessary, except
where the failure to so qualify would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole. The Company beneficially owns
the percentage indicated on Schedule III hereto of the outstanding equity
interests in each of the Subsidiaries, free and clear of all liens, security
interests, restrictions, pledges, encumbrances, charges, equities, claims,
easements, assessments and tenancies (collectively, "Encumbrances") other than
Encumbrances described in the Registration Statement and the Prospectus. All
of the equity interests held (or, in the case of the ALS-East Entities, to be
held after the Closing) by the Company in each of the Subsidiaries have been
duly authorized and are validly issued, fully paid and nonassessable and were
not issued in violation of any preemptive or similar rights. Complete and
correct copies of (i) the Certificate of Incorporation and the Bylaws of the
Company and all amendments thereto and (ii) the organizational documents of
each of the Subsidiaries and all amendments thereto, have been delivered to the
Representatives or Jones, Day, Reavis & Pogue, counsel for the Underwriters,
and no changes therein will be made subsequent to the date hereof and prior to
the Closing Date or the Option Closing Date.
(d) The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights arising by or through the Company. The Shares to be issued and sold by
the Company are duly authorized and, upon such issuance and payment therefor in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable and are not the subject of any preemptive or similar rights
arising by or through the Company. The Company has, and upon completion of the
sale of the Shares will have, an authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus.
The description of the securities of the Company in the Registration Statement
and the Prospectus is complete and accurate in all material respects. Except
as set forth in the Registration Statement and the Prospectus, the Company does
not have outstanding any options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible into or
exchangeable for, or any contracts or commitments to issue or sell, any shares
of its capital stock or any such warrants, convertible securities or
obligations. Except as set forth in the Registration Statement and the
Prospectus, no person has any right to have any securities of the Company held
by them registered under the Act. All holders of securities of the Company who
had a right to register shares held by them as a result of the filing of the
Registration Statement (i) are Selling Stockholders and are selling the maximum
number of shares subject to such right; (ii) have waived any such rights to the
registration of any securities of the Company or (iii) received proper notice
from the Company in accordance with such rights and have elected not to sell
such shares in the offering.
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(e) The consolidated financial statements and the related
notes of the Company and its subsidiaries set forth in the Registration
Statement and the Prospectus present fairly the financial condition of the
Company and its subsidiaries as of the dates indicated and the consolidated
results of operations, stockholders' equity and cash flows of the Company and
its subsidiaries for the periods covered thereby, all in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the entire period involved. The combined financial statements and
related notes of New Crossings International Corporation ("Crossings") and its
subsidiaries set forth in the Registration Statement and Prospectus present
fairly the financial condition of Crossings and its subsidiaries as of the
dates indicated and the combined results of operations, shareholders' deficit
and cash flows of Crossings and its subsidiaries for the periods covered
thereby, all in conformity with GAAP applied on a consistent basis throughout
the entire period involved. The consolidated financial statements and related
notes of Heartland Retirement Services, Inc. ("Heartland") and its subsidiaries
set forth in the Registration Statement and Prospectus present fairly the
financial condition of Heartland and its subsidiaries as of the dates indicated
and the consolidated results of operations, shareholders' equity and cash flows
of Heartland and its subsidiaries for the periods covered thereby, all in
conformity with GAAP applied on a consistent basis throughout the entire period
involved. The combined financial statements and related notes of Alternative
Living Services - Midwest Inc. ("ALS-Midwest") and its affiliates set forth in
the Registration Statement and Prospectus present fairly the financial
condition of ALS-Midwest and its affiliates as of the dates indicated and the
consolidated results of operations, stockholders' equity and cash flows of
ALS-Midwest and its affiliates for the periods covered thereby, all in
conformity with GAAP applied on a consistent basis throughout the entire
periods involved. The selected historical financial data for the Company and
its subsidiaries set forth under the captions "Prospectus Summary--Summary
Consolidated Financial and Operating Data," "Pro Forma Financial Information"
and "Selected Consolidated Financial Data" in the Prospectus have been prepared
on a basis consistent with the historical consolidated financial statements of
the Company and its Subsidiaries. The pro forma condensed combined financial
information of the Company and the related notes included in the Registration
Statement and the Prospectus under the caption "Pro Forma Financial
Information" comply in all material respects with the applicable requirements
of Rules 11-01 and 11-02 of Regulation S-X of the Commission and present fairly
the information shown therein; and the pro forma adjustments have been properly
applied to the historical amounts in the compilation of such statements. No
other financial statements or schedules of the Company, Heartland, Crossings,
ALS-Midwest or any other entity are required by the Act or the Rules and
Regulations to be included in the Registration Statement, any Preliminary
Prospectus or the Prospectus. KPMG Peat Marwick LLP ("KPMG"), who have
reported on certain of such financial statements and schedules which are
audited, are independent accountants with respect to the Company and its
subsidiaries, Crossings and its subsidiaries and ALS-Midwest and its
affiliates, as required by the Act and the Rules and Regulations. Arthur
Andersen LLP ("Andersen" and, together with KPMG, the "Accountants"), who have
reported on certain of such financial statements and schedules which are
audited, are independent accountants with respect to Heartland and its
subsidiaries, as required by the Act and the Rules and Regulations.
(f) The Company and its Subsidiaries maintain a system of
internal accounting control sufficient to provide reasonable assurance that (i)
transactions are executed in accordance
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with management's general or specific authorization, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(g) Except as set forth or described in the Registration
Statement and Prospectus, subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i)
there has not been, and will not have been, any change in the capitalization of
the Company or any Subsidiary or any material adverse change in the business,
properties, prospects, condition (financial or otherwise), net worth or results
of operations of the Company and its Subsidiaries, taken as a whole, arising
for any reason whatsoever, (ii) neither the Company nor any of its Subsidiaries
has incurred, nor will it have incurred, any material liabilities or
obligations, direct or contingent, (iii) neither the Company nor any of its
Subsidiaries has entered into, nor will it have entered into any material
transactions other than pursuant to this Agreement, and (iv) neither the
Company nor any Subsidiary has, or will have, paid or declared any dividends or
other distributions of any kind on any class of its capital stock.
(h) The Company (either directly or through the
Subsidiaries) has good and indefeasible title to all properties and assets
described in the Registration Statement and Prospectus as owned by it, free and
clear of all Encumbrances other than those described in the Registration
Statement and Prospectus and other than those that do not materially adversely
affect the value of such properties and assets and do not materially interfere
with the use made or proposed to be made of such properties and assets. The
Company (either directly or through its Subsidiaries) has valid and subsisting
leasehold interests in the properties and assets described in the Registration
Statement and Prospectus as leased by it, free and clear of all Encumbrances,
other than those described in the Registration Statement and Prospectus and
those that do not materially adversely affect the value of such properties and
assets and do not interfere with the use made, or proposed to be made, of such
properties and assets. The Company (either directly or through its
Subsidiaries) has valid and subsisting options or other rights to purchase the
properties described as being under development in the "Status" column of the
chart captioned "Residences Under construction/Development" under the caption
in the Registration Statement and the Prospectus. Title insurance in favor of
the Company or its Subsidiaries is in full force and effect with respect to
each parcel of real property and asset thereon described in the Registration
Statement and Prospectus (i) listed as owned or leased by the Company (either
directly or through its Subsidiaries) in the chart captioned "Operating
Residences" under the caption "Business-Residences" and (ii) reflected as being
under construction in the "Status" column of the chart captioned "Residences
Under Construction/Development" under the caption "Business-Residences" in
amounts at least equal to the purchase price paid by the Company or any
Subsidiary for such property and assets thereon. Except as set forth in the
Registration Statement and Prospectus, none of the mortgages encumbering any
property owned by the Company (either directly or through its Subsidiaries) (i)
is convertible into equity interests in the Company, any Subsidiary or any
property owned by the Company or any Subsidiary or (ii) cross-defaulted or
cross-collateralized to any other property.
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(i) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended (the "Investment Company Act").
(j) Except as set forth in the Registration Statement and
Prospectus, there are no actions, suits or proceedings pending or, to the
Company's knowledge, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective directors, officers or stockholders in
their capacity as such, or any of the properties or assets owned, leased or
operated by the Company or any of its Subsidiaries, before or by any Federal or
state court, commission, regulatory body, administrative agency or other
governmental body, domestic or foreign (collectively, a "Governmental Body"),
wherein an unfavorable ruling, decision or finding would have a material
adverse effect on the business, properties, prospects, condition (financial or
otherwise), net worth or results of operations of the Company and its
Subsidiaries, taken as a whole. There is no pending litigation or governmental
proceeding required to be described in the Registration Statement and the
Prospectus that is not described as required.
(k) Each of the Company and its Subsidiaries has all
governmental licenses, permits, consents, orders, approvals, franchises,
certificates and other authorizations (collectively, "Licenses") necessary to
carry on its business and own or lease its properties as contemplated in the
Registration Statement and Prospectus, except such Licenses, the failure to so
have would not have a material adverse effect on the business, properties,
prospects, condition (financial or otherwise), net worth or results of
operations of the Company and its Subsidiaries, taken as a whole. Each of the
Company and its Subsidiaries has complied in all material respects with all
laws, regulations and orders applicable to it or its business, assets and
properties. Each of the Company and its Subsidiaries is not in breach or
default (nor has any event occurred which, with notice or lapse of time or
both, would constitute a default) in the due performance and observation of any
term, covenant or condition of any indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, bond, debenture, note agreement or other
evidence of indebtedness, lease, contract or other agreement or instrument
(collectively, a "contract or other agreement") to which it is a party or by
which its properties is bound or affected, which default could reasonably be
expected, individually or in the aggregate, to have a material adverse effect
on the business, properties, prospects, condition (financial or otherwise), net
worth or results of operations of the Company and its Subsidiaries, taken as a
whole. To the best knowledge of the Company, no other party under any such
contract or other agreement is in default in any material respect thereunder.
Except as otherwise described in the Registration Statement and Prospectus,
there are no governmental proceedings or actions pending or, to the Company's
knowledge, threatened for the purpose of suspending, modifying or revoking any
License held by the Company or any of its Subsidiaries. The Company is not in
violation of any provision of its Certificate of Incorporation or Bylaws, as
amended. None of the Subsidiaries is in violation of its organizational
documents, as amended.
(l) No consent, approval, authorization or order of, or
any filing or declaration with, any Governmental Body is required for the
consummation of the transactions contemplated by this Agreement or in
connection with the issuance and sale of the Shares by the Company, except such
as have been obtained under the Act or the Rules and Regulations and such as
may be required under state securities or Blue Sky laws, any securities laws of
the
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<PAGE> 10
United Kingdom or the bylaws and rules of the National Association of
Securities Dealers, Inc. (the "NASD") in connection with the purchase and
distribution by the Underwriters of the Shares to be sold by the Company.
(m) The Company has full power and authority to enter
into this Agreement and to carry out all the terms and provisions hereof to be
carried out by it. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with the terms
hereof. The execution, delivery and the performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
creation or imposition of any Encumbrance upon any of the properties or assets
of the Company or any of its Subsidiaries pursuant to the terms or provisions
of, or result in a breach or violation of or conflict with any of the terms or
provisions of, or constitute a default under, or give any other party a right
to terminate any of its obligations under, or result in the acceleration of any
obligation under, (i) the Restated Certificate of Incorporation or Bylaws of
the Company, in each case as amended, (ii) the organizational or charter
documents of any of the Subsidiaries, as amended, or (iii) any contract or
other agreement to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its subsidiaries or any of their respective
assets or properties are bound or affected, or (iv) any judgment, ruling,
decree, order, law, statute, rule or regulation of any Governmental Body
applicable to the Company or any of its Subsidiaries or their business or
properties, except, in the case of clauses (iii) and (iv), any violation which
could not reasonably be expected, individually or in the aggregate, to have a
material adverse effect on the business, properties, prospects, condition
(financial or otherwise), net worth or results of operations of the Company and
its Subsidiaries, taken as a whole. The Company has full power and authority
to authorize, issue, offer and sell the Shares to be sold by it, as
contemplated by this Agreement, free of any preemptive or similar rights. The
offer, issuance and sale by the Company of any shares of its capital stock
prior to the date hereof was and is exempt from the registration requirements
of the Act and applicable state securities, real estate syndication and blue
sky laws.
(n) There is no document or contract of a character
required to be described in the Registration Statement or Prospectus, or to be
filed as a exhibit to the Registration Statement which is not described or
filed as required.
(o) No statement, representation, warranty or covenant
made by the Company in this Agreement or made in any certificate or document
required by this Agreement to be delivered to the Representatives is or will
be, when made, inaccurate, untrue or incorrect.
(p) Neither the Company nor any of its directors,
officers or affiliates (within the meaning of the Rules and Regulations) has
taken, nor will he, she or it take, directly or indirectly, any action
designed, or which might reasonably be expected in the future to cause or
result in, under the Act or otherwise, or which has constituted, stabilization
or manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares or otherwise.
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<PAGE> 11
(q) The Shares have been approved for listing on the
American Stock Exchange, Inc. (the "AMEX"), subject only to notice of issuance.
(r) Neither the Company nor any of its Subsidiaries is
involved in any labor dispute with its employees which could reasonably be
expected, individually or in the aggregate, to have a material adverse effect
on the business, properties, prospects, condition (financial or otherwise), net
worth or results of operations of the Company and its Subsidiaries, taken as a
whole nor, to the Company's knowledge, is any such dispute threatened or
imminent.
(s) Each of the Company and its Subsidiaries owns, or is
licensed or otherwise has the right to use, all material trademarks and trade
names which are used in or necessary for the conduct of its business as
described in the Registration Statement and Prospectus. To the Company's
knowledge, no claims have been asserted by any person to the use of any such
trademarks or trade names or challenging or questioning the validity or
effectiveness of any such trademark or trade name. The use of such trademarks
and trade names in connection with the business and operations of the Company
and its Subsidiaries does not, to the Company's knowledge, infringe on the
rights of any person.
(t) Neither the Company nor any of its Subsidiaries nor
any employee or agent of the Company or any Subsidiary has made any payment of
funds of the Company or any Subsidiary or received or retained any funds of the
Company or any Subsidiary in violation of any law, rule or regulation or of a
character required to be disclosed in the Registration Statement and
Prospectus.
(u) The Company and its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which
they are engaged; and the Company has no reason to believe that it and its
Subsidiaries will not be able to renew their existing insurance coverage as and
when such coverage expires.
(v) The business, operations and facilities of the
Company and its Subsidiaries have been and are being conducted in compliance in
all material respects with all applicable laws, ordinances, rules, regulations,
Licenses, permits, approvals, plans, authorizations or requirements relating to
occupational safety and health, or pollution, or protection of health or the
environment (including, without limitation, those relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants or
hazardous or toxic substances, materials or wastes into ambient air, surface
water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
chemical substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes, whether solid, gaseous or liquid in nature) of any
governmental department, commission, board, bureau, agency or instrumentality
of the United States or any state or political subdivision thereof, and all
applicable judicial or administrative agency or regulatory decrees, awards,
judgments and orders relating thereto; and none of the Company or any of its
Subsidiaries has received any notice from any governmental instrumentality or
any third party alleging any violation thereof or liability thereunder
(including, without limitation, liability for costs of investigating or
remediating sites containing hazardous substances and/or damages to natural
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<PAGE> 12
resources), which violation would have, or could reasonably be expected to
have, a material adverse effect on the business, properties, prospects,
condition (financial or otherwise), net worth or results of operations of the
Company and its Subsidiaries, taken as a whole. The intended use and occupancy
of each of the facilities owned or operated by the Company or any of its
Subsidiaries complies in all material respects with all applicable codes and
zoning laws and regulations and there is no pending or, to the knowledge of the
Company, threatened condemnation, zoning change, environmental or other
proceeding or action that will in any material respect adversely affect the
size of, use of, improvements on, construction on, or access to such
facilities.
(w) The Company and each of its Subsidiaries has filed
all foreign, federal, state and local tax returns that are required to be filed
or has requested extensions thereof and has paid all taxes required to be paid
by it and any other assessment, fine or penalty levied against it, to the
extent due and payable, except where such failure to file or pay could not
reasonably be expected, individually or in the aggregate, to have a material
adverse effect on the business, properties, prospects, condition (financial or
otherwise), net worth or results of operations of the Company and its
subsidiaries, taken as a whole.
(x) Each officer, director and 5% stockholder of the
Company (other than the Selling Stockholders), each member of ALI (other than
the ALI Selling Stockholders) who will, upon liquidation of ALI, become a 5%
stockholder of the Company and each of Assisted Living Equity Investors, Petty
Kneen & Company and [the Damone entities and individuals] has delivered to
NatWest Securities Limited an agreement (the "Lockup Agreement") in the form of
Exhibit D attached hereto.
(y) Each certificate signed by an officer of the Company
and delivered to the Representatives or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to each Underwriter
as to the matters covered thereby.
(z) None of the Company, any Subsidiary or any affiliate
thereof does business with the government of Cuba or with any person or
affiliate located in Cuba and the Company and each Subsidiary has complied to
the extent necessary with the provisions of Florida H.B. 1771.
(aa) The [agreements related to the rollup of the ALS-East
Entities] (the "JV Agreements") have been duly authorized, executed and
delivered by the Company and constitute the valid and binding agreement of the
Company and are enforceable against the Company in accordance with the terms
thereof. The execution, delivery and the performance of the JV Agreements and
the [Meditrust Commitment] and the consummation of the transactions
contemplated thereby have not and will not, as the case may be, result in the
creation or imposition of any Encumbrance upon any of the properties or assets
of the Company or any of its Subsidiaries pursuant to the terms or provisions
of, or result in a breach or violation of or conflict with any of the terms or
provisions of, or constitute a default under, or give any other party a right
to terminate any of its obligations under, or result in the acceleration of any
obligation under, (i) the Restated Certificate of Incorporation or Bylaws of
the Company, in each case as amended, (ii) the organizational or charter
documents of any of the Subsidiaries, as
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<PAGE> 13
amended, or (iii) any contract or other agreement to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective assets or properties are bound or
affected, or (iv) any judgment, ruling, decree, order, law, statute, rule or
regulation of any Governmental Body applicable to the Company or any of its
Subsidiaries or their business or properties, except, in the case of clauses
(iii) and (iv), any violation which could not reasonably be expected,
individually or in the aggregate, to have a material adverse effect on the
business, properties, prospects, condition (financial or otherwise), net worth
or results of operations of the Company and its Subsidiaries, taken as a whole.
4. Representations and Warranties of the Selling Stockholders.
Each of the Selling Stockholders other than Capital Consultants, Inc. ("CCI"),
severally and not jointly, represents, warrants and covenants to each
Underwriter that:
(a) Such Selling Stockholder (if a corporation or other
business entity) is duly organized, validly existing and in good standing (to
the extent such legal status is recognized by the jurisdiction of its
incorporation) under the laws of the jurisdiction of its organization.
(b) Such Selling Stockholder has full power and authority
to enter into this Agreement and to carry out all the terms and provisions
hereof to be carried out by it. All authorizations and consents necessary for
the execution and delivery by such Selling Stockholder of this Agreement have
been given. This Agreement has been duly authorized, executed and delivered by
or on behalf of such Selling Stockholder and constitutes a valid and binding
agreement of such Selling Stockholder and is enforceable against such Selling
Stockholder in accordance with the terms hereof.
(c) Such Selling Stockholder has full power and authority
to enter into the Power of Attorney in the form heretofore furnished to the
Underwriters and the Custody Agreement in the form heretofore furnished to the
Underwriters and to carry out all the terms and provisions thereof to be
carried out by it. All authorizations and consents necessary for the execution
and delivery by or on behalf of such Selling Stockholder of the Power of
Attorney and the Custody Agreement have been given. Each of the Power of
Attorney and the Custody Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder and is enforceable
against such Selling Stockholder in accordance with the terms thereof.
(d) Such Selling Stockholder (if other than an ALI
Selling Stockholder) now has, and at the time of delivery thereof hereunder
will have, good and marketable title to the Shares to be sold by such Selling
Stockholder hereunder, free and clear of all Encumbrances. Such ALI Selling
Stockholder (i) now has, and immediately prior to the ALI liquidation will
have, a good and marketable membership interest in ALI, free and clear of all
Encumbrances and (ii) will have, immediately after the ALI liquidation and at
the time of delivery thereof hereunder, good and marketable title to the shares
to be sold by such ALI Selling Stockholder hereunder, free and clear of all
Encumbrances. Such Selling Stockholder (if an ALI Selling Stockholder)
acknowledges that shares of Common Stock issued to such Selling Stockholder
pursuant to the ALI liquidation will be delivered directly to the Custodian to
be held automatically in custody under the Custody Agreement. Such Selling
Stockholder has full legal
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<PAGE> 14
right and power, and all authorizations and approvals required by law, to sell,
transfer and deliver the Shares to be sold by such Selling Stockholder
hereunder to the Underwriters and to make the representations, warranties and
agreements made by such Selling Stockholder herein. Upon the delivery of and
payment for the Shares to be sold by such Selling Stockholder hereunder, the
Underwriters will receive good and marketable title to such Shares, free and
clear of all Encumbrances.
(e) On the Closing Date all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection with the
sale and transfer of the Shares to be sold by such Selling Stockholder to the
several Underwriters hereunder will have been fully paid or provided for by
such Selling Stockholder and all laws imposing such taxes will have been fully
complied with.
(f) None of the execution, delivery or performance of
this Agreement, the Power of Attorney or the Custody Agreement and the
consummation of the transactions contemplated herein or therein by such Selling
Stockholder conflicts or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the creation or imposition of any
Encumbrance upon, any property or assets of such Selling Stockholder pursuant
to (i) the terms of its organizational documents; (ii) the terms of any
contract or other agreement to which such Selling Stockholder is a party or by
which it is bound or to which any of its properties is subject; (iii) any
statute, rule or regulation of any Governmental Body having jurisdiction over
such Selling Stockholder or any of its activities or properties; or (iv) the
terms of any judgment, decree or order of any arbitration or Governmental Body
having such jurisdiction.
(g) No consent, approval, authorization or order of, or
any filing or declaration with, any Governmental Body is required for the
consummation by such Selling Stockholder of the transactions on its part
contemplated herein and in the Custody Agreement or Power of Attorney, except
such as have been obtained under the Act or the Rules and Regulations and such
as may be required under state securities or Blue Sky laws, any securities laws
of the United Kingdom, or the bylaws and rules of the NASD in connection with
the purchase and distribution by the Underwriters of the Shares to be sold by
such Selling Stockholder.
(h) The sale of the Shares to be sold by such Selling
Stockholder is not prompted by such Selling Stockholder's knowledge of any
material adverse information concerning the Company or its Subsidiaries which
is not set forth or described in the Registration Statement and the Prospectus.
(i) Such Selling Stockholder has not distributed and will
not distribute the Registration Statement, any Preliminary Prospectus, the
Prospectus or any other offering material in connection with the offering and
sale of the Shares. Such Selling Stockholder has not taken, directly or
indirectly, any action designed, or which might reasonably be expected, to
cause or result in, under the Act or otherwise, or which has caused or resulted
in,
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<PAGE> 15
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(j) On the Effective Date and when any post-effective
amendment to the Registration Statement becomes effective, no information
regarding such Selling Stockholder included under the caption "Principal and
Selling Stockholders" in the Registration Statement or any such amendment
contained or will contain, as the case may be, any untrue statement of a
material fact or omitted or will omit, as the case may be, to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading. At the Effective Date, the date the Prospectus or any
amendment or supplement to the Prospectus is filed with the Commission and at
the Closing Date and the Option Closing Date, the information regarding such
Selling Stockholder included under the caption "Principal and Selling
Stockholders" in the Prospectus did not or will not, as the case may be,
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
4A. Representations and Warranties of CCI. CCI, one of the
Selling Stockholders, represents, warrants and covenants to each Underwriter
that:
(a) CCI is a corporation duly organized and validly
existing under the laws of the State of Oregon, and has the corporate power and
authority to carry on its business as and where it is presently conducted and
to enter into this Agreement, the Power of Attorney and the Custody Agreement
and to carry out all the terms and provisions hereof and thereof to be carried
out by it. CCI has a limited power of attorney that authorizes it as agent for
the individuals and entities listed on Schedule IV to this Agreement (the "CCI
Holders") to enter into this Agreement, the Power of Attorney and the Custody
Agreement and has the power and authority to carry out the transactions
contemplated hereby and thereby. All authorizations and consents necessary for
the execution and delivery by CCI of this Agreement, the Power of Attorney and
the Custody Agreement have been given. This Agreement, the Power of Attorney
and the Custody Agreement have been duly authorized, executed and delivered by
CCI and constitute legal, valid and binding agreements of CCI, as agent for the
CCI Holders, enforceable in accordance with their respective terms.
(b) CCI has all necessary power and authority as agent on
behalf of the CCI Holders to sell the Shares to be sold by CCI, as agent for
the CCI Holders, hereunder.
(c) CCI has sufficient knowledge to make the
representations and warranties and has all necessary power and authority as
agent on behalf of the CCI Holders to make the undertakings and agreements on
behalf of the CCI Holders pursuant to the terms of this Agreement.
(d) To the best knowledge of CCI, acting on behalf of the
CCI Holders, each CCI Holder now has, and at the time of delivery thereof
hereunder will have, good and marketable title to the Shares to be sold by such
CCI Holder hereunder, free and clear of all Encumbrances. CCI has full legal
right and power, and all authorizations and approvals required by law, to sell,
transfer and deliver the Shares to be sold by CCI on behalf of such CCI
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<PAGE> 16
Holder hereunder to the Underwriters and to make the representations,
warranties and agreements made by CCI herein on behalf of the CCI Holders.
Upon the delivery of and payment for the Shares to be sold by CCI hereunder,
the Underwriters will receive good and marketable title to such Shares, free
and clear of all Encumbrances.
(e) On the Closing Date all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection with the
sale and transfer of the Shares to be sold by CCI, as agent for each CCI
Holder, to the several Underwriters hereunder will have been fully paid or
provided for by CCI, as agent for such CCI Holder, and all laws imposing such
taxes will have been fully complied with.
(f) None of the execution, delivery or performance of
this Agreement, the Power of Attorney or the Custody Agreement and the
consummation of the transactions contemplated herein or therein by CCI
conflicts or will conflict with or results or will result in any breach or
violation of any of the terms or provisions of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the creation or imposition of any Encumbrance upon, any
property or assets of CCI pursuant to (i) the terms of its organizational
documents; (ii) the terms of any contract or other agreement to which CCI is a
party or by which it is bound or to which any of its properties is subject;
(iii) any statute, rule or regulation of any Governmental Body having
jurisdiction over CCI or any of its activities or properties; or (iv) the terms
of any judgment, decree or order of any arbitration or Governmental Body having
such jurisdiction.
(g) No consent, approval, authorization or order of, or
any filing or declaration with, any Governmental Body is required for the
consummation by CCI of the transactions on its part, as agent for the CCI
Holders, contemplated herein and in the Custody Agreement or Power of Attorney,
except such as have been obtained under the Act or the Rules and Regulations
and such as may be required under state securities or Blue Sky laws, any
securities laws of the United Kingdom, or the bylaws and rules of the NASD in
connection with the purchase and distribution by the Underwriters of the Shares
to be sold by CCI, as agent for the CCI Holders.
(h) The sale of the Shares to be sold by CCI, as agent
for the CCI Holders, is not prompted by CCI's knowledge of any material adverse
information concerning the Company or its Subsidiaries which is not set forth
or described in the Registration Statement and the Prospectus.
(i) CCI, as agent for the CCI Holders, has not
distributed and will not distribute the Registration Statement, any Preliminary
Prospectus, the Prospectus or any other offering material in connection with
the offering and sale of the Shares. CCI, as agent for the CCI Holders, has
not taken, directly or indirectly, any action designed, or which might
reasonably be expected, to cause or result in, under the Act or otherwise, or
which has caused or resulted in, stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Shares.
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<PAGE> 17
(j) On the Effective Date and when any post-effective
amendment to the Registration Statement becomes effective, no information
regarding CCI included under the caption "Principal and Selling Stockholders"
in the Registration Statement or any such amendment contained or will contain,
as the case may be, any untrue statement of a material fact or omitted or will
omit, as the case may be, to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading.
At the Effective Date, the date the Prospectus or any amendment or supplement
to the Prospectus is filed with the Commission and at the Closing Date and the
Option Closing Date, the information under the caption "Principal and Selling
Stockholders" regarding CCI included in the Prospectus did not or will not, as
the case may be, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
4B. Representations and Warranties of ALI. ALI is a limited
liability company duly organized, validly existing and is in good-standing,
under the laws of the State of Delaware. ALI has full power and authority to
enter into this Agreement and to carry out all the terms and provisions hereof
to be carried out by it. All authorizations and consents necessary for the
execution and delivery of this Agreement by ALI have been given. This
Agreement has been duly authorized, executed and delivered by or on behalf of
ALI and constitutes a valid and binding agreement of ALI and is enforceable
against ALI in accordance with the terms hereof. Upon the liquidation of ALI,
each ALI Selling Stockholder will receive from ALI at least the number of
shares of Common Stock set forth opposite the name of such ALI Selling
Stockholder in column (2) of Schedule I hereto.
5. Representations and Warranties of the Underwriters. Upon your
authorization of the release of the Firm Shares, the several Underwriters
propose to offer the Firm Shares for sale to the public upon the terms set
forth in the Prospectus. NatWest Securities Limited represents and agrees that
(i) it has not offered or sold and will not offer or sell any Shares to persons
in the United Kingdom, except to persons whose ordinary activities involve them
in acquiring, holding, managing or disposing of investments (whether as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995 or the Financial Services Act 1986 (the "UK Act");
(ii) it has complied and will comply with all applicable provisions of the UK
Act with respect to anything done by it in relation to the Shares in, from or
otherwise involving the United Kingdom; and (iii) it has only issued or passed
on, and will only issue or pass on, in the United Kingdom, any document which
consists of or any part of listing particulars, supplementary listing
particulars or any other document required or permitted to be published by
listing rules under Part IV of the UK Act, to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or is a person to whom the document may
otherwise lawfully be passed on.
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<PAGE> 18
6. Agreements of the Company and the Selling Stockholders. The
Company and, as to subsections (j), (m) and (n) of this Section 6, each Selling
Stockholder, severally and not jointly, and, as to subsection (o) of this
Section, ALI, covenant and agree with each of the several Underwriters as
follows:
(a) The Company will not, either prior to the Effective
Date or thereafter during such period as the Prospectus is required by law to
be delivered in connection with sales of the Shares by an Underwriter or
dealer, file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have objected thereto.
(b) The Company will notify the Representatives promptly,
and will confirm such advice in writing, (i) of the time the Registration
Statement became effective and when any post-effective amendment thereto
becomes effective, (ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose or the threat thereof, (iv) of the happening
of any event during the period mentioned in the second sentence of Section 6(f)
that in the judgment of the Company makes any statement made in the
Registration Statement or the Prospectus untrue or that requires the making of
any changes in the Registration Statement or the Prospectus in order to make
the statements therein, in light of the circumstances in which they are made,
not misleading and (v) of receipt by the Company or any representative or
attorney of the Company of any other communication from the Commission relating
to the Company, the Registration Statement, any Preliminary Prospectus or the
Prospectus. If at any time the Commission shall issue any order suspending the
effectiveness of the Registration Statement, the Company will use its best
efforts to obtain the withdrawal of such order at the earliest possible moment.
The Company will prepare the Prospectus in a form approved by the
Representatives and will file such Prospectus pursuant to Rule 424(b) under the
Act not later than the Commission's close of business on the second business
day following the execution and delivery of this Agreement or, if applicable,
such earlier time as may be required by Rule 430A(a)(3) under the Securities
Act. If the Company has omitted any information from the Registration Statement
pursuant to Rule 430A, the Company will use its best efforts to comply with the
provisions of and make all requisite filings with the Commission pursuant to
said Rule 430A and to notify the Representatives promptly of all such filings.
(c) If, at any time when a Prospectus relating to the
Shares is required to be delivered under the Act, any event occurs as a result
of which the Prospectus, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, or the Registration Statement, as then
amended or supplemented, would include any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein not
misleading, or if for any other reason it is necessary at any time to amend or
supplement the Prospectus or the Registration Statement to comply with the Act
or the Rules and Regulations, the Company will promptly notify the
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<PAGE> 19
Representatives thereof and, subject to Section 6(b) hereof, will prepare and
file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance.
(d) The Company will furnish to the Representatives,
without charge, two signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto and will furnish to the Representatives, without
charge, for transmittal to each of the other Underwriters, copies of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules but without exhibits.
(e) The Company will comply with all the provisions of
all undertakings contained in the Registration Statement.
(f) On the Effective Date, and thereafter from time to
time for such period as the Prospectus is required by the Act to be delivered,
the Company will deliver to each of the Underwriters, without charge, as many
copies of the Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request. The Company consents to the use of the
Prospectus or any amendment or supplement thereto by the several Underwriters
and by all dealers to whom the Shares may be sold, both in connection with the
offering or sale of the Shares and for any period of time thereafter during
which the Prospectus is required by law to be delivered in connection
therewith. If during such period of time any event shall occur which in the
judgment of the Company or counsel to the Underwriters should be set forth in
the Prospectus in order to make any statement therein, in the light of the
circumstances under which it was made, not misleading, or in the Registration
Statement in order to make any statement therein not misleading, or if it is
necessary to supplement or amend the Prospectus or the Registration Statement
to comply with law, the Company will forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto, and will deliver to
each of the Underwriters, without charge, such number of copies thereof as the
Representatives may reasonably request.
(g) Prior to any public offering of the Shares by the
Underwriters, the Company will cooperate with the Representatives and counsel
to the Underwriters in connection with the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Representatives may request; provided that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject it
to general service of process in any jurisdiction where it is not now so
subject.
(h) During the period of three years commencing on the
Effective Date, the Company will furnish to the Representatives and each other
Underwriter who may so request copies of such financial statements and other
periodic and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock, and will furnish to
the Representatives and each other Underwriter who may so request a copy of
each annual or other report it shall be required to file with the Commission.
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<PAGE> 20
(i) The Company will make generally available to holders
of its securities, as soon as may be practicable, but in no event later than
the last day of the fifteenth full calendar month following the calendar
quarter in which the Effective Date falls, a consolidated earnings statement
(which need not be audited but shall be in reasonable detail) for a period of
12 months commencing after the Effective Date, and satisfying the provisions of
Section 11(a) of the Act (including Rule 158 of the Rules and Regulations).
(j) Neither the Company nor any Selling Stockholder will
at any time, directly or indirectly, take any action intended, or which might
reasonably be expected, to cause or result in, or which will constitute,
stabilization of the price of the shares of Common Stock to facilitate the sale
or resale of any of the Shares.
(k) The Company will apply the net proceeds from the
offering and sale of the Shares to be sold by the Company in the manner set
forth in the Prospectus under "Use of Proceeds" and shall file such reports
with the Commission with respect to the sale of the Shares and the application
of the proceeds therefrom as may be required in accordance with Rule 463 under
the Act.
(l) The Company will not, for a period of 180 days after
the date hereof, without the prior written consent of NatWest Securities
Limited, offer to sell, sell, contract to sell, grant any option to purchase or
otherwise dispose (or announce any offer, sale, grant of any option to purchase
or other disposition) of any shares of Common Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Common Stock,
except that the Company may (i) grant options to purchase shares of Common
Stock (and issue shares upon exercise thereof) under its 1995 Incentive
Compensation Plan, (ii) issue shares upon the exercise of any other options
outstanding on the date hereof and described in the Registration and the
Prospectus, and (iii) issue shares of Common Stock in partial or total
consideration for acquisitions of assisted living residences or operations
provided that the shares are not issued in a transaction registered under the
Act and that the holders of such shares are not given rights to register any
shares under the Act which are effective during the 180-day period referred to
herein.
(m) Each Selling Stockholder will not, for a period of 180
days after the date hereof, without the prior written consent of NatWest
Securities Limited, offer to sell, sell, contract to sell, grant any option to
purchase or otherwise dispose (or announce any offer, sale, grant of any option
to purchase or other disposition) of any shares of Common Stock or any
securities convertible into, or exchangeable or exercisable for, shares of
Common Stock.
(n) Each Selling Stockholder [other than CCI] will
deliver to the Representatives prior to or on the Effective Date a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof). [CCI will deliver to the Representatives prior to or on the
Effective Date a letter stating that CCI will be wholly responsible for the tax
withholding obligations associated with Shares to be sold by CCI as agent for
the CCI Holders.] [Note: Subject to discussion with tax attorney.]
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<PAGE> 21
(o) Prior to the Closing, ALI will liquidate and will, in
connection therewith, distribute pro-rata to its members (including the ALI
Selling Stockholders) all shares of Common Stock held by it. All shares of
Common Stock transferred by ALI to the ALI Selling Stockholders will be
delivered (or caused to be delivered) by ALI directly to the Custodian to be
held in custody under the Custody Agreement.
7. Expenses.
(a) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will
pay, or reimburse if paid by the Representatives, all costs and expenses
incident to the performance of the obligations of the Company under this
Agreement, including but not limited to costs and expenses of or relating to
(i) the preparation, printing and filing of the Registration Statement and
exhibits thereto, each Preliminary Prospectus, the Prospectus, any amendment or
supplement to the Registration Statement or the Prospectus, the Custody
Agreements and the Powers of Attorney, (ii) the preparation and delivery of
certificates representing the Shares, (iii) furnishing (including costs of
shipping and mailing) such copies of the Registration Statement, the Prospectus
and any Preliminary Prospectus, and all amendments and supplements thereto, as
may be requested for use in connection with the offering and sale of the Shares
by the Underwriters or by dealers to whom Shares may be sold, (iv) the listing
of the Shares on the AMEX, (v) filing fees required to be paid by the
Underwriters to the NASD, (vi) the registration or qualification of the Shares
for offer and sale under the securities or Blue Sky laws of such jurisdictions
designated pursuant to Section 6(g), including the reasonable fees,
disbursements and other charges of counsel to the Underwriters in connection
therewith, and the preparation and printing of preliminary, supplemental and
final Blue Sky memoranda, (vii) counsel and accountants to the Company and
(viii) the transfer agent for the Shares. Whether or not the transactions
contemplated by this Agreement are consummated or this Agreement is terminated,
each of the Selling Stockholders will pay, or reimburse if paid by the
Representatives, all costs and expenses incident to the performance of such
Selling Stockholder under this Agreement, including, but not limited to, cost
and expenses of or relating to counsel to such Selling Stockholder.
(b) If this Agreement is terminated for any reason
permitted hereunder, the Company will reimburse the several Underwriters for
all out-of-pocket expenses (including the fees, disbursements and other charges
of counsel to the Underwriters) incurred by them in connection herewith.
8. Conditions of the Obligations of the Underwriters. The
obligations of each Underwriter to purchase the Firm Shares or the Options
Shares hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has
become effective shall have been received by the Representatives not later than
2:00 p.m., New York City time, on the date of this Agreement and all filings
required by Rules 424 and 430A of the Rules and Regulations shall have been
made.
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(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the
Commission or such authorities and (iv) after the date hereof no amendment or
supplement to the Registration Statement or the Prospectus shall have been
filed unless a copy thereof was first submitted to the Representatives and the
Representatives did not object thereto in good faith, and the Representatives
shall have received certificates, dated the Closing Date and the Option Closing
Date and signed by the Chief Executive Officer of the Company and the Chief
Financial Officer of the Company (who may, as to proceedings threatened, rely
upon the best of their information and belief), to the effect of the foregoing
clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall not
have been a material adverse change in the general affairs, business,
prospects, properties, management, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of business,
and (ii) neither the Company nor any of its Subsidiaries shall have sustained
any material loss or interference with its business, assets or properties from
fire, explosion, flood or other casualty, whether or not covered by insurance,
or from any labor dispute or any court or legislative or other governmental
action, order or decree, which is not set forth in the Registration Statement
and the Prospectus, if in the judgment of the Representatives any such
development makes it impracticable or inadvisable to consummate the sale and
delivery of the Shares by the Underwriters at the initial public offering
price.
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have been
no litigation or other proceeding instituted against the Company or any of its
Subsidiaries or any of their respective officers, directors or stockholders in
their capacities as such, or any of their respective assets or properties,
before or by any Governmental Body in which litigation or proceeding an
unfavorable ruling, decision or finding could reasonably be expected to
materially and adversely affect the business, properties, business prospects,
condition (financial or otherwise), net worth or results of operations of the
Company and its Subsidiaries, taken as a whole.
(e) Each of the representations and warranties of the
Company contained herein shall be true and correct at the Closing Date and,
with respect to the Option Shares, at the Option Closing Date, as if made on
such date, and all covenants and agreements herein contained to be performed on
the part of the Company and all conditions herein contained to be fulfilled or
complied with by the Company at or prior to the Closing Date and, with respect
to the Option Shares, at or prior to the Option Closing Date, shall have been
fully performed, fulfilled or complied with.
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<PAGE> 23
(f) The Representatives shall have received an opinion,
dated the Closing Date and the Option Closing Date, from Rogers & Hardin,
Atlanta, Georgia, counsel for the Company in the form attached hereto as
Exhibit A. In rendering any such opinion, such counsel may rely, as to matters
of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials and, as to matters
involving the application of laws of any state other than the State of Georgia
and the General Corporation Law of the State of Delaware (to the extent
satisfactory in form and scope to counsel for the Underwriters) such counsel
may rely upon the opinion of local counsel to the Company. The foregoing
opinion shall also state that the Underwriters are justified in relying upon
such opinion of local counsel, and copies of such opinion shall be delivered to
the Representatives and counsel for the Underwriters.
In addition, such counsel shall state that in the course of the
preparation of the Registration Statement and the Prospectus, such counsel has
participated in conferences with officers and representatives of the Company
and with the Accountants, at which conferences such counsel made inquiries of
such officers, representatives and Accountants and discussed the contents of
the Registration Statement and the Prospectus and, on the basis of the
foregoing, nothing has come to such counsel's attention that causes such
counsel to believe that the Registration Statement as of the Effective Date and
as of the date of such opinion contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus as of its date and as of the date of such opinion,
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (it being understood that such counsel need not
express any belief with respect to the financial statements, schedules and
other financial data included in the Registration Statement or the Prospectus).
References to the Registration Statement and the Prospectus in such
opinion shall include any amendment or supplement thereto at the date of such
opinion.
(g) The Representatives shall have received an opinion,
dated the Closing Date and the Option Closing Date, from regulatory counsel for
the Company in each of the States of Wisconsin, Oregon, Michigan and Colorado,
which counsel shall be acceptable to the Underwriters and each such opinion to
relate to matters involving health care licensing and to be in the form
attached hereto as Exhibit B.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials. The foregoing opinion shall also
state that the Underwriters are justified in relying upon such opinion of local
counsel, and copies of such opinion shall be delivered to the Representatives
and counsel for the underwriters.
References to the Registration Statement and the Prospectus in such
opinion shall include any amendment or supplement thereto at the date of such
opinion.
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<PAGE> 24
(h) The Representatives shall have received an opinion,
dated the Closing Date or the Option Closing Date, as the case may be, from
counsel for each of the Selling Stockholders, which counsel shall be
satisfactory to the Underwriters, such opinion to be in the form attached
hereto as Exhibit C.
References to the Registration Statement and the Prospectus in such
opinion shall include any amendment or supplement thereto at the date of such
opinion.
(i) The Representatives shall have received an opinion,
dated the Closing Date and the Option Closing Date, from Jones, Day, Reavis &
Pogue, counsel to the Underwriters, which opinion shall be satisfactory in all
respects to the Representatives. In rendering such opinion, such counsel may
rely as to all matters of ______________ law upon the opinion of
_________________.
(j) Concurrently with the execution and delivery of this
Agreement, KPMG shall have furnished to the Representatives a letter, dated the
date of its delivery (the "Original Letter"), addressed to the Representatives
and in form and substance satisfactory to the Representatives, confirming that
(i) they are independent public accountants with respect to the Company and its
Subsidiaries, Crossings and its subsidiaries and ALS-Midwest and its affiliates
within the meaning of the Act and the Rules and Regulations; (ii) in their
opinion, the financial statements and any supplementary financial information
and schedules (and pro forma financial information) included in the
Registration Statement and examined by them comply as to form in all material
respects with the applicable accounting requirements of the Act and the Rules
and Regulations; (iii) on the basis of procedures, not constituting an
examination in accordance with generally accepted auditing standards, set forth
in detail in the Original Letter, including performance of the procedures
specified by the American Institute of Certified Public Accountants for a
review of interim financial information as described in SAS No. 71 "Interim
Financial Information," on the unaudited financial statements included in the
Registration Statement and the Prospectus, a reading of the unaudited financial
statements and other information referred to below, a reading of the latest
available interim financial statements of the Company and its Subsidiaries,
inspections of the minute books and corporate records of the Company and its
Subsidiaries, since the latest audited financial statements included in the
Prospectus, inquiries of officials of the Company responsible for financial and
accounting matters and such other inquiries and procedures as may be specified
in the Original Letter to a date not more than five days prior to the date of
the Original Letter, nothing came to their attention that caused them to
believe that: (A) the unaudited financial statements and schedules of the
Company and its subsidiaries, Crossings and its subsidiaries and ALS-Midwest
and its subsidiaries included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act and
the Rules and Regulations, or are not fairly presented in conformity with GAAP
applied on a basis substantially consistent with the basis for the audited
financial statements included in the Prospectus; (B) any other unaudited income
statement data and balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited financial statements from which
such data and items were derived, and any such unaudited data and items were
not determined on a basis substantially consistent with the basis for the
corresponding amounts in the audited financial statements included in the
Prospectus;(C) in the unaudited financial statements which were not included
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<PAGE> 25
in the Prospectus but from which were derived any unaudited financial
statements referred to in clause (A) and any unaudited income statement data
and balance sheet items included in the Prospectus and referred to in clause
(B) were not determined on a basis substantially consistent with the basis for
the audited financial statements included in the Prospectus; (D) the unaudited
pro forma financial statements included in the Prospectus do not comply as to
form in all material respects with the applicable accounting requirements of
the Act and the Rules and Regulations or the pro forma adjustments have not
been properly applied to the historical amounts in the compilation of those
statements; (E) as of a specified date not more than five days prior to the
date of the Original Letter, there have been any changes in the capital stock
of the Company and its Subsidiaries, or any increase in the long-term debt of
the Company and its Subsidiaries, or any decreases in net current assets or net
assets or other items specified by the Representatives, or any increases in any
items specified by the Representatives, in each case as compared with amounts
shown in the latest balance sheet included in the Prospectus, except in each
case for changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in the Original Letter; and (F)
for the period from the date of the latest financial statements included in the
Prospectus to the specified date referred to in Clause (E), there were any
decreases in revenue or operating profit (loss) or the total or per share
amounts of net income (loss) or other items specified by the Representatives,
or any increases in any items specified by the Representatives, in each case as
compared with the comparable period of the preceding year and with any other
period of corresponding length specified by the Representatives, except in each
case for decreases or increases which the Prospectus discloses have occurred or
may occur or which are described in the Original Letter; and (iv) in addition
to the examination referred to in their reports included in the Prospectus and
the procedures referred to in clause (iii) above, they have carried out certain
specified procedures, not constituting an examination in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Representatives, which
are derived from the general accounting, financial or other records of the
Company and its Subsidiaries, as the case may be, which appear in the
Prospectus or in Part II of, or in exhibits or schedules to, the Registration
Statement, and have compared such amounts, percentages and financial
information with such accounting, financial and other records and have found
them to be in agreement. Concurrently with the execution and delivery of this
Agreement, Andersen shall have furnished to the Representatives a letter, dated
the date of its delivery (the "Andersen Original Letter"), addressed to the
Representatives and in form and substance satisfactory to the Representatives,
confirming that (i) they are independent accountants with respect to Heartland
and its subsidiaries within the meaning of the Act and the Rules and
Regulations; (ii) in their opinion, the financial statements and any
supplementary financial information and schedules (and pro forma financial
information) included in the Registration Statement and examined by them comply
as to form in all material respects with the applicable accounting requirements
of the Act and the Rules and Regulations; and (iii) in addition to the
examination referred to in their reports included in the Prospectus, they have
carried out certain specified procedures, not constituting an examination in
accordance with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives, which are derived from the general accounting, financial or
other records of Heartland and its subsidiaries which appear in the Prospectus
and have compared such amounts, percentages and financial information with such
accounting, financial and other records and have found them to be in agreement.
At the Closing Date and, as to the
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<PAGE> 26
Option Shares, the Option Closing Date, each of the Accountants shall have
furnished to the Representatives a letter, dated the date of its delivery,
which shall confirm, on the basis of a review in accordance with the procedures
set forth in the Original Letter, that nothing has come to their attention
during the period from the date of the Original Letter or the Anderson Original
Letter, as the case may be, to a date (specified in the letter) not more than
five days prior to the Closing Date or the Option Closing Date, as the case may
be, which would require any change in the Original Letter if it were required
to be dated and delivered at the Closing Date or the Option Closing Date, as
the case may be.
(k) At the Closing Date and the Option Closing Date,
there shall be furnished to the Representatives a certificate, dated the date
of its delivery, signed by each of the Chief Executive Officer and the Chief
Financial Officer of the Company, in form and substance satisfactory to the
Representatives, to the effect that:
(i) Each signer of such certificate has carefully
examined the Registration Statement and the Prospectus and (A) as of
the date of such certificate, (x) the Registration Statement does not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein not misleading and (y) the Prospectus does
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading and (B) since the Effective Date no
event has occurred as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein not
untrue or misleading in any material respect;
(ii) Each of the representations and warranties of the
Company contained in this Agreement were, when originally made, and
are, at the time such certificate is delivered, true and correct; and
(iii) Each of the covenants required herein to be performed
by the Company on or prior to the date of such certificate has been
duly, timely and fully performed and each condition herein required to
be complied with by the Company on or prior to the delivery of such
certificate has been duly, timely and fully complied with.
(l) The Shares shall be qualified for sale in such states
as the Representatives may reasonably request, each such qualification shall be
in effect and not subject to any stop order or other proceeding on the Closing
Date and the Option Closing Date.
(m) Prior to the Closing Date, the Shares shall have been
approved for listing on the AMEX, subject only to notice of issuance.
(n) At the Closing Date, there shall be furnished to the
Representatives a certificate, dated the date of its delivery, from each
Selling Stockholder (which may be signed by an Attorney-in-Fact), in form and
substance satisfactory to the Representatives, to the effect that:
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(i) (A) As of the date of such certificate, (x) no
information with respect to such Selling Stockholder included under
the caption "Principal and Selling Stockholders" in the Registration
Statement contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading and (y)
information regarding such Stockholder included under the caption
"Principal and Selling Stockholders" in the Prospectus does not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein, in the light of the
circumstances under which they were made, not misleading and (B) since
the Effective Date no event has occurred as a result of which it is
necessary to amend or supplement the information under the caption
"Principal and Selling Stockholders" in the Prospectus in order to
make the statements therein regarding such Stockholder not untrue or
misleading in any material respect;
(ii) Each of the representations and warranties of such
Selling Stockholder contained in this Agreement were, when originally
made, and are, at the time such certificate is delivered, true and
correct; and
(iii) Each of the covenants required herein to be performed
by such Selling Stockholder on or prior to the date of such
certificate has been duly, timely and fully performed and each
condition herein required to be complied with by such Selling
Stockholder on or prior to the delivery of such certificate has been
duly, timely and fully complied with.
(o) On or prior to the Closing Date, the Representatives
shall have received a Lock-up Agreement from the persons referred to in Section
3(x) of this Agreement.
(p) The Company shall have furnished to the
Representatives such certificates, letters and other documents, in addition to
those specifically mentioned herein, as the Representatives may have reasonably
requested as to the accuracy and completeness at the Closing Date and the
Option Closing Date of any statement in the Registration Statement or the
Prospectus. The Company and the Selling Stockholders shall have furnished to
the Representatives such certificates, letters and other documents, in addition
to those specifically mentioned herein, as the representatives may have
reasonably requested as to the accuracy at the Closing Date and the Option
Closing Date of the representations and warranties of the Company or the
Selling Stockholders, as to the performance by the Company or the Selling
Stockholders of their obligations hereunder, or as to the fulfillment of the
conditions concurrent and precedent to the obligations hereunder of the
Underwriters.
(q) Prior to the Closing, ALI shall have liquidated and
distributed to its members of Common Stock owned by it and certificates
representing at least the number of shares of Common Stock set forth opposite
the name of each ALI Selling Stockholder in column (2) of Schedule I hereto
shall have been delivered to the Custodian to be held in custody under the
Custody Agreement.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you. The Company
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<PAGE> 28
and the Selling Stockholders will furnish you with such conformed copies of
such opinions, certificates, letters and other documents as you shall
reasonably request.
9. Indemnification and Contribution.
(a) The Company and, subject to Section 9(f) GranCare,
Inc. ("GranCare"), jointly and severally agree to indemnify and hold harmless
each Underwriter and each person, if any, who controls such Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), from and against any and all
losses, claims, damages or liabilities, joint or several (and actions in
respect thereof), to which they, or any of them, may become subject under the
Act or other Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement made in Section 3 of this Agreement (ii) any untrue
statement or alleged untrue statement of any material fact contained in (A) any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus or (B)
any application or other document, or any amendment or supplement thereto,
executed by the Company and based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to qualify the Shares
under the securities or blue sky laws thereof or filed with the Commission or
any securities association or securities exchange (each, an "Application"), or
(iii) the omission or alleged omission to state in any Preliminary Prospectus,
the Registration Statement or the Prospectus or any amendment or supplement to
the Registration Statement or the Prospectus or any Application a material fact
required to be stated therein or necessary to make the statement therein (A) in
the case of the Registration Statement, any amendment or supplement to the
Registration Statement or any Application, not misleading and (B) in the case
of any Preliminary Prospectus or the Prospectus or any amendment on supplement
thereto, not misleading in light of the circumstances in which they were made,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company and GranCare
will not be liable in any such case to the extent that any such loss, claim,
damage or liability based upon an untrue statement or omission or alleged
untrue statement or omission in any of such documents was made in reliance upon
and in conformity with written information furnished to the Company by any
Underwriter through the Representatives expressly for use therein. This
indemnity agreement will be in addition to any liability that the Company or
GranCare might otherwise have. The Company and GranCare will not, without the
prior written consent of each Underwriter, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such Underwriter or any person who controls such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act is a party
to each claim, action, suit or proceeding), unless such settlement, compromise
or consent includes an unconditional release of each Underwriter and each such
controlling person from all liability arising out of such claim, action, suit
or proceeding.
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<PAGE> 29
(b) Each Selling Stockholder, severally and not jointly,
agrees to indemnify and hold harmless each Underwriter and each person, if any,
who controls each Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages or liabilities, joint or several (and actions in respect thereof), to
which they, or any of them, may become subject under the Act or other Federal
or state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement made by such Selling Stockholder in Section 4 or 4A, as applicable,
of this Agreement, (ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) any Preliminary Prospectus, the Registration
Statement or the Prospectus or any amendment or supplement to the Registration
Statement or the Prospectus or (B) any Application executed by such Selling
Stockholder or based upon written information furnished by or on behalf of such
Selling Stockholder, or (iii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus or any
Application a material fact required to be stated therein or necessary to make
the statement therein (A) in the case of the Registration Statement, any
amendment or supplement to the Registration Statement or any Application, not
misleading and (B) in the case of any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, not misleading in light of the
circumstances in which they were made, and will reimburse, as incurred, each
Underwriter and each such controlling person for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in
connection with investigating, defending or appearing as a third-party witness
in connection with any such loss, claim, damage, liability or action; provided,
however, that such Selling Stockholder will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based solely upon an untrue statement or omission or alleged untrue statement
or omission in any of such documents made in reliance upon and in conformity
with information relating to any Underwriter furnished in writing to the
Company by the Representatives on behalf of any Underwriter expressly for
inclusion therein; and provided further, that such Selling Stockholder will be
liable, in the case of clauses (ii) and (iii) above, only to the extent that
such loss, claim, damage, lability or action arises out of or is based upon any
untrue statement or omission or alleged untrue statement or omission made in
the Registration Statement or any amendment thereto or in the Prospectus or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with information furnished to the Company by such Selling
Stockholder for use in the Registration Statement. The Underwriters each
expressly acknowledge that none of the Selling Stockholders has provided any
information to the Underwriters with respect to the Registration Statement, the
Prospectus, any supplement or amendment of either or any Application other than
(i) the name and address of such Selling Stockholder included under the caption
"Principal and Selling Stockholders," (ii) the number of shares beneficially
owned by such Selling Stockholder under the caption "Principal and Selling
Stockholders," and (iii) the information (if any) contained in the footnotes
and related to such Selling Stockholder under the caption "Principal and
Selling Stockholders." This indemnity agreement will be in addition to any
liability that such Selling Stockholder might otherwise have. Such Selling
Stockholder will not, without the prior written consent of each Underwriter,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Underwriter or any
person who controls such Underwriter within
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<PAGE> 30
the meaning of Section 15 of the Act or Section 20 of the Exchange Act is a
party to each claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of each Underwriter and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding. The liability of such Selling Stockholder under
this Section 9(b) shall be limited to an amount equal to the aggregate initial
public offering price of the Shares sold by such Selling Stockholder to the
Underwriters. The Company and such Selling Stockholder may agree, as among
themselves and without limiting the rights of the Underwriters under this
Agreement, as to the respective amounts of such liability for which they each
shall be responsible.
(c) Each Underwriter, severally and not jointly, will
indemnify and hold harmless the Company, each Selling Stockholder, each person,
if any, who controls the Company or any of the Selling Stockholders within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, each
director of the Company and each officer of the Company who signed the
Registration Statement against any losses, claims, damages or liabilities,
joint or several (and actions in respect thereof) to which the Company, the
Selling Stockholders and any such director, director nominee, officer or
controlling person may become subject under the Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue statement
of any material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any amendment or supplement to the Registration
Statement or the Prospectus or any Application, or material fact required to be
stated therein or (ii) the omission or the alleged omission to state in the
Registration Statement, any Preliminary Prospectus or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus, or any
Application, a material fact required to be stated therein or necessary to make
the statement therein (A) in the case of the Registration Statement, any
amendment or supplement to the Registration Statement or any Application, not
misleading and (B) in the case of any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, not misleading in light of the
circumstances in which they were made, in all cases to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives expressly for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company, the Selling Stockholders
and any such director, director nominee, officer or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or any action in respect thereof. The Company and the Selling
Stockholders acknowledge that, for all purposes under this Agreement, the
statements set forth in the [third] paragraph under the heading "Underwriting"
and the information in the last two paragraphs on the inside front cover of any
Preliminary Prospectus and the Prospectus constitute the only information
relating to any Underwriter furnished in writing to the Company by the
Representatives on behalf of the Underwriters expressly for inclusion in the
Registration Statement, any Preliminary Prospectus or the Prospectus. This
indemnity agreement will be in addition to any liability that each Underwriter
may otherwise have.
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<PAGE> 31
(d) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
or parties under this Section 9, notify such indemnifying party or parties of
the commencement thereof; but the omission so to notify that indemnifying party
or parties will not relieve it or them from any liability which it or they may
have to any indemnified party under the foregoing provisions of this Section 9
or otherwise unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party. If any
such action is brought against an indemnified party and it notifies an
indemnifying party or parties of its commencement, the indemnifying party or
parties against which a claim is made will be entitled to participate therein
and, to the extent that it or they may wish, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be one or more legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so as to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 9 for any
legal or other expenses other than reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the preceding sentence (it being understood,
however, that in connection with such action the indemnifying party shall not
be liable for the expenses of more than one separate counsel (in addition to
local counsel) in any one action or separate but substantially similar actions
in the same jurisdiction arising out of the same general allegations or
circumstances, designated by the Representatives in the case of paragraph (a)
of this Section 9, representing the indemnified parties under such paragraph
(a) who are parties to such action or actions), (ii) a conflict or potential
conflict exists (based on advice of counsel to the indemnified party) between
the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party), (iii) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of this action, or (iv) the
indemnifying party has authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such notice
from the indemnifying party to such indemnified party, the indemnifying party
will not be liable for the costs and expense of any settlement of such action
effected by such indemnified party without the consent of the indemnifying
party, unless such indemnified party waived its rights under this Section 9 in
which case the indemnified party may effect such a settlement without such
consent.
(e) If the indemnification provided for in the foregoing
paragraphs of this Section 9 is unavailable or insufficient to hold harmless an
indemnified party under paragraph (a), (b) or (c) above in respect of any
losses, claims, damages or liabilities (or actions in respect thereof) referred
to therein, then each indemnifying party shall contribute to the
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<PAGE> 32
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party or parties, on the one hand, and the indemnified party, on
the other, from the offering of the Shares or (ii) if, but only if, the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
indemnifying party or parties on the one hand, and the indemnified party, on
the other, in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders, on the one hand, and the Underwriters, on the other, shall be
deemed to be in the same proportion as the total proceeds from the offering of
the Shares (before deducting expenses) received by the Company and the Selling
Stockholders bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page
of the Prospectus; provided that, in the event the Underwriters shall have
purchased any Option Shares hereunder, any determination of the relative
benefits received by the Company, the Selling Stockholders or the Underwriters
from the offering of the Shares shall include the total proceeds from the
offering (before deducting expenses) received by the Company and the Selling
Stockholders, and the underwriting discounts and commissions received by the
Underwriters from the sale of such Option Shares, in each case as set forth in
the notes to the table on the cover page of the Prospectus. Relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, the Selling
Stockholders or the Underwriters through the Representatives, the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission, as well as any other relevant equitable
considerations with respect to such offering. The Company, the Selling
Stockholders and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 9(e) were to be determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages, liabilities
(or actions in respect thereof) referred to above in this Section 9(e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 9(e), no Selling
Stockholder shall be required to contribute any amount in excess of the
aggregate initial public offering price of the Shares sold by such Selling
Stockholder to the Underwriters. Notwithstanding the provisions of this
Section 9(e), no Underwriter shall be required to contribute any amount in
excess of the total underwriting discounts received by it with respect to the
Shares purchased by such Underwriter under this Agreement, less the aggregate
amount of any damages that such Underwriter has otherwise been required to pay
in respect of the same or any substantially similar claim. No person found
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) will be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations to contribute
as provided in this Section 9(e) are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section 9(e),
each person, if any,
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<PAGE> 33
who controls an Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act will have the same rights to contribution as
such Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement and each person, if any, who controls the
Company or any Selling Stockholder within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, will have the same rights to contribution as
the Company and the Selling Stockholders, subject in each case to the
provisions of this paragraph (e). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made under this Section 9(d), will notify any such party or parties from
whom contribution may be sought, but the omission so to notify will not relieve
the party or parties from whom contribution may be sought from any other
obligation(s) it or they may have hereunder or otherwise than under this
Section 9(d). The contribution agreement set forth above shall be in addition
to any liabilities which any indemnifying party may otherwise have. No party
will be liable for contribution with respect to any action or claim settled
without its written consent (which consent will not be unreasonably withheld).
(f) No indemnification or contribution provided for in
Section 9(a) by GranCare shall be available to any Underwriter, its officers,
directors, partners, employees, agents or counsel, or any person who controls
any Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (each an "Underwriter Indemnified Party") until
such Underwriter Indemnified Party has first used its best efforts to pursue
and exhaust all remedies (including the enforcement and collection of judgments
or claims against the Company) it may have against the Company under Section
9(a). Without limiting the generality of the foregoing, an Underwriter
Indemnified Party shall be deemed to have used its best efforts to pursue and
exhaust all remedies it may have against the Company, and may pursue any
remedies it may have against GranCare, if (A) such Underwriter Indemnified
Party is in the process of pursuing remedies against the Company and any of the
following events occurs, or, immediately prior to the time at which such
Underwriter Indemnified Party commences the process of pursuing remedies
against the Company, any of the following events has occurred and is
continuing: (1) the Company files a petition, answer or any pleading seeking
or acquiescing in any reorganization, liquidation or other relief under chapter
7 or 11 of the bankruptcy code; (2) the Company seeks or acquiesces in the
appointment of a trustee (other than a trustee appointed solely for purposes of
facilitating the issuance of any debt securities of the Company), receiver or
liquidator of all or part of its assets; or (3) the Company makes a general
assignment for the benefit of its creditors, (B) a court of competent
jurisdiction: (1) appoints a trustee, receiver or liquidator of all or part of
the Company's assets; or (2) determines in any action, suit or proceeding that
the Company is insolvent (in the accounting, bankruptcy, equity or legal
definitions), or (C) a court or arbitration panel of competent jurisdiction
enters an order in any action, suit or proceeding by such Underwriter
Indemnified Party for indemnification from the Company that is adverse to such
Underwriter Indemnified Party. Notwithstanding the foregoing, if, in the
reasonable judgment of any Underwriter Indemnified Party, the applicable
statute of limitations for any potential action, suit or proceeding by such
Underwriter Indemnified Party for indemnification against GranCare will expire,
such Underwriter Indemnified Party may name GranCare in any action, suit or
proceeding to which the Company is also a party solely for purposes of
preserving any rights such Underwriter Indemnified Party may have to seek
indemnification from the Selling
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<PAGE> 34
Stockholder after having used its best efforts to pursue and exhaust all
remedies it may have against the Company.
10. Termination. The obligations of the several Underwriters
under this Agreement may be terminated at any time prior to the Closing Date
(or, with respect to the Option Shares, on or prior to the Option Closing
Date), by notice to the Company from the Representatives, without liability on
the part of any Underwriter to the Company or the Selling Stockholders if,
prior to delivery and payment for the Firm Shares (or the Option Shares, as the
case may be), in the sole judgment of the Representatives, (i) trading in any
of the equity securities of the Company shall have been suspended by the
Commission or by an exchange that lists the Shares, (ii) trading in securities
generally on the AMEX, the New York Stock Exchange or the International Stock
Exchange of the United Kingdom and the Republic of Ireland, Limited shall have
been suspended or limited or minimum or maximum prices shall have been
generally established on any of such exchanges, or additional material
governmental restrictions, not in force on the date of this Agreement, shall
have been imposed upon trading in securities generally by any of such exchanges
or by order of the Commission or any court or other governmental authority,
(iii) a general banking moratorium shall have been declared by Federal, New
York State or United Kingdom authorities or (iv) any material adverse change in
the financial or securities markets in the United States or United Kingdom or
any outbreak or material escalation of hostilities or declaration by the United
States or the United Kingdom of a national emergency or war or other calamity
or crisis shall have occurred, the effect of any of which is such as to make
it, in the sole judgment of the Representatives, impracticable or inadvisable
to market the Shares on the terms and in the manner contemplated by the
Prospectus. Any such termination will not affect the obligations set forth in
Sections 7 and 9.
11. Default of Underwriters. If one or more Underwriters default
in their obligations to purchase Firm Shares or Option Shares hereunder and the
aggregate number of such Shares that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Shares or Option Shares to be purchased by all of the
Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Shares by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Shares or Option
Shares that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If one or more Underwriters so default with respect to an aggregate
number of Shares that is more than ten percent of the aggregate number of Firm
Shares or Option Shares, as the case maybe, to be purchased by all of the
Underwriters at such time hereunder, and if arrangements satisfactory to the
Representatives are not made within 36 hours after such default for the
purchase by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Shares with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter, the Company or the Selling
Stockholders other than as provided in Section 12 hereof. In the event of any
default by one or more Underwriters as described in this Section 11, the
Representatives shall have the right to postpone the Firm Closing Date or the
Option Closing Date, as the case may be,
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<PAGE> 35
established as provided in Section 11 hereof for not more than seven business
days in order that any necessary changes may be made in the arrangements or
documents for the purchase and delivery of the Firm Shares or Option Shares, as
the case may be. As used in this agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section 11. Nothing
herein shall relieve any defaulting Underwriter from liability for its default.
12. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers, the Selling Stockholders and the several Underwriters set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, any of its officers or
directors, any Selling Stockholder, any Underwriter or any controlling person
referred to in Section 9 hereof and (ii) delivery of and payment for the
Shares. The respective agreements, covenants, indemnities and other statements
set forth in Sections 7 and 9 hereof shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement.
13. Notices. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, 450 N.
Sunnyslope Road, Suite 300, Brookfield, Wisconsin 53005, Attention:
President, (b) if to the Selling Stockholders, to the Power of Attorney at the
address set forth in the Custody Agreement, or (c) if to the Underwriters, to
the Representatives at the offices of NatWest Securities Limited, c/o
[___________ _____________________]. Any such notice shall be effective only
upon receipt. Any notice under Section 9 or 10 may be made by telex or
telephone, but if so made shall be subsequently confirmed in writing.
14. Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Company, the Selling
Stockholders and their respective successors and legal representatives, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person except that (i) the indemnities of the
Company and the Selling Stockholders contained in Section 9 of this Agreement
shall also be for the benefit of any person or persons who control any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnities of the Underwriters contained in Section
9 of this Agreement shall also be for the benefit of the directors of the
Company, the officers of the Company who have signed the Registration Statement
and any person or persons who control the Company or the Selling Stockholders
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act.
No purchaser of Shares from any Underwriter shall be deemed a successor because
of such purchase. This Agreement shall not be assignable by any party hereto
without the prior written consent of the other party.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE
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<PAGE> 36
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE> 37
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Stockholders and the several Underwriters.
Very truly yours,
ALTERNATIVE LIVING SERVICES, INC.
By:
----------------------------------
Name:
Title:
ALTERNATIVE LIVING INVESTORS, L.L.C.
By:
----------------------------------
Name:
Title:
SELLING STOCKHOLDERS:
EVERGREEN HEALTHCARE, INC.
(a wholly-owned subsidiary of GranCare, Inc.)
CAPITAL CONSULTANTS, INC., as agent and investment
manager for the individuals and entities listed
on Schedule IV hereto
CARE LIVING CENTERS, INC.
HEARTLAND DEVELOPMENT CORPORATION
Dr. Jonathan S. Berman
Joel H. Shapiro
Merton J. Segal and Beverly Segal
[ALI MEMBERS]
By:
----------------------------------------------
[William G. Petty]
Attorney-in-Fact
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<PAGE> 38
Confirmed as of the date first
above mentioned:
NATWEST SECURITIES LIMITED
By:
----------------------------------
Name:
Title:
McDONALD & COMPANY SECURITIES, INC.
By:
----------------------------------
Name:
Title:
THE CHICAGO CORPORATION
By:
----------------------------------
Name:
Title:
Acting on behalf of
themselves and as the
Representatives of the
other several Underwriters
named in Schedule II hereof.
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<PAGE> 39
SCHEDULE I
SELLING STOCKHOLDERS
<TABLE>
<CAPTION>
(1) (2)
Number of Firm Maximum Number of
Shares to be Option Shares
Sold to be Sold
-------------- -----------------
<S> <C> <C>
GranCare, Inc.(*) . . . . . . . . . . . . . . . . . . 1,852,493 39,809
Capital Consultants, Inc. . . . . . . . . . . . . .
742,602 0
Care Living Centers, Inc.(*) . . . . . . . . . . . . 0 29,049
Heartland Development Corporation . . . . . . . . . . 198,547 0
Dr. Jonathan S. Berman . . . . . . . . . . . . . . . 6,492 0
Joel H. Shapiro . . . . . . . . . . . . . . . . . . . 7,960 0
Merton J. Segal and Beverly Segal . . . . . . . . . . 4,406 0
[Members of ALI](8)(*) (**) . . . . . . . . . . . . . 0 [700,000]
--------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . 2,812,500 768,858
========= ========
</TABLE>
- ------------------------
(*) Participating in sale of Option Shares.
(**) Member of ALI. Option Shares to be sold will be distributed by ALI to
member prior to the Closing and placed automatically in custody under
the Custody Agreement.
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<PAGE> 40
SCHEDULE II
UNDERWRITERS
<TABLE>
<CAPTION>
(1) (2) (3)
Number of
Number of Firm Shares
Firm Shares to be Aggregate
to be Purchased Number of
Purchased from the Firm
from the Selling Shares to be
Company Stockholders Purchased
<S> <C> <C> <C>
NatWest Securities
Limited . . . . . . . . . . . . . . . . . . .
McDonald & Company
Securities, Inc. . . . . . . . . . . . . . .
The Chicago Corporation . . . . . . . . . . . .
[Others] . . . . . . . . . . . . . . . . . . .
--------- --------- ---------
Total . . . . . . . . . . . . . . . . . . . . . 3,187,500 2,812,500 6,000,000
========= ========= =========
</TABLE>
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<PAGE> 41
SCHEDULE III
SUBSIDIARIES
[To Come]
-41-
<PAGE> 42
SCHEDULE IV
CCI HOLDERS
[To Be Provided]
-42-
<PAGE> 43
DRAFT OF 7/16/96
EXHIBIT A
FORM OF OPINION OF COMPANY COUNSEL
___________, 1996
NATWEST SECURITIES LIMITED
McDONALD & COMPANY SECURITIES, INC.
THE CHICAGO CORPORATION
As Representatives of the
several Underwriters
c/o NatWest Securities Limited
135 Bishopsgate
London EC2M 3XT
England
Re: 6,000,000 Shares of Common Stock, par value $.01 per
share of Alternative Living Services, Inc.
Ladies and Gentlemen:
We have acted as counsel to Alternative Living Services, Inc., a
Delaware corporation (the "Company"), in connection with the purchase on this
date by you and the other underwriters (collectively, the "Underwriters") named
in Schedule II of that certain Underwriting Agreement dated __________________,
1996, among the Underwriters, the Company and the Selling Stockholders (as
defined therein) (the "Underwriting Agreement") of an aggregate of 6,000,000
shares (the "Firm Shares") of the Company's common stock, par value $.01 (the
"Common Stock"), of which (i) 2,831,358 shares in the aggregate are to be sold
by the Selling Stockholders and (ii) 3,168,642 shares are to be issued and sold
by the Company. This opinion is furnished to you pursuant to Section 8(f) of
the Underwriting Agreement. Terms used herein and not defined herein are used
as defined in the Underwriting Agreement.
In connection with this opinion, we have reviewed such documents and
matters of law as we have deemed necessary for the purposes of expressing the
opinions set forth herein. Based upon the foregoing, we are of the opinion
that:
1. The Company is duly organized, validly existing and
in good standing under the laws of the State of Delaware. We are not aware of
any subsidiaries of the Company other than the Subsidiaries. Each of the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the state of its incorporation or formation. The Company and each of
the Subsidiaries has full corporate or other power and authority
A-1
<PAGE> 44
to conduct all the activities conducted by it, to own or lease all the
properties and assets owned or leased by it and to conduct its business as
described in the Registration Statement and the Prospectus. The Company and
each of its Subsidiaries is duly licensed or qualified to do business and in
good standing as a foreign corporation or partnership, as the case may be, in
all jurisdictions in which the nature of the activities conducted by it or the
character of the properties and assets owned or leased by it makes such
licensing or qualification necessary, except where the failure to so qualify
would not have a material adverse effect on the Company and its Subsidiaries,
taken as a whole. To the best of our knowledge after due inquiry, the Company
beneficially owns the percentage indicated in Exhibit 21.1 of the Registration
Statement of the outstanding equity interests in each of the Subsidiaries, free
and clear of all Encumbrances. All of the equity interests held by the Company
in each of the Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights.
2. The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights arising by or through the Company. The Shares to be issued and sold by
the Company are duly authorized and, upon such issuance and payment therefor in
accordance with the terms of the Underwriting Agreement will be, validly
issued, fully paid and nonassessable and are not the subject to any preemptive
or similar rights arising by or through the Company. The Company has, and,
upon completion of the sale of the Shares, will have, an authorized, issued and
outstanding capitalization as set forth in the Registration Statement and the
Prospectus. The description of the securities of the Company in the
Registration Statement and the Prospectus is complete and accurate in all
material respects.
3. To the best our knowledge after due inquiry, except
as set forth in the Registration Statement and the Prospectus, the Company does
not have outstanding any options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible into or
exchangeable for, or any contracts or commitments to issue or sell, any shares
of its capital stock or any such warrants, convertible securities or
obligations.
4. To the best of our knowledge after due inquiry,
except as set forth in the Registration Statement and the Prospectus, no person
has any right to have any securities of the Company held by them registered
under the Act.
5. The Company (either directly or through its
Subsidiaries) has good and indefeasible title to all properties and assets
described in the Registration Statement and Prospectus as owned by it, free
and clear of all Encumbrances other than those described in the Registration
Statement and Prospectus and other than those that do not materially adversely
affect the value of such properties and assets and do not interfere with the
use made or proposed to be made of such properties and assets. The Company
(either directly or through its Subsidiaries) has valid and subsisting
leasehold interests in the properties and assets described in the Registration
Statement and Prospectus as leased by it, free and clear of all Encumbrances,
other than those described in the Registration Statement and
A-2
<PAGE> 45
Prospectus and those that do not materially adversely affect the value of such
properties and assets and do not materially interfere with the use made, or
proposed to be made, of such properties and assets. The Company (either
directly or through its Subsidiaries) has valid and subsisting options to
purchase the properties described in the Registration Statement and Prospectus
under the caption "Business - Properties - Properties Under
Construction/Development" as being under development.
6. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act.
7. Except as set forth in the Registration Statement and
Prospectus, there are no actions, suits or proceedings pending or, to the best
of our knowledge after due inquiry, threatened against or affecting the Company
or any of its Subsidiaries or any of their respective directors, officers or
stockholders in their capacity as such, or any of the properties or assets
owned, leased or operated by the Company or any of its Subsidiaries, before or
by any Governmental Body, wherein an unfavorable ruling, decision or finding
would have a material adverse effect on the business, properties, prospects,
condition (financial or otherwise), net worth or results of operations of the
Company and its Subsidiaries, taken as a whole. There is no pending litigation
or governmental proceeding required to be described in the Prospectus that is
not described as required.
8. To the best of our knowledge after due inquiry, none
of the Company and its Subsidiaries is in breach or default (nor has an event
occurred which, with notice or lapse of time or both, would constitute a
default) in the due performance and observation of any term, covenant or
condition of any contract or other agreement to which it is a party or by which
its properties is bound or affected, which default could reasonably be
expected, individually or in the aggregate, to have a material adverse effect
on the business, properties, prospects, condition (financial or otherwise), net
worth or results of operations of the Company and its Subsidiaries, taken as a
whole. To the best of our knowledge after due inquiry, (i) the Company is not
in violation of any provision of its Certificate of Incorporation or Bylaws, as
amended, and (ii) none of the Subsidiaries is in violation of its
organizational documents, as amended.
9. No consent, approval, authorization or order of, or
any filing or declaration with, any Governmental Body is required for the
consummation of the transactions contemplated by the Underwriting Agreement or
in connection with the issuance and sale of the Shares to be sold by the
Company, except such as have been obtained under the Act or the Rules and
Regulations and such as may be required under state securities or Blue Sky laws
or the bylaws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the Shares to be sold by the Company.
10. The Company has full power and authority to enter
into the Underwriting Agreement and to carry out all the terms and provisions
thereof to be carried out by it. The Underwriting Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding agreement of the Company and is
A-3
<PAGE> 46
enforceable against the Company in accordance with the terms thereof, except as
limited by general principles of equity relating to the availability of
remedies and except as rights to indemnity or contribution may be limited by
federal or state securities laws and the public policy underlying such laws.
11. The execution, delivery and the performance of the
Underwriting Agreement and the consummation of the transactions contemplated
thereby will not result in the creation or imposition of any Encumbrance upon
any of the properties or assets of the Company or any of its Subsidiaries
pursuant to the terms or provisions of, or result in a breach or violation of
or conflict with any of the terms or provisions of, or constitute a default
under, or give any other party a right to terminate any of its obligations
under, or result in the acceleration of any obligation under, (i) the
Certificate of Incorporation or Bylaws of the Company, in each case as amended,
(ii) the organizational or charter documents of any of the Subsidiaries, as
amended, or (iii) any contract or other agreement to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective assets or properties are bound or
affected, or (iv) any judgment, ruling, decree, order, law, statute, rule or
regulation of any Governmental Body applicable to the Company or any of its
Subsidiaries or their business or properties, except, in the case of clauses
(iii) and (iv), any violation which could not reasonably be expected,
individually or in the aggregate, to have a material adverse effect on the
business, properties, prospects, condition (financial or otherwise), net worth
or results of operations of the Company and its Subsidiaries, taken as a whole.
12. The Company has full power and authority to
authorize, issue, offer and sell the Shares to be sold by it, as contemplated
by the Underwriting Agreement, free of any preemptive or similar rights. The
offer, issuance and sale by the Company of any shares of its capital stock
prior to the Effective Date was exempt from the registration requirements of
the Act and applicable state securities, real estate syndication and blue sky
laws.
13. All holders of securities of the Company have waived
any rights to the registration of any securities of the Company which they may
have as a result of the filing of the Registration Statement.
14. There is no document or contract of a character
required to be described in the Registration Statement or Prospectus or to be
filed as a exhibit to the Registration Statement which is not described or
filed as required.
15. Each of the Company and its Subsidiaries owns, or is
licensed or otherwise has the right to use, all material trademarks and trade
names which are used in or necessary for the conduct of its business as
described in the Registration Statement and Prospectus. To the best of our
knowledge after due inquiry, no claims have been asserted by any person to the
use of any such trademarks or trade names or challenging or questioning the
validity or effectiveness of any such trademark or trade name.
16. The Registration Statement has become effective under
the Act and, to the best of our knowledge after due inquiry, no stop order
preventing or suspending the
A-4
<PAGE> 47
use of the Registration Statement or Prospectus, has been issued and no
proceeding for that purpose has been instituted or is pending or threatened by
the Commission.
17. The Registration Statement, as of the Effective Date,
and the Prospectus, as of its date and as of the date hereof, complied or
complies, as the case may be, in all material respects with the applicable
requirements of the Act and the Rules and Regulations of the Commission.
18. The form of certificate evidencing the Shares has
been duly approved by all necessary corporate action of the Company and
complies as to form with the requirements of the Delaware General Corporation
Law.
19. The statements in the Prospectus under the captions
"Business - Joint Ventures and Strategic Alliances," "History and
Organization," "Management - Employment and Services Agreements" and "Certain
Relationships and Related Transactions," insofar as they purport to summarize
the provisions of documents referred to therein, and the statements in the
Prospectus under the captions "Description of Capital Stock" and "Shares
Eligible For Future Sale" insofar as they purport to summarize the provisions
of documents or matters of law referred to therein or constitute legal
conclusions, are accurate in all material respects.
Very truly yours,
Rogers & Hardin
A-5
<PAGE> 48
EXHIBIT B
FORM OF OPINION OF COMPANY REGULATORY COUNSEL
___________, 1996
NATWEST SECURITIES LIMITED
McDONALD & COMPANY SECURITIES, INC.
THE CHICAGO CORPORATION
As Representatives of the
several Underwriters
c/o NatWest Securities Limited
135 Bishopsgate
London EC2M 3XT
England
Re: 6,000,000 Shares of Common Stock, par value $.01 per
share of Alternative Living Services, Inc.
Ladies and Gentlemen:
We have acted as counsel to Alternative Living Services, Inc., a
Delaware corporation (the "Company"), in connection with the purchase on this
date by you and the other underwriters (collectively, the "Underwriters") named
in Schedule II of that certain Underwriting Agreement dated __________________,
1996, among the Underwriters, the Company and the Selling Stockholders (as
defined therein) (the "Underwriting Agreement") of an aggregate of 6,000,000
shares (the "Firm Shares") of the Company's common stock, par value $.01 (the
"Common Stock"), of which (i) 2,831,358 shares in the aggregate are to be sold
by the Selling Stockholders and (ii) 3,168,642 shares are to be issued and sold
by the Company. This opinion is furnished to you pursuant to Section 8(g) of
the Underwriting Agreement. Terms used herein and not defined herein are used
as defined in the Underwriting Agreement.
In connection with this opinion, we have reviewed such documents and
matters of law as we have deemed necessary for the purposes of expressing the
opinions set forth herein. Based upon the foregoing, we are of the opinion
that:
1. Except as otherwise described in the Registration
Statement and Prospectus, each of the facilities described in the Registration
Statement under the captions "Business-Properties" and located in the State of
__________ is organized, licensed and operated in conformity with the
requirements for qualification as a licensed facility of the type set forth
next to the name of such Facility in Exhibit A hereto under the applicable
laws, rules and regulations of the State of __________ in which the Facilities
are located and
B-1
<PAGE> 49
is therefore able to conduct the Company's business of "assisted living"
described as being conducted at each such Facility in its beds as set forth
more fully in the Prospectus. Furthermore, the Company's _________________
facility in ______________, is not currently a licensed facility but is
operated as an independent living facility. Those facilities listed herein
which are not licensed under state law or which contain unlicensed beds do not
currently provide in those facilities or unlicensed beds services of a nature
which would require the Company or its Subsidiaries to be duly licensed to
provide the same.
2. The statements set forth under the headings "Risk
Factors-Governmental Regulation" and "Business-Government Regulation" in the
Registration Statement and the Prospectus, insofar as such statements
constitute a summary of the legal matters, documents or proceedings referred to
therein, provide accurate summaries of such legal matters, documents and
proceedings.
3. To our knowledge after reasonable investigation, the
conduct of the business of the Company and its Subsidiaries is not in violation
of any federal, state or local statute, administrative regulation or other law,
which violation is likely to have a material adverse effect on the Company and
its Subsidiaries, taken as a whole; and each of the Company and its
Subsidiaries has either (i) obtained all Licenses which are necessary or
required to be issued to the Company and its Subsidiaries for the ownership,
leasing and operation o f its Facilities and the conduct of its business as
presently conducted, except where the failure to obtain such Licenses would not
have a material adverse affect on each of the Company and its Subsidiaries or
(ii) taken all steps necessary to obtain such Licenses an depending issuance
thereof is lawfully operating its Facilities under Licenses issued in the name
of the prior operator thereof.
Although we assume no responsibility for the accuracy,
completeness and fairness of the statements contained in the Registration
Statement and Prospectus, we have participated in discussions with officers of
the Company regarding the provisions of the Prospectus described in Paragraph 2
of this opinion and no facts have come to our attention that lead us to believe
that the provisions of the Registration Statement described in Paragraph 2 of
this opinion as of the date it was declared effective and as of the date hereof
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the provisions of the
Prospectus described in Paragraph 2 of this opinion as of its date and the date
hereof, contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that we have not been
requested to comment on, and express no comment with respect to, financial,
operating and statistical data and the historical and pro forma financial
statements, including the notes and schedules thereto, in the Prospectus).
Sincerely,
B-2
<PAGE> 50
EXHIBIT C
FORM OF OPINION OF SELLING STOCKHOLDERS
___________, 1996
NATWEST SECURITIES LIMITED
McDONALD & COMPANY SECURITIES, INC.
THE CHICAGO CORPORATION
As Representatives of the
several Underwriters
c/o NatWest Securities Limited
135 Bishopsgate
London EC2M 3XT
England
Re: 6,000,000 Shares of Common Stock, par value $.01 per
share, of Alternative Living Services, Inc.
Ladies and Gentlemen:
We have acted as counsel to _________________, _______________ and
_________________________ (collectively, the "Selling Stockholders"), in
connection with the purchase on this date by you and the other underwriters
(collectively, the "Underwriters") named in Schedule II of that certain
Underwriting Agreement dated __________________, 1996, among the Underwriters,
Alternative Living Services, Inc., a Delaware corporation (the "Company"), and
certain stockholders of the Company including the Selling Stockholders (the
"Underwriting Agreement") of an aggregate of 6,000,000 shares (the "Firm
Shares") of the Company's common stock, par value $.01 (the "Common Stock"),
of which (i) 2,831,358 shares in the aggregate are to be sold by the Selling
Stockholders and (ii) 3,168,642 shares are to be issued and sold by the
Company. This opinion is furnished to you pursuant to Section 8(h) of the
Underwriting Agreement. Terms used herein and not defined herein are used as
defined in the Underwriting Agreement.
In connection with this opinion, we have reviewed such documents and
matters of law as we have deemed necessary for the purposes of expressing the
opinions set forth herein. Based upon the foregoing, we are of the opinion
that:
1. Each Selling Stockholder that is a corporation or
other business entity is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization.
C-1
<PAGE> 51
2. Each Selling Stockholder has full power and authority
to enter into the Underwriting Agreement and to carry out all the terms and
provisions thereof to be carried out by it. All authorizations and consents
necessary for the execution and delivery by each Selling Stockholder of the
Underwriting Agreement have been given. The Underwriting Agreement has been
duly authorized, executed and delivered by or on behalf of each Selling
Stockholder and constitutes a valid and binding agreement of each Selling
Stockholder and is enforceable against each Selling Stockholder in accordance
with the terms thereof, except as limited by general principles of equity
relating to the availability of remedies and except as rights to indemnity or
contribution may be limited by federal or state securities laws and the public
policy underlying such laws.
3. Each Selling Stockholder has full power and authority
to enter into the Power of Attorney in the form heretofore furnished to the
Underwriters and the Custody Agreement in the form heretofore furnished to the
Underwriters and to carry out all the terms and provisions thereof to be
carried out by it. All authorizations and consents necessary for the execution
and delivery by each Selling Stockholder of the Power of Attorney and the
Custody Agreement have been given. Each Power of Attorney and Custody
Agreement has been duly authorized, executed and delivered by or on behalf of
such Selling Stockholder and is enforceable against such Selling Stockholder in
accordance with the terms thereof, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws now or hereafter in effect
relating to or affecting creditors' rights generally or by general principles
of equity relating to the availability of remedies.
4. Each Selling Stockholder has (i) good and marketable
title to the Shares to be sold by such Selling Stockholder under the
Underwriting Agreement, free and clear of all Encumbrances, and (ii) full legal
right and power, and all authorizations and approvals required by law, to sell,
transfer and deliver the Shares to the Underwriters pursuant to the
Underwriting Agreement and to make the representations, warranties and
agreements made by such Selling Stockholder therein.
5. Upon the delivery of and payment for the Shares to be
sold by the Selling Stockholders under the Underwriting Agreement, the
Underwriters will receive good and marketable title to such Shares, free and
clear of all Encumbrances.
6. None of the execution, delivery or performance of the
Underwriting Agreement, the Power of Attorney or the Custody Agreement and the
consummation of the transactions contemplated therein by the Selling
Stockholders conflicts or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the creation or imposition of any
Encumbrance upon, any property or assets of any Selling Stockholder pursuant to
(i) the terms of its organizational documents; (ii) the terms of any contract
or other agreement to which any Selling Stockholder is a party or by which it
is bound or to which any of its properties is subject; (iii) any statute, rule
or regulation of any Governmental Body having jurisdiction
C-2
<PAGE> 52
over such Selling Stockholder or any of its activities or properties; or (iv)
the terms of any judgment, decree or order of any arbitration or Governmental
Body having such jurisdiction.
7. No consent, approval, authorization or order of, or
any filing or declaration with, any Governmental Body is required for the
consummation by any Selling Stockholder of the transactions on its part
contemplated by the Underwriting Agreement, the Custody Agreement or Power of
Attorney, except such as have been obtained under the Act or the Rules and
Regulations and such as may be required under state securities or Blue Sky laws
or the bylaws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the Shares to be sold by such Selling
Stockholder.
C-3
<PAGE> 53
EXHIBIT D
FORM OF LOCK-UP AGREEMENT
NATWEST SECURITIES LIMITED
McDONALD & COMPANY SECURITIES, INC.
THE CHICAGO CORPORATION
As Representatives of the
several Underwriters
c/o NatWest Securities Limited
135 Bishopsgate
London EC2M 3XT
England
Ladies and Gentlemen:
The undersigned understands that Alternative Living Services,
Inc. (the "Company") has filed a Registration Statement (the "Registration
Statement") with the Securities and Exchange Commission (the "Commission")
relating to the proposed sale of the Company's common stock, par value $.01 per
share (the "Common Stock") by the Company and certain existing stockholders of
the Company in a public offering (the "Offering") to be underwritten by NatWest
Securities Limited ("NatWest"), McDonald & Company Securities, Inc., The
Chicago Corporation (the "Representatives"), and other potential underwriters
(the "Underwriters"). NatWest has requested that certain stockholders of the
Company enter into this Agreement because the prospect of public sales of
Common Stock by the Company's stockholders during the period after the offering
would be detrimental to the proposed underwriting effort. The undersigned
recognizes that it is in the best financial interests of the undersigned, as a
stockholder of the Company, that the proposed public offering be completed.
In consideration of the foregoing and with the understanding
that the Underwriters will rely hereon in connection with their commitment to
underwrite the proposed public offering, the undersigned hereby agrees for the
benefit of the Company, the Representatives and the Underwriters not to,
without the prior written consent of NatWest, directly or indirectly, offer to
sell, sell, contract to sell, grant any option to purchase or otherwise dispose
(or announce any offer, sale, grant of any option to purchase or other
D-1
<PAGE> 54
disposition) of any shares of Common Stock, or any securities convertible into
or exercisable or exchangeable for, shares of Common Stock for a period of 180
days after the date of the Underwriting Agreement related to the Offering.
Dated: , 1996
----------------------------
------------------------------
[Director/Officer/Stockholder]
D-2
<PAGE> 1
EXHIBIT 4.1
[LOGO] ALTERNATIVE LIVING SERVICES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
NUMBER SHARES
------ ------
A
CUSIP 02145K 10 7
SEE REVERSE FOR
CERTAIN DEFINITION
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK,
$.01 PAR VALUE PER SHARE, OF
ALTERNATIVE LIVING SERVICES, INC.
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. This
certificate and the shares represented hereby are issued under and shall be
subject to the laws of the State of Delaware and all of the provisions of the
Restated Certificate of Incorporation and Restated Bylaws of the Corporation,
and all of the amendments from time to time made thereto. This certificate is
not valid until countersigned and registered by the Transfer Agent and
Registrar.
WITNESS the facsimile seal of the Corporation and the
facsimile signatures of its duly authorized officers.
Dated:
[SEAL]
/s/ William F. Lasky /s/ John W. Kneen
-------------------------- -----------------------
Chief Executive Officer Vice President and
and President Secretary
Countersigned and Registered:
AMERICAN STOCK TRANSFER & TRUST COMPANY
(New York, N.Y.)
Transfer Agent and Registrar,
By
Authorized Signature
<PAGE> 2
ALTERNATIVE LIVING SERVICES, INC.
This Corporation will furnish without charge to each stockholder who
so requests, a copy of the designations, powers, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights. Any such requests may be addressed to the Secretary
of the Corporation.
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM as tenants in common
TEN ENT as tenants by the entireties
JT TEN as joint tenants with right
of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - _____________ Custodian _____________
(Cust) (Minor)
under Uniform Gifts to Minors Act
_________________________________
(State)
Additional abbreviations may also be used though not in the above list
For value received, ______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[______________________________________]________________________________________
________________________________________________________________________________
Please print or typewrite name and address including postal zip code of assignee
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
of the stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint__________________________________________________________
________________________________________________________________________________
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated, ______________________________
________________________________________________________________
NOTICE: The signature to this assignment must correspond with
the name as written upon the face of the Certificate, in every particular,
without alteration or enlargement or any change whatever.
