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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: May 14, 1997
(Date of earliest event reported)
-------------------------------
ALTERNATIVE LIVING SERVICES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-11999 39-1771281
(State or other jurisdiction of (Commission file number) (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
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450 N. SUNNYSLOPE ROAD, SUITE 300
BROOKFIELD, WISCONSIN 53005
(Address of principal executive offices)
(414) 789-9565
(Registrant's telephone number, including area code)
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Item 5. Other Information.
On May 14, 1997, Alternative Living Services, Inc. (the
"Company") issued a press release announcing that it would sell $50 million of
7% convertible debentures due 2004 (the "Debentures"), at par value.
On May 21, 1997 (the "Closing Date"), the Company closed the
sale of the Debentures and received $48,150,000 in net proceeds therefrom. The
terms of the Debentures are described below.
DESCRIPTION OF DEBENTURES
The Debentures were issued under an Indenture dated as of May
21, 1997 (the "Indenture") executed by the Company and IBJ Schroder Bank &
Trust Company, as the trustee under the Indenture (the "Trustee"). The terms of
the Debentures include those stated in the Indenture and those made a part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended.
The following is a summary of certain provisions of the
Indenture and does not purport to be complete and is qualified in its entirety
by reference to the detailed provisions of the Indenture, including the
definitions of certain terms therein to which reference is hereby made, for a
complete statement of such provisions. Wherever particular provisions or
sections of the Indenture or terms defined therein are referred to herein, such
provisions or definitions are incorporated herein by reference.
GENERAL
The Debentures are unsecured general obligations of the
Company, subject to the rights of holders of Senior Indebtedness of the
Company, and will mature on June 1, 2004. The Debentures are limited to $50.0
million aggregate principal amount and bear interest payable semiannually on
June 1 and December 1 of each year, commencing December 1, 1997, at the per
annum rate of 7.0%. The first payment will be for the period from the date of
delivery to December 1, 1997. The Company will pay interest on the Debentures
to the persons who are registered holders of Debentures at the close of
business on the May 15 or November 15 preceding the interest payment date.
Principal (and premium, if any) and interest will be payable, the Debentures
will be convertible and exchangeable, and transfers thereof will be
registerable, at the office or agency of the Company maintained for such
purposes, initially at the offices of the Trustee. The Company may pay
principal and interest by check and may mail an interest check to a holder's
registered address. Holders must surrender Debentures to a Paying Agent to
collect principal payments.
Initially, the Trustee will act as Paying Agent, Registrar
and Conversion Agent. The Company may change any Paying Agent, Registrar,
Conversion Agent or co-registrar upon prior written notice to the Trustee and
may act in any such capacity itself.
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DELIVERY AND FORM OF DEBENTURES
Debentures in the face amount of $35 million were sold to
qualified institutional buyers (as defined in Rule 144A under the Securities
Act of 1933, as amended (the "Securities Act")) and are represented by a single
global Debenture (the "Rule 144A Global Security"), which was deposited on the
Closing Date with, or on behalf of, The Depository Trust Company (the
"Depository") and registered in the name of Cede & Co., as nominee of the
Depository (such nominee being referred to herein as the "Rule 144A Global
Security Holder"). The Company understands that the Debentures represented by
the Rule 144A Global Security are eligible for trading on the Private Offerings
Resales and Trading through Automatic Linkages ("PORTAL") System of the
National Association of Securities Dealers, Inc. The $15 million of Debentures
that were sold to accredited investors (the "Accredited Investor Securities")
are in fully registered form and were delivered to National Westminster Bank
PLC, New York Bank (the "Placement Agent") on behalf of such investors. The
Rule 144A Global Security and the Accredited Investor Securities were delivered
for the accounts of the purchasers (the "Purchasers") thereof on the Closing
Date.
The Depository is a limited-purpose trust company that was
created to hold securities for its participating organizations (collectively,
the "Participants" or the "Depository's Participants") and to facilitate the
clearance and settlement of transactions in such securities between
Participants through electronic book-entry changes in accounts of its
Participants. The Depository's Participants include securities brokers and
dealers, banks and trust companies, clearing corporations and certain other
organizations. Access to the Depository's system is also available to other
entities such as bank brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depository's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly. Persons who are not Participants may beneficially own
securities held by or on behalf of the Depository only through the Depository's
Participants or the Depository's Indirect Participants.
So long as the Rule 144A Global Security Holder is the
registered owner of any Debentures, the Rule 144A Global Security Holder will
be considered the sole holder under the Indenture of any Debentures evidenced
by the Rule 144A Global Security. Beneficial owners of Debentures evidenced by
the Rule 144A Global Security will not be considered the owners or holders
thereof under the Indenture for any purpose, including with respect to the
giving of any directions, instructions or approvals to the Trustee thereunder.
Neither the Company nor the Trustee will have any responsibility or liability
for any aspect of the records of the Depository or for maintaining, supervising
or reviewing any records of the Depository relating to the Debentures.
Payments in respect of the principal or premium, if any, and
interest on any Debentures registered in the name of the Rule 144A Global
Security Holder on the applicable record date will be payable to the Trustee to
or at the direction of the Rule 144A Global Security Holder in its capacity as
the registered holder under the Indenture. Under the terms of the Indenture,
the Company and the Trustee may treat the persons in whose names the
Debentures, including the Rule 144A Global Security, are registered as the
owner thereof for the purpose of
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receiving such payments. Consequently, neither the Company nor the Trustee has
or will have any responsibility or liability for the payment of such amounts to
beneficial owners of Debentures (including principal or premium, if any, and
interest). The Company believes, however, that it is currently the policy of
the Depository immediately to credit the accounts of the relevant Participants
with such payments, in amounts proportionate to their respective holdings of
beneficial interests in the relevant security as shown on the records of the
Depository. Payments by the Depository's Participants and the Depository's
Indirect Participants to the beneficial owners of Debentures will be governed
by standing instructions and customary practice and will be the responsibility
of the Depository's Participants or the Depository's Indirect Participants.
The Debentures are in fully registered form without coupons
in denominations of $1,000 or any multiples thereof. A holder may transfer or
exchange Debentures in accordance with the Indenture. No service charge will be
made for any registration or transfer, exchange or conversion of Debentures,
except for any tax or other governmental charges that may be imposed in
connection therewith. The Registrar need not transfer or exchange any
Debentures selected for redemption. Also, in the event of a partial redemption,
it need not transfer or exchange any Debentures for a period of 15 days before
selecting Debentures to be redeemed. The Indenture does not contain any
provision requiring the Company to repurchase the Debentures at the option of
the holders thereof in the event of a leveraged buyout, recapitalization or
similar restructuring of the Company, even though the Company's credit
worthiness and the market value of the Debentures may decline significantly as
a result of such transaction. The Indenture does not protect holders of the
Debentures against any decline in credit quality, whether resulting from any
such transaction or from any other cause. The registered holder of a Debenture
may be treated as its owner for all purposes.
CONVERSION RIGHTS
The holders of the Debentures are entitled at any time after
the registration statement required to be filed by the Company pursuant to the
Registration Rights Agreement described below (the "Registration Date") and
prior to maturity, subject to prior redemption, to convert the Debentures or
portions thereof (which are $1,000 or multiples thereof) into shares of the
Company's common stock, $.01 par value per share (the "Common Stock"), at the
conversion price of $20.25 per share (subject to adjustments as described
below). No payment or adjustment will be made for accrued interest on a
converted Debenture. If any Debenture not called for redemption is converted
between a record date for the payment of interest and the next succeeding
interest payment date, such Debenture must be accompanied by funds equal to the
interest payable to the registered holder on such interest payment date on the
principal amount so converted. The Company will not issue fractional interests
in shares of Common Stock upon conversion of the Debentures and instead will
deliver a check for the fractional share based upon the market value of the
Common Stock on the last trading date prior to the conversion date. If the
Debentures are called for redemption, conversion rights will expire at the
close of business on the redemption date, unless the Company defaults in
payment due upon such redemption.
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The conversion price is subject to adjustments, as set forth
in the Indenture, in certain events, including the payment of dividends or
distributions on the Company's Common Stock in shares of capital stock;
subdivisions or combinations of the Common Stock into a greater or smaller
number of shares of Common Stock; reclassification of the shares of Common
Stock resulting in an issuance of any shares of the Company's capital stock;
distribution of rights or warrants to all holders of Common Stock entitling
them to purchase Common Stock at less than the then current price at that time;
and the distribution to all holders of Common Stock of assets, excluding
certain cash dividends and distributions, or debt securities or any rights or
warrants to purchase securities of the Company; provided, however, that no
adjustment will be required if holders of the Debentures receive notice of and
are allowed to participate in such transactions. No adjustment will be required
for rights to purchase Common Stock pursuant to a Company plan for reinvestment
of dividends or interest, or for a change in the par value of the Common Stock.
To the extent that Debentures become convertible into cash, no adjustment will
be required thereafter as to cash. No adjustment in the conversion price need
be made unless such adjustment would require a change of at least 1.0% in the
conversion price; however, any adjustment that would otherwise be required to
be made shall be carried forward and taken into account in any subsequent
adjustment. The Company may voluntarily reduce the conversion price for a
period of time.
If the Company pays dividends on the Common Stock in shares
of capital stock or subdivides or combines the Common Stock or issues by
reclassification of its Common Stock any shares of its capital stock or merges
with, or transfers or leases substantially all of its assets to, another
corporation or trust, the holders of the Debentures then outstanding will be
entitled thereafter to convert such Debentures into the kind and amount of
shares of capital stock, other securities, cash or other assets which they
would have owned immediately after such event had such Debentures been
converted before the effective date of the transaction.
Any Debentures called for redemption, unless surrendered for
conversion on or before the close of business on the redemption date, are
subject to being purchased from the holder of such Debentures at the redemption
price by one or more investment banks or other purchasers who may agree with
the Company to purchase such Debentures and convert them into Common Stock of
the Company.
SUBORDINATION OF DEBENTURES
The indebtedness evidenced by the Debentures is subordinated
and junior in right of payment to the extent set forth in the Indenture to the
prior payment in full of amounts then due on all Senior Indebtedness (as
hereinafter defined). No payment shall be made by the Company on account of
principal of (or premium if any) or interest on the Debentures or on account of
the purchase or other acquisition of Debentures, if there shall have occurred
and be continuing a default with respect to any Senior Indebtedness permitting
the holders to accelerate the maturity thereof, or with respect to any Senior
Indebtedness and such default shall be the subject of a judicial proceeding, or
the Company shall have received notice of such default from certain authorized
persons, unless and until such default or event of default shall have been
cured
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or waived or shall have ceased to exist. By reason of these provisions, in the
event of default on any Senior Indebtedness, whether now outstanding or
hereafter issued, payments of principal of (and premium, if any) and interest
on the Debentures may not be permitted to be made until such Senior
Indebtedness is paid in full, or the event of default on such Senior
Indebtedness is cured or waived.
Upon any acceleration of the principal of the Debentures or
any distribution of assets of the Company upon any receivership, dissolution,
winding-up, liquidation, reorganization or similar proceedings of the Company,
whether voluntary or involuntary, or in bankruptcy or insolvency, all amounts
due or to become due upon all Senior Indebtedness must be paid in full before
the holders of the Debentures or the Trustee are entitled to receive or retain
any assets so distributed in respect of the Debentures. By reason of this
provision, in the event of insolvency, holders of the Debentures may recover
less, ratably, than holders of Senior Indebtedness.
"Senior Indebtedness" is defined to mean the principal,
premium, if any, interest on and all other amounts payable under or in respect
of Indebtedness (as defined in the Indenture) of the Company (other than
Indebtedness owed to a subsidiary of the Company, Indebtedness of the Company
which is expressly pari passu with the Debentures or Indebtedness which is
expressly subordinated to the Debentures). There is no limit on the amount of
Senior Indebtedness that the Company may incur.
OPTIONAL REDEMPTION
The Debentures will be subject to redemption, as a whole or
in part, at any time or from time to time commencing on or after June 15, 2000
at the option of the Company on at least 30 days' and not more than 60 days'
prior notice by mail. The redemption prices (expressed as a percentage of
principal amount) are as follows for the 12-month period beginning on or after
June 15 of the following years:
<TABLE>
<CAPTION>
Redemption
Year Price
---- -----
<S> <C>
2000 103%
2001 102%
2002 101%
2003 and thereafter 100%
</TABLE>
MODIFICATION OF THE INDENTURE
Under the Indenture, with certain exceptions, the rights and
obligations of the Company with respect to the Debentures and the rights of
holders of the Debentures may only be modified by the Company and the Trustee
with the written consent of the holders of not less than 66-2/3% in principal
amount of the outstanding Debentures. However, without the consent
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of each Holder of any Debenture affected, an amendment, waiver or supplement
may not (a) reduce the amount of Debentures whose holders may consent to an
amendment; (b) reduce the rate or change the time of payment of interest on any
Debenture; (c) reduce the principal of or change the fixed maturity of any
Debenture; (d) make any Debenture payable in money other than that stated in
the Debenture; (e) change the provisions of the Indenture regarding the right
of the holders of a majority of the Debentures to waive defaults under the
Indenture or impair the right of any holder of Debentures to institute suit for
the enforcement of any payment of principal and interest on the Debentures on
and after their respective due dates; or (f) make any change that adversely
affects the right to convert any Debenture.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The following is a summary of certain provisions of the
Indenture relating to events of default notice and waiver.
The following are Events of Default under the Indenture with
respect to the Debentures: (i) default in the payment of interest on the
Debentures when due and payable which continues for 30 days; (ii) default in
the payment of principal of (and premium, if any) on the Debentures when due
and payable, at maturity, upon redemption or otherwise, which continues for
five business days; (iii) failure to perform any other covenant of the Company
contained in the Indenture or the Debentures which continues for 60 days after
notice as provided in the Indenture; (iv) acceleration of any indebtedness for
money borrowed (including obligations under leases required to be capitalized
on the balance sheet of the lessee under generally accepted accounting
principles but not including any indebtedness or obligation for which recourse
is limited to property purchased) in an aggregate principal amount in excess of
$5.0 million, whether existing on the date of the execution of the Indenture or
thereafter created, if such indebtedness is not paid or such acceleration is
not annulled within ten days after notice to the Company of such acceleration;
and (v) certain events of bankruptcy, insolvency or reorganization relating to
the Company.
If an Event of Default occurs and is continuing with respect
to the Debentures, either the Trustee or the Holders of at least a majority in
principal amount of the Debentures may declare all of the Debentures to be due
and payable immediately.
The Company will not (i) declare or pay any dividends or make
any distribution to holders of its capital stock or (ii) purchase, redeem or
otherwise acquire or retire for value any of its Common Stock, or any warrants,
rights or options, to purchase or acquire any shares of its Common Stock (other
than the Debentures or any other convertible indebtedness of the Company that
is neither secured nor subordinated to the Debentures), if at the time any of
the aforementioned Events of Default has occurred and is continuing or would
exist immediately after giving effect to such action.
The Trustee may require indemnity reasonably satisfactory to
it before it enforces the Indenture or the Debentures. Subject to certain
limitations, holders of a majority in principal
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amount of the Debentures may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from holders of the Debentures notice of any
default (except a default in payment of principal or interest) if it determines
that withholding notice is in their interests. The Company is required to file
with the Trustee annually an officer's statement as to the absence of defaults
in fulfilling any of its obligations under the Indenture.
No consent of the holders of the Debentures is required for
the Company to consolidate with or merge into or transfer or lease
substantially all of its assets to another corporation or trust which assumes
the obligations of the Company under the Indenture and Debentures or for any
reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code; nor is any such consent of holders of the Debentures required for
any amendment of the Indenture or the Debentures by the Company or the Trustee
to cure any ambiguity, defect or inconsistency, or to provide for
uncertificated Debentures in addition to certified Debentures, or to make any
change that does not adversely affect the right of a holder of a Debenture.
Subject to certain conditions, any person having a beneficial
interest in the Rule 144A Global Security may, upon request to the Trustee,
exchange such beneficial interest for Debentures in the form of certificated
Debentures. Upon any such issuance, the Trustee is required to register such
certificated Debentures in the name of, and cause the same to be delivered to,
such person or persons (nominee of any thereof). All such certificated
Debentures will be subject to the legend requirements set forth in the
Indenture. In addition, if (i) the Company notifies the Trustee in writing that
the Depository is no longer willing or able to act as a depository and the
Company is unable to locate a qualified successor within 90 days or (ii) the
Company, at its option, notifies the Trustee in writing that it elects to cause
the issuance of Debentures in the form of certificated Debentures under the
Indenture, then, upon surrender by the Rule 144A Global Security Holder of its
Rule 144A Global Security, Debentures in certificated form will be issued to
each person that the Rule 144A Global Security Holder and the Depository
identify as being the beneficial owner of the related Debentures.
Neither the Company nor the Trustee will be liable for any
delay by the Rule 144A Global Security Holder or the Depository in identifying
the beneficial owners of Debentures, and the Company and the Trustee may
conclusively rely on, and will be protected in relying on, instructions from
the Rule 144A Global Security Holder or the Depository for all purposes.
The Debentures may not be sold or otherwise transferred
except (i) (A) to the Company, (B) pursuant to a registration statement which
has been declared effective under the Securities Act, or (C) in accordance with
Rule 144 under the Securities Act or pursuant to another available exemption
from the registration requirements of the Securities Act (and confirmed in an
opinion of counsel acceptable in form and substance to the Company if the
Company so requests) and, in each case, in accordance with the applicable
securities laws of any state of the United States or any other applicable
jurisdiction, and (ii) in accordance with the provisions set forth in the
Indenture.
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CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Indenture provides that the Company may not merge or
consolidate with, or sell or convey all, or substantially all, of its assets to
another person unless such person is a company or a trust; such person assumes
by supplemental indenture all the obligations of the Company under the
Debentures and the Indenture; and immediately after the transaction no default
or Event of Default shall exist.
GOVERNING LAW
The Indenture and the Debentures are governed by and will be
construed in accordance with the laws of the State of New York.
REGISTRATION RIGHTS AGREEMENT
The Company has agreed to use its best efforts, subject to
the receipt of necessary information from the Purchasers, to prepare and file
with the Securities and Exchange Commission (the "Commission") a registration
statement (the "Registration Statement") with respect to the resale of the
Debentures and the shares of Common Stock issuable upon conversion thereof (the
"Conversion Shares") from time to time on the American Stock Exchange, in the
over-the-counter market or in privately negotiated transactions, as the case
may be, and to cause the Registration Statement to become effective as promptly
as practicable after the Company becomes eligible for Form S-3 promulgated by
the Commission and in any event not later than November 14, 1997. The Company
has also agreed to prepare and file such amendments and supplements to the
Registration Statement as may be necessary to keep the Registration Statement
effective until all the Debentures and the Conversion Shares have been sold
thereby or until the Debentures and the Conversion Shares are no longer, by
reason of Rule 144(k) promulgated under the Securities Act or any other rule of
similar effect, required to be registered for the sale thereof by the
Purchasers. The Registration Rights Agreement entitles the Company to suspend
temporarily the right of holders of the Common Stock registerable thereby (the
"Registrable Securities") to make dispositions of Registrable Securities
pursuant to the Registration Statement to the extent the Board of Directors
determines such suspension to be necessary in light of the existence of any
undisclosed acquisition, financing activity or other material event the
disclosure of which may reasonably be expected to materially disadvantage the
Company.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) None.
(b) None.
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(c) Exhibits.
4.1 Indenture dated as of May 21, 1997 by and
between the Company and IBJ Schroder Bank &
Trust Company, as Trustee.
99.1 Press release dated May 14, 1997 announcing
proposed sale of convertible debentures.
99.2 Form of Registration Rights Agreement dated
as of May 21, 1997 by and between the
Company and the Purchasers of the
Debentures.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: May 27, 1997
ALTERNATIVE LIVING SERVICES, INC.
---------------------------------------------
(Registrant)
By: /s/ Thomas E. Komula
----------------------------------------
Thomas E. Komula, Senior Vice President,
Treasurer and Chief Financial Officer
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EXHIBIT 4.1
- -------------------------------------------------------------------------------
ALTERNATIVE LIVING SERVICES, INC.
$50,000,000
7.0% Convertible Subordinated Debentures Due 2004
INDENTURE
Dated as of May 21, 1997
IBJ SCHRODER BANK & TRUST COMPANY,
AS TRUSTEE
- -------------------------------------------------------------------------------
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
SECTION 1.1. Definitions.........................................................................1
SECTION 1.2. Other Definitions...................................................................5
SECTION 1.3. Incorporation by Reference to Trust Indenture Act...................................5
SECTION 1.4. Rules of Construction...............................................................6
ARTICLE II.
THE SECURITIES
SECTION 2.1. Form; Dating; Incorporation of Form in Indenture....................................6
SECTION 2.2. Execution and Authentication........................................................8
SECTION 2.3. Registrar and Agents................................................................9
SECTION 2.4. Paying Agent to Hold Money in Trust.................................................9
SECTION 2.5. Transfer and Exchange..............................................................10
SECTION 2.6. Replacement Securities.............................................................15
SECTION 2.7. Outstanding Securities.............................................................15
SECTION 2.8. Temporary Securities...............................................................16
SECTION 2.9. Cancellation.......................................................................16
SECTION 2.10. Defaulted Interest.................................................................17
SECTION 2.11. Securityholder Lists...............................................................17
SECTION 2.12. Persons Deemed Owners..............................................................17
SECTION 2.13. CUSIP Number.......................................................................18
ARTICLE III.
REDEMPTION
SECTION 3.1. Notices to Trustee.................................................................18
SECTION 3.2. Selection of Securities to be Redeemed.............................................18
SECTION 3.3. Notice of Redemption by the Company................................................19
SECTION 3.4. Effect of Notice of Redemption.....................................................20
SECTION 3.5. Deposit of Redemption Price........................................................20
SECTION 3.6. Securities Redeemed in Part........................................................20
ARTICLE IV.
COVENANTS
SECTION 4.1. Payment of the Securities..........................................................20
SECTION 4.2. Commission Reports.................................................................20
SECTION 4.3. Waiver of Stay, Extension or Usury Laws............................................21
SECTION 4.4. Notice of Default..................................................................21
SECTION 4.5. Compliance Certificates............................................................21
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 4.6. Limitation on Dividends and Other Distributions....................................22
ARTICLE V.
SUCCESSOR CORPORATION
SECTION 5.1. When Company May Merge, etc........................................................22
SECTION 5.2. Successor Corporation or Trust Substituted.........................................23
ARTICLE VI.
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default..................................................................23
SECTION 6.2. Acceleration.......................................................................25
SECTION 6.3. Other Remedies.....................................................................26
SECTION 6.4. Waiver of Defaults and Events of Default...........................................26
SECTION 6.5. Control by Majority................................................................26
SECTION 6.6. Rights of Holders to Receive Payment...............................................26
SECTION 6.7. Collection Suit by Trustee.........................................................27
SECTION 6.8. Trustee May File Proofs of Claim...................................................27
SECTION 6.9. Priorities.........................................................................28
SECTION 6.10. Undertaking for Costs..............................................................28
SECTION 6.11. Limitation on Suits................................................................28
ARTICLE VII.
TRUSTEE
SECTION 7.1. Duties of Trustee..................................................................29
SECTION 7.2. Rights of Trustee..................................................................30
SECTION 7.3. Individual Rights of Trustee.......................................................31
SECTION 7.4. Trustee's Disclaimer...............................................................31
SECTION 7.5. Notice of Defaults.................................................................31
SECTION 7.6. Reports by Trustee to Holders......................................................32
SECTION 7.7. Compensation and Indemnity.........................................................32
SECTION 7.8. Replacement of Trustee.............................................................33
SECTION 7.9. Successor Trustee by Merger, etc...................................................34
SECTION 7.10. Eligibility; Disqualification......................................................34
SECTION 7.11. Preferential Collection of Claims Against Company..................................34
ARTICLE VIII.
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.1. Satisfaction, Discharge and Defeasance of the Securities...........................35
SECTION 8.2. Satisfaction and Discharge of Indenture............................................36
SECTION 8.3. Survival of Certain Obligations....................................................36
SECTION 8.4. Application of Trust Money.........................................................36
SECTION 8.5. Paying Agent to Repay Monies Held..................................................37
SECTION 8.6. Return of Unclaimed Monies.........................................................37
SECTION 8.7. Reinstatement......................................................................37
SECTION 8.8. Indemnity for Government Obligations...............................................38
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE IX.
AMENDMENTS AND WAIVERS
<S> <C> <C>
SECTION 9.1. Amendments and Waivers Without Consent of Holders..................................38
SECTION 9.2. Amendments and Waivers with Consent of Holders.....................................39
SECTION 9.3. Compliance with Trust Indenture Act................................................40
SECTION 9.4. Revocation and Effect of Consents..................................................40
SECTION 9.5. Notation on or Exchange of Securities..............................................40
SECTION 9.6. Trustee to Sign Amendments, etc....................................................41
ARTICLE X.
CONVERSION OF SECURITIES
SECTION 10.1. Right of Conversion; Conversion Price..............................................41
SECTION 10.2. Issuance of Shares on Conversion...................................................41
SECTION 10.3. No Adjustment for Interest or Dividends............................................42
SECTION 10.4. Adjustment of Conversion Price.....................................................43
SECTION 10.5. Notice of Adjustment of Conversion Price...........................................45
SECTION 10.6. Notice of Certain Corporate Action.................................................46
SECTION 10.7. Taxes on Conversions...............................................................47
SECTION 10.8. Fractional Shares..................................................................47
SECTION 10.9. Cancellation of Converted Securities...............................................47
SECTION 10.10. Provisions in Case of Consolidation, Merger or Sale of Assets......................47
SECTION 10.11. Disclaimer by Trustee of Responsibility for Certain Matters........................48
SECTION 10.12. Covenant to Reserve Shares.........................................................48
ARTICLE XI.
SUBORDINATION; SENIORITY
SECTION 11.1. Securities Subordinated to Senior Indebtedness.....................................49
SECTION 11.2. Company Not to Make Payments with Respect to Securities in
Certain Circumstances..............................................................49
SECTION 11.3. Subrogation of Securities..........................................................51
SECTION 11.4. Authorization by Holders of Securities.............................................53
SECTION 11.5. Notices to Trustee.................................................................53
SECTION 11.6. Trustee's Relation to Senior Indebtedness..........................................54
SECTION 11.7. No Impairment of Subordination.....................................................54
SECTION 11.8. Article 11 Not To Prevent Events of Default........................................54
SECTION 11.9. Paying Agents other than the Trustee...............................................55
SECTION 11.10. Securities Senior to Subordinated Indebtedness.....................................55
ARTICLE XII.
MISCELLANEOUS
SECTION 12.1. Trust Indenture Act Controls.......................................................55
SECTION 12.2. Notices............................................................................55
SECTION 12.3. Communications by Holders with Other Holders.......................................57
SECTION 12.4. Certificate and Opinion as to Conditions Precedent.................................57
SECTION 12.5. Statements Required in Certificate and Opinion.....................................57
SECTION 12.6. Rules by Trustee and Agents........................................................57
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 12.7. Record Date........................................................................58
SECTION 12.8. Legal Holidays.....................................................................58
SECTION 12.9. Governing Law......................................................................58
SECTION 12.10. No Adverse Interpretation of Other Agreements......................................58
SECTION 12.11. No Recourse Against Others.........................................................58
SECTION 12.12. Successors.........................................................................59
SECTION 12.13. Multiple Counterparts..............................................................59
SECTION 12.14. Table of Contents, Headings, etc...................................................59
SECTION 12.15. Severability.......................................................................59
</TABLE>
EXHIBIT A - FORM OF SECURITY
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<PAGE> 6
CROSS-REFERENCE TABLE
ALTERNATIVE LIVING SERVICES, INC.
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture
- ------------- ---------
<S> <C>
310(a)(1) 7.10; 12.1
(a)(2) 12.1
(a)(3) 12.1
(a)(4) 12.1
(a)(5) 12.1
(b) 7.10; 12.1
(c) 12.1
311(a) 7.11; 12.1
(b) 7.11; 12.1
(c) 12.1
312(a) 12.1
(b) 12.1; 12.3
(c) 12.1; 12.3
313(a) 7.6; 12.1
(b) 7.6; 12.1
(c) 7.6; 12.1
(d) 7.6; 12.1
314(a) 4.2; 12.1
(b) 12.1
(c) 12.1
(d) 12.1
(e) 12.1
(f) 12.1
315(a) 7.1; 12.1
(b) 7.1; 12.1
(c) 7.1; 12.1
(d) 7.1; 12.1
(e) 7.1; 12.1
316(a) 7.1; 12.1
(b) 7.1; 12.1
(c) 7.1; 12.1
317(a) 12.1
(b) 12.1
318(a) Not Applicable
</TABLE>
- -------------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 7
INDENTURE dated as of May 21, 1997 by and between ALTERNATIVE
LIVING SERVICES, INC., a Delaware corporation (the "Company"), and IBJ SCHRODER
BANK & TRUST COMPANY, a New York banking corporation, as trustee ("Trustee").
RECITALS OF THE COMPANY
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders (as defined herein)
of the Company's 7.0% Convertible Subordinated Debentures due 2004 (the
"Securities"):
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"Affiliate" means any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities
or by agreement or otherwise.
"Agent" means any Registrar, Paying Agent, Conversion Agent,
co-registrar or agent for service of notices and demands.
"Bankruptcy Law" means Title 11 of the U.S. Code or any
similar Federal or State law for the relief of debtors.
"Board of Directors of the Company" means the Board of
Directors of the Company or any committee of the Board of Directors of the
Company.
"Board Resolution" means a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors of the Company and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means any and all shares or other equivalents
(however designated) of capital stock, including all common stock and all
preferred stock, in the case of a corporation, or partnership interests or
other equivalents (however designated) in the case of a partnership or
<PAGE> 8
common shares of beneficial interest or other equivalents (however designated)
in the case of a trust.
"Closing Price" means with respect to the shares of Capital
Stock of the Company on any day, (i) the reported last sale price regular way
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the
American Stock Exchange (the "AMEX"), or (ii) if the shares of Capital Stock
are not listed or admitted to trading on the AMEX, the reported last sale price
regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either
case on the principal national securities exchange on which the shares of
Capital Stock are listed or admitted to trading, or (iii) if the shares of
Capital Stock are not listed or admitted to trading on any national securities
exchange, the average of the closing bid and asked prices as furnished by any
New York Stock Exchange member firm selected from time to time by the Company
for that purpose.
"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
the successor.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is
located at One State Street, New York, New York 10004.
"Custodian" means any receiver, trustee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or
passage of time or both would be, an Event of Default.
"Dollar" or "$" means the lawful money of the United States
of America.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Security Register.
"Indebtedness" as applied to any Person, means, without
duplication: (i) all indebtedness for borrowed money whether or not evidenced
by a promissory note, draft or similar instrument; (ii) that portion of
obligations with respect to any lease that is properly classified as a
liability on a balance sheet in accordance with generally accepted accounting
principles; (iii) notes payable and drafts accepted representing extensions of
credit; (iv) any balance owed for all or any part of the deferred purchase
price of property or services, which purchase price is due more than six months
from the date of incurrence of the obligation in respect thereof (except any
such balance that constitutes (a) a trade payable or an accrued liability
arising in the
-2-
<PAGE> 9
ordinary course of business or (b) a trade draft or note payable issued in the
ordinary course of business in connection with the purchase of goods or
services), if and to the extent such debt would appear as a liability upon a
balance sheet of such Person prepared in accordance with generally accepted
accounting principles; (v) any debt of others described in the preceding
clauses (i) through (iv) which such Person has guaranteed or for which it is
otherwise liable; and (vi) any deferral, amendment, renewal, extension,
supplement or refunding of any of the foregoing indebtedness; provided,
however, that, in computing the "Indebtedness" of any Person, there shall be
excluded any particular indebtedness if, upon or prior to the maturity thereof
and at the time of determination of such indebtedness, there shall have been
deposited with a depository in trust money (or evidences of indebtedness if
permitted by the instrument creating such indebtedness) in the necessary amount
to pay, redeem or satisfy such indebtedness as it becomes due, and the amount
so deposited shall not be included in any computation of the assets of such
Person.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer, the Secretary or the Controller of the Company.
"Officers' Certificate" means a certificate signed by two
Officers or by an Officer and an Assistant Treasurer, Assistant Secretary or
Assistant Controller of the Company. See Sections 12.4 and 12.5.
"Opinion of Counsel" means a written opinion from Rogers &
Hardin or any other legal counsel who is reasonably acceptable to the Trustee.
The counsel may be an employee of or counsel to the Company or the Trustee. See
Sections 12.4 and 12.5.
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Redemption Date" when used with respect to any Security to
be redeemed, means the date fixed for such redemption pursuant to this
Indenture.
"Redemption Price" when used with respect to any Security to
be redeemed, means the price fixed for such redemption pursuant to this
Indenture as specified in the form of Security annexed hereto as Exhibit A.
"Registration Statement" means the registration statement
that the Company is required to file with the Securities and Exchange
Commission pursuant to that certain Registration Rights Agreement, dated as of
May 21, 1997, by and between the Company and the Holders from time to time of
the Securities.
-3-
<PAGE> 10
"Regular Record Date" means, with respect to any Interest
Payment Date, the May 15 or November 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Restricted Security", means the Securities, upon original
issuance thereof, and all Securities issued upon registration of transfer
thereof or in exchange therefor, and at all times subsequent thereto, until, in
the case of any such Securities the earlier of the following: (i) such
Securities have been effectively registered under Section 5 of the Securities
Act and disposed of in accordance with a registration statement covering them
or (ii) such Securities have been distributed to the public pursuant to Rule
144 of the Securities Act (or any similar provisions then in force). When any
Security which is a Restricted Security ceases to be a Restricted Security,
such Restricted Security shall no longer be subject to the transfer
restrictions as imposed by Section 2.5(2) hereof.
"Securities Act" means the Securities Act of 1933, as amended
from time to time. "Securities" means the securities in the form of Exhibit A
hereto that are issued under this Indenture as amended or supplemented from
time to time.
"Senior Indebtedness" means the principal, premium, if any,
and unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post-filing interest is allowed in such proceeding), fees,
charges, expenses, reimbursement and indemnification obligations, and all other
amounts payable under or in respect of Indebtedness of the Company, whether any
such Indebtedness exists as of the date of this Indenture or shall hereafter be
created, incurred, assumed or guaranteed, as may be amended from time to time
and any renewals, extensions, refundings, amendments and modifications of any
such indebtedness or obligations or of the instruments creating or evidencing
such indebtedness or obligations or guarantees; provided, however, that Senior
Indebtedness shall not include (A) Indebtedness owed to a Subsidiary, (B)
Indebtedness of the Company which is expressly pari passu to the Securities or
(C) Subordinated Indebtedness.
"Subordinated Indebtedness" means the principal, premium, if
any, and interest on any Indebtedness of the Company which by its terms is
expressly subordinated in right of payment to the Securities.
"Subsidiary" means a Person the majority of whose voting
stock is owned by the Company or a subsidiary of the Company. Voting stock is
Capital Stock having voting power under ordinary circumstances to elect
directors or similar positions.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
ss.ss. 77aaa - 77bbbb) as amended by the Trust Indenture Reform Act of 1990 and
as in effect on the date of this Indenture.
-4-
<PAGE> 11
"Trustee" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
the successor.
"Trust Officer", when used with respect to the Trustee, means
an officer of the Trustee assigned by the Trustee to administer its corporate
trust matters or any other officer of the Trustee to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"United States" means the United States of America.
SECTION 1.2. Other Definitions.
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Common Stock" 10.1
"Company Order" 2.2
"Conversion Agent" 2.3
"conversion price" 10.1
"current market price" 10.4
"DTC" 2.3
"Depository" 2.3
"Event of Default" 6.1
"Interest Payment Date" 2.1
"Legal Holiday" 12.8
"Paying Agent" 2.3
"Payment or Distribution" 11.1
"Registered Accredited
"Investor Securities" 2.1
"Registrar" 2.3
"Rule 144A Securities" 2.1
"Rule 13e-3 Transaction" 10.6
"Security Register" 2.3
"U.S. Government Obligations" 8.1
</TABLE>
SECTION 1.3. Incorporation by Reference to Trust Indenture
Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Securities.
-5-
<PAGE> 12
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company or
any other obligor on the indenture securities.
All other terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by Commission
rules have the meanings assigned to them therein.
SECTION 1.4. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with United States
generally accepted accounting principles in effect as of the
time as to which such accounting principles are to be
applied;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and in
the plural include the singular.
ARTICLE II.
THE SECURITIES
SECTION 2.1. Form; Dating; Incorporation of Form in
Indenture.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $50,000,000,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Sections
2.3, 2.5, 2.6, 2.8, 3.6, 9.5 or 10.1.
The Securities shall be known and designated as the 7.0%
Convertible Subordinated Debentures due 2004 of the Company. Their fixed
maturity shall be June 1, 2004, and they shall bear interest at the rate per
annum of 7.0%, from and including the date of issuance thereof until maturity
or earlier redemption, payable semiannually on June 1 and December 1 commencing
December 1, 1997 (each an "Interest Payment Date"), until the
-6-
<PAGE> 13
principal thereof is paid or made available for payment. Subject to Section
2.10, such interest shall be paid to the Holder in whose name each Security was
registered at the close of business on the Regular Record Date next preceding
each Interest Payment Date.
The Securities shall be redeemable as provided in Article 3.
The Securities shall be subordinated in right of payment to
Senior Indebtedness, to the extent provided in Article 11.
The Securities shall be convertible as provided in Article
10.
The Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A which is
incorporated in and made part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rules,
agreements to which the Company is subject, or usage. The Company shall approve
the form of the Securities and any notation, legend or endorsement on them.
Each Security shall be dated the date of its authentication.
The terms and provisions contained in the Securities shall
constitute, and are hereby expressly made, a part of this Indenture and to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
The Securities (the "Rule 144A Securities") offered and sold
to "qualified institutional buyers" (as such term is defined in Rule 144A under
the Securities Act) will initially be issued in the form of a global Security
in the aggregate principal amount of the Rule 144A Securities, which Security
shall be in substantially the form of Exhibit A hereto, including the
paragraphs referred to in footnotes 1 and 2, and is hereinafter referred to as
the "Rule 144A Global Security." The aggregate principal amount of the Rule
144A Global Security may from time to time be increased or decreased as
hereinafter provided.
All other Securities will be issued in fully registered form
in denominations of U.S. $1,000 and integral multiples thereof (the "Registered
Securities"), which Securities shall be in substantially the form of Exhibit A
hereto, excluding the information called for by footnote 1 thereto but
including, if applicable, the information called for by footnote 2 thereto. The
Registered Securities which are Restricted Securities are hereinafter
collectively referred to as "Registered Accredited Investor Securities."
-7-
<PAGE> 14
SECTION 2.2. Execution and Authentication.
Two Officers shall sign the Securities for the Company by
manual or facsimile signature.
If an Officer whose signature is on a Security no longer
holds that office at the time the Trustee authenticates the Security, the
Security shall nevertheless be valid.
A Security shall not be valid until the Trustee manually
signs the certificate of authentication on the Security. Such signature shall
be conclusive evidence that the Security has been authenticated under this
Indenture. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 2.9, for all purposes of this Indenture such Security shall
be deemed never to have been authenticated and delivered hereunder and shall
never be entitled to the benefits of this Indenture.
The Trustee shall authenticate Securities for original issue
in the aggregate principal amount of up to $50,000,000 upon the execution of
the Indenture and a written order or orders of the Company signed by two
Officers or by an Officer and an Assistant Treasurer of the Company (a "Company
Order"). The aggregate principal amount of the Securities outstanding at any
time may not exceed that amount.
The Trustee may appoint an authenticating agent to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company
or an Affiliate.
The Securities shall be issuable only in registered form
without coupons. The Securities shall be issuable only in denominations of
$1,000 principal amount and any whole multiples thereof.
-8-
<PAGE> 15
SECTION 2.3. Registrar and Agents.
The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities may be presented for
payment ("Paying Agent"), an office or agency where Securities may be presented
for conversion ("Conversion Agent") and an office or agency where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Registrar shall keep a register of the Securities (the
"Security Register") and of their transfer and exchange. The Company may have
one or more co-registrars, one or more additional Paying Agents and one or more
additional Conversion Agents. The Company or any Subsidiary may act as Paying
Agent and/or Conversion Agent. The term "Paying Agent" includes any additional
paying agent and the term "Conversion Agent" includes any additional conversion
agent.
The Company may change any Paying Agent, Registrar,
Conversion Agent or Co-Registrar on sixty (60) days' prior written notice to
the Trustee. The Company shall notify the Trustee in writing of the name and
address of any such Agent. If the Company fails to maintain a Registrar, Paying
Agent, Conversion Agent or agent for service of notices and demands, or fails
to give the foregoing notice, the Trustee shall act as such.
The Company initially appoints the Trustee as Registrar,
Paying Agent, Conversion Agent and agent for service of notices and demands.
With respect to the Securities issuable or issued in whole or
in part in the form of Rule 144A Global Securities, the Company hereby appoints
The Depository Trust Company ("DTC"), at present located at 55 Water Street,
New York, New York, 10041 as the depository for the Rule 144A Global Securities
upon the terms and subject to the conditions herein set forth. (DTC and its
successor or successors as such depository are herein called the "Depository.")
SECTION 2.4. Paying Agent to Hold Money in Trust.
At least one Business Day prior to each due date of the
principal of, premium if any, and interest on any Securities, the Company shall
deposit with each Paying Agent a sum sufficient to pay such principal, premium,
if any, and interest so becoming due. The Company shall require each Paying
Agent other than the Trustee to agree in writing that it will hold in trust for
the benefit of Holders of Securities or the Trustee all money held by the
Paying Agent for the payment of principal of, premium if any, or interest on
the Securities and to notify the Trustee of any default by the Company (or any
other obligor on the Securities) in making any such payment. If the Company or
a Subsidiary acts as Paying Agent, it shall on or before each due date of the
principal of, premium, if any, or interest on any Securities segregate the
money and hold it as a separate trust fund. The Company at any time may require
a Paying Agent to pay all money held by it to the Trustee and the Trustee may
at any time during the continuance
-9-
<PAGE> 16
of any payment default, upon written request to a Paying Agent, require such
Paying Agent to forthwith pay to the Trustee all sums so held in trust by such
Paying Agent. Upon doing so, the Paying Agent (if other than the Company or a
Subsidiary thereof) shall have no further liability for the money.
The final installment of principal of and premium, if any, on
each Security shall be payable only upon surrender of such Security at the
office or agency of the Company maintained for such purpose. Payments of
principal and premium, if any, and interest on this Security shall be made at
the office or agency of the Company maintained for such purpose, or, in the
case of any such payments other than the final payment of principal and
premium, if any, at the Company's option, by check mailed to the Person
entitled thereto at such Person's address last appearing on the Security
Register maintained by the Registrar.
SECTION 2.5. Transfer and Exchange.
(1) When a Security is presented to the Registrar or a
co-registrar with a request to register the transfer thereof, the Registrar or
co-registrar shall register the transfer as requested, and when Securities are
presented to the Registrar or a co-registrar with a request to exchange them
for an equal principal amount of Securities of other authorized denominations,
the Registrar shall make the exchange as requested provided that every Security
represented or surrendered for registration of transfer or exchange shall be
duly endorsed and accompanied by a written instrument of transfer satisfactory
to the Company and the Registrar duly executed by the Holder or such Holder's
attorney-in-fact duly authorized in writing; provided, further, that the
Registrar or co-registrar, as the case may be, shall not register the transfer
of such Security if such Security is a Restricted Security unless the
conditions in Section 2.5(2) hereof shall have been satisfied. The Holder of
each Security, including each Restricted Security, by such Holder's acceptance
thereof, agrees to be bound by the transfer restrictions set forth herein and
in the legend on such Security.
(2) Whenever any Restricted Security is presented or
surrendered for registration of transfer or exchange for a Security registered
in a name other than that of the Holder, no registration of transfer or
exchange shall be made unless:
(a) The registered Holder presenting such Restricted
Security for transfer shall have certified to the Trustee in
writing that the registered Holder is transferring the
Restricted Security to the Company;
(b) The Trustee has received written certification
from the registered Holder, and a written opinion of counsel
acceptable in form and substance to the Company and the
Trustee, indicating that the transfer is being made pursuant
to an available exemption from, or a transaction not
otherwise subject to, the registration requirements of the
Securities Act; or
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<PAGE> 17
(c) In the case of Rule 144A Securities, the
registered Holder presenting such Restricted Security for
transfer shall have certified to the Trustee in writing that
such registered Holder is transferring such Restricted
Securities to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in compliance with the
exemption from registration as provided by Rule 144A under
the Securities Act.
For purposes of this Section 2.5(2), such certification to
the Trustee in writing shall be in the form of the Transfer Notice set forth on
the reverse of such Security.
(3) Each certificate evidencing Restricted Securities shall
bear a legend in substantially the following form:
THIS SECURITY HAS BEEN ACQUIRED BY THE HOLDER FOR THE PURPOSE
OF INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN
CONNECTION WITH ANY DISTRIBUTION. THIS SECURITY (OR ITS
PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS
SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER
OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS,
ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE COMPANY THAT:
(I) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO
ALTERNATIVE LIVING SERVICES, INC., (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) IN THE CASE OF A HOLDER WHO IS
A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT), FOR SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (D)
IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OR
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
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<PAGE> 18
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (AND
CONFIRMED IN AN OPINION OF COUNSEL ACCEPTABLE IN FORM AND
SUBSTANCE TO THE ISSUER OF THIS SECURITY IF THE ISSUER SO
REQUESTS) AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION; AND (III) IT WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS SET FORTH
IN (II) ABOVE.
Subject to compliance with Section 2.5(6) hereof, the above legend may be
removed from a certificate when it no longer evidences a Security which is a
Restricted Security.
(4) To permit registrations of transfers and exchanges, the
Company shall issue and the Trustee or any authenticating agent shall
authenticate Securities at the Registrar's or co-registrar's request. No
service charge shall be made for any registration of transfer or exchange of
Securities but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto, but
this provision shall not apply to any exchange pursuant to Section 2.8, 3.6,
9.5 or 10.2 not involving any transfer.
(5) The Registrar shall not be required (i) to issue,
register the transfer of or exchange Securities during a period beginning at
the opening of business 15 days before the day of any selection of Securities
for redemption under Section 3.2 and ending at the close of business on the day
of selection, or (ii) to register the transfer or exchange of any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
(6) Any Restricted Security as to which the restrictions on
transfer set forth in Section 2.5(2) hereof shall have expired in accordance
with their terms or shall have terminated may, upon surrender of such
Restricted Security for exchange to the Trustee in accordance with the
provisions of this Section 2.5(6) (accompanied, in the event that such
restrictions on transfer have terminated by reason of a transfer pursuant to
Rule 144 (or any successor provision), by an opinion of counsel reasonably
acceptable to the Company, addressed to the Company and the Trustee and in form
and scope reasonably satisfactory to the Company, to the effect that the
transfer of such Restricted Security has been made in compliance with Rule 144
(or such successor provision)), be exchanged for a new Security, of like tenor
and aggregate principal amount, which shall not bear the restrictive legend
required by Section 2.5(3) hereof. The Company shall promptly inform the
Trustee in writing of the effective date of any registration statement
registering the Securities under the Securities Act.
(7) If the Security so surrendered for exchange is a
Registered Accredited Investor Security and the Holder thereof requests in
writing that such Registered Accredited
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Investor Security be exchanged for an interest in the Rule 144A Global
Security, such Registered Accredited Investor Security will be exchangeable
into an equal aggregate principal amount of beneficial interests in the Rule
144A Global Security; provided, however, that, if such Registered Accredited
Investor Security is a Restricted Security, such exchange may only be made if
such Holder certifies to the Trustee in writing that such Holder is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) by completing the Transfer Notice on the reverse of such Security. Upon
any exchange as provided in the immediately preceding sentence, the Trustee
shall cancel such Registered Accredited Investor Security and cause, or direct
any custodian for the Rule 144A Global Security to cause, in accordance with
the standing instructions and procedures existing between the Depository and
any such custodian, the aggregate principal amount of Securities represented by
the Rule 144A Global Security to be increased accordingly. If no Rule 144A
Global Securities are then outstanding, the Company shall issue and the Trustee
shall authenticate a new Rule 144A Global Security in the appropriate principal
amount.
Any person having a beneficial interest in a Rule 144A Global
Security may upon request exchange such beneficial interest for a Registered
Accredited Investor Security only as provided in this paragraph. Upon receipt
by the Company and the Trustee of (i) written instructions (or such other form
of instructions as is customary) on behalf of any person having a beneficial
interest in a Rule 144A Global Security and (ii) in the case of a Restricted
Security, the following additional information and documents (all of which may
be submitted by facsimile):
(A) if such beneficial interest is being
transferred to the person designated as
being the beneficial owner, a certification
to that effect from such person; or
(B) if such beneficial interest is being
transferred to a person other than the
person designated as being the beneficial
owner, the provisions of Section 2.5(2)(b)
hereof have been satisfied;
in which case the Trustee or any custodian for the Rule 144A Global Security,
at the direction of the Trustee, shall, in accordance with the standing
instructions and procedures existing between the Depository and such custodian,
cause the aggregate principal amount of the Rule 144A Global Security to be
reduced accordingly and, following such reduction, the Company shall execute
and the Trustee shall authenticate and deliver to the transferee a Registered
Security in the appropriate principal amount and, if such Security is a
Restricted Security, including the appropriate legend. Securities issued in
exchange for a beneficial interest in the Rule 144A Global Security pursuant to
this paragraph shall be registered in such names and in such authorized
denominations as shall be instructed to the Trustee by the Depositary. The
Trustee shall deliver such Securities to the persons in whose names such
Securities are so registered.
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(8) Notwithstanding any other provision of this Agreement
(other than the provisions set forth in Section 2.5(2)(c) hereof), the Rule
144A Global Security may not be transferred as a whole except by the Depository
to a nominee of the Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository or by Depository or any such
nominee to a successor Depository or a nominee of such successor Depository.
(9) If at any time either (i) the Depository for the Rule
144A Global Security notifies the Company that the Depository is unwilling or
unable to continue as Depository for the Rule 144A Global Security and a
successor Depository for the Rule 144A Global Security is not appointed by the
Company within 90 days after delivery of such notice, or (ii) the Company, at
its sole discretion, notifies the Trustee in writing that it elects to cause
the issuance of Registered Securities under this Indenture, then the Company
shall execute, and the Trustee shall authenticate and deliver, Registered
Securities in an aggregate principal amount equal to the principal amount of
the Rule 144A Global Security in exchange for such Rule 144A Global Security.
(10) At such time as all beneficial interests in the Rule
144A Global Security have either been exchanged for Registered Securities,
redeemed, repurchased or canceled, the Rule 144A Global Security shall be
returned to or retained and canceled by the Trustee. At any time prior to such
cancellation, if any beneficial interest in the Rule 144A Global Security is
exchanged for Registered Securities, redeemed, repurchased or canceled, the
principal amount of Securities represented by the Rule 144A Global Security
shall be reduced accordingly and an endorsement shall be made on the Rule 144A
Global Security, by the Trustee or any custodian therefor, at the direction of
the Trustee, to reflect such reduction.
(11) The transfer and exchange of the Rule 144A Global
Security or beneficial interests therein shall be effected through the
Depository, in accordance with this Indenture and the procedures of the
Depository therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act.
(12) The Trustee shall have no responsibility or obligation
to any beneficial owner of a Rule 144A Global Security, a member of, or a
participant in the Depository or other Person with respect to any ownership
interest in the Securities, with respect to the accuracy of the records of the
Depository or its nominee or of any participant or member thereof or with
respect to the delivery to any participant, member, beneficial owner or other
Person (other than the Depository) of any notice (including any notice of
redemption) or the payment of any amount, under or with respect to such
Securities. All notices and communications to be given to the Holders and all
payments to be made to Holders under the Securities shall be given or made only
to the registered Holders (which shall be the Depository or its nominee in the
case of a Rule 144A Global Security). The rights of beneficial owners in any
Rule 144A Global Security in global form shall be exercised only through the
Depository subject to the applicable rules and procedures of the Depository.
The Trustee may rely and shall be fully protected and indemnified pursuant to
Section 7.7 in relying upon information furnished by the Depository with
respect to any beneficial owners, its members and participants.
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The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of
any interest in any Security (including without limitation any transfers
between or among Depository participants, members or beneficial owners in any
Global Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and
when expressly required by, the terms of this Indenture, and to examine the
same to determine substantial compliance as to form with the express
requirements hereof.
SECTION 2.6. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if
the Holder of a Security presents evidence to the satisfaction of the Company
and the Trustee that the Security has been lost, destroyed or wrongfully taken,
the Company shall issue and the Trustee shall authenticate a new Security in
replacement of and substitution for such Security if the requirements of the
Trustee and the Company are met. An indemnity bond may be required by the
Company or the Trustee that is sufficient in the judgment of the Company to
protect the Company and is sufficient in the judgment of the Trustee to protect
the Trustee or any Agent from any loss which it may suffer if a Security is
replaced pursuant to this Section 2.6. The Company and the Trustee may charge
for its expense in replacing a Security.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the Company in its
sole discretion may, instead of issuing a new Security, pay or authorize the
payment or convert or authorize the conversion of such Security.
Every new Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
SECTION 2.7. Outstanding Securities.
Securities outstanding at any time are all Securities
theretofore authenticated and delivered under this Indenture except: (a)
Securities theretofore canceled by the Trustee or delivered to the Trustee for
cancellation; and (b) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this Indenture,
other than any Securities in respect of which there shall have been presented
to the Trustee proof satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid obligations of the
Issuer; provided, that in determining whether the Securityholders of the
requisite principal amount of outstanding Securities are present at a meeting
of Securityholders
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for quorum purposes or have voted or taken or concurred in any action under
this Indenture, including the making of any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned by the Company
or any other obligor upon the Securities or any Affiliate of the Company or
such other obligor shall be disregarded and deemed not outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such determination as to the presence of a quorum or upon any such request,
demand, authorization, direction, notice, consent or waiver, only Securities
which a Trust Officer of the Trustee actually knows to be so owned shall be
disregarded.
If a Security is replaced pursuant to Section 2.7, it ceases
to be outstanding until the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company or a Subsidiary)
holds on a Redemption Date or maturity date money deposited with it by or on
behalf of the Company sufficient to pay the principal of, premium, if any, and
accrued interest on Securities payable on that date, then on and after that
date such Securities cease to be outstanding and interest on them ceases to
accrue.
A Security does not cease to be outstanding because the
Company or an Affiliate holds the Security.
SECTION 2.8. Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive
Securities but may have non-material variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities in
exchange for temporary Securities upon written order of the Company signed by
two Officers. Until so exchanged, temporary Securities represent the same
rights as definitive Securities. Upon request of the Trustee, the Company shall
provide a certificate to the effect that the temporary Securities meet the
requirements of the second sentence of this Section 2.8.
SECTION 2.9. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar, the Paying Agent and the Conversion Agent
shall forward to the Trustee any Securities surrendered to them for transfer,
exchange, payment or conversion. The Trustee shall cancel all Securities
surrendered for transfer, exchange, payment or conversion and destroy canceled
Securities and deliver a certificate of such destruction to the Company unless
the Company directs the Trustee in writing prior to such destruction to deliver
canceled Securities
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to the Company. Subject to Sections 2.6, 3.6 and the second paragraph of
Section 10.2, the Company may not issue Securities to replace Securities that
it has previously paid or delivered to the Trustee for cancellation or that a
Securityholder has converted pursuant to Article 10 hereof.
SECTION 2.10. Defaulted Interest.
If the Company defaults in a payment of interest on
Securities when the same becomes due and payable and such default continues for
a period of 30 days, it shall pay the defaulted interest to the Persons who are
Holders of the Securities on a subsequent special record date. After the
deposit by the Company with the Trustee of money sufficient to pay such
defaulted interest, the Trustee shall fix the special record date and payment
date. Each such special record date shall be not less than 10 days prior to
such payment date. Each such payment date shall be not more than 60 days after
the deposit by the Company of money to pay the defaulted interest. At least 15
days before the special record date, the Company shall mail to each Holder of a
Security, with a copy to the Trustee, a notice that states the special record
date, the payment date, and the amount of defaulted interest to be paid.
SECTION 2.11. Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders, a copy of which list shall be provided to the
Company upon its written request. If the Trustee is not the Registrar, the
Registrar shall furnish to the Trustee at least seven Business Days prior to
each semiannual interest payment date and at such other times as the Trustee
may reasonably request in writing a list in such form and as of such date as
the Trustee may require of the names and addresses of Securityholders upon
which the Trustee may conclusively rely. The Trustee may destroy any such list
upon receipt of a replacement list. The Paying Agent will solicit from each
Securityholder a certification of social security number or taxpayer
identification number in accordance with its customary practice and as required
by law, unless the Paying Agent is in possession of such certification. Each
Paying Agent is authorized to impose back-up withholding with respect to
payments to be made to Securityholders to the extent required by law.
SECTION 2.12. Persons Deemed Owners.
Prior to registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the Person in whose name
such Security is registered as the owner of such Security and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
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SECTION 2.13. CUSIP Number.
The Company shall use a "CUSIP" number when issuing the Rule
144A Securities, but shall not use a "CUSIP" number when issuing Registered
Accredited Investor Securities. The Trustee may use the CUSIP number in notices
of redemption or exchange as a convenience to Securityholders; provided that
any such notice may state that no representation is made as to the correctness
or accuracy of the CUSIP number printed in the notice or on the Securities and
that reliance may be placed only on the other identification numbers printed on
the Securities, and any such redemption or exchange shall not be affected by
any defect in or omission of such numbers.
ARTICLE III.
REDEMPTION
SECTION 3.1. Notices to Trustee.
If the Company wants to redeem the Securities pursuant to the
optional redemption provisions of Paragraph 5 of the Securities, it shall
notify the Trustee of the Redemption Date and the principal amount of
Securities to be redeemed. The notice shall be given to the Trustee in writing
at least 60 days prior to the Redemption Date (unless a shorter notice period
shall be satisfactory to the Trustee in its discretion) and accompanied by an
Officers' Certificate stating that the redemption complies with the provisions
of this Indenture. Redemptions provided for in Paragraph 5 of the Securities
shall be effected as provided in said Paragraph 5 or as otherwise agreed upon
by the Company and the Trustee.
SECTION 3.2. Selection of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the
Trustee shall select the Securities to be redeemed pro rata or by lot or by any
other method that the Trustee considers fair and appropriate under the
circumstances. The Trustee shall promptly notify the Company of the Securities
to be so called for redemption. The Trustee shall make the selection from
Securities outstanding and not previously called for redemption. The Trustee
may select for redemption portions of the principal of Securities that have
denominations larger than $1,000 principal amount. Securities and portions of
them it selects shall be in principal amounts of $1,000 or multiples thereof.
Provisions of this Indenture that apply to Securities called for redemption
also apply to portions of Securities called for redemption. The Trustee's
selection of Securities for redemption by any method authorized by this Section
3.2 shall be conclusively deemed reasonable.
Upon any redemption of less than all the Securities, the
Company and the Trustee, for the purpose of selecting Securities to be
redeemed, may treat as outstanding any Securities surrendered for conversion
during the period of 15 days next preceding the selection of the Securities and
need not treat as outstanding any Security authenticated and delivered during
such
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period in exchange for the unconverted portion of any Security converted in
part during such period.
SECTION 3.3. Notice of Redemption by the Company.
At least 30 days but not more than 60 days before a
Redemption Date, the Company shall mail a notice of redemption by first-class
mail to each Holder of Securities to be redeemed, with a copy to the Trustee.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the Conversion Price;
(4) the name and address of the Paying Agent and
the Conversion Agent;
(5) that Securities called for redemption may be
converted at any time before the close of business on the
Redemption Date and, if not converted prior to the close of
business on the Redemption Date, the right of conversion will
be lost;
(6) that Holders who want to convert Securities
must satisfy the requirements of Paragraph 7 thereof;
(7) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption
Price;
(8) that interest on Securities called for
redemption ceases to accrue on and after the Redemption Date;
and
(9) if any Security is being redeemed in part, the
portion of the principal amount of such Security to be
redeemed and that, after the Redemption Date, upon surrender
of such Security, a new Security or Securities in principal
amount equal to the unredeemed portion thereof will be
issued.
At the Company's written request, the Trustee shall give the
notice of redemption in the Company's name and at the Company's expense. If a
CUSIP number is listed in such notice or printed on the Security, the notice
shall state that no representation is made as to the correctness or accuracy of
such CUSIP number.
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SECTION 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the applicable Redemption Date and at the
applicable Redemption Price. Upon surrender to the Paying Agent, such
Securities shall be paid at the Redemption Price, plus accrued interest to the
Redemption Date.
SECTION 3.5. Deposit of Redemption Price.
At least one Business Day before the Redemption Date, the
Company shall deposit with the Paying Agent (or if the Company or a Subsidiary
is the Paying Agent, shall segregate and hold in trust or cause such Subsidiary
to segregate and hold in trust) in immediately available funds money sufficient
to pay the Redemption Price of and accrued interest on all Securities to be
redeemed on that date. The Trustee or the Paying Agent shall return to the
Company any money so deposited not required for that purpose.
SECTION 3.6. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the
Trustee shall authenticate for the Holder, at the expense of the Company, a new
Security equal in principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE IV.
COVENANTS
SECTION 4.1. Payment of the Securities.
The Company shall pay the principal of, premium, if any, and
interest on the Securities on the dates and in the manner provided in the
Securities and this Indenture. An installment of principal, premium, if any, or
interest shall be considered paid on the date it is due if the Trustee or
Paying Agent (if other than the Company or a Subsidiary) holds on that date
money designated for and sufficient to pay the installment. The Company shall
pay interest on overdue principal and premium, if any, at the rate borne by the
Security; it shall pay interest, including post-petition interest in the event
of a proceeding under any Bankruptcy Law, on overdue installments of interest
at the same rate to the extent lawful.
SECTION 4.2. Commission Reports.
The Company shall file with the Trustee, promptly after
filing with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) which
the Company is required to file with the Commission pursuant to
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Section 13 or 15(d) of the Exchange Act. The Company shall also comply with the
other provisions of TIA ss. 314(a).
So long as the Securities remain outstanding, the Company
shall cause its annual reports to stockholders (containing audited financial
statements) and any other financial reports furnished by it to stockholders to
be mailed to the Holders at their addresses appearing in the Security Register
maintained by the Registrar.
For so long as any of the Rule 144A Securities remain
outstanding and are "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act, the Company covenants and agrees that it
shall, during any period in which it is not subject to Section 13 or 15(d) of
the Exchange Act, make available to any holder or beneficial holder of
securities which continue to be restricted securities in connection with any
sale thereof to any prospective purchase of such securities from such holder or
beneficial holder, the information specified in, and meeting the requirements
of the Rule 144A(d)(4) under the Securities Act.
SECTION 4.3. Waiver of Stay, Extension or Usury Laws.
The Company expressly waives (to the extent that it may
lawfully do so) any stay or extension law or any usury law or other law that
would prohibit or forgive the Company from paying all or any portion of the
principal of, premium, if any, or interest on Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force, or that may
affect the covenants or the performance of this Indenture, and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
SECTION 4.4. Notice of Default.
The Company will, so long as any Securities are outstanding,
deliver to the Trustee, within 10 days of becoming aware of any Default or
Event of Default in the performance of any covenant, agreement or condition in
this Indenture, an Officers' Certificate specifying such Default or Event of
Default, the period of existence thereof and what action the Company is taking
or proposes to take with respect thereto.
SECTION 4.5. Compliance Certificates.
The Company will deliver to the Trustee, within 120 days
after the end of each fiscal year of the Company (which as of the date hereof
is December 31), a written statement signed by the principal executive officer,
principal financial officer or principal accounting officer of the Company,
stating, as to each signer thereof:
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(1) that a review of the activities of the Company
during such year and of performance under this Indenture has
been made under his or her supervision;
(2) that to the best of his or her knowledge, based
on such review, the Company has kept, observed, performed and
fulfilled in all material respects each and every condition
and covenant contained in this Indenture throughout such
year, or, if there has been a default in the fulfillment of
any such condition or covenant, specifying each such default
known to him or her and the nature and status thereof; and
(3) the conversion price (as described in Article 10
of this Indenture) then in effect.
The Company will give the Trustee written notice of a change
in the fiscal year of the Company, within a reasonable time after such change
is effected.
SECTION 4.6. Limitation on Dividends and Other Distributions.
The Company will not declare or pay any dividends or make any
distribution to holders of its Capital Stock (other than dividends or
distributions payable in Capital Stock of the Company), or purchase, redeem or
otherwise acquire or retire for value any of its Capital Stock or permit any
Subsidiary to purchase, redeem or otherwise acquire or retire for value any of
the Company's Capital Stock if at the time of any of the aforementioned actions
an Event of Default has occurred and is continuing or would exist immediately
after giving effect to such action.
Notwithstanding the foregoing, the provisions of this Section
4.6 will not prevent (i) the payment of any dividend within 60 days after the
date of declaration when the payment would have complied with the foregoing
provisions on the date of declaration; or (ii) the retirement of any shares of
the Company's Capital Stock by exchange for, or out of the proceeds of the
substantially concurrent sale (other than to a Subsidiary) of, other shares of
its Capital Stock.
ARTICLE V.
SUCCESSOR CORPORATION
SECTION 5.1. When Company May Merge, etc.
The Company shall not consolidate with or merge into, or
transfer all or substantially all of its assets to, another Person in any
transaction in which the Company is not the continuing or surviving entity
unless (i) the resulting, surviving or transferee Person (or the parent
corporation of such Person in the case of a triangular merger) is a corporation
which assumes by supplemental indenture, in form satisfactory to the Trustee,
all the obligations of the Company under the Securities and this Indenture;
(ii) such corporation is organized and existing
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under the laws of the United States, a State thereof or the District of
Columbia although it in turn may be owned by a foreign entity; (iii)
immediately after giving effect to such transaction no Default or Event of
Default shall have happened and be continuing and the Officers' Certificate
referred to in the following clause reflects that such Officers are not aware
of any such Default or Event of Default that shall have happened and be
continuing, and (iv) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture comply with
this Indenture, and thereafter all obligations of the Company shall terminate.
SECTION 5.2. Successor Corporation or Trust Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.1,
the successor corporation formed by such consolidation or into which the
Company is merged (or the parent company of such successor or surviving
corporation in the case of a triangular merger in which the Company is a
constituent corporation) or to which such transfer is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor corporation has
been named as the Company herein; the Company shall thereupon be relieved of
any further obligation or liability hereunder or upon the Securities; and the
Company as the predecessor corporation may thereupon or at any time thereafter
be dissolved, wound up or liquidated. Such successor corporation thereupon may
cause to be signed, and may issue either in its own name or in the name of
Alternative Living Services, Inc., any or all of the Securities issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor corporation,
instead of the Company, and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities which previously shall have been signed and
delivered by the Officers to the Trustee for authentication, and any Securities
which such successor corporation thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Securities so issued shall
in all respects have the same legal rank and benefit under this Indenture as
the Securities theretofore or thereafter issued in accordance with the terms of
this Indenture as though all such Securities had been issued at the date of the
execution hereof.
ARTICLE VI.
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default.
An "Event of Default", wherever used herein, means any one of
the following events (whatever the reason for such Event of Default and whether
it shall be occasioned by the provisions of Article 11 or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order or any court or any order, rule or regulation of any
administrative or governmental body):
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(1) the Company defaults in the payment of interest
on any Security when the same becomes due and payable and
such default continues for a period of 30 days;
(2) the Company defaults in the payment of the
principal of or premium, if any, on any Security when the
same becomes due and payable at maturity, upon redemption or
otherwise, and such default continues for five Business Days;
(3) the Company fails to comply with any of its
other covenants, agreements or conditions in the Securities
or this Indenture and such default continues for the period
and after the notice specified in the last paragraph of this
Section 6.1;
(4) there shall be a default under any bond,
debenture, note or other evidence of Indebtedness or under
any mortgage, indenture or other instrument under which there
may be issued or by which there may be secured or evidenced
any Indebtedness of the Company or any Subsidiary, whether
any such Indebtedness now exists or shall hereafter be
created, if (a) either (i) such event of default results from
the failure to pay any such Indebtedness at maturity or (ii)
as a result of such event of default, the maturity of such
Indebtedness has been accelerated prior to its stated
maturity and such acceleration shall not be rescinded or
annulled or the accelerated amount paid within ten days after
notice to the Company of such acceleration, or such
Indebtedness having been discharged and (b) the principal
amount of such Indebtedness, together with the principal
amount of any other such Indebtedness in default for failure
to pay principal or interest thereon, or the maturity of
which has been so accelerated, aggregates $5,000,000 or more;
(5) the Company pursuant to or within the meaning of
any Bankruptcy Law:
(a) commences a voluntary case or
proceeding,
(b) consents to the entry of an order for
relief against it in an involuntary case or
proceeding,
(c) consents to the appointment of a
Custodian of it or for all or substantially all of
its property, or
(d) makes a general assignment for the
benefit of its creditors; or
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(6) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law:
(a) for relief against the Company in an
involuntary case or proceeding,
(b) appointing a Custodian of the Company
or for all or substantially all of its property, or
(c) ordering the liquidation of the
Company,
and the order or decree remains unstayed and in effect for 90
days.
A default under clause (3) is not an Event of Default until
the Trustee notifies the Company, or the Holders of a majority in principal
amount of the Securities then outstanding notify the Company and the Trustee in
writing, of the default and the Company does not cure the default within 60
days after receipt of such notice. The notice must specify the default, demand
that it be remedied and state that the notice is a "Notice of Default." The
Trustee shall give such notice to the Company only if directed to do so in
writing by the Holders of a majority in principal amount of the Securities then
outstanding. Such notice by the Trustee shall not be deemed to be a
certification by the Trustee as to whether an Event of Default has occurred.
SECTION 6.2. Acceleration.
If an Event of Default (other than an Event of Default
specified in Section 6.1(5) or 6.1(6) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of a majority in principal amount of the
Securities then outstanding by notice to the Company and the Trustee, may
declare to be due and payable immediately the principal amount of the
Securities plus accrued interest to the date of acceleration. Upon any such
declaration, such amount shall be due and payable immediately, and upon payment
of such amount all of the Company's obligations with respect to the Securities,
other than obligations under Section 7.7, shall terminate. If an Event of
Default specified in Section 6.1(5) or 6.1(6) occurs, all unpaid principal and
accrued interest on the Securities then outstanding shall become and be
immediately due and payable without any declaration or the act on the part of
the Trustee or any Holder. The Holders of a majority in principal amount of the
outstanding Securities by written notice to the Trustee may rescind an
acceleration and its consequences if (x) all existing Events of Default, other
than the non-payment of the principal of the Securities, which have become due
solely by such declaration of acceleration, have been cured or waived, (y) to
the extent the payment of such interest is lawful, interest on overdue
installments of interest and overdue principal and premium, if any, which has
become due otherwise than by such declaration of acceleration, has been paid,
and (z) the rescission would not conflict with any judgment or decree of a
court of competent
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jurisdiction. The Trustee may rely upon such notice of rescission without any
independent investigation as to the satisfaction of conditions (x), (y) and
(z).
SECTION 6.3. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect
the payment of principal of and premium, if any, or interest on the Securities
or to enforce the performance of any provision of the Securities or this
Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
SECTION 6.4. Waiver of Defaults and Events of Default.
Subject to Section 9.2, the Holders of a majority in
principal amount of the Securities then outstanding, on behalf of all the
Securityholders, by written notice to the Trustee may waive a Default or Event
of Default with respect to the Securities and its consequences. When a Default
or Event of Default is waived, it is considered to be cured and ceases to
exist; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
SECTION 6.5. Control by Majority.
The Holders of a majority in principal amount of the
Securities then outstanding may direct in writing the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on it. The Trustee, however, may refuse
to follow any direction that conflicts with law or this Indenture, that the
Trustee determines may be unduly prejudicial to the rights of other
Securityholders, it being understood that (subject to Section 7.1) the Trustee
shall have no duty to ascertain whether or not such actions or forbearances are
unduly prejudicial to such Securityholders, or that may involve the Trustee in
personal liability or for which the Trustee does not have indemnification
reasonably satisfactory to the Trustee pursuant to Sections 7.1(5) and 7.2(6);
provided that, the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 6.6. Rights of Holders to Receive Payment.
Subject to Article 11, notwithstanding any other provision of
this Indenture, the right of any Securityholder to receive payment of principal
of, premium, if any, and interest on
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the Security, on or after the respective due dates expressed in the Security,
or to bring suit for the enforcement of any such payment on or after such
respective dates, is absolute and unconditional and shall not be impaired or
affected without the consent of the Holder.
Notwithstanding any other provision of this Indenture, the
right of any Holder of any Security to convert such Security or to bring suit
for the enforcement of such right shall not be impaired or affected without the
written consent of the Holder.
SECTION 6.7. Collection Suit by Trustee.
If an Event of Default in payment of interest or principal,
and premium, if any, specified in Section 6.1(1) or (2) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company or any other obligor on the Securities for
the whole amount of unpaid principal, and premium, if any, and accrued interest
remaining unpaid on the Securities, together with interest on overdue
principal, and premium, if any, and to the extent that payment of such interest
is lawful, interest on overdue installments of interest, in each case at the
rate borne by the Securities and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 6.8. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of Securities allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Securities), its creditors or its
property and shall be entitled and empowered to collect and receive any monies
or other property payable or deliverable on any such claims and to distribute
the same. Any Custodian in any such judicial proceeding is hereby authorized by
each Securityholder to make such payments to the Trustee, and in the event that
the Trustee shall consent to the making of such payments directly to the
Holders of Securities, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section
7.7.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan or reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceedings.
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SECTION 6.9. Priorities.
If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:
FIRST: to the Trustee amounts due under Section 7.7;
SECOND: to holders of any Senior Indebtedness as required by
Article 11;
THIRD: to the Holders of the Securities for amounts due and
unpaid on the Securities for principal, premium, if any, and
interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the
Securities for principal, premium, if any, and interest,
respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Holders of Securities pursuant to this Section 6.9.
SECTION 6.10. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorney's fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.10 does not apply to a suit by the Trustee, a suit by
a Holder pursuant to Section 6.6 or a suit by Holders of more than 10% in
principal amount of the Securities then outstanding or a suit by any holder of
Senior Indebtedness.
SECTION 6.11. Limitation on Suits.
A Securityholder may not pursue any remedy with respect to
this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice
stating that an Event of Default is continuing;
(2) the Holders of at least 25% in aggregate
principal amount of the Securities at the time outstanding
make a written request to the Trustee to pursue the remedy;
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(3) such Holder or Holders offer to the Trustee
reasonable security or indemnity against any loss, liability
or expense satisfactory to the Trustee;
(4) the Trustee does not comply with the request
within 60 days after receipt of notice, the request and the
offer of security or indemnity; and
(5) the Holders of a majority in aggregate principal
amount of the Securities at the time outstanding do not give
the Trustee a direction inconsistent with the request during
such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of any other Securityholder or to obtain a preference or priority over
any other Securityholder.
ARTICLE VII.
TRUSTEE
SECTION 7.1. Duties of Trustee.
(1) The duties and responsibilities of the Trustee shall be
as provided by the TIA. If an Event of Default has occurred and is continuing,
the Trustee shall exercise its rights and powers vested in it by this Indenture
and use the same degree of care and skill in their exercise as a prudent Person
would exercise or use under the circumstances in the conduct of his own
affairs.
(2) Except during the continuance of an Event of Default and
after the curing or waiving of all such Events of Default which may have
occurred:
(a) The Trustee need perform only those duties that
are specifically set forth in this Indenture, and the Trustee
shall not be liable except for the performance of such duties
as are specifically set forth in this Indenture, and no
others, and no implied covenants or obligation shall be read
into this Indenture against the Trustee.
(b) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any statements, certificates or opinions
furnished to the Trustee and conforming to the requirements
of this Indenture. The Trustee, however, shall examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
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(3) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(a) This paragraph does not limit the effect of
paragraph (2) of this Section 7.1.
(b) The Trustee shall not be liable for any error in
judgment made in good faith by a Trust Officer, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts.
(c) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 6.5.
(d) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(4) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (1), (2) and (3) of this Section 7.1
and subject to Sections 315 and 316 of the TIA.
(5) Subject to subsection (3), the Trustee may refuse to
perform any duty or exercise any right or power unless, subject to the
provisions of the TIA, it receives indemnity satisfactory to it against any
loss, liability, expense or fee.
(6) The Trustee shall not be liable for interest on any money
received by it. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
SECTION 7.2. Rights of Trustee.
(1) The Trustee may rely on and shall be protected in acting
or refraining from acting upon any document believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, or both, which shall
conform to Section 12.5. The Trustee
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shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel.
(3) The Trustee may act through agents or attorneys and shall
not be responsible for the misconduct or negligence of such agents or attorneys
appointed with due care and shall not be responsible for their supervision.
(4) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers.
(5) The Trustee may consult with counsel of its choice and
the written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by the Trustee hereunder in good faith and reliance thereon.
(6) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders of Securities pursuant to this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity
reasonably satisfactory to the Trustee against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction.
SECTION 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. The Trustee, however, is
subject to Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be accountable for
the Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement of the Company in the Indenture or any statement
in the Securities other than its certificate of authentication or in any
document used in the sale of the Securities other than any statement in writing
provided by the Trustee expressly for use in such document.
SECTION 7.5. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and
if it is actually known to the Trustee, the Trustee shall mail to each Holder
of Securities notice of the Default or Event of Default within 90 days after it
becomes known to the Trustee. Except in the case of a default in payment of
principal of, premium, if any, or interest on any Security, the Trustee
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may withhold the notice if and so long as a committee of its Trust Officers in
good faith determines that withholding the notice is in the interests of
Holders of Securities. Notwithstanding anything to the contrary expressed in
this Indenture, the Trustee shall not be deemed to have knowledge of any Event
of Default hereunder unless and until a Trust Officer shall have actual
knowledge thereof, or shall have received written notice thereof from the
Company at its principal Corporate Trust Office as specified in Section 12.1.
The Trustee shall not be deemed to have actual knowledge of an Event of Default
hereunder, except in the case of an Event of Default under Sections 6.1(1) or
6.1(2) (provided that the Trustee is the Paying Agent), until a Trust Officer
receives written notice thereof from the Company or any Securityholder that
such a Default or an Event of Default has occurred.
SECTION 7.6. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with May 15 of the
first year in which Securities are outstanding hereunder, the Trustee, if
required by the provisions of TIA ss. 313(a), shall mail to each Securityholder
a brief report dated as of May 15 of such year that complies with TIA ss.
313(a). The Trustee also shall comply with TIA ss. 313(b), ss. 313(c) and ss.
313(d).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the Securities and Exchange Commission and
each securities exchange, if any, on which the Securities are listed. The
Company agrees to notify the Trustee in writing whenever the Securities become
listed or delisted on or from any securities exchange.
SECTION 7.7. Compensation and Indemnity
The Company shall pay to the Trustee from time to time, and
the Trustee shall be entitled to, reasonable compensation for its services
(which compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust). The Company shall reimburse
the Trustee upon request for all reasonable disbursements, expenses and
advances incurred or made by it. Such expenses may include, but shall not be
limited to, the reasonable compensation, disbursements and expenses of the
Trustee's agents, consultants and counsel.
The Company shall indemnify the Trustee and its officers,
directors, stockholders, agents and employees for, and hold them harmless
against, any loss or liability incurred by it in connection with the acceptance
or administration of this trust, including the costs and expenses of defending
themselves against any claim or liability in connection with the Securities or
the exercise or performance of any of the Trustee's powers or duties hereunder.
The Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity; provided, however, that any failure to
so notify the Company shall not relieve the Company of its indemnity
obligations hereunder except to the extent the Company's ability to
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defend such claim shall be prejudiced thereby. The Company may elect by written
notice to the Trustee to assume the defense of any such claim at the Company's
expense with counsel reasonably satisfactory to the Trustee; provided, however,
that if the Trustee is advised by counsel that the interests of the Company and
the Trustee conflict, the Trustee shall have the right to retain separate
counsel.
The Company need not reimburse the Trustee for any expense or
indemnify it against any loss or liability incurred by it through the Trustee's
negligence or willful misconduct. The Company shall not be liable for any
settlement of any claim or action effected without the Company's consent, which
consent shall not be unreasonably withheld. To secure the Company's payment
obligations in this Section, the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1 occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any applicable bankruptcy or comparable law. The
provisions of this Section shall survive termination of this Indenture.
SECTION 7.8. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.8.
The Trustee may resign by so notifying the Company. The
Holders of a majority in principal amount of the Securities then outstanding
may remove the Trustee by so notifying the Trustee and may appoint a successor
Trustee with the Company's written consent. The Company may remove the Trustee
if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an
insolvent;
(3) a receiver or other public officer takes charge
of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of
acting.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee.
If a successor Trustee does not take office within 45 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in principal
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amount of the Securities then outstanding may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall, upon payment of its fees and expenses, transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7, the resignation or removal of the retiring Trustee
shall become effective, and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. Notwithstanding the
replacement of the Trustee pursuant to this Section 7.8, the Company's
obligations under Section 7.7 shall continue for the benefit of the retiring
Trustee with respect to expenses and liabilities incurred by it and
compensation earned by it prior to such replacement or otherwise or the
Indenture. A successor Trustee shall mail notice of its succession to each
Holder of Securities.
SECTION 7.9. Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1). The Trustee shall have a combined capital
and surplus of at least $50,000,000 as set forth in its most recent published
annual report of condition. The Trustee shall comply with TIA ss. 310(b),
including the optional provision permitted by the second sentence of TIA ss.
310(b)(9).
SECTION 7.11. Preferential Collection of Claims Against
Company.
The Trustee is subject to TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated
therein.
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ARTICLE VIII
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.1. Satisfaction, Discharge and Defeasance of the
Securities.
The Company shall be deemed to have paid and discharged the
entire indebtedness on the Securities after the date of the deposit referred to
in paragraph (1) below, the provisions of this Indenture shall no longer be in
effect in respect of the Securities, and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of such indebtedness; provided that the following conditions shall
have been satisfied:
(1) the Company has deposited or caused to be
deposited with the Trustee irrevocably as trust funds in
trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Securities, with
reference to this Section 8.1, (a) money or (b) U.S.
Government Obligations or (c) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and
discharge the entire indebtedness on all the Securities for
principal, premium, if any, and interest, if any, to the
maturity date of the Securities as such principal, premium,
if any, or interest becomes due and payable in accordance
with the terms of this Indenture and the Securities;
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company in connection
with all of the Securities, including all fees and expenses
of the Trustee; and
(3) the Company has delivered to the Trustee an
Opinion of Counsel and an Officers' Certificate, each stating
that all conditions precedent herein provided for relating to
the satisfaction and discharge of the entire Indebtedness on
the Securities and the discharge of this Indenture and the
termination of the Company's obligations hereunder have been
complied with.
"U.S. Government Obligations" means direct, non-callable
obligations of, or non-callable obligations guaranteed by, the United States of
America for the timely payment of which obligation or guarantee the full faith
and credit of the United States of America is pledged.
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SECTION 8.2. Satisfaction and Discharge of Indenture.
In addition to its rights under Section 8.1, the Company may
terminate all of its obligations under this Indenture when:
(1) all of the Securities theretofore authenticated
and delivered (other than (a) Securities which have been
destroyed, lost or stolen and which have been replaced or
paid as provided in Section 2.7 hereof and (b) Securities for
whose payment money has theretofore been deposited with the
Trustee or the Paying Agent in trust or segregated and held
in trust by the Company and thereafter repaid to the Company
or discharged from such trust, as provided in Section 2.4 and
Section 8.6 hereof) have been delivered to the Trustee for
cancellation (including any cancellation resulting from the
conversion of such Securities pursuant to Paragraph 7 of the
Securities); and
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company in connection
with the outstanding Securities, including all fees and
expenses of the Trustee.
SECTION 8.3. Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this
Indenture pursuant to Section 8.1, the respective obligations of the Company
specified in Sections 2.3, 2.4, 2.5, 2.6, 2.11, 4.1, 7.7, 8.5, 8.6, 8.7 and in
Article 10 shall survive until the Securities are no longer outstanding, and
after the Securities are no longer outstanding, or upon compliance with Section
8.2, only the obligations of the Company in such Sections 7.7 and 8.6 shall
survive. Nothing contained in this Article 8 shall abrogate any of the
obligations or duties of the Trustee under this Indenture.
SECTION 8.4. Application of Trust Money.
(1) Subject to the provisions of Section 8.6, all money and
U.S. Government Obligations deposited with the Trustee for the Securities
pursuant to Section 8.1 or Section 8.2, and all money received by the Trustee
in respect of U.S. Government Obligations deposited with the Trustee for the
Securities pursuant to Section 8.1 or Section 8.2 shall be held in trust and
reinvested by the Trustee in (a) U.S. Government Obligations or (b) beneficial
interests in one or more mutual funds which invest solely in U.S. Government
Obligations and which are rated in the highest applicable rating category by a
nationally-recognized statistical rating organization in accordance with the
Company's written instructions and applied by the Trustee in accordance with
the provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company or any Subsidiary
acting as Paying Agent) as the Trustee may determine, to the Persons entitled
thereto, of the principal, premium, if any, and interest, if any, on the
Securities; but such money need not be segregated from other funds except
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to the extent required by law. Money and U.S. Government Obligations so held in
trust are not subject to the subordination provisions of Article 11.
(2) The Trustee shall deliver or pay to the Company from time
to time upon the Company's written request any U.S. Government Obligations or
money held by it as provided in Section 8.1 or Section 8.2 which, in the
written opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are then in excess of the amount thereof which then would have been
required to be deposited for the purpose for which such U.S. Government
Obligations, or money, were deposited or received.
SECTION 8.5. Paying Agent to Repay Monies Held.
Upon the satisfaction and discharge of this Indenture, all
monies then held by any Paying Agent under the provisions of this Indenture
shall, upon written demand of the Company, be repaid to it or paid to the
Trustee, and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
SECTION 8.6. Return of Unclaimed Monies.
Any monies deposited with or paid to the Trustee or any
Paying Agent for the Securities, or then held by the Company in trust, for the
payment of any principal, premium, if any, and interest, if any, on the
Securities and not applied but remaining unclaimed by the Holders of the
Securities for two years after the date upon which the principal of, premium,
if any, and interest, if any, on the Securities, as the case may be, shall have
become due and payable, shall, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property law, be
repaid to the Company by such Trustee or any Paying Agent on written demand by
the Company or (if then held by the Company or any Affiliate) shall be
discharged from such trust; and the Holders of the Securities entitled to
receive such payment shall thereafter look only to the Company for the payment
thereof; provided, however, that, before being required to make any such
repayment, the Trustee may, or shall at the written request of the Company, at
the expense of the Company, cause to be published once in an authorized
newspaper in the same city in which the place of payment with respect to the
Securities shall be located and in an authorized newspaper in the City of New
York, or mail to each such Holder, a notice (in such form as may be deemed
appropriate by the Trustee) that said monies remain unclaimed and that, after a
date named therein, any unclaimed balance of said monies then remaining will be
returned to the Company.
SECTION 8.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money
or U.S. Government Obligations in accordance with Section 8.1 by reason of any
legal proceeding or by reason of any
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order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.1 until such time as the Trustee or
Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with Section 8.4; provided, however, that if the
Company has made any payment of principal of, premium, if any, or interest on
the Securities because of the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Securities to receive
such payment from the money or U.S. Government Obligations held by the Trustee
or Paying Agent.
SECTION 8.8. Indemnity for Government Obligations.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against U.S. Government
Obligations deposited with the Trustee pursuant hereto or the principal and
interest received on such U.S. Government Obligations.
ARTICLE IX.
AMENDMENTS AND WAIVERS
SECTION 9.1. Amendments and Waivers Without Consent of
Holders.
The Company, when authorized by Board Resolution, and the
Trustee at any time and from time to time, may amend or supplement this
Indenture, (any such amendment or supplement to be in a form satisfactory to
the Trustee) or the Securities without notice to or consent of any
Securityholder for any of the following purposes:
(1) to comply with Section 5.1; or
(2) to provide for uncertificated Securities in
addition to or in place of certificated Securities; or
(3) to cure any ambiguity, defect or inconsistency,
or to make any other change that does not adversely affect
the interests of the Holders of Securities in any material
respect; or
(4) to add to the covenants of the Company, for the
benefit of the Holders or to surrender any right or power
herein conferred upon the Company; or
(5) to add any Event of Default.
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The Trustee shall be entitled to receive upon request an
Opinion of Counsel to its satisfaction with respect to any supplement to this
Indenture without consent of the Holders that all conditions precedent have
been satisfied.
SECTION 9.2. Amendments and Waivers with Consent of Holders.
With the written consent of the Holders of not less than
66-2/3% in aggregate principal amount of the Securities at the time
outstanding, the Company, when authorized by Board Resolution, and the Trustee
may amend or supplement this Indenture (any such amendment or supplement to be
in a form satisfactory to the Trustee) or the Securities for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying
in any manner the rights of the Holders of the Securities. The Holders of a
majority in principal amount of the Securities then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Securities without notice to any Securityholder. Subject to
Section 9.4, without the consent of each Holder of Securities affected,
however, an amendment, supplement or waiver, including a waiver pursuant to
Section 6.4, may not:
(1) reduce the amount of Securities whose Holders
must consent to an amendment or waiver;
(2) reduce the rate of or extend the time for
payment of interest on any Security;
(3) reduce the principal of or extend the fixed
maturity of any Security;
(4) waive (except unless theretofore cured) a
default in the payment of the principal of (and premium, if
any on), interest on or redemption amounts with respect to
any Security;
(5) make any Security payable in currency other than
that stated in the Security;
(6) make any change in Sections 6.4, 6.6 or 9.2;
(7) make any change that adversely affects the right
to convert any Security; or
(8) make any change in Article 11 that adversely
affects the rights of any Securityholder.
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To secure a consent of the Holders under this Section, it
shall not be necessary for the Holders to approve the particular form of any
proposed amendment or waiver; rather, it shall be sufficient if such consent
approves the substance thereof.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment.
SECTION 9.3. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.4. Revocation and Effect of Consents.
Subject to this Indenture, each amendment, supplement or
waiver evidencing other action shall become effective in accordance with its
terms. Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Security is a continuing consent by the Holder even if
notation of the consent is not made on any Security. Any such Holder or
subsequent Holder, however, may revoke the consent as to his Security or
portion of a Security, if the Trustee receives the notice of revocation before
the date the amendment, waiver or other action becomes effective.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then
notwithstanding the provisions of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated proxies)
and only those Persons, shall be entitled to consent to such amendment,
supplement or waiver or to revoke any consent previously given, whether or not
such Persons continue to be Holders after such record date. No consent shall be
valid or effective for more than 90 days after such record date unless consent
from Holders of the principal amount of Securities then outstanding required
hereunder for such amendment, supplement or waiver to be effective shall have
also been given and not revoked within such 90-day period.
After an amendment, waiver or other action becomes effective,
pursuant to Section 9.1 or Section 9.2, as the case may be, it shall bind every
Holder of a Security.
SECTION 9.5. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may request the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Security
about the changed terms and return it to the Holder. Alternatively, if the
Company or the Trustee so determine, the Company in exchange for the
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Security shall issue and the Trustee shall authenticate a new Security that
reflects the changed terms the cost and expense of which will be borne by the
Company.
SECTION 9.6. Trustee to Sign Amendments, etc.
The Trustee need not sign any amendment that adversely
affects its rights or interests, as determined by the Trustee in its sole
discretion. In signing or refusing to sign any amendment the Trustee shall be
entitled to receive and shall be fully protected in relying upon, an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture. The Company may not sign an amendment until its Board of Directors
approves it.
ARTICLE X.
CONVERSION OF SECURITIES
SECTION 10.1. Right of Conversion; Conversion Price.
Subject to the provisions of Section 7 of the Securities, the
Holder of any Security or Securities shall have the right, at such Holder's
option, at any time after the effective date of the Registration Statement and
before the close of business on June 1, 2004 (except that, with respect to any
Security or portion of a Security which shall be called for redemption, such
right shall terminate at the close of business on the Redemption Date fixed for
redemption of such Security or portion of a Security unless the Company shall
default in payment due upon redemption thereof), to convert, subject to the
terms and provisions of this Article 10, the principal of any such Security or
Securities or any portion thereof which is $1,000 principal amount or an
integral multiple thereof into shares of common stock of the Company, $.01 par
value per share ("Common Stock"), initially at the conversion price per share
of $20.25 or, in case an adjustment of such price has taken place pursuant to
the provisions of Section 10.4, then at the price as last adjusted (such price
or adjusted price being referred to herein as the "conversion price"), upon
surrender of the Security or Securities, the principal of which is so to be
converted, accompanied by written notice of conversion duly executed, to the
Company, at any time during usual business hours at the office or agency
maintained by it for such purpose, and, if so required by the Conversion Agent
or Registrar, accompanied by a written instrument or instruments of transfer in
form satisfactory to the Conversion Agent or Registrar duly executed by the
Holder or his duly authorized representative in writing. For convenience, the
conversion of any portion of the principal of any Security or Securities into
shares of Common Stock is hereinafter sometimes referred to as the conversion
of such Security or Securities.
SECTION 10.2. Issuance of Shares on Conversion.
As promptly as practicable after the surrender, as herein
provided, of any Security or Securities for conversion, the Company shall
deliver or cause to be delivered at its said office or agency, to or upon the
written order of the Holder of the Security or Securities so surrendered,
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certificates representing the number of fully paid and nonassessable shares of
Common Stock into which such Security or Securities may be converted in
accordance with the provisions of this Article 10. Such conversion shall be
deemed to have been made as of the close of business on the date that such
Security or Securities shall have been surrendered for conversion by delivery
thereof with a written notice of conversion duly executed, so that the rights
of the Holder of such Security or Securities as a Securityholder shall cease at
such time and, subject to the following provisions of this paragraph, the
Person or Persons entitled to receive the shares of Common Stock upon
conversion of such Security or Securities shall be treated for all purposes as
having become the record holder or holders of such shares of Common Stock at
such time and such conversion shall be at the conversion price in effect at
such time; provided, however, that no such surrender on any date when the stock
transfer books of the Company shall be closed shall be effective to constitute
the Person or Persons entitled to receive the shares of Common Stock upon such
conversion as the record holder or holders of such shares of Common Stock on
such date, but such surrender shall be effective to constitute the Person or
Persons entitled to receive such shares of Common Stock as the record holder or
holders thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open; and provided,
further, that in such event such conversion shall be at the conversion price in
effect on the date that such Security or Securities shall have been surrendered
for conversion by delivery thereof, as if the stock transfer books of the
Company had not been closed. The Company shall give or cause to be given to the
Trustee written notice whenever the stock transfer books of the Company shall
be closed.
Upon Conversion of any Security which is converted in part
only, the Company shall execute and the Trustee shall authenticate and deliver
to or on the order of the Holder thereof, at the expense of the Company, a new
Security or Securities of authorized denominations in principal amount equal to
the unconverted portion of such Security.
SECTION 10.3. No Adjustment for Interest or Dividends.
No payment or adjustment in respect of interest on the
Securities or dividends on the shares of Common Stock shall be made upon the
conversion of any Security or Securities; provided, however, that if a Security
or any portion thereof shall be converted subsequent to any Regular Record Date
and on or prior to the next succeeding Interest Payment Date, the interest
falling due on such Interest Payment Date shall be payable on such Interest
Payment Date notwithstanding such conversion, and such interest (whether or not
punctually paid or duly provided for) shall be paid to the Person in whose name
such Security is registered at the close of business on such Regular Record
Date and Securities surrendered for conversion during the period from the close
of business on any Regular Record Date to the opening of business on the
corresponding Interest Payment Date must be accompanied by payment of an amount
equal to the interest payable on such Interest Payment Date.
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SECTION 10.4. Adjustment of Conversion Price.
(1) In case the Company shall pay or make a dividend or other
distribution on any class of Capital Stock of the Company in shares of Common
Stock, the conversion price in effect at the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying
such conversion price by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date
fixed for such determination and the denominator shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such determination.
(2) In case the Company shall issue rights or warrants to all
or substantially all holders of its shares of Common Stock entitling them to
subscribe for or purchase shares of Common Stock (or securities convertible
into or exchangeable for Common Stock) at a price per share (or having a
conversion or exchange price per share) less than the current market price per
share (determined as provided in paragraph (6) of this Section 10.4) of the
shares of Common Stock on the date fixed for the determination of stockholders
entitled to receive such rights or warrants, the conversion price in effect at
the opening of business on the day following the date fixed for such
determination shall be reduced by multiplying such conversion price by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock which the aggregate of the
subscription price of the total number of shares of Common Stock so offered for
subscription or purchase (or the aggregate conversion of exchange price of the
convertible or exchangeable securities so offered) would purchase at such
current market price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. In the event that all of the shares of Common Stock subject to
such rights or warrants have not been issued when such rights or warrants
expire, then the conversion price shall promptly be readjusted to the
conversion price which would then be in effect had the adjustment upon the
issuance of such rights or warrants been made on the basis of the actual number
of shares of Common Stock issued upon the exercise of such rights or warrants.
For the purposes of this paragraph (2), the number of shares of Common Stock at
any time outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not
issue any rights or warrants in respect of shares of Common Stock held in the
treasury of the Company.
(3) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares, the conversion price in effect at
the opening of business on the day
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following the day upon which such subdivision becomes effective shall be
proportionately reduced, and, conversely, in case outstanding shares of Common
Stock shall each be combined into a smaller number of shares, the conversion
price in effect at the opening of business on the day following the day upon
which such combination becomes effective shall be proportionately increased,
such reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(4) In case the Company shall, by dividend or otherwise,
distribute to all or substantially all holders of shares of Common Stock
evidences of indebtedness or assets (including securities, but excluding any
(a) rights or warrants referred to in paragraph (2) of this Section 10.4, (b)
any dividend or distribution not prohibited by Section 4.6 hereof and (c) any
dividend or distribution referred to in paragraph (1) of this Section 10.4),
the conversion price shall be adjusted so that the same shall equal the price
determined by multiplying the conversion price in effect immediately prior to
the close of business on the day fixed for the determination of stockholders
entitled to receive such distribution by a fraction of which the numerator
shall be the current market price per share (determined as provided in
paragraph (6) of this Section) of the shares of Common Stock on the date fixed
for such determination less the then fair market value as determined by the
Board of Directors of the Company (whose determination shall be conclusive and
described in a resolution of the Board of Directors of the Company filed with
the Trustee) of the portion of the assets or evidences of indebtedness so
distributed allocable to one share of Common Stock and the denominator shall be
such current market price per share of the shares of Common Stock, such
adjustment to become effective immediately prior to the opening of business on
the day following the date fixed for the determination of stockholders entitled
to receive such distribution.
(5) In case the shares of Common Stock shall be changed into
the same or a different number of shares of any class or classes of stock,
whether by capital reorganization, reclassification, or otherwise (other than a
subdivision or combination of shares or a stock dividend described in paragraph
(1) or (3) of this Section 10.4, or a consolidation, merger or sale of assets
described in Section 10.10), then and in each such event the Holders of
Securities shall have the right thereafter to convert such Securities into the
kind and amount of shares of stock and other securities and property receivable
upon such reorganization, reclassification or other change, by holders of the
number of shares of Common Stock into which such Securities might have been
converted immediately prior to such reorganization, reclassification or change.
(6) For the purpose of any computation under paragraphs (2)
and (4) of this Section, the current market price per share of Common Stock on
any date shall be deemed to be the average of the Closing Prices for the 15
consecutive Business Days selected by the Company commencing not more than 30
and not less than 20 Business Days before the date in question.
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(7) No adjustment in the conversion price shall be required
unless such adjustment (plus any adjustments not previously made by reason of
this paragraph (7)) would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of this
paragraph (7) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this
paragraph (7) shall be made to the nearest cent.
(8) The Company may, but shall not be required to, make such
reductions in the conversion price, in addition to those required by paragraph
(1), (2), (3), (4) and (5) of this Section 10.4 as the Company's Board of
Directors considers to be advisable in order to avoid or diminish any income
tax to any holders of shares of Common Stock resulting from any dividend or
distribution of stock or issuance of rights or warrants to purchase or
subscribe for stock or from any event treated as such for income tax purposes
or for any other reason. The Company's Board of Directors shall have the power
to resolve any ambiguity or correct any error in the adjustments made pursuant
to this Section 10.4 and its actions in so doing shall be final and conclusive.
(9) The adjustments provided for in this Section 10.4 shall
be made successively whenever any event listed above shall occur.
SECTION 10.5. Notice of Adjustment of Conversion Price.
Whenever the conversion price for the Securities is adjusted
as herein provided:
(1) the Company shall compute the adjusted
conversion price in accordance with Section 10.4 and shall
prepare an Officers' Certificate setting forth the adjusted
conversion price and showing in reasonable detail the facts
upon which such adjustment is based and the computation
thereof, and such certificate shall forthwith be filed at
each office or agency maintained for the purpose of
conversion of the Securities pursuant to Section 2.4 and with
the Trustee; and
(2) a notice stating that the conversion price has
been adjusted and setting forth the adjusted conversion price
shall as soon as practicable be mailed by the Company to all
Holders of the Securities at their last addresses as they
shall appear in the Security Register.
(3) If the conversion price is adjusted and the
Company fails to file an Officers' Certificate with the
Trustee as provided by Section 10.5(1) and the Trustee is
acting as the Conversion Agent, the Trustee shall be entitled
to rely conclusively on the conversion price set forth in the
Officer's Certificate most recently received by the Trustee
(or as set forth in the Securities and this Indenture if the
conversion price shall not have been adjusted).
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SECTION 10.6. Notice of Certain Corporate Action.
(1) In case:
(a) the Company shall authorize the granting to
holders of its shares of Common Stock of rights or warrants
entitling them to subscribe for or purchase any shares of
Capital Stock of any class or of any other rights; or
(b) of any reclassification of the shares of Common
Stock of the Company, or of any consolidation or merger to
which the Company is a party and for which approval of any
stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the
Company; or
(c) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of the Securities pursuant to Section 2.3 and
shall cause to be mailed to the Trustee and all Holders of the Securities at
their last addresses as they shall appear in the Security Register, at least 20
days (or 10 days in any case specified in clause (a) or (b) above) prior to the
applicable record date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
rights or warrants, or, if a record is not to be taken, the date as of which
the Holders of shares of Common Stock of record to be entitled to such
dividend, distribution, rights or warrants are to be determined, or (y) the
date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of shares of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
Such notice shall also state whether such transaction will result in any
adjustment in the conversion price applicable to the Securities and, if so,
shall state what the adjusted conversion price will be and when it will become
effective. Neither the failure to give the notice required by this Section, nor
any defect therein, to any particular Holder shall affect the sufficiency of
the notice or the legality or validity of any such dividend, distribution,
right, warrant, reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding-up, or the vote on any action authorizing
such with respect to the other holders.
(2) In case the Company or any Affiliate of the Company shall
propose to engage in a "Rule 13e-3 Transaction" as defined in the Commission's
Rule 13e-3 under the Exchange Act, the Company shall, no later than the date on
which any information with respect to such Rule 13e-3 Transaction is first
required to be given to the Commission or any other Person pursuant to such
Rule 13e-3, cause to be mailed to all Holders at their last addresses as
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they shall appear in the Security Register, a copy of all information required
to be given to the holders of the Company's Capital Stock pursuant to such Rule
13e-3. The information required to be given under this paragraph shall be in
addition to and not in lieu of any other information required to be given by
the Company pursuant to this Section 10.6 or any other provision of the
Securities or this Indenture.
SECTION 10.7. Taxes on Conversions.
The Company will pay any and all stamp or similar taxes that
may be payable in respect of the issuance or delivery of shares of Common Stock
on conversion of the Securities pursuant hereto. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of shares of Common Stock in a
name other than that of the Holder of the Security or Securities to be
converted, and no such issuance or delivery shall be made unless and until the
Person requesting such issuance has paid to the Company the amount of any such
tax, or has established to the satisfaction of the Company that such tax has
been paid.
SECTION 10.8. Fractional Shares.
No fractional shares or scrip representing fractional shares
shall be issued upon any conversion of the Securities. If any such conversion
would otherwise require the issuance of a fractional share an amount equal to
such fraction multiplied by the current market price per share of Common Stock
(determined as provided in paragraph (6) of Section 10.4) on the day of
conversion shall be paid to the Holder in cash by the Company.
SECTION 10.9. Cancellation of Converted Securities.
All Securities delivered for conversion shall be delivered to
the Trustee or the Conversion Agent to be canceled by or at the direction of
the Trustee or the Conversion Agent, which shall dispose of the same as
provided in Section 2.10.
SECTION 10.10. Provisions in Case of Consolidation, Merger or
Sale of Assets.
(1) In case of any consolidation of the Company with, or
merger of the Company into, any Person, or in case of any merger of another
Person into the Company (other than a consolidation or merger which does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock), or in case of any sale or transfer of all
or substantially all of the assets of the Company, the Person formed by such
consolidation or resulting from such merger or which acquires such assets, as
the case may be, shall execute and deliver to the Trustee a supplemental
indenture providing that the Holder of each Security then outstanding shall
have the right thereafter, during the period such Security shall be convertible
as specified in Section 10.1 to convert such Security only into the kind and
amount of securities,
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cash and other property receivable upon such consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock into which such
Security might have been converted immediately prior to such consolidation,
merger, sale or transfer. Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Article 10. The above provisions of this
Section 10.10 shall similarly apply to successive consolidations, mergers,
sales or transfers.
(2) The Trustee shall not be under any responsibility to
determine the correctness of any provisions contained in any such supplemental
indenture relating either to the kind or amount of shares of stock or
securities or property receivable by Holders upon the conversion of their
Securities after any such reclassification, change, consolidation, merger, sale
or conveyance or to any adjustment to be made with respect thereto.
SECTION 10.11. Disclaimer by Trustee of Responsibility for
Certain Matters.
The Trustee and each Conversion Agent (other than the Company
or any Subsidiary) shall not at any time be under any duty or responsibility to
any Holder of the Securities to determine whether any facts exist which may
require any adjustment of the conversion price, how it should be calculated or
what it should be, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed, or herein or in
any supplemental indenture provided to be employed, in making the same. The
Trustee and each Conversion Agent (other than the Company or any Subsidiary)
shall not be accountable with respect to the validity, value, kind or amount of
any shares of Common Stock, or of any securities or property, which may at any
time be issued or delivered upon the conversion of any Security; and it makes
no representation with respect thereto. The Trustee and each Conversion Agent
(other than the Company or any Subsidiary) shall not be responsible for any
failure of the Company to issue, transfer or deliver any shares of Common Stock
or stock certificates or other securities or property upon the surrender of any
Security for the purpose of conversion or, subject to Section 7.1, to comply
with any of the covenants of the Company contained in this Article 10.
SECTION 10.12. Covenant to Reserve Shares.
The Company covenants that it will at all times reserve and
keep available, free from preemptive rights, out of its authorized shares of
Common Stock, solely for the purpose of issuance upon conversion of the
Securities as herein provided, such number of shares of Common Stock as shall
then be issuable upon the conversion of all outstanding Securities. The Company
covenants that all shares of Common Stock which shall be so issuable shall be,
when issued, duly and validly issued and fully paid and non-assessable. For
purposes of this Section 10.12, the number of shares of Common Stock which
shall be deliverable upon the conversion of all outstanding Securities shall be
computed as if at the time of computation all outstanding Securities were held
by a single holder.
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ARTICLE XI.
SUBORDINATION; SENIORITY
SECTION 11.1. Securities Subordinated to Senior Indebtedness.
(1) The Company agrees, and each Holder of the Securities by
his acceptance thereof likewise agrees, that the payment of the principal of,
premium, if any, and interest on the Securities (all of the foregoing, a
"Payment or Distribution") is subordinated and junior in right of payment, to
the extent and in the manner provided in this Article 11, except as provided in
Article 8, to the prior payment in full in cash of all Senior Indebtedness
whether outstanding on the date hereof or hereafter created, incurred, assumed
or guaranteed.
A Payment or Distribution shall include any asset of any kind
or character, and may consist of cash, securities or other property, by set-off
or otherwise, and shall include, without limitation, any purchase, redemption
or other acquisition of Securities or the making of any deposit of funds or
securities pursuant to this Indenture (including, without limitation, any
deposit pursuant to Article 8 hereof).
(2) The Senior Indebtedness of the Company shall continue to
be Senior Indebtedness and entitled to the benefit of these subordination
provisions irrespective of any amendment, modification or waiver of any term of
any instrument relating to refinancing of the Senior Indebtedness.
(3) All the provisions of this Indenture and the Securities
shall be subject to the provisions of this Article 11 so far as they may be
applicable thereto, except that nothing in this Article 11 shall apply to
claims for, or payments to, the Trustee under or pursuant to Section 7.7.
(4) No right of any holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time or in any way be
affected or impaired by any failure to act on the part of the Company, any
Paying Agent, the Holders of the Securities, the Trustee or the holders of the
Senior Indebtedness, or by any noncompliance by the Company, any Paying Agent,
the Holders of the Securities or the Trustee with any of the terms, provisions
and covenants of the Securities or this Indenture, regardless of any knowledge
thereof that any such holder of Senior Indebtedness may have or be otherwise
charged with.
SECTION 11.2. Company Not to Make Payments with Respect to
Securities in Certain Circumstances.
No Payment or Distribution shall be made by the Company, the
Trustee or any Paying Agent on account of principal of, premium, if any, or
interest on the Securities, whether upon stated maturity, upon redemption or
acceleration, or otherwise, or on account of the
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purchase or other acquisition of Securities, whether upon stated maturity, upon
redemption or acceleration, or otherwise, if there shall have occurred and be
continuing a default with respect to any Senior Indebtedness permitting the
acceleration thereof or with respect to the payment of any Senior Indebtedness
and (a) such default is the subject of a judicial proceeding or (b) written
notice of such default has been given to the Company by any holder or holders
of any Senior Indebtedness, unless and until such default or event of default
shall have been cured or waived or shall have ceased to exist.
Upon any acceleration of the principal of the Securities or
any payment by the Company or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to creditors upon any
dissolution or winding up or liquidation or reorganization of the Company,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due or to become due upon all Senior
Indebtedness shall first be paid in full in cash, or payment thereof provided
for to the satisfaction of the holders thereof, before any Payment or
Distribution is made on account of the redemption price or principal of (and
premium, if any) or interest on the Securities; and (subject to the power of a
court of competent jurisdiction to make other equitable provision, which shall
have been determined by such court to give effect to the rights conferred in
this Article upon the Senior Indebtedness and the holders thereof with respect
to the Securities or the Holders thereof or the Trustee, by a lawful plan of
reorganization or readjustment under applicable law) upon any such dissolution
or winding up or liquidation or reorganization, any Payment or Distribution by
the Company or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (other than securities of the Company
as reorganized or readjusted or securities of the Company or any other company,
trust or corporation provided for by a plan of reorganization or readjustment,
the payment of which is junior or otherwise subordinate, at least to the extent
provided in this Article 11 with respect to the Securities to the payment of
all Senior Indebtedness at the time outstanding and to the payment of all
securities issued in exchange therefor to the holders of the Senior
Indebtedness at the time outstanding, and the rights of the holders of Senior
Indebtedness of the Company are not altered by such plan of reorganization or
readjustment), to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article 11, shall be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such Payment or Distribution directly to the holders of
Senior Indebtedness of the Company or their representative or representatives,
or to the trustee or trustees under any indenture pursuant to which any
instruments evidencing any Senior Indebtedness may have been issued, as their
respective interests may appear, to the extent necessary to pay all Senior
Indebtedness in full in cash, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness, before any Payment
or Distribution is made to the Holders of the Securities or to the Trustee,
except that the Trustee will have a lien for the payment of its fees and
expenses.
In the event that, notwithstanding the foregoing, any Payment
or Distribution by the Company of any kind or character, (whether such payment
shall be in cash, property or
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securities) which is prohibited by the foregoing, shall have been made to the
Trustee or the Holders of the Securities before all Senior Indebtedness is paid
in full in cash, or provision is made for such payment to the satisfaction of
the holders thereof, and if such fact shall then have been or thereafter be
made known to a Trust Officer of the Trustee or, as the case may be, such
Holder, then and in such event such Payment or Distribution shall be paid over
by the Trustee (if the Notice required by Section 11.5 has been timely received
by the Trustee) or such Holder or delivered to the holders of Senior
Indebtedness or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
Senior Indebtedness may have been issued, as their respective interests may
appear, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior Indebtedness in full in cash,
after giving effect to any concurrent Payment or Distribution to or for the
holders of such Senior Indebtedness, and, until so delivered, the same shall be
held in trust by any Holder of a Security as the property of the holders of
Senior Indebtedness.
The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution of the Company
following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided in Article 5 shall not be deemed a dissolution, winding up,
liquidation or reorganization for the purposes of this Section 11.2 if such
other Person shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article 5. Nothing in this
Section shall apply to claims of, or payments to, the Trustee under or pursuant
to Section 7.7.
The holders of Senior Indebtedness may, at any time and from
time to time, without the consent of or notice to the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the obligations of the Holders of the
Securities hereunder to the holders of Senior Indebtedness: (i) change the
manner, place or terms of payment or change or extend the time of payment of,
or renew or alter, Senior Indebtedness, or otherwise amend in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; (iv) apply any amounts received to any liability of the
Company owing to holders of Senior Indebtedness; and/or (v) exercise or refrain
from exercising any rights against the Company and any other Person.
SECTION 11.3. Subrogation of Securities.
Subject to the payment in full in cash of all amounts then
due (whether by acceleration of the maturity thereof or otherwise) on account
of all Senior Indebtedness at the time outstanding, the Holders of the
Securities shall be subrogated to the rights of the holders of
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<PAGE> 58
Senior Indebtedness to receive Payments or Distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal of, premium, if any, and interest on the Securities shall be paid in
full; and, for the purposes of such subrogation, no Payments or Distributions
to the holders of Senior Indebtedness to which the Holders of the Securities or
the Trustee would be entitled except for the provisions of this Article 11, and
no payments over pursuant to the provisions of this Article 11 to the holders
of Senior Indebtedness by Holders of the Securities or the Trustee, shall, as
between the Company, the Company's creditors other than holders of Senior
Indebtedness, and the Holders of the Securities, be deemed to be a payment by
the Company to or on account of the Senior Indebtedness. It is understood that
the provisions of this Article 11 are and are intended solely for the purpose
of defining the relative rights of the Holders of the Securities, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
Nothing contained in this Article 11 or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company, its creditors other than the holders of Senior Indebtedness, and the
Holders of the Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the principal of,
premium, if any, and interest on the Securities as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holders of the Securities and creditors
of the Company other than the holders of Senior Indebtedness, nor shall
anything herein or therein prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article 11 of
the holders of Senior Indebtedness in respect of cash, property or securities
of the Company received upon the exercise of any such remedy. Nothing in this
Article 11 shall prevent conversions of Securities pursuant to Article 10.
Upon any payment or distribution of assets of the Company
referred to in this Article 11, the Trustee, subject to the provisions of
Section 7.1, and the Holders of the Securities shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which any
dissolution, winding up, liquidation or reorganization proceedings are pending,
or certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the Securities, for the purpose of ascertaining
the Persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article 11.
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<PAGE> 59
SECTION 11.4. Authorization by Holders of Securities.
Each holder of a Security by his acceptance thereof
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate, as between the Holder of the Security
and the holders of Senior Indebtedness, the subordination provided in this
Article 11 and appoints the Trustee his attorney-in-fact for any and all such
purposes including, without limitation, to execute, verify, deliver and file
any proofs of claim which any holder of Senior Indebtedness may at any time
require in order to prove and realize upon any rights or claims pertaining to
the Securities and to effectuate the full benefit of the subordination
contained herein. If the Trustee shall fail to do so prior to 30 days prior to
the expiration of the period for filing such claims, any such holder of Senior
Indebtedness shall be deemed to be irrevocably appointed the agent and
attorney-in-fact of the Holder to execute, verify, deliver and file any such
proofs of claim; provided that no holder of Senior Indebtedness shall incur any
liability for any failure to exercise its right to file any such proofs of
claim.
SECTION 11.5. Notices to Trustee.
The Company shall give prompt written notice to the Trustee
of any fact known to it which would prohibit the making of any payment of
moneys to or by the Trustee in respect of the Securities pursuant to the
provisions of this Article 11. Notwithstanding the provisions of this Article
11 or any other provision of this Indenture, the Trustee shall not be charged
with knowledge of the existence of any facts which would prohibit the making of
any payment of moneys to or by the Trustee in respect of the Securities
pursuant to the provisions of this Article 11 unless and until a Trust Officer
of the Trustee shall have received at its Corporate Trust Office written notice
thereof from the Company or a holder or holders of Senior Indebtedness or from
any trustee or agent therefor; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Section 7.1, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if a Trust Officer of the Trustee shall not have received at least three
Business Days prior to the date upon which by the terms hereof any such moneys
may become payable for any purpose (including, without limitation, the payment
of the principal of, premium, if any, or interest on any Security) with respect
to such moneys the notice provided for in this Section 11.5, then, anything
herein contained to the contrary notwithstanding, the Trustee shall have the
full power and authority to receive such moneys and to apply the same to the
purpose for which they were received and shall not be affected by any notice to
the contrary which may be received by it within three Business Days prior to
such date or at any time thereafter.
The Trustee shall be entitled to rely conclusively on the
delivery to it of a written notice by a Person representing himself to be a
holder of Senior Indebtedness (or a trustee on behalf of such holder) to
establish that such notice has been given by a holder of Senior Indebtedness or
a trustee or agent on behalf of any such holder. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person
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<PAGE> 60
as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article 11, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article 11, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 11.6. Trustee's Relation to Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article 11 in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in Section 7.11 or elsewhere in this Indenture
shall deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article 11, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not
owe any fiduciary duty to the holders of Senior Indebtedness and shall not be
liable to any such holder if it shall mistakenly pay over or distribute to
Holders of the Securities or the Company or any other Person money or assets to
which any holder of Senior Indebtedness shall be entitled by virtue of this
Article 11 or otherwise.
SECTION 11.7. No Impairment of Subordination.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company, the Trustee or the Holder of any of the Securities or by any act,
or failure to act, in good faith, by any such holder of Senior Indebtedness, or
by any noncompliance by the Company, the Trustee or the Holder of any of the
Securities with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with.
SECTION 11.8. Article 11 Not To Prevent Events of Default.
The failure to make a payment on account of principal of,
premium, if any, or interest on the Securities by reason of any provision in
this Article 11 shall not be construed as preventing the occurrence of an Event
of Default with respect to such Securities under Section 6.1.
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SECTION 11.9. Paying Agents other than the Trustee.
In any case at any time any Paying Agent other than the
Trustee shall have been appointed by the Company and be then acting hereunder,
the term "Trustee" as used in this Article 11 shall in such case (unless the
context shall otherwise require) be construed as extending to and including
such Paying Agent within its meaning as fully for all intents and purposes as
if such Paying Agent were named in this Article 11 in addition to or in place
of the Trustee.
SECTION 11.10. Securities Senior to Subordinated
Indebtedness.
The indebtedness represented by the Securities will be senior
and prior in right of payment to all Subordinated Indebtedness, to the extent
and in the manner provided in such Subordinated Indebtedness.
ARTICLE XII.
MISCELLANEOUS
SECTION 12.1. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provisions shall control. The provisions of
TIA Sections 310 through 317 that impose duties on any Person (including the
provisions automatically deemed included herein unless expressly excluded by
this Indenture) are a part of and govern this Indenture, whether or not
physically contained herein.
SECTION 12.2. Notices.
Any notices or other communications required or permitted
hereunder shall be in writing, and shall be sufficiently given if made by hand
delivery, or first class mail, postage prepaid (except that any notice by the
Trustee to the Company of a default or an Event of Default under this Indenture
shall be by registered or certified mail, postage prepaid, return receipt
requested), or by a nationally-recognized overnight express courier service
(which notices or communications shall be deemed received, in the case of the
Company, the business day after the receipt thereof by such service and, in the
case of the Trustee, upon receipt), addressed as follows:
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<PAGE> 62
if to the Company:
Alternative Living Services, Inc.
450 North Sunnyslope Road
Suite 300
Brookfield, Wisconsin 53005
Attention: President
Telephone: (414) 789-9565
Telecopier: (414) 789-6677
if to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Finance Trust Services
Telephone: (212) 858-2529
Telecopier: (212) 858-2952
The Company or the Trustee by notice to the other may designate additional or
different addresses as shall be furnished in writing by either party. Any
notice or communication to the Company or the Trustee shall be deemed to have
been given or made as of the date so delivered if personally delivered, and
five (5) calendar days after mailing if sent by registered or certified mail
(except that a notice of change of address shall not be deemed to have been
given until actually received by the addressee).
Any notice or communication mailed to a Securityholder shall
be mailed to the address of such Securityholder as it appears on the
registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service,
or by reason of any other cause, it shall be impossible to mail any notice, as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
If the Company mails any notice or communication to
Securityholders, it shall mail a copy to the Trustee and all Agents at the same
time.
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SECTION 12.3. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Trustee, the Registrar and anyone else shall
have the protection of TIA ss. 312(c).
SECTION 12.4. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate (which shall include
the statements set forth in Section 12.5) stating that, in
the opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed
action have been complied with; and
(2) an Opinion of Counsel (which shall include the
statements set forth in Section 12.5) stating that, in the
opinion of such counsel, all such conditions precedent have
been complied with.
SECTION 12.5. Statements Required in Certificate and Opinion.
Each Certificate and Opinion with respect to compliance with
a condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such
certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person,
he has made such examination or investigation as is necessary
to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion
of such Person, such covenant or condition has been complied
with.
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<PAGE> 64
SECTION 12.6. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Registrar, Paying Agent or Conversion Agent may
make reasonable rules for its functions.
SECTION 12.7. Record Date.
Whenever the Company or the Trustee solicits an act of
Securityholders, the Company or the Trustee may fix in advance of the
solicitation of such act a date as the record date for determining
Securityholders entitled to perform said act. The record date shall be not more
than 15 days prior to the date fixed for the solicitation of said act.
SECTION 12.8. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which
banks or trust companies in the city in which either the Trustee or the Company
is located are not required to be open. If a payment date is a Legal Holiday at
a place of payment, payment may be made at that place on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
SECTION 12.9. Governing Law.
The laws of the State of New York shall govern this Indenture
and the Securities without regard to principles of conflicts of law. Each of
the parties hereto agrees to submit to the jurisdiction of the Courts of the
State of New York and the U.S. Federal Courts, in each case sitting in the
Borough of Manhattan, and waives any objection as to venue or forum non
conveniens.
SECTION 12.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or a Subsidiary. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 12.11. No Recourse Against Others.
No stockholder, director or officer, as such, past, present
or future, of the Company or of any successor corporation or trust shall have
any liability for any obligation of the Company under the Securities or the
Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of a Security by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities.
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<PAGE> 65
SECTION 12.12. Successors.
All agreements of the Company in this Indenture and the
Securities shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 12.13. Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture.
Each signed counterpart shall be deemed an original, but all of them together
represent the same agreement.
SECTION 12.14. Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 12.15. Severability.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, and a Holder shall have no claim therefor against any party
hereto.
(Signature page follows.)
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<PAGE> 66
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written above.
ALTERNATIVE LIVING SERVICES, INC.,
a Delaware corporation
By: /s/ THOMAS E. KOMULA
------------------------------------------
Name: THOMAS E. KOMULA
Title: Senior Vice President, Chief Financial
Officer, Treasurer and Assistant
Secretary
IBJ SCHRODER BANK & TRUST COMPANY
as Trustee
By: /s/ LUIS PEREZ
------------------------------------------
Name: LUIS PEREZ
Title: Assistant Vice President
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<PAGE> 67
EXHIBIT A
FORM OF SECURITY
[Attached]
<PAGE> 68
FORM OF SECURITY
[FORM OF FACE OF SECURITY]
Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation (55
Water Street, New York, New York) ("DTC"), to the issuer or its agent for
registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as may be requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or
such other entity as may be requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.(1)
[THIS SECURITY HAS BEEN ACQUIRED BY THE HOLDER FOR THE PURPOSE OF INVESTMENT
AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION. THIS
SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTRED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF
THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES
FOR THE BENEFIT OF THE COMPANY THAT: (I) IT HAS ACQUIRED A "RESTRICTED"
SECURITY WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL
NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO ALTERNATIVE
LIVING SERVICES, INC., (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) IN THE CASE OF A HOLDER WHO IS
A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT), FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (D) IN
<PAGE> 69
ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OR PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
(AND CONFIRMED IN AN OPINION OF COUNSEL ACCEPTABLE IN FORM AND SUBSTANCE TO THE
ISSUER OF THIS SECURITY IF THE ISSUER SO REQUESTS) AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION; AND (III) IT WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT
OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE.]1
ALTERNATIVE LIVING SERVICES, INC.
7.0% Convertible Subordinated Debenture Due 2004
ALTERNATIVE LIVING SERVICES, INC., a Delaware corporation,
promises to pay to ________________________________ or registered assigns, the
principal sum of _____________ Dollars, on June 1, 2004.
Interest Payment Dates: June 1 and December 1
Record Dates: May 15 and November 15
Additional provisions of this Security are set forth on other
side of this Security.
Dated:
CERTIFICATE OF AUTHENTICATION ALTERNATIVE LIVING SERVICES,
IBJ SCHRODER BANK & TRUST COMPANY INC.
as Trustee, certifies that this
is one of the Securities referred
to in the within mentioned
Indenture. By:
-----------------------------
By:
-----------------------
Authorized Signatory
By:
------------------------------
SEAL
- --------
(1) To be included on all Securities which are Restricted Securities.
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<PAGE> 70
[FORM OF REVERSE OF SECURITY]
ALTERNATIVE LIVING SERVICES, INC.
7.0% Convertible Subordinated Debenture Due 2004
1. Interest. Alternative Living Services, Inc., a Delaware
corporation (the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above. The Company will pay
interest semiannually on June 1 and December 1 of each year beginning December
1, 1997. Interest on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from May 21,
1997; provided that, if there is no existing Default in the payment of
interest, and if this Security is authenticated between a record date referred
to on the face hereof and the next succeeding interest payment date, interest
shall accrue from such interest payment date. Interest will be computed on the
basis of a 360 day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the
Securities (except defaulted interest) to the persons who are the registered
Holders of the Securities at the close of business on the May 15 or November 15
immediately preceding the interest payment date. Holders must surrender
Securities to a Paying Agent to collect principal and premium payments. The
Company will pay principal, premium and interest in money of the United States
that at the time of payment is legal tender for payment of public and private
debts. The Company, however, may pay principal, premium and interest by its
check payable in such money. It may mail an interest check to a Holder's
registered address.
The payment of principal of and premium, if any, on this
Security shall be payable only upon surrender of this Security at the office or
agency of the Paying Agent in the Borough of Manhattan, City and State of New
York. Payments of principal of, premium, if any, and interest on this Security
shall be made at the office or agency of the Trustee maintained in the Borough
of Manhattan, City and State of New York, or, in the case of any such payments
other than the payment of principal and premium, if any, at the Company's
option, by check mailed to the Person entitled thereto at such Person's address
last appearing on the Company's register.
3. Registrar and Agents. Initially, IBJ Schroder Bank & Trust
Company will act as Registrar, Paying Agent, Conversion Agent and agent for
service of notices and demands. The Company may change any Registrar,
co-registrar, Paying Agent, Conversion Agent and agent for service of notices
and demands without notice. The Company or any of its Subsidiaries may act as
Paying Agent or Conversion Agent. The address of IBJ Schroder Bank & Trust
Company is One State Street, New York, NY 10004.
<PAGE> 71
4. Indenture; Limitations. The Company issued the Securities
under an Indenture, dated as of May 21, 1997 (the "Indenture"), between the
Company and IBJ Schroder Bank & Trust Company (the "Trustee"). Capitalized
terms herein are used as defined in the Indenture unless otherwise defined
herein. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S. Code ss.ss. 77aaa-77bbbb) as in effect on the date of the
Indenture. The Securities are subject to all such terms, and the Holders of the
Securities are referred to the Indenture and said Act for a statement of them.
The Securities are general unsecured obligations of the Company
limited to $50,000,000 principal amount. The Indenture imposes certain
limitations on the ability of the Company to, among other things, make payments
in respect of its Capital Stock, merge or consolidate with any other Person and
sell, lease, transfer or otherwise dispose of its properties or assets.
5. Optional Redemption by the Company. The Company may, at its
option, redeem the Securities at any time, in whole or in part, together with
accrued and unpaid interest to the Redemption Date, on or after June 15, 2000
in accordance with the following schedule:
<TABLE>
<CAPTION>
On or After Redemption
June 15, Price
-------- -----
<S> <C>
2000 103%
2001 102%
2002 101%
2003 and thereafter 100%
</TABLE>
6. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 principal amount may be redeemed in part, but
only in whole multiples thereof. On and after the Redemption Date interest
ceases to accrue on Securities or portions of them called for redemption.
7. Conversion. A Holder of a Security may convert such Security
into shares of common stock of the Company after the effective date of the
Registration Statement and before the close of business on June 1, 2004. If the
Security is called for redemption, the Holder may convert it at any time before
the close of business on the date fixed for such redemption. The initial
conversion price is $20.25 per share, subject to adjustment in certain events.
To determine the number of shares issuable upon conversion of a Security,
divide the principal amount to be converted by the conversion price in effect
on the conversion date. The Company will deliver a check for any fractional
share.
-2-
<PAGE> 72
To convert a Security, a Holder must (1) complete and sign the
conversion notice on the back of the Security, (2) surrender the Security to
the Conversion Agent, (3) furnish appropriate endorsements and transfer
documents if required by the Registrar or Conversion Agent and (4) pay any
transfer or similar tax if required. No payment or adjustment is to be made on
conversion for interest accrued hereon or for dividends on shares of common
stock issued on conversion; provided, however, that if a Security is
surrendered for conversion after the record date for a payment of interest and
on or before the interest payment date, then, notwithstanding such conversion,
the interest falling due to such interest payment date will be paid to the
Person in whose name the Security is registered at the close of business on
such record date and any Security surrendered for conversion during the period
from the close of business on any regular record date to the opening of
business on the corresponding interest payment date must be accompanied by
payment of an amount equal to the interest payable on such interest payment
date. A Holder may convert a portion of a Security if the portion is $1,000
principal amount or an integral multiple thereof.
If the Company is a party to a consolidation or merger or a
transfer or lease of all or substantially all of its assets, the right to
convert a Security into shares of common stock may be changed into a right to
convert it into securities, cash or other assets of the Company or another
Person.
8. Subordination. This Security is subordinated to all Senior
Indebtedness of the Company. To the extent and in the manner provided in the
Indenture, Senior Indebtedness must be paid before any payment may be made to
any Holders of Securities. Any Securityholder by accepting this Security agrees
to such subordination and authorizes the Trustee to give it effect.
In addition to all other rights of Senior Indebtedness
described in the Indenture, the Senior Indebtedness shall continue to be Senior
Indebtedness and entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any term of any
instrument relating to the Senior Indebtedness or extension or renewal of the
Senior Indebtedness.
9. Denominations, Transfer, Exchange. The Securities issued
under the Indenture are in the aggregate principal amount of up to $50,000,000.
The Securities are in registered form without coupons in denominations of
$1,000 principal amount and integral multiples thereof. A Holder may register
the transfer of or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption or register the transfer
of or exchange any Securities for a period of 15 days before a selection of
Securities to be redeemed.
-3-
<PAGE> 73
10. Persons Deemed Owners. The registered Holder of a Security
may be treated as its owner for all purposes.
11. Unclaimed Money. If money for the payment of principal or
interest on any Securities remains unclaimed for two years, the Trustee and the
Paying Agent will pay the money back to the Company at its written request.
After that, Holders may look only to the Company for payment.
12. Discharge Prior to Redemption or Maturity. The Indenture
will be discharged and canceled except for certain sections thereof upon
payment of all the Securities, or upon the irrevocable deposit with the Trustee
of funds or U.S. Government Obligations maturing on or before such payment date
or Redemption Date, sufficient to pay principal, premium, if any, and interest
on such payment or redemption.
13. Amendment and Waiver. Subject to certain exceptions,
without notice to the Holders of the Securities, the Indenture or the
Securities may be amended with the consent of the Holders of at least 66-2/3%
in principal amount of the Securities then outstanding and any existing default
or compliance with any provision may be waived with the consent of the Holders
of a majority in principal amount of the Securities then outstanding. Without
the consent of or notice to any Securityholder, the Company may amend or
supplement the Indenture or the Securities to, among other things, provide for
uncertificated Securities, to cure any ambiguity, defect or inconsistency or
make any other change that does not adversely affect the rights of any
Securityholder.
14. Successors. When a successor assumes all the obligations of
its predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
15. Defaults and Remedies. If an Event of Default, as defined
in the Indenture (other than a Event of Default relating to bankruptcy of the
Company), occurs and is continuing, the Trustee or the Holders of a majority in
principal amount of Securities may declare all the Securities to be due and
payable immediately in the manner and with the effect provided in the
Indenture. If an Event of Default relating to bankruptcy of the Company occurs,
then all Securities shall become immediately due and payable without any
declaration or act on the part of the Trustee or any Holder. Holders of
Securities may not enforce the Indenture or the Securities except as provided
in the Indenture. The Trustee may require indemnity satisfactory to it, subject
to the provisions of the TIA, before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in principal
amount of the Securities then outstanding may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of
Securities notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. The Company is required to file periodic reports with the Trustee as
to the absence of any Default or Event of Default.
-4-
<PAGE> 74
16. Trustee Dealings with the Company. IBJ Schroder Bank &
Trust Company, the Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not Trustee.
17. No Recourse Against Others. No stockholder, director,
officer or incorporator, as such, past, present or future, of the Company or
any successor corporation shall have any liability for any obligation of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of, such obligations or their creation. Each Holder of
a Security by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the
Securities.
18. Authentication. This Security shall not be valid until the
Trustee signs the certificate of authentication on the other side of this
Security.
19. Abbreviations. Customary abbreviations may be used in the
name of a Securityholder or an assignee, such as: TEN COM (=tenants in common),
TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (=Custodian), and U/G/M/A
(=Uniform Gifts to Minors Act).
The Company will furnish to any Securityholder upon written
request and without charge a copy for the Indenture. It also will furnish the
text of this Security in larger type. Requests may be made to: Alternative
Living Services, Inc., 450 North Sunnyslope Road, Suite 300, Brookfield,
Wisconsin 53005. Attention: Chief Financial Officer.
-5-
<PAGE> 75
TRANSFER NOTICE
If you, the Holder, wants to assign this Security, fill in the form below and
have your signature guaranteed:
For value received, I or we assign and transfer this Security to
- -------------------------------------------------------------------------------
(INSERT ASSIGNEE'S SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER)
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
agent
- --------------------------------------------------------------------------
to transfer this Security on the books of the Company. The agent may substitute
another to act for him.
In connection with the transfer of this Security, the
undersigned certifies that:
(Check one)
/ / (a) This Security is being transferred
to a "qualified institutional
buyer" (as defined in Rule 144A
under the Securities Act) in
compliance with the exemption from
registration under the Securities
Act provided by Rule 144A.
/ / (b) This Security is being transferred
to Alternative Living Services,
Inc.
/ / (c) Transfer other than those above in
connection with which the Company
has received an opinion of counsel
(satisfactory to it in form and
substance) to the effect that the
transfer is being made pursuant to
an exemption from, or in a
transaction not subject to, the
registration requirements of the
Securities Act.
/ / (d) This Security is being exchanged
for a beneficial interest in the
Rule 144A Global Security and the
undersigned is a "qualified
institutional buyer" (as defined
in Rule 144A under the Securities
Act of 1933).
<PAGE> 76
Date:
------------------------------------------------------------------------
Your signature:
--------------------------------------------------------------
(Sign exactly as your name appears on the other side of this
Security)
Signature Guaranteed by*:
-----------------------------------------------------
* Signature must be guaranteed by an eligible guarantor institution within the
meaning of Securities and Exchange Commission Rule 17Ad-15 (including banks,
stock brokers, savings and loan associations, national securities exchanges,
registered securities associations, clearing agencies and credit unions) with
membership or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other signature guarantee medallion program as may be
approved by the Registrar in addition to, or substitution for, STAMP, if this
Security is to be delivered other than to and in the name of the registered
holder.
IF NONE OF THE FOREGOING BOXES IS CHECKED, THE TRUSTEE SHALL NOT BE OBLIGATED
TO REGISTER THE TRANSFER OF THIS SECURITY UNLESS AND UNTIL THE CONDITIONS TO
ANY SUCH TRANSFER OF REGISTRATION SET FORTH HEREIN, ON THE FACE HEREOF AND IN
THE INDENTURE SHALL HAVE BEEN SATISFIED.
-2-
<PAGE> 77
CONVERSION NOTICE
To convert this Security into shares of common stock of the
Company, check the box:
------------
To convert only part of this Security, state the principal amount to be
converted (which must be a minimum of $1,000 or any multiple thereof):
$
------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
If you want the Security certificate, if any, made out in another person's
name, fill in the form below:
(INSERT OTHER PERSON'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
Date:
-------------------------------------------------------------------------
Your signature:
---------------------------------------------------------------
(Sign exactly as your name appears on the other side of this Security)
Signature Guaranteed By*:_____________________________________________________
*Signature must be guaranteed by an eligible guarantor institution within the
meaning of Securities and Exchange Commission Rule 17Ad-15 (including banks,
stock brokers, savings and loan associations, national securities exchanges,
registered securities associations, clearing agencies and credit unions) with
membership or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other signature guarantee medallion program as may be
approved by the Registrar in addition to, or substitution for, STAMP, if this
Security is to be delivered other than to and in the name of the registered
holder.
<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE:
CONTACT: GARY KASTEL, DIRECTOR OF CORPORATE COMMUNICATIONS
(800) 236-3454
FOR IMMEDIATE RELEASE:
ALTERNATIVE LIVING SERVICES, INC.
WILL SELL $50 MILLION OF CONVERTIBLE DEBT
(Brookfield, WI -- May 14, 1997) -- Alternative Living Services, Inc.
(AMEX-ALI) announced today that it will sell $50 million of 7% convertible
subordinated debentures due 2004, at par value. The transaction is expected to
close May 21, 1997. The Company intends to use the net proceeds from this
offering to develop and construct new residences, to acquire additional
residences as appropriate opportunities arise and for general working capital
needs.
The debentures, which are non-callable for three years, will be convertible
into common stock at a rate of $20.25 per share. The shares will convert to
approximately 2,469,000 shares of common stock.
Neither the debentures or the common stock issuable upon conversion thereof
have been registered under the United States Securities Act of 1933.
Accordingly, these securities may not be offered or sold in the United States
or to any US person absent registration or an applicable exemption from the
registration requirements.
Alternative Living Services currently operates 88 residences, with an aggregate
capacity of 3,763, in 14 states. The Company offers four types of home-like
residential models, including Clare Bridge, a specially designed residence for
individuals with Alzheimer's disease and other dementias; Wynwood, an upscale
residence for the frail elderly; WovenHearts, a moderate income residence to
serve the frail elderly in smaller communities; and Crossings, an apartment
style residence. Alternative Living Services currently operates in Wisconsin,
Michigan, Minnesota, Florida, Pennsylvania, Oregon, Colorado, California,
Washington, Idaho, New Jersey, North Carolina, New York and Arizona, with
residences under construction and development in many of its existing markets
as well as in South Carolina and Delaware.
This announcement is neither an offer to sell nor a solicitation of an offer to
buy any of these securities.
<PAGE> 1
EXHIBIT 99.2
Appendix II
to Purchase Agreement
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of May 21, 1997, by and between ALTERNATIVE LIVING SERVICES,
INC., a Delaware corporation (the "Company"), and the purchaser whose name and
address is set forth on the signature page hereof (the "Purchaser").
This Agreement is made pursuant to the Purchase Agreement, dated as of
May 14, 1997, between the Company and the Purchaser (the "Purchase Agreement").
In order to induce the Purchaser to enter into the Purchase Agreement, the
Company has agreed to provide for the benefit of the holders (initially
consisting of the Purchaser and the Other Purchasers as defined below) of the
Company's Transfer Restricted Securities (as defined below) the registration
rights set forth in this Agreement. The execution of this Agreement is a
condition to the Closing under the Purchase Agreement.
The Company proposes to enter into substantially this same form of
registration rights agreement with certain other investors (the "Other
Purchasers") and expects to complete sales of the Debentures to them. The
Purchaser and the Other Purchasers are hereinafter sometimes collectively
referred to as the "Purchasers," and this Agreement and the registration rights
agreements executed by the Other Purchasers are hereinafter sometimes
collectively referred to as the "Agreements." The term "Placement Agent" shall
mean National Westminster Bank PLC, New York Branch.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Closing: Has the meaning such term is given in the Purchase Agreement.
Closing Date: Has the meaning such term is given in the Purchase
Agreement.
Common Stock: The shares of common stock of the Company, $.01 par
value per share.
Debentures: The Company's 7.0% Convertible Subordinated Debentures due
2004 being sold and issued pursuant to the Purchase Agreement and the Indenture
in an aggregate principal amount of $50.0 million.
Effective Date: The date the Shelf Registration is declared effective
by the SEC.
Exchange Act: The Securities Exchange Act of 1934, as amended from
time to time.
<PAGE> 2
Indemnified Holder: See Section 6(a).
Indenture: The Indenture, dated as of May 21, 1997, between the
Company and IBJ Schroder Bank & Trust Company, as Trustee.
NASD: National Association of Securities Dealers, Inc.
Person: Any individual, partnership, corporation, trust or
unincorporated organization, or government (or any agency, instrumentality or
political subdivision thereof).
Prospectus: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Transfer Restricted Securities, pursuant
to any registration covered by the Registration Statement and by all other
amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.
Registrable Securities: The Debentures and the shares of Common Stock
issuable upon conversion of the Debentures; provided that a Debenture or a
share of Common Stock, as the case may be, ceases to be a Registrable Security
when it is no longer a Transfer Restricted Security.
Registration Expenses. See Section 5.
Registration Statement: Any registration statement of the Company
which covers any of the Transfer Restricted Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective
amendments, and all exhibits and all material incorporated by reference in such
Registration Statement.
Securities Act: The Securities Act of 1933, as amended from time to
time.
SEC: The Securities and Exchange Commission.
Selling Expenses: All underwriting discounts, selling commissions and
stock transfer taxes applicable to the Registrable Securities.
Shelf Registration: See Section 3.
Transfer Restricted Debentures: The Debentures upon original issuance
thereof and at all times subsequent thereto until the earlier of the following:
(i) such Debentures have been effectively registered under Section 5 of the
Securities Act and disposed of in accordance with the Registration Statement
covering them or (ii) such Debentures have been distributed to the public
pursuant to Rule 144 (or any similar provisions then in force).
Transfer Restricted Securities: The Transfer Restricted Debentures and
the Transfer Restricted Shares.
-2-
<PAGE> 3
Transfer Restricted Shares: The shares of Common Stock issuable upon
conversion of the Debentures until the earlier of the following: (i) such
shares of Common Stock have been effectively registered under Section 5 of the
Securities Act and disposed of in accordance with the Registration Statement
covering them or (ii) such shares of Common Stock have been distributed to the
public pursuant to Rule 144 (or any similar provisions then in force).
Trustee: The Trustee under the Indenture.
2. Securities Subject to this Agreement
Registrable Securities. The securities entitled to the benefits of
this Agreement are the Registrable Securities.
Holders of Registrable Securities. A Person is deemed to be a holder
of Registrable Securities whenever such Person is the beneficial owner of
Registrable Securities. The Company is entitled to treat the record holder of
Registrable Securities as beneficial owner of Registrable Securities unless
otherwise notified by such holder.
3. Shelf Registration: Timing of Filing, Effectiveness and Period of
Usability
Subject to the provisions of Section 4 hereof, the Company shall use
its best efforts to cause to be declared effective as promptly as practicable
after the Company becomes eligible for Form S-3 promulgated under the
Securities Act and in any event not later than November 14, 1997, a "shelf"
Registration Statement (a "Shelf Registration") on Form S-3 or any other
appropriate form pursuant to Rule 415 (or similar rule that may be adopted by
the SEC) under the Securities Act for all the Registrable Securities, which
form shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution thereof.
The Company agrees to use its best efforts to keep the Registration
Statement continuously effective and usable for resale of Registrable
Securities until two (2) years from the Effective Date or such shorter period
which will terminate when all the Registrable Securities covered by such
Registration Statement have been sold pursuant to such Registration Statement
or when all Registrable Securities otherwise have been sold pursuant to Rule
144 or are freely tradeable in essentially the same manner as contemplated in
Section 4 below (the "Effectiveness Period").
With respect to a Registration Statement which has become effective
pursuant to this Agreement, if the Board of Directors of the Company shall
determine, in its good faith reasonable judgment, that it is necessary to
suspend the availability of the Registration Statement in light of the
existence of any undisclosed acquisition or financing activity or other
undisclosed material event, circumstance or condition involving the Company or
any subsidiary of the Company, the disclosure of which in any such case could
reasonably be expected to materially disadvantage the Company, and the
existence of which would render the Registration Statement inadequate as
failing to include material information, then the Company may cause the right
of holders of Registrable Securities to make dispositions of Registrable
Securities pursuant to the Registration Statement to be suspended for such
period as the Board of Directors determines in its good faith
-3-
<PAGE> 4
reasonable judgment to be necessary (but not on more than two occasions nor for
more than 60 days in the aggregate nor for more than 30 days in the aggregate
during any continuous 12-month period). If the Company determines to suspend
the right of the holders pursuant to the preceding sentence, the Company shall
deliver a notice to each holder of Registrable Securities covered under the
Registration Statement, which indicates that the Registration Statement is no
longer usable. Upon the receipt of any such notice, such holders shall
forthwith discontinue any sale of Registrable Securities pursuant to the
Registration Statement and any use of the prospectus contained in the
Registration Statement. As soon as the circumstances which resulted in the
delivery of any such notice cease to exist, the Company shall promptly notify
the holders of Registrable Securities of such cessation, whereupon such holders
may resume making dispositions of Registrable Securities pursuant to the
Registration Statement.
4. Registration Procedures
In connection with the Company's obligation to file a Registration
Statement as provided in Section 3 hereof, the Company will as expeditiously as
possible:
(a) before filing a Registration Statement or Prospectus or any
amendments or supplements thereto, furnish to Purchaser and the holders of the
Registrable Securities covered by such Registration Statement a copy of all
such documents proposed to be filed, which documents will be subject to the
review of Purchaser and such holders and the Company will not file any
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto to which the holders of a majority in aggregate principal amount of the
Registrable Securities covered by such Registration Statement shall reasonably
object (provided that the Company may assume, for the purposes of the foregoing
that any holder of Registrable Securities has no objection if the Company has
not received notice from such holder within five business days after delivery
of such documents to such holder);
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement, and such supplements to the
Prospectus, as may be required by the rules, regulations or instructions
applicable to the registration form utilized by the Company or by the
Securities Act or rules and regulations thereunder for shelf registration or
otherwise necessary to keep the Registration Statement effective for the
applicable period and cause the Prospectus as so supplemented to be filed
pursuant to Rule 424 under the Securities Act; and comply with the provisions
of the Securities Act with respect to the disposition of all securities covered
by such Registration Statement during the applicable period in accordance with
the intended methods of disposition by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(c) notify Purchaser and the holders of Registrable Securities
promptly, and confirm such advice in writing:
(1) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same
has become effective,
-4-
<PAGE> 5
(2) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose, and
(3) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
(d) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(e) furnish, without charge, to Purchaser and each selling holder of
Registrable Securities, at least one conformed copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits (including those incorporated by reference);
(f) deliver to Purchaser and each selling holder of Registrable
Securities without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such Persons
may reasonably request; the Company consents to the use of the Prospectus or
any amendment or supplement thereto by each of Purchaser and the selling
holders of Registrable Securities in connection with the offering and sale of
the Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
(g) at least 14 days prior to filing of the Registration Statement,
use its best efforts to furnish by certified mail to the beneficial holders of
the Registrable Securities, at the addresses of record specified on the
transfer books held by the Trustee, notice of the Company's intention to file a
Registration Statement and request that all holders of Registrable Securities
desiring to sell their Registrable Securities pursuant to the Registration
Statement notify the Company promptly in writing;
(h) cooperate with Purchaser and the selling holders of Registrable
Securities to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any restrictive
legends;
(i) use its best efforts to cause the Registrable Securities covered
by the Registration Statement to be registered with or approved by such
governmental agencies or authorities as may be necessary to enable the seller
or sellers thereof to consummate the disposition of such Registrable Securities
in such jurisdictions within the United States of America as the sellers may
specify in response to inquiries to be made by the Company, provided that the
Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which
would subject it to general service of process in any such jurisdiction where
it is not then so subject;
(j) as provided in Section 3, if any event shall occur as a result of
which it is necessary, in the opinion of counsel for the Company or for the
holders of a majority of the Registrable Securities, to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser,
-5-
<PAGE> 6
prepare a supplement or post-effective amendment to the Registration Statement
or the related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading;
(k) obtain a CUSIP number for all Registrable Securities (unless
already obtained), not later than the Effective Date;
(l) make available for inspection during normal business hours by a
representative of the holders of a majority of Registrable Securities and any
attorney or accountant retained by such representative, all material financial
and other records, pertinent and material corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to
supply all material information reasonably requested by such representative or
any such attorney or accountant in connection with the Registration Statement;
provided that all such records, information or documents shall be kept
confidential by such Persons unless disclosure of such records, information or
documents is required by court or administrative order or is generally
available to the public other than as a result of disclosure in violation of
this paragraph (l);
(m) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC, and make generally available to their security
holders an earning statement satisfying the provisions of Section 11(a) of the
Securities Act (in accordance with Rule 158 thereunder or otherwise), no later
than 45 days after the end of the 12-month period (or 90 days, if such period
is a fiscal year) beginning with the first month of the Company's first fiscal
quarter commencing after the Effective Date, which statements shall cover said
12-month period;
(n) cause the Indenture to be qualified under the Trust Indenture Act
of 1939, as amended from time to time (the "TIA"), and, in connection
therewith, cooperate with the Trustee under the Indenture and the holders of
the Debentures to effect such changes to the Indenture as may be required for
the Indenture to be so qualified in accordance with the terms of the TIA and
execute, and use their best efforts to cause the Trustee to execute, all
documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner; and
(o) if at any time an event of the kind described in Section 4(j)
shall occur, promptly notify Purchaser and the holders of Registrable
Securities that the use of the Prospectus must be discontinued.
Each selling holder of Registrable Securities as to which any
registration is being effected agrees, as a condition to the registration
obligations with respect to such holder provided herein, to furnish to the
Company such information regarding the distribution of such securities as the
Company may from time to time reasonably request in writing.
-6-
<PAGE> 7
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company
described in paragraph 4(o), such holder will forthwith discontinue disposition
of Registrable Securities until such holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 4(j) hereof, or
until it is advised in writing by the Company (which notice the Company shall
give as promptly as reasonably possible), that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings
which are incorporated by reference in the Prospectus, and, if so directed by
the Company, such holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such holder's possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of such notice.
5. Registration Expenses
(a) All expenses (other than Selling Expenses) incident to the
Company's performance of or compliance with this Agreement, including without
limitation:
(1) all registration, filing and listing fees;
(2) fees and expenses of compliance with securities or
blue sky laws (including reasonable fees and disbursements of one
counsel in connection with blue sky qualifications of the Registrable
Securities and determination of their eligibility for investment under
the laws of such jurisdictions as the holders of a majority in
principal amount of the Registrable Securities being sold may
reasonably designate);
(3) printing, messenger, telephone and delivery expenses;
(4) fees and disbursements of counsel for the Company;
(5) fees and disbursements of all independent certified
public accountants of the Company (including the expenses of any
special audit necessary to satisfy the requirements of the Securities
Act and any "cold comfort" letters required by or incident to such
performance);
(6) securities acts liability insurance if the Company so
desires;
(7) fees and expenses of other Persons retained by the
Company; and
(8) fees and expenses associated with any NASD filing
required to be made in connection with the Registration Statement
(all such expenses being herein called "Registration Expenses") will be borne
by the Company, regardless of whether the Registration Statement becomes
effective.
The Company will, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the securities to
be registered on a securities exchange, rating agency fees and the fees and
expenses
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<PAGE> 8
of any Person, including special experts, retained by the Company.
(b) All Selling Expenses relating to the Registrable Securities shall
be borne by the holders thereof pro rata on the basis of the number of such
securities registered on their behalf.
6. Indemnification and Contribution
(a) Indemnification by the Company. The Company agrees, to indemnify
and hold harmless each holder of Registrable Securities, its officers,
directors, employees and agents and each Person who controls such holder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act (each such person being sometimes hereinafter referred to as an
"Indemnified Holder") from and against all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation and legal expenses)
arising out of or based upon any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement or Prospectus or in
any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or based upon any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any such untrue
statement or omission or allegation thereof based upon information furnished in
writing to the Company by such holder expressly for use therein; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary prospectus if (i) such holder failed
to send or deliver a copy of the Prospectus with or prior to the delivery of
written confirmation of the sale of Registrable Securities and (ii) the
Prospectus would have corrected such untrue statement or omission; and provided
further, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission in the Prospectus, if such untrue statement or alleged untrue
statement, omission or alleged omission is corrected in an amendment or
supplement to the Prospectus and if, having previously been furnished by or on
behalf of the Company with copies of the Prospectus as so amended or
supplemented, such holder thereafter fails to deliver such Prospectus as so
amended or supplemented, prior to or concurrently with the sale of a
Registrable Security to the person asserting such loss, claim, damage,
liability or expense who purchased such Registrable Security which is the
subject thereof from such holder. This indemnity will be in addition to any
liability which the Company may otherwise have. The Company will also indemnify
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, their officers and directors
and each Person who controls such Persons (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) to the same extent as
provided above with respect to the indemnification of the holders of
Registrable Securities.
If any action or proceeding (including any governmental investigation
or inquiry) shall be brought or asserted against any Indemnified Holder in
respect of which indemnity may be sought from the Company, such Indemnified
Holder shall promptly notify the Company in writing (but the omission to so
notify the Company shall not relieve it of any liability that it may
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<PAGE> 9
have against any Indemnified Holder otherwise than under this subsection), and
the Company shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Holder and the payment of
all expenses. Indemnified Holders shall have the right, collectively, to employ
their own counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall be the expense of the
Indemnified Holders unless (a) the Company has agreed to pay such fees and
expenses or (b) the Company shall have failed to assume the defense of such
action or proceeding and have failed to employ counsel reasonably satisfactory
to the Indemnified Holders in any such action or proceeding or (c) the named
parties to any such action or proceeding (including any impleaded parties)
include the Indemnified Holders and the Company, and the Indemnified Holders
shall have been advised by counsel that there may be one or more legal defenses
available to the Indemnified Holders which are different from or additional to
those available to the Company (in which case, if the Indemnified Holders
notify the Company in writing that they elect to employ their own counsel at
the expense of the Company, the Company shall not have the right to assume the
defense of such action or proceeding on behalf of the Indemnified Holders, it
being understood, however, that the Company shall not, in connection with any
one such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel) at any time for the Indemnified Holders which firm shall be designated
in writing by the Indemnified Holders representing at least a majority of the
aggregate principal amount of the outstanding Debentures). Any such fees and
expenses payable by the Company shall be paid to the Indemnified Holders
entitled thereto as incurred by the Indemnified Holders. The Company shall not
be liable for any settlement of any such action or proceeding effected without
its written consent, but if settled with its written consent, or if there be a
final judgment for the plaintiff in any such action or proceeding, the Company
agrees to indemnify and hold harmless the Indemnified Holders from and against
any loss or liability by reason of such settlement or judgment.
(b) Indemnification by Holder of Registrable Securities. Each holder
of Registrable Securities agrees to indemnify and hold harmless the Company,
its respective directors, officers, employees and agents and each Person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to such holder, but only with respect to
information relating to such holder furnished in writing by such holder
expressly for use in any Registration Statement or Prospectus, or any amendment
or supplement thereto, or any preliminary prospectus. In case any action or
proceeding shall be brought against the Company or its respective directors,
officers, employees or agents or any such controlling person, in respect of
which indemnity may be sought against a holder of Registrable Securities, such
holder shall have the rights and duties given the Company, and the Company or
its respective directors, officers, employees or agents or such controlling
person shall have the rights and duties given to each holder by the preceding
paragraph. In no event shall the liability of any selling holder of Registrable
Securities hereunder be greater in amount than the dollar amount of the
proceeds received by such holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation. Each holder of Registrable
Securities will also indemnify underwriters, selling brokers, dealer managers
and similar securities industry professionals
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<PAGE> 10
participating in the distribution, their officers and directors and each Person
who controls such Persons (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) to the same extent as provided above
with respect to the indemnification of the Company. The Company and each holder
of Registrable Securities shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, to the same extent as provided
above with respect to information so furnished in writing by such Persons
specifically for inclusion in any Prospectus or Registration Statement.
(c) Contribution. If the indemnification provided for in this Section
6 is unavailable to an indemnified party under Section 6(a) or Section 6(b)
hereof (other than by reason of exceptions provided in those Sections) in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company from the sale of the Debentures to Purchaser
pursuant to the Purchase Agreement on the one hand and each holder of
Registrable Securities from the offering of the Registrable Securities by such
holder, on the other hand, or (ii) if the allocation provided by clause (i)
above 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 Company on the one hand and each holder of
Registrable Securities on the other in connection with the statements or
omissions that resulted in such losses, claims, damages, or liabilities, as
well as the other relevant equitable considerations. The relative benefits
received by the Company on the one hand and each holder of Registrable
Securities on the other shall be deemed to be in the same proportion as the
aggregate amount paid by Purchaser to the Company pursuant to the Purchase
Agreement for the Registrable Securities purchased by such holder that were
sold pursuant to the Registration Statement bears to the difference (the
"Difference") between the amount such holder paid for the Registrable
Securities that were sold pursuant to the Registration Statement and the amount
received by such holder from such sale. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the particular
holder and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
Company and the holders of Registrable Securities agree that it would not be
just and equitable if contributions pursuant to this subsection (c) were to be
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable consideration referred to in the first
sentence of this subsection (c). The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (c) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigation or defending against any action or claim that is the subject of
this subsection (c). Notwithstanding the provision of this subsection (c), each
holder of Registrable Securities shall not be required to contribute any amount
in excess of the amount by which the Difference exceeds the amount of any
damages that such holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission
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<PAGE> 11
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act), shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
7. Rule 144 and Rule 144A
During the Effectiveness Period and for so long as the Company is
subject to the reporting requirements of Section 13 or 15 of the Exchange Act,
the Company covenants that it will file the reports required to be filed by it
under the Securities Act and Section 13(a) or 15(d) of the Exchange Act and the
rules and regulations adopted by the SEC thereunder. If the Company is not
subject to the reporting requirements of Section 13 or 15 of the Exchange Act,
the Company also covenants that it will provide the information required
pursuant to Rule 144A(d)(4) under the Securities Act upon the request of any
holder of Registrable Securities which continues to be "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act and it will take
such further action as any holder of such Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell its Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, so long as such
provision does not require the public filing of information relating to the
Company which the Company is not otherwise required to file, (b) Rule 144A
under the Securities Act, as such Rule may be amended from time to time, or (c)
any similar rule or regulation hereafter adopted by the SEC that does not
require the public filing of information relating to the Company. Upon the
request of any holder of Registrable Securities, the Company will deliver to
such holder a written statement as to whether it has complied with such
requirements.
8. Miscellaneous
(a) No Inconsistent Agreements. The Company will not on or after the
date of this Agreement enter into any agreement with respect to their
securities which is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the holders of Registrable Securities
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's securities under any such
agreements.
(b) Adjustments Affecting Registrable Securities. The Company will not
take any action, or permit any change to occur, with respect to the Registrable
Securities which would adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of holders
of a majority of the Transfer Restricted Debentures and a majority of the
Transfer Restricted Shares. Notwithstanding the foregoing, a waiver of consent
to departure from the provision hereof that relates exclusively to the rights
of holders of Registrable Securities whose securities are being sold pursuant
to a Registration Statement and
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<PAGE> 12
that does not directly or indirectly affect the rights of other holders of
Registrable Securities may be given by the holders of a majority of the
Transfer Restricted Securities being sold.
(d) Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed by first-class registered or
certified airmail, telecopier, or nationally recognized overnight express
courier postage prepaid, and shall be deemed given when so mailed or if
telecopied, when receipt is acknowledged, and shall be delivered as addressed
as follows:
(1) if to the Purchaser, at the most current address given by
the Purchaser to the Company in accordance with the provisions of this
Section 8(d), which address initially is as set forth on the signature
page hereto;
(2) if to a holder of Registrable Securities, at its address
of record as indicated on the books of the transfer agent and
registrar for the Registrable Securities; and
(3) if to the Company, initially at its address set forth in
the Purchase Agreement and thereafter at such other address, notice of
which is given in accordance with the provisions of this Section 8(d).
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the addresses specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent holders of Registrable Securities.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
RULES AS TO CONFLICTS OF LAW.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter hereof. There are no restrictions, promises, warranties
or undertakings, other than those set forth or referred to herein
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<PAGE> 13
with respect to the registration rights granted by the Company with respect to
the securities sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
[signature page follows]
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<PAGE> 14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ALTERNATIVE LIVING SERVICES, INC.
By
-------------------------------------
Name:
Title:
Print or Type:
Name of Purchaser (Individual or Institution):
---------------------------------
Name of Individual representing
Purchaser (if an Institution):
---------------------------------
Title of Individual representing
Purchaser (if an Institution):
---------------------------------
Signature by:
Purchaser or Individual
representing Purchaser:
---------------------------------
Address:
-------------------------
Telephone:
----------------------
Telecopier:
---------------------
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