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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 26, 1997
REGISTRATION NO. 333-39705
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ALTERNATIVE LIVING SERVICES, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 39-1771281
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
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450 NORTH SUNNYSLOPE ROAD, SUITE 300
BROOKFIELD, WISCONSIN 53005
(414) 789-9565
(Address and telephone number of Registrant's principal executive offices)
WILLIAM F. LASKY, CHIEF EXECUTIVE OFFICER
ALTERNATIVE LIVING SERVICES, INC.
450 NORTH SUNNYSLOPE ROAD, SUITE 300
BROOKFIELD, WISCONSIN 53005
(414) 789-9565
(Name, address and telephone number of agent for service)
Copies of all communications, including all communications sent to the agent for
service, should be sent to:
ALAN C. LEET, ESQ.
ROGERS & HARDIN LLP
2700 INTERNATIONAL TOWER, PEACHTREE CENTER
229 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30303
(404) 522-4700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective, depending on market
conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE(1) FEE(2)
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Common Stock, par value $0.01 per share, Debt
Securities Issuable in Series and Preferred
Stock issuable in Series(3).................. (4) (4) $325,000,000 $98,485*
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(1) In no event will aggregate maximum offering price of all securities offered
pursuant to this Registration Statement exceed $325,000,000, or if any debt
securities are issued with original discount, such greater amount as shall
result in an aggregate offering price of $325,000,000. Any securities
registered hereunder may be sold separately or as units with other
securities registered hereunder.
(2) Determined pursuant to Rule 457(o) under the Securities Act of 1933, as
amended.
(3) There is also being registered hereunder an indeterminate number of shares
of Common Stock as may be issued upon conversion of the Debt Securities or
Preferred Stock registered hereby.
(4) Not applicable pursuant to General Instruction II.D of Form S-3 under the
Securities Act of 1933, as amended.
* Previously paid.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 26, 1997
PRELIMINARY PROSPECTUS
ALTERNATIVE LIVING SERVICES, INC.
Alternative Living Services, Inc., a Delaware corporation (the "Company"),
may offer from time to time, in one or more series, its debt securities (the
"Debt Securities"), shares of its preferred stock, $.01 par value per share (the
"Preferred Stock"), and shares of its common stock, $.01 par value per share
(the "Common Stock"). The Debt Securities, Preferred Stock and Common Stock are
collectively referred to herein as the "Securities". The Securities will have an
aggregate offering price of up to $325,000,000 and will be offered on terms to
be determined at the time of the offering.
In the case of Debt Securities, the specific title, the aggregate principal
amount, the ranking, the purchase price, the maturity, the rate and time of
payment of any interest, any redemption or sinking fund provisions, any
conversion provisions and any other specific term of the Debt Securities will be
set forth in an accompanying supplement to this Prospectus (the "Prospectus
Supplement"). In the case of Preferred Stock, the specific number of shares,
designation, stated value per share, liquidation preference per share, issuance
price, dividend rate (or method of calculation), dividend payment dates, any
redemption or sinking fund provisions, any conversion rights and other specific
terms of the series of Preferred Stock will be set forth in an accompanying
Prospectus Supplement. In the case of Common Stock, the specific number of
shares and issuance price per share will be set forth in an accompanying
Prospectus Supplement. The Prospectus Supplement will also disclose whether the
Securities will be listed on a national securities exchange and, if they are not
to be listed, the possible effects thereof on their marketability.
The Securities may be sold: (i) directly by the Company; (ii) through
underwriting syndicates represented by one or more managing underwriters, or
through one or more underwriters without a syndicate; and (iii) through agents
designated from time to time. The names of any underwriters or agents of the
Company involved in the sale of the Securities in respect of which this
Prospectus is being delivered and any applicable commissions or discounts will
be set forth in an accompanying Prospectus Supplement. See "Plan of
Distribution". The net proceeds to the Company from such sale will be set forth
in the Prospectus Supplement.
The Company's Common Stock is traded on the American Stock Exchange (the
"AMEX") under the symbol "ALI". On November 25, 1997, the closing sale price of
the Common Stock on the AMEX was $26 11/16 per share.
SEE "RISK FACTORS" COMMENCING ON PAGE 4 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY PROSPECTIVE INVESTORS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
THE DATE OF THIS PROSPECTUS IS NOVEMBER , 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities of the Commission located at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at the New York Regional
Office of the Commission, Seven World Trade Center, Suite 1300, New York, New
York 10048, and at the Chicago Regional Office of the Commission, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can also be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Such reports and other information may also be inspected at the offices of the
American Stock Exchange, 86 Trinity Place, New York, New York 10006. The
Commission also maintains a World Wide Web Site that contains reports, proxy and
information statements and other information regarding registrants, including
the Company, that file electronically with the Commission, at
http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Securities offered hereby. The
Prospectus and any accompanying Prospectus Supplement do not contain all of the
information included in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information with respect to the Company and the Securities, reference is
hereby made to the Registration Statement including the exhibits and schedules
thereto. Statements contained in this Prospectus and any accompanying Prospectus
Supplement concerning the provisions or contents of any contract, agreement or
any other document referred to herein or therein are not necessarily complete.
With respect to each such contract, agreement or document filed as an exhibit to
the Registration Statement, reference is made to such exhibit for a more
complete description of the matters involved, and each such statement shall be
deemed qualified in its entirety by such reference to the copy of the applicable
document filed with the Commission. The Registration Statement, including the
exhibits and schedules thereto, may be inspected without charge at the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. and
copies of it or any part thereof may be obtained from such office, upon payment
of the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated herein by reference: (i) the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996, as amended by
Amendment No. 1 on Form 10-K/A filed with the Commission on May 12, 1997; (ii)
the Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1997; (iii) the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997; (iv) the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997; (v) the Company's Current Report on Form 8-K dated
December 31, 1996, filed with the Commission on January 15, 1997, as amended by
Amendment No. 1 on Form 8-K/A filed with the Commission on March 17, 1997; (vi)
the Company's Current Report on Form 8-K dated May 14, 1997, filed with the
Commission on May 27, 1997; (vii) the Company's Current Report on Form 8-K dated
July 30, 1997, filed with the Commission on August 14, 1997; (viii) the
Company's Current Report on Form 8-K dated September 23, 1997, filed with the
Commission on October 10, 1997, as amended by Amendment No. 1 on Form 8-K/A
filed with the Commission on November 6, 1997; and (ix) the description of the
Company's Capital Stock contained in the Company's Registration Statement on
Form 8-A, filed with the Commission on July 30, 1996. In addition, each document
filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to termination
of the offering of Securities offered hereby shall be deemed to be incorporated
by reference into this Prospectus and to be a part hereof from the date such
document is filed with the Commission.
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Any statement contained herein, or in any document, all or a portion of
which is incorporated or deemed to be incorporated by reference herein, shall be
deemed to be modified or superseded for purposes of the Registration Statement
and this Prospectus to the extent that a statement contained herein, or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute part of the Registration Statement or this Prospectus. All
information appearing in this Prospectus is qualified in its entirety by the
information and financial statements (including notes thereto) appearing in the
documents incorporated herein by reference. This Prospectus incorporates
documents by reference which are not presented herein or delivered herewith.
These documents (other than exhibits to such documents which are not
specifically incorporated by reference into such documents) are available
without charge, upon written or oral request by any person to whom this
Prospectus has been delivered, from Thomas E. Komula, Senior Vice President, 450
N. Sunnyslope Road, Suite 300, Brookfield, Wisconsin 53005, telephone (414)
789-9565.
FORWARD LOOKING STATEMENTS
The matters discussed in this Prospectus under "Risk Factors," in addition
to certain statements contained elsewhere in this Prospectus, in the
accompanying Prospectus Supplement or in the Company's filings under the
Exchange Act, are "Forward-Looking Statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and are thus prospective. Such
forward-looking statements are subject to risks, uncertainties and other factors
which could cause actual future results or trends to differ materially from
future results or trends expressed or implied by such forward-looking
statements. The most significant of such risks, uncertainties and other factors
are discussed in this Prospectus under "Risk Factors" and prospective investors
are urged to carefully consider such factors. Updated information will be
periodically provided by the Company as required by the Securities Act and the
Exchange Act. The Company, however, undertakes no obligation to publicly release
the results of any revisions to such forward-looking statements which may be
made to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
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RISK FACTORS
An investment in the Securities offered hereby involves various risks.
Prospective investors are urged to carefully consider each of the following
risks, in conjunction with the other information contained in this Prospectus
and in the accompanying Prospectus Supplement, before purchasing any Securities
of the Company.
HISTORY OF OPERATING LOSSES
The Company has experienced significant operating losses and net losses in
each year since inception, primarily as a result of its development,
construction and residence lease-up activities as well as the incurrence of
certain expenses to establish corporate infrastructure to support future planned
growth. For the years ended December 31, 1994, 1995 and 1996, the Company
incurred operating losses of $390,000, $1.0 million and $4.1 million,
respectively, and net losses of $643,000, $1.7 million and $7.8 million,
respectively. For the nine months ended September 30, 1997, the Company incurred
an operating loss and net loss of $1.7 million and $57,000, respectively. On a
pro forma basis giving effect to the Sterling Merger (as hereinafter defined) as
if it had occurred as of January 1, 1994, the Company would have incurred
operating losses of $5.7 million and $3.4 million and a net loss of $8.8 million
and net income of $79,000 for the year ended December 31, 1996 and for the nine
months ended September 30, 1997, respectively.
Newly opened assisted living residences typically operate at a loss during
the first six to 12 months of operation, primarily due to the incurrence of
certain fixed and variable expenses in advance of the achievement of targeted
rent and service fee revenues from the lease-up of such residences. As of
November 1, 1997, of the Company's 219 residences, 90 had been open for 12
months or less. In addition, the development and construction of assisted living
residences requires the commitment of substantial capital over a typical six- to
12-month construction period, the consequence of which may be an adverse impact
on the Company's liquidity. As of November 1, 1997, the Company had 99
residences under construction and an additional 74 residences under development.
In the case of acquired residences, resident turnover and increased marketing
expenditures which may be required to reposition such residences, together with
the possible disruption of operations resulting from the implementation of
renovations, may adversely impact the financial performance of such residences
for a period of time after their acquisition. In addition, occupancy levels and
the rates which the Company may be able to charge for its services may be
adversely affected in competitive market circumstances which would negatively
impact the operating results of affected residences. Accordingly, there can be
no assurance that the Company will not experience unforeseen expenses,
difficulties, complications and delays which could result in greater than
anticipated operating losses or otherwise materially adversely affect the
Company's financial condition and results of operations. See "-- Development and
Construction Risks" and "-- Competition."
SUBSTANTIAL DEBT AND OPERATING LEASE PAYMENT OBLIGATIONS
The Company had lease expense of $6.1 million and $10.7 million for the
year ended December 31, 1996 and the nine months ended September 30, 1997,
respectively. On a pro forma basis giving effect to the Sterling Merger as if it
had occurred as of January 1, 1994, the Company's total indebtedness as of
September 30, 1997 would have been $222 million, and its net interest expense
and lease expense would have been $3.2 million and $9.0 million, respectively,
for the year ended December 31, 1996 and $2.2 million and $18.1 million,
respectively, for the nine months ended September 30, 1997. Debt and annual
operating lease payment obligations will continue to increase significantly as
the Company pursues its growth strategy. In addition, the Company anticipates
that future development of residences may be financed with construction loans
and, therefore, there is a risk that, upon completion of construction, permanent
financing for newly developed residences may not be available or may be
available only on terms that are unfavorable or unacceptable to the Company.
There can be no assurance that the Company will generate sufficient cash
flow to meet its obligations. Any payment or other default with respect to such
obligations could cause the lender to foreclose upon the residences securing the
indebtedness or, in the case of an operating lease, to terminate the lease, with
a
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consequent loss of income and asset value to the Company. Moreover, because of
cross-default and cross-collateralization provisions in certain mortgages and
debt instruments of the Company and in most of its leases, a default by the
Company on one of its payment obligations could result in acceleration of other
obligations and adversely affect a significant number of its other residences.
See "-- Need for Additional Financing; Risk of Rising Interest Rates."
INTEGRATION OF OPERATIONS FOLLOWING THE STERLING MERGER
The merger of the Company with Sterling House Corporation ("Sterling"),
which was consummated on October 23, 1997 (the "Sterling Merger"), involves the
integration of two companies that have previously operated independently. Among
the factors considered by the Board of Directors of the Company in connection
with its approval of the Sterling Merger were the opportunities for operating
efficiencies that may result from the Sterling Merger. While the Company would
expect to achieve certain operating efficiencies as a result of the Sterling
Merger, no assurance can be given that difficulties will not be encountered in
integrating the operations of the Company and Sterling or that the benefits
expected from such integration will be realized. In addition, management of the
Company expects to devote significant attention to efforts to integrate the
operations of the two companies, which effort may affect such management's
ability to manage ongoing operations and expansion efforts. Any delays or
unexpected costs incurred in connection with such integration could have a
material adverse effect on the business, results of operations or financial
condition of the Company.
ABILITY TO CONTINUE GROWTH; ABILITY TO MANAGE RAPID EXPANSION AND BUSINESS
DIVERSIFICATION
The Company has and expects to continue to pursue an aggressive expansion
strategy focused on developing, constructing and acquiring assisted living
residences. The Company is currently managing significant construction and
development activity. Accordingly, the Company's prospects are directly affected
by its ability to develop, construct and, to a lesser extent, acquire additional
residences. The Company's ability to continue to grow will depend in large part
on its ability to identify suitable and affordable development and acquisition
opportunities and successfully pursue such opportunities, identify and obtain
necessary financing commitments and effectively operate its assisted living
residences. There can be no assurance, however, that the Company will be
successful in developing, constructing or acquiring any additional residences or
that it will be able to continue to achieve or exceed its historical growth
rate.
The Company's rapid expansion places significant demands on the Company's
management and operating personnel. The Company's ability to manage its recent
and future growth effectively will require it to continue to improve its
operational, financial and management information systems and to continue to
attract, retain, train, motivate and manage key employees. If the Company is
unable to manage its growth effectively, its business, operating results and
financial condition will be adversely affected.
Management of the Company intends to review and, in appropriate
circumstances, pursue opportunities for development and expansion of new
products and services, such as home health care, rehabilitation and pharmacy
services. Efforts to achieve such business diversification, however, are subject
to certain risks, including management's relative unfamiliarity with such
businesses, additional uncertainties related to government regulation and
possible difficulties in integrating new products or businesses.
DEVELOPMENT AND CONSTRUCTION RISKS
The Company's growth strategy is dependent, in part, on its ability to
develop and construct a significant number of additional residences. As of
November 1, 1997, the Company had 99 residences under construction and 74
residences under development. Development projects generally are subject to
various risks, including zoning, permitting, health care licensing and
construction delays, that may result in construction cost overruns and longer
development periods and, accordingly, higher than anticipated start-up losses.
Project management is subject to a number of contingencies over which the
Company will have little or no control and which might adversely affect project
costs and completion time. Such contingencies include shortages of, or the
inability to obtain, labor or materials, the inability of the general contractor
or subcontractors to perform under their
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contracts, strikes, adverse weather conditions and changes in applicable laws or
regulations or in the method of applying such laws and regulations. In addition,
the Company's construction management subsidiary serves as general contractor on
many of the Company's residences in construction and development, and,
accordingly, in these instances the Company may not have the same contractual
recourse for construction delays and defects as would generally be available
were a third party general contractor engaged to construct these residences. As
a result of these various factors, there can be no assurance that the Company
will not experience construction delays, that it will be successful in
developing and constructing currently planned or additional residences or that
any developed residence will be economically successful. If the Company's
planned development is delayed, the Company's business, operating results and
financial condition could be adversely affected.
RISKS ASSOCIATED WITH ACQUISITIONS
The Company has acquired residences in the past and intends to continue to
seek acquisition opportunities in the future. However, no assurances can be
given that the Company will be successful in identifying any future acquisition
opportunities or completing any identified acquisitions. The acquisition of
residences involves a number of risks. Existing residences available for
acquisition frequently serve or target different market segments than those
presently served by the Company. It may be necessary in such cases to reposition
and renovate acquired residences or turn over the existing resident population
to achieve a resident acuity and income profile which is consistent with the
Company's current operations. In addition, the Company may also determine that
staff and operating management personnel changes are necessary to successfully
integrate such residences into the Company's existing operations. No assurances
can be made that management will be successful in repositioning any acquired
residences or in effecting any necessary operational or structural changes and
improvements on a timely basis. Any failure by the Company to make necessary
operational or structural changes or to successfully reposition acquired
residences may adversely impact the Company's business, operating results and
financial condition. In undertaking acquisitions of residences, the Company also
may be adversely impacted by unforeseen liabilities attributable to the prior
operators of such residences, against whom the Company may have little or no
recourse.
NEED FOR ADDITIONAL FINANCING; RISK OF RISING INTEREST RATES
To achieve its growth strategy, the Company will need to obtain sufficient
financing to fund its continued development, construction and acquisition
activities. Accordingly, the Company's future growth will depend on its ability
to obtain additional financing on acceptable terms. The Company has executed
non-binding letters of intent with four health care REITs for financing
commitments aggregating approximately $574 million (of which $281 million has
been utilized in sale/leaseback and mortgages financing transactions through
November 1, 1997) and with a mortgage lender for construction and long- term
mortgage financing aggregating $100 million (none of which has been used as of
November 1, 1997). The Company's management believes financing available
pursuant to these arrangements, and pursuant to other sources of financing, will
be sufficient to fund its development and acquisition programs for at least the
next 12 months. The Company will from time to time seek additional funding
through public or private financing, including equity or debt financing. If
additional funds are raised by issuing equity securities, the Company's
stockholders may experience dilution. In addition, the Company will require
significant financial resources to meet its operating and working capital needs,
including contractual obligations to purchase the equity interest of joint
venture portions in residences owned in joint ventures. See "-- Joint Ventures
and Related Mandatory Purchase Obligations." There can be no assurance that any
newly constructed residences will achieve a stabilized occupancy rate and attain
a resident mix that meet the Company's expectations or generate sufficient
positive cash flow to cover operating and financing costs associated with such
residences. There can be no assurance that the Company will be successful in
securing additional financing or that adequate funding will be available and, if
available, will be on terms that are acceptable to the Company. A lack of funds
may require the Company to delay or eliminate all or some of its development
projects and acquisition plans. In addition, the Company may require additional
financing to enable it to acquire additional residences, to respond to changing
economic conditions, to expand the Company's development program or to account
for changes in assumptions related to its development program.
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Approximately $34 million, or 20%, of the Company's total indebtedness as
of November 1, 1997 was subject to floating interest rates. Although a majority
of the debt and lease payment obligations of the Company are not subject to
floating interest rates, indebtedness that the Company may incur in the future
may bear interest at a floating rate. In addition, future fixed rate
indebtedness and lease obligations will be based on interest rates prevailing at
the time such arrangements are obtained. Therefore, increases in prevailing
interest rates could increase the Company's interest or lease payment
obligations and could have an adverse effect on the Company's business,
financial condition and results of operations.
RESIDENCE MANAGEMENT, STAFFING AND LABOR COSTS
The Company competes with other providers of long-term care with respect to
attracting and retaining qualified and skilled personnel. The Company will be
dependent upon its ability to attract and retain management personnel
responsible for the day-to-day operations of each of the Company's residences.
Any inability of the Company to attract or retain qualified residence management
personnel could have a material adverse effect on the Company's financial
condition or results of operations. In addition, a possible shortage of nurses
or trained personnel may require the Company to enhance its wage and benefits
package in order to compete in the hiring and retention of such personnel. The
Company will also be dependent upon the available labor pool of semi-skilled and
unskilled employees in each of the markets in which it operates. No assurance
can be given that the Company's labor costs will not increase, or that, if they
do increase, they can be matched by corresponding increases in rates charged to
residents. Any significant failure by the Company to attract and retain
qualified management and staff personnel, to control its labor costs or to pass
on any increased labor costs to residents through rate increases would have a
material adverse effect on the Company's business, operating results and
financial condition.
COMPETITION
The long-term care industry is highly competitive and, given the relatively
low barriers to entry and continuing health care cost containment pressures, the
Company expects that the assisted living segment of such industry will become
increasingly competitive in the future. The Company competes with other
companies providing assisted living services as well as numerous other companies
providing similar service and care alternatives, such as home health care
agencies, congregate care facilities, retirement communities and skilled nursing
facilities. While the Company believes there is a need for additional assisted
living residences in the markets where the Company is constructing and
developing residences, the Company expects that, as assisted living residences
receive increased market awareness and the number of states which include
assisted living services in their Medicaid programs increases, competition will
increase from new market entrants, many of whom may have substantially greater
financial resources than the Company. No assurance can be given that increased
competition will not adversely affect the Company's ability to attract or retain
residents or maintain its existing rate structures. Moreover, in implementing
its growth strategy, the Company expects to face competition for development and
acquisition opportunities from local developers and regional and national
assisted living companies. Some of the Company's present and potential
competitors have, or may have access to, greater financial resources than those
of the Company. Consequently, there can be no assurance that the Company will
not encounter increased competition in the future which could limit its ability
to attract and retain residents, to maintain or increase resident service fees
or to expand its business and could have a material adverse effect on the
Company's financial condition, results of operations and prospects.
Management of the Company is not able to predict the effect that the health
care industry trend towards managed care will have on the assisted living
marketplace. Managed care, an arrangement whereby service and care providers
agree to sell specifically defined services to one or more public or private
payors (frequently not the end user or resident) subject to a predefined system
in an effort to achieve more efficiency with respect to utilization and cost, is
not currently a significant factor in the assisted living marketplace. However,
managed care plans sponsored by insurance companies or HMOs may in the future be
a factor in the assisted living marketplace. There can be no assurance that the
Company will not encounter increased competition or be subject to other
competitive pressures that could affect its business, results of operation or
financial condition as a result of managed care.
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JOINT VENTURES AND RELATED MANDATORY PURCHASE OBLIGATIONS
The Company has entered into several joint ventures with regional real
estate development partners and others for the construction, development and
ownership of assisted living residences in targeted geographic areas. As of
November 1, 1997, 53 of the Company's operating residences were jointly owned,
directly or indirectly, with venture partners. Of the 173 of the Company
residences which were either under construction or development as of November 1,
1997, a significant portion of such residences are being or will be constructed
or developed under joint venture agreements. There can be no assurance that
these joint venture development partners will be successful in identifying sites
for future residences, securing necessary permits and licenses for the
construction of new residences and supervising the construction of new
residences on time and within budget. In addition, the Company has agreed not to
own or operate competing assisted living residences during specified contractual
periods within specified geographic areas adjacent to residences developed
through certain of its joint ventures. While the Company typically receives a
fee for managing residences developed through joint ventures, it shares with its
joint venture partners any profits or losses realized from the operation or sale
of such residences. The Company is obligated under its joint venture
arrangements to purchase the equity interests of its joint venture partners upon
the election of such joint venture partners at a price based on either a formula
price or the appraised value of the residence owned by the applicable joint
venture. These purchase rights generally become exercisable during the first six
months to two years following the opening of the residence owned by such joint
venture. As a result of these provisions, the Company might become obligated to
acquire additional interests in residences developed through joint ventures on
terms or at times that would otherwise not be acceptable to the Company,
including times during which the Company may not have adequate liquidity to fund
such acquisitions.
GOVERNMENT REGULATION
Health care is an area of extensive and frequent regulatory change. The
assisted living industry is relatively new, and, accordingly, the manner and
extent to which it is regulated at the Federal and state levels is evolving.
Changes in the laws or new interpretations of existing laws may have a
significant impact on the Company's methods and costs of doing business. The
Company is, and will be, subject to varying degrees of regulation and licensing
by health or social service agencies and other regulatory authorities in the
various states and localities where they operate or intend to operate.
The Company and its activities are subject to zoning, health and other
state and local government regulations. Zoning variances or use permits are
often required for construction. Severely restrictive regulations could impair
the ability of the Company to open additional residences at desired locations or
could result in costly delays. Several of the Company's residences have been
financed by revenue bonds. In order to continue to qualify for favorable tax
treatment of the interest payable on certain of these bonds, the financed
residences must comply with certain federal income tax requirements, principally
pertaining to the maximum income level of a specified portion of the residents.
Failure to satisfy these requirements constitutes an event of default under the
bonds, thereby accelerating their maturity.
The Company's success will depend in part upon its ability to satisfy
applicable regulations and requirements and to procure and maintain required
licenses in rapidly changing regulatory environments. Any failure to satisfy
applicable regulations or to procure or maintain a required license could have a
material adverse effect on the Company's financial condition, results of
operations and prospects. The Company's operations could also be adversely
affected by, among other things, regulatory developments such as revisions in
building code requirements for assisted living residences, mandatory increases
in the scope and quality of care to be offered to residents and revisions in
licensing and certification standards. There can be no assurance that Federal,
state or local laws or regulations will not be imposed or expanded which
adversely impact the Company's business, financial condition, results of
operations or prospects. The Company's residence operations are also subject to
health and other state and local government regulations.
The Company has sold franchises for its Sterling House model and may sell
on a limited basis franchises for such model in the future. The sale of
franchises is regulated by the Federal Trade Commission and by certain state
agencies located in jurisdictions other than those states where the Company
currently conducts
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franchise operations. Principally, these regulations require that certain
written disclosures be made prior to the sale of a franchise. In addition, some
states have relationship laws which prescribe the basis for terminating a
franchisee's rights and regulate both the franchisor's and its franchisees'
post-termination rights and obligations. There can be no assurance that changes
in such regulations will not have an adverse impact upon the ability of the
combined company to continue its franchising activities.
The Company intends to review and, in appropriate circumstances, pursue
opportunities for development and expansion into new products and services.
These new products and services may include home health care, rehabilitation and
pharmacy services. The Federal and state regulation of such additional products
and services may be more evolved and extensive than that related to the
Company's assisted living operations. The Company has not in the past engaged in
significant activities outside of its core assisted living business. Should the
Company expand into new products and services, the Company will be subject to
additional Federal, state and local laws and regulations. Non-compliance with
such regulations could have a material adverse effect on the Company's business,
financial condition, results of operations or prospects.
LIABILITY AND INSURANCE
The provision of personal and health care services entails an inherent risk
of liability. In recent years, participants in the long-term care industry have
become subject to an increasing number of lawsuits alleging malpractice or
related legal theories, many of which involve large claims and result in the
incurrence of significant defense costs. In addition, compared to more
institutional long-term care facilities, assisted living residences (especially
dementia care residences) of the type operated by the Company offer residents a
greater degree of independence in their daily lives. This increased level of
independence, however, may subject the resident and the Company to certain risks
that would be reduced in more institutionalized settings. The Company currently
maintains liability insurance intended to cover such claims which it believes is
adequate based on the nature of the risks, historical experience and industry
standards. There can be no assurance, however, that claims in excess of such
insurance or claims not covered by insurance, such as claims for punitive
damages, will not arise. A successful claim against the Company not covered by,
or in excess of, its insurance could have a material adverse effect upon the
Company's financial condition and results of operations. Claims against the
Company, regardless of their merit or eventual outcome, may also have a material
adverse effect upon the Company's ability to attract or retain residents or
expand its business and may require management to devote substantial time to
matters unrelated to day-to-day operations. In addition, insurance policies must
be renewed annually. There can be no assurance that the Company will be able to
obtain liability insurance in the future or that, if such insurance is
available, it will be available on acceptable economic terms.
DEPENDENCE ON ATTRACTING SENIORS WITH SUFFICIENT RESOURCES TO PAY
The Company currently relies, and for the foreseeable future, the Company
expects to rely, primarily on the ability of its residents to pay for services
from their own and their families' financial resources. Generally, only elderly
adults with income or assets meeting or exceeding the comparable median in the
region where assisted living residences of the Company are located can afford
the fees for such residences. Inflation or other circumstances which adversely
affect the ability of residents and potential residents to pay for assisted
living services could have an adverse effect on the Company. In the event that
the Company encounters difficulty in attracting seniors with adequate resources
to pay for the Company's services, the Company would be adversely affected.
ENVIRONMENTAL LIABILITY RISKS ASSOCIATED WITH REAL PROPERTY
Under various Federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real estate may be
required to investigate and clean up hazardous or toxic substances or petroleum
product releases at such property, and may be held liable to a governmental
entity or to third parties for property damage and for investigation and clean
up costs incurred by such parties in connection with the contamination. Such
laws typically impose clean up responsibility and liability without regard to
whether the owner knew of or caused the presence of contaminants, and liability
under such laws has
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<PAGE> 11
been interpreted to be joint and several unless the harm is divisible and there
is a reasonable basis for allocation or responsibility. The costs of
investigation, remediation or removal of such substances may be substantial, and
the presence of such substances, or the failure to properly remediate such
property, may adversely affect the owner's ability to sell or lease such
property or to borrow using such property as collateral. In addition, some
environmental laws create a lien on the contaminated site in favor of the
government for damages and costs it incurs in connection with the contamination.
Persons who arrange for the disposal or treatment of hazardous or toxic
substances also may be liable for the costs of removal or remediation of such
substances at the disposal or treatment facility, whether or not such facility
is owned or operated by such person. Finally, the owner of a site may be subject
to common law claims by third parties based on damages and costs resulting from
environmental contamination emanating from a site.
With the exception of four Sterling House residences operated by the
Company or its predecessors since prior to 1995, the Company has conducted
environmental assessments of all of its operating residences and has conducted,
or is in the process of conducting, environmental assessments of all of its
undeveloped sites and sites currently under construction. These assessments have
not revealed, and the Company is not otherwise aware of, any environmental
liability that it believes would have a material adverse effect on the Company's
business, assets or results of operations. There can be no assurance, however,
that environmental assessments would detect all environmental contamination
which may give rise to material environmental liabilities. The Company believes
that its respective residences are in compliance in all material respects with
all applicable environmental laws. The Company has not been notified by any
governmental authority, or is otherwise aware, of any material non-compliance,
liability or claim relating to hazardous or toxic substances or petroleum
products in connection with any of the residences its currently operates.
ANTI-TAKEOVER PROVISIONS
The Company's Restated Certificate of Incorporation, as amended (the
"Certificate"), authorizes the issuance of 5,000,000 shares of Preferred Stock
and 30,000,000 shares of Common Stock. Giving effect to the reservation of
shares issuable upon conversion of the Company's outstanding $35,000,000
principal amount of 6.75% Convertible Subordinated Debentures due 2006 and the
Company's outstanding $50,000,000 principal amount of 7% Convertible
Subordinated Debentures due 2004 (collectively, the "Debentures") and exercise
of stock options previously granted or available to be granted under the
Company's stock option plans, the Company will have 5,415,369 shares of
authorized but unissued Common Stock. Subject to the rules of the American Stock
Exchange ("AMEX") upon which the Common Stock is listed, the Board of Directors
of the Company has the power to issue any or all of these additional shares
without stockholder approval, and the preferred shares can be issued with such
rights, preferences and limitations as may be determined by the Company's Board.
The rights of the holders of Common Stock will be subject to, and may be
adversely affected by, the rights of any holders of Preferred Stock that may be
issued in the future. The Company presently has no commitments or contracts to
issue any additional shares of Common Stock (other than pursuant to the exercise
of outstanding stock options or the conversion of the Debentures) or any shares
of Preferred Stock. Authorized and unissued Preferred Stock and Common Stock,
while providing desirable flexibility in connection with possible acquisitions
and other corporate purposes, could delay, discourage, hinder or preclude an
unsolicited acquisition of the Company, could make it less likely that
stockholders receive a premium for their shares as a result of any such attempt
and could adversely affect the market price of and the voting and other rights
of the holders of outstanding shares of Common Stock. As a Delaware corporation,
the Company is subject to Section 203 of the Delaware General Corporation Law
(the "DGCL") which, in general, prevents an "interested stockholder" (defined
generally as a person owing 15% or more of the corporation's outstanding voting
stock) from engaging in a "business combination" (as defined in Section 203) for
three years following the date such person became an interested stockholder
unless certain conditions are satisfied.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the public market could
adversely affect prevailing market prices of the Common Stock.
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<PAGE> 12
In connection with the Sterling Merger, the Company issued 5,549,760 shares
of Common Stock to holders of the common stock of Sterling. Up to 46% of such
shares are available for sale by the holders thereof pursuant to Rule 145
adopted by the Commission under the Securities Act upon the publication by the
Company of financial results covering at least 30 days of post-Sterling Merger
combined operations, and the remainder of such shares are available for
immediate resale by the holders thereof.
Approximately 51.1% of the outstanding shares of Common Stock was offered
and sold in reliance upon exemptions from registration under the Securities Act
and, accordingly, such shares are "restricted shares" for purposes of Rule 144
adopted under the Securities Act ("Restricted Shares"). The substantial majority
of the Restricted Shares are currently either freely tradeable without
restriction or limitation under the Securities Act or may be sold in the public
market pursuant to Rule 144 promulgated under the Securities Act, subject to the
volume and resale restrictions of such rule.
Holders of the Debentures have the right to convert the Debentures into
Common Stock at a conversion price of either $20.25 or $20.38 per share
(depending upon which debenture they hold) at any time after the registration
statements which have been or will be filed by the Company with respect thereto
are declared effective by the Commission. If holders elect to convert all of the
outstanding Debentures into shares of Common Stock, the Company would issue an
additional 4,186,353 shares of Common Stock.
POSSIBLE PRICE VOLATILITY OF THE SECURITIES
The market price of the Securities offered hereby could be subject to
significant fluctuations in response to various factors and events, including
the liquidity of the market for the Securities offered hereby, variations in the
Company's operating results, and new statutes or regulations or changes in the
interpretation of existing statutes or regulations affecting the health care
industry generally or the assisted living industry in particular. In addition,
the stock market in recent years has experienced broad price and volume
fluctuations that often have been unrelated to the operating performance of
particular companies. These market fluctuations also may adversely affect the
market price of the Securities.
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THE COMPANY
Alternative Living Services, Inc. is a national assisted living company
operating 219 residences with an aggregate capacity to accommodate approximately
9,200 residents as of November 1, 1997. Of these residences, the Company owns
48, leases 101, holds majority interests in 34 (22 of which are owned and 12 of
which are leased), holds minority interests in 20 (11 of which are owned and
nine of which are leased) and manages 16. The Company provides a full range of
assisted living services in its residences for the frail elderly and
free-standing specialty care residences for individuals with Alzheimer's disease
and other dementias. The Company and its predecessor have operated assisted
living residences since 1981, and specialty dementia care residences since 1985.
The Company provides a broad continuum of personal care (such as assistance
with bathing, toileting, dressing, eating and ambulation), support services
(such as housekeeping, laundry and transportation) and health care (such as
medication administration and health monitoring) to its residents. In addition,
the Company offers a wide range of specialized services, including behavior
management and environmental adaptation programs, to residents who suffer from
Alzheimer's disease and other dementias. All of these services are provided on a
24-hour basis in "home-like" settings which emphasize privacy, individual choice
and independence. The Company operates five distinct assisted living product
lines (Clare Bridge, Wynwood, Crossings, Sterling House and WovenHearts), each
serving a particular segment of the private pay elderly population. Each
assisted living product line is designed to permit residents to age in place by
meeting their personal and health care needs across a range of pricing options.
Since 1993, the Company has experienced significant growth through its
aggressive development program and several strategic acquisitions. In October
1997, the Company completed the merger with Sterling, which at the time operated
104 residences with an aggregate capacity of 3,892 residents. As a result of the
Sterling Merger, the Company added significant depth to its experienced
management team, acquired a fifth product line in the Sterling House residence
model and significantly expanded its presence in the Midwest and Southeast. In
1996, the Company acquired New Crossings International Corporation, an assisted
living company which operated 15 residences with a capacity of approximately
1,420 residents throughout the Western United States, and Heartland Retirement
Services, Inc., an assisted living company which operated 20 WovenHearts
residences throughout Wisconsin. As a result of these transactions, the Company
expanded into several new geographic markets and broadened its assisted living
product lines through the addition of the Crossings apartment style residence
model and the WovenHearts residence model designed to serve frail elderly
individuals in moderate income markets and smaller communities. The Company has
also significantly expanded its operations through the development of
free-standing residences. Through November 1, 1997, the Company has developed
203 residences with an aggregate capacity to accommodate approximately 8,700
residents. The Company intends to continue its development strategy and, at
November 1, 1997, is constructing 99 residences and is developing an additional
74 residences. Of these residences, 110 to 130 are expected to open during 1998.
The Company's executive offices are located at 450 North Sunnyslope Road,
Suite 300, Brookfield, Wisconsin 53005, and its telephone number is (414)
789-9565.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges(1).................. -- -- -- -- -- -- --
</TABLE>
- ---------------
(1) No preferred stock was outstanding during the periods presented; therefore,
the ratio of earnings to combined fixed charges and preferred stock
dividends has not been presented. Earnings consist of earnings from
continuing operations excluding unusual charges or extraordinary items, plus
fixed charges, reduced by the amount of unamortized interest capitalized.
Fixed charges consist of interest on debt,
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including amortization of debt issuance costs, and a portion of rent expense
estimated by management to be the interest component of such rentals.
Earnings were not sufficient to cover fixed charges as follows: for the
years ended December 31, 1992, 1993, 1994, 1995 and 1996, $130,000,
$180,000, $691,000, $1,482,000 and $8,326,000, respectively; and for the
nine months ended September 30, 1996 and 1997, $6,547,000 and $7,485,000,
respectively.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement which accompanies
this Prospectus, the net proceeds from the sale of the Securities offered from
time to time hereby will be used for the repayment of outstanding amounts under
the Company's temporary construction financing arrangements, to fund the
development of additional assisted living and dementia residences and for
general corporate purposes.
DILUTION
To the extent the Company offers Common Stock, information with respect to
dilution will be set forth in an accompanying Prospectus Supplement.
DESCRIPTION OF THE COMPANY'S CAPITAL STOCK
The summary of the terms of the capital stock of the Company set forth
below does not purport to be complete and is subject to and qualified in its
entirety by reference to the Certificate, and the Company's Restated Bylaws, as
amended (the "Bylaws"), copies of which have been filed as exhibits to the
Registration Statement of which this Prospectus is a part. See "Available
Information".
GENERAL
The Certificate authorizes 30,000,000 shares of Common Stock, par value
$.01 per share, and 5,000,000 shares of Preferred Stock, par value $.01 per
share. As of November 1, 1997, the Company had 18,575,524 shares of Common Stock
issued and outstanding and no outstanding shares of Preferred Stock.
COMMON STOCK
Each holder of Common Stock is entitled to one vote for each share owned of
record on all matters voted upon by stockholders, and a majority vote is
required for all action to be taken by stockholders. Cumulative voting of shares
is prohibited. Accordingly, the holders of a majority of the voting power of the
shares voting for the election of directors can elect all of the directors if
they choose to do so. The Common Stock bears no preemptive rights, and is not
subject to redemption, sinking fund or conversion provisions. The shares of
Common Stock offered hereby will be, when issued and paid for, fully paid and
non-assessable.
Holders of Common Stock are entitled to receive dividends if, as and when
declared by the Company's Board of Directors out of funds legally available
therefor, subject to the dividend and liquidation rights of any preferred stock
that may be issued (and subject to any dividend restriction contained in any
credit facility which the Company may enter into in the future) and distributed
pro rata in accordance with the number of shares of Common Stock held by each
stockholder.
The Common Stock is listed on the American Stock Exchange. The transfer
agent and registrar for the Common Stock is American Stock Transfer & Trust
Company.
PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be described in such
Prospectus Supplement. The description of certain provisions of the Preferred
Stock set forth below and in any Prospectus
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<PAGE> 15
Supplement does not purport to be complete and is subject to and qualified in
its entirety by reference to the Certificate and the Board of Directors'
resolution relating to each series of the Preferred Stock which will be filed
with the Commission and incorporated by reference to the Registration Statement
of which this Prospectus is a part at or prior to the time of the issuance of
such series of Preferred Stock.
Under the Certificate, the Board of Directors of the Company is authorized
to establish and issue, from time to time, up to 5,000,000 shares of Preferred
Stock, in one or more series, with such dividend rights, dividend rate,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), the redemption price or prices, and the liquidation
preference as shall be stated in the resolution providing for the issue of a
series of such stock, adopted, at any time or from time to time, by the Board of
Directors of the Company.
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference is
made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i) the
designation and stated value per share of such Preferred Stock and the number of
shares offered; (ii) the amount of liquidation preference per share; (iii) the
initial public offering price at which such Preferred Stock will be issued; (iv)
the dividend rate (or method of calculation), the dates on which dividends shall
be payable and the dates from which dividends shall commence to cumulate, if
any; (v) any redemption or sinking fund provisions; (vi) any conversion rights;
and (vii) any additional voting, dividend, liquidation, redemption, sinking fund
and other rights, preferences, privileges, limitations and restrictions.
The Preferred Stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. Unless otherwise stated in a Prospectus
Supplement relating to a particular series of the Preferred Stock, each series
of the Preferred Stock will rank on a parity as to dividends and distributions
of assets with each other series of the Preferred Stock. The rights of the
holders of each series of the Preferred Stock will be subordinate to those of
the Company's general creditors.
Dividend Rights. Unless otherwise stated in a Prospectus Supplement
relating to a particular series of the Preferred Stock, holders of shares of the
Preferred Stock of each series will be entitled to receive, when, as and if
declared by the Board of Directors of the Company, out of funds of the Company
legally available therefor, cash dividends on such dates and at such rates as
will be set forth in, or as are determined by the method described in the
Prospectus Supplement relating to such series of the Preferred Stock. Such rate
may be fixed or variable or both. Each such dividend will be payable to the
holders of record as they appear on the stock books of the Company on such
record dates, fixed by the Board of Directors of the Company, as specified in
the Prospectus Supplement relating to such series of Preferred Stock.
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating to such series of Preferred Stock. If the Board
of Directors of the Company fails to declare a dividend payable on a dividend
payment date on any series of Preferred Stock for which dividends are
noncumulative, then the holders of such series of Preferred Stock will have no
right to receive a dividend in respect of the dividend period ending on such
dividend payment date, and the Company shall have no obligation to pay the
dividend accrued for such period, whether or not dividends on such series are
declared payable on any future dividend payment dates. Dividends on the shares
of each series of Preferred Stock for which dividends are cumulative will accrue
from the date on which the Company initially issues shares of such series.
Unless otherwise stated in a Prospectus Supplement relating to a particular
series of the Preferred Stock, so long as the shares of any series of the
Preferred Stock shall be outstanding, unless (i) full dividends (including if
such Preferred Stock is cumulative, dividends for prior dividend periods) shall
have been paid or declared and set apart for payment on all outstanding shares
of the Preferred Stock of such series and all other classes and series of
Preferred Stock (other than Junior Stock, as defined below) and (ii) the Company
is not in default or in arrears with respect to the mandatory or optional
redemption or mandatory repurchase or other mandatory retirement of, or with
respect to any sinking or other analogous fund for, any shares of Preferred
Stock of such series or any shares of any other Preferred Stock of any class or
series (other than Junior Stock), the Company may not declare any dividends on
any shares of Common Stock or any other stock of the
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<PAGE> 16
Company ranking as to dividends or distributions of assets junior to such series
of Preferred Stock (the Common Stock and any such other stock being herein
referred to as "Junior Stock"), or make any payment on account of, or set apart
money for, the purchase, redemption or other retirement of, or for a sinking or
other analogous fund for, any shares of Junior Stock or make any distribution in
respect thereof, whether in cash or property or in obligations or stock of the
Company, other than Junior Stock which is neither convertible into, nor
exchangeable or exercisable for, any securities of the Company other than Junior
Stock.
Liquidation Preference. In the event of any liquidation, dissolution or
winding up of the Company, voluntary or involuntary, the holders of each series
of the Preferred Stock will be entitled to receive out of the assets of the
Company available for distribution to stockholders, before any distribution of
assets or payment is made to the holders of Common Stock or any other shares of
stock of the Company ranking junior as to such distribution or payment to such
series of Preferred Stock, the amount set forth in the Prospectus Supplement
relating to such series of the Preferred Stock. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Company, the Preferred
Stock of such series and such other shares of Preferred Stock will share ratably
in any such distribution of assets of the Company in proportion to the full
respective preferential amounts to which they are entitled. After payment to the
holders of the Preferred Stock of each series of the full preferential amounts
of the liquidating distribution to which they are entitled, the holders of each
such series of the Preferred Stock will be entitled to no further participation
in any distribution of assets by the Company.
If such payment shall have been made in full to all holders of shares of
Preferred Stock, the remaining assets of the Company shall be distributed among
the holders of any other classes of stock ranking junior to the Preferred Stock
upon liquidation, dissolution or winding up, according to their respective
rights and preferences and in each case according to their respective number of
shares. For such purposes, the consolidation or merger of the Company with or
into any other corporation, or the sale, lease or conveyance of all or
substantially all of the property or business of the Company, shall not be
deemed to constitute a liquidation, dissolution or winding up of the Company.
Redemption. A series of the Preferred Stock may be redeemable, in whole or
from time to time in part, at the option of the Company, and may be subject to
mandatory redemption pursuant to a sinking fund or otherwise, in each case upon
terms, at the times and at the redemption prices set forth in the Prospectus
Supplement relating to such series. Shares of the Preferred Stock redeemed by
the Company will be restored to the status of authorized but unissued shares of
Preferred Stock of the Company.
In the event that fewer than all of the outstanding shares of a series of
the Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or pro
rata (subject to rounding to avoid fractional shares) as may be determined by
the Company or by any other method as may be determined by the Company in its
sole discretion to be equitable. From and after the redemption date (unless the
Company defaults in the payment of the redemption price plus accumulated and
unpaid dividends, if any), dividends shall cease to accumulate on the shares of
the Preferred Stock called for redemption and all rights of the holders thereof
(except the right to receive the redemption price plus accumulated and unpaid
dividends, if any) shall cease.
So long as any dividends on shares of any series of the Preferred Stock or
any other series of Preferred Stock of the Company ranking on a parity as to
dividends and distributions of assets with such series of the Preferred Stock
are in arrears, no shares of any such series of the Preferred Stock or such
other series of Preferred Stock of the Company will be redeemed (whether by
mandatory or optional redemption) unless all such shares are simultaneously
redeemed, and the Company will not purchase or otherwise acquire any such
shares; provided, however, that the foregoing will not prevent the purchase or
acquisition of such shares of Preferred Stock of such series or of shares of
such other series of Preferred Stock pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of Preferred Stock
of such series and, unless the full cumulative dividends on all outstanding
shares of any cumulative Preferred Stock of such series and any other stock of
the Company ranking on a parity with such series as to dividends and upon
liquidation shall have been paid or contemporaneously are declared and paid for
all past dividend periods, the Company shall not purchase or otherwise acquire
directly or indirectly any shares of Preferred Stock of such
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<PAGE> 17
series (except by conversion into or exchange for stock of the Company ranking
junior to the Preferred Stock of such series as to dividends and upon
liquidation).
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of shares of Preferred
Stock to be redeemed at the address shown on the stock transfer books of the
Company. After the redemption date, dividends will cease to accrue on the shares
of Preferred Stock called for redemption and all rights of the holders of such
shares will terminate, except the right to receive the redemption price without
interest.
Conversion Rights. The terms, if any, on which shares of Preferred Stock
of any series may be exchanged for or converted (mandatorily or otherwise) into
shares of Common Stock or another series of Preferred Stock will be set forth in
the Prospectus Supplement relating thereto.
Voting Rights. Except as indicated below or in a Prospectus Supplement
relating to a particular series of the Preferred Stock, or except as required by
applicable law, the holders of the Preferred Stock will not be entitled to vote
for any purpose.
Unless otherwise stated in a Prospectus Supplement relating to a particular
series of the Preferred Stock, so long as any shares of Preferred Stock remain
outstanding, the Company shall not, without the consent or the affirmative vote
of the holders of a majority of the shares of each series of Preferred Stock
outstanding at the time given in person or by proxy, either in writing or at a
meeting (such series voting separately as a class) (i) authorize, create or
issue, or increase the authorized or issued amount of, any class or series of
stock ranking prior to such series of Preferred Stock with respect to payment of
dividends, or the distribution of assets on liquidation, dissolution or winding
up or reclassifying any authorized stock of the Company into any such shares, or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares and (ii) to repeal, amend or
otherwise change any of the provisions applicable to the Preferred Stock of such
series in any manner which materially and adversely affects the powers,
preferences, voting power or other rights or privileges of such series of the
Preferred Stock or the holders thereof; provided, however, that any increase in
the amount of the authorized Preferred Stock or the creation or issuance of
other series of Preferred Stock, or any increase in the amount of authorized
shares of such series or of any other series of Preferred Stock, in each case
ranking on a parity with or junior to the Preferred Stock of such series, shall
not be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of the Preferred Stock shall have been
redeemed or called for redemption and sufficient funds shall have been deposited
in trust to effect such redemption.
Transfer Agent and Registrar. The transfer agent, dividend and redemption
price disbursement agent and registrar for shares of each series of the
Preferred Stock will be set forth in the Prospectus Supplement relating thereto.
RESTRICTIONS ON BUSINESS COMBINATIONS AND CORPORATE CONTROL
Section 203 of the DGCL prohibits certain transactions between a publicly
held Delaware corporation and an "interested stockholder," which is defined as a
person who, together with any affiliates and/or associates of such person,
beneficially owns, directly or indirectly, 15 percent or more of the outstanding
voting shares of a Delaware corporation. This provision prohibits certain
business combinations (defined broadly to include mergers, consolidations, sales
or other dispositions of assets having an aggregate value 10 percent or more of
the consolidated assets of the corporation, and certain transactions that would
increase the interested stockholder's proportionate share ownership in the
corporation) between an interested stockholder and a corporation for a period of
three years after the date the interested stockholder acquired its stock, unless
(i) the business combination or the transaction whereby the person became an
interested stockholder is approved by the corporation's board of directors prior
to the date of such transaction; (ii) the interested stockholder acquired at
least 85 percent of the voting stock of the corporation in the transaction in
which it became an interested stockholder; or (iii) the business combination is
approved by a majority of the board of
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<PAGE> 18
directors and by the affirmative vote of two-thirds of the outstanding voting
stock owned by disinterested stockholders at an annual or special meeting.
Limitations on Directors Liability. The Certificate limits the liability
of directors and officers to the Company or its stockholders to the fullest
extent permitted by the DGCL. The inclusion of this provision in the Certificate
may have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter stockholders or management from bringing a
lawsuit against directors for breach of their duty of care, even though such an
action, if successful, might otherwise have benefited the Company and its
stockholders.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an indenture (the "Indenture")
to be executed by the Company and the United States Trust Company of New York,
as trustee (the "Trustee"), a form of which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The following
summaries of certain provisions of the Indenture and the Debt Securities do not
purport to be complete. These summaries are qualified in their entirety by
reference to all of the provisions of the Indenture to which reference is hereby
made for a full description of such provisions, including the definitions
therein of certain terms and other information regarding the Debt Securities.
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Indenture. Whenever particular sections or defined terms of the
Indenture are referred to, it is intended that such sections or defined terms
shall be incorporated herein by reference. Copies of the form of the Indenture
are available for inspection during normal business hours at the principal
executive offices of the Company, 450 N. Sunnyslope Road, Suite 300, Brookfield,
Wisconsin 53005.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued thereunder and provides that Debt Securities may
be issued from time to time in one or more series. The Prospectus Supplement
will describe certain terms of any Debt Securities offered thereby, including
(i) the title of such Debt Securities; (ii) any limit on the aggregate principal
amount of such Debt Securities and their purchase price; (iii) the date or dates
on which such Debt Securities will mature; (iv) the rate or rates per annum (or
manner in which interest is to be determined) at which such Debt Securities will
bear interest, if any, and the date from which such interest, if any, will
accrue; (v) the dates on which such interest, if any, on such Debt Securities
will be payable and the regular record dates for such interest payment dates;
(vi) any mandatory or optional sinking fund or analogous provisions; (vii)
additional provisions, if any, for the defeasance of such Debt Securities;
(viii) the date, if any, after which and the price or prices at which such Debt
Securities may, pursuant to any optional or mandatory redemption or repayment
provisions, be redeemed and the other detailed terms and provisions of any such
optional or mandatory redemption or repayment provisions; (ix) whether such Debt
Securities are to be issued in whole or in part in registered form represented
by one or more registered global securities (a "Registered Global Security")
and, if so, the identity of the depository for such Registered Global Security
or Debt Securities; (x) certain applicable United States federal income tax
consequences; (xi) any provisions relating to security for payments due under
such Debt Securities; (xii) any provisions relating to the conversion or
exchange of such Debt Securities into or for shares of Common Stock or Debt
Securities of another series; (xiii) any provisions relating to the ranking of
such Debt Securities in right of payment as compared to other obligations of the
Company; (xiv) the denominations in which such Debt Securities are authorized to
be issued; (xv) the place or places where principal of, premium, if any, and
interest, if any, on such Debt Securities will be payable; and (xvi) any other
specific term of such Debt Securities, including any additional events of
default or covenants provided for with respect to such Debt Securities, and any
terms that may be required by or advisable under applicable laws or regulations.
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<PAGE> 19
CONVERSION RIGHTS
The terms, if any, on which Debt Securities of any series may be exchanged
for or converted into shares of Common Stock or Debt Securities of another
series will be set forth in the Prospectus Supplement relating thereto.
The conversion price will be subject to adjustment under certain
conditions, including (i) the payment of dividends (and other distributions) in
shares of Common Stock on any class of capital stock of the Company; (ii)
subdivisions, combinations and reclassifications of the Common Stock; (iii) the
issuance to all or substantially all holders of Common Stock of rights or
warrants entitling them to subscribe for or purchase shares of Common Stock at a
price per share (or having a conversion price per share) less than the then
current market price; and (iv) distributions to all or substantially all holders
of shares of Common Stock of evidences of indebtedness or assets (including
securities, but excluding those rights, warrants, dividends and distributions
referred to above and dividends and distributions not prohibited under the terms
of the Indenture) of the Company, subject to the limitation that all adjustments
by reason of any of the foregoing would not be made until they result in a
cumulative change in the conversion price of at least 1%. No adjustments in the
conversion price of the Debt Securities will be made for regular quarterly or
other periodic or recurring cash dividends or distributions. In the event the
Company shall effect any capital reorganization or reclassification of its
shares of Common Stock or shall consolidate or merge with or into any trust or
corporation (other than a consolidation or merger in which the Company is the
surviving entity) or shall sell or transfer substantially all of its assets to
any other trust or corporation, the holders of the Debt Securities of any series
shall, if entitled to convert such Debt Securities at any time after such
transaction, receive upon conversion thereof, in lieu of each share of Common
Stock into which the Debt Securities of such series would have been convertible
prior to such transaction, the same kind and amount of stock and other
securities, cash or property as shall have been issuable or distributable in
connection with such transaction wit respect to each share of Common Stock.
A conversion price adjustment made according to the provisions of the Debt
Securities of any series (or the absence of provisions for such an adjustment)
might result in a constructive distribution to the holders of Debt Securities of
such series or holders of shares of Common Stock that would be subject to
taxation as a dividend. The Company may, at its option, make such reductions in
the conversion price, in addition to those set forth above, as the Board of
Directors of the Company deems advisable to avoid or diminish any income tax to
holders of shares of Common Stock resulting from any dividend or distribution of
shares of Common Stock (or rights to acquire shares of Common Stock) or from any
event treated as such for income tax purposes or for any other reason. The Board
of Directors will also have the power to resolve any ambiguity or correct any
error in the adjustments made pursuant to these provisions and its actions in so
doing shall be final and conclusive.
Fractional shares of Common Stock will not be issued upon conversion but,
in lieu thereof, the Company will pay a cash adjustment based upon market price.
The holders of Debt Securities of any series at the close of business on an
interest payment record date shall be entitled to receive the interest payable
on such Debt Securities on the corresponding interest payment date
notwithstanding the conversion thereof. However, Debt Securities surrendered for
conversion during the period from the close of business on any record date for
the payment of interest to the opening of business on the corresponding interest
payment date must be accompanied by payment of an amount equal to the interest
payable on such interest payment date. Holders of Debt Securities of any series
who convert Debt Securities of such series on an interest payment date will
receive the interest payable by the Company on such date and need not include
payment in the amount of such interest upon surrender of such Debt Securities
for conversion. Except as aforesaid, no payment or adjustment is to be made on
conversion for interest accrued on the Debt Securities of any series or for
dividends on shares of Common Stock.
OPTIONAL REDEMPTION
The Debt Securities of any series may be subject to redemption as permitted
or required by the terms of such Debt Securities on at least 30 days' prior
notice by mail. The Indenture does not contain any provision
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<PAGE> 20
requiring the Company to repurchase the Debt Securities of any series at the
option of the holders thereof in the event of a leveraged buyout,
recapitalization or similar restructuring of the Company, even though the
Company's creditworthiness and the market value of the Debt Securities may
decline significantly as a result of such transaction. The Indenture does not
protect holders of the Debt Securities of any series against any decline in
credit quality, whether resulting from any such transaction or from any other
cause. The Company may at any time buy Debt Securities of any series on the open
market.
SUBORDINATION
The indebtedness evidenced by the Debt Securities of any series may be
subordinated and junior in right of payment to the extent set forth in the
Indenture to the prior payment in full of amounts then due or thereafter created
on all Senior Indebtedness (as defined). The terms, if any, on which the Debt
Securities of any series may be subordinated and junior in right of payment to
the prior payment in full of amounts then due or thereafter created on all
Senior Indebtedness will be set forth in the Prospectus Supplement relating
thereto. No payment shall be made by the Company on account of principal of (or
premium, if any) or interest on the Debt Securities of any series or on account
of the purchase or other acquisition of Debt Securities of any series, if there
shall have occurred and be continuing a default with respect to any Senior
Indebtedness permitting the holders to accelerate the maturity thereof or with
respect to the payment of any Senior Indebtedness, and such default shall be the
subject of a judicial proceeding or the Company shall have received notice of
such default from any holder of Senior Indebtedness, unless and until such
default or event of default shall have been cured or waived or shall have ceased
to exist. By reason of these provisions, in the event of default on any Senior
Indebtedness, whether now outstanding or hereafter issued, payment of principal
of (and premium, if any) and interest on the Debt Securities of any series may
not be permitted to be made until such Senior Indebtedness is paid in full, or
the event of default on such Senior Indebtedness is cured or waived.
Upon any acceleration of the principal of the Debt Securities or any
distribution of assets of the Company upon any receivership, dissolution,
winding-up, liquidation, reorganization, or similar proceedings of the Company,
whether voluntary or involuntary, or in bankruptcy or insolvency, all amounts
due or to become due upon all Senior Indebtedness must be paid in full before
the holders of the Debt Securities of any series or the Trustee are entitled to
receive or retain any assets so distributed in respect of the Debt Securities.
By reason of this provision, in the event of insolvency, holders of the Debt
Securities of any series may recover less, ratably, than holders of Senior
Indebtedness.
"Senior Indebtedness" is defined to mean the principal, premium, if any,
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 proceedings), fees,
charges, expenses, reimbursement and indemnification obligations, and all other
amounts payable under or in respect of Indebtedness (as defined) of the Company
for money borrowed, whether any such Indebtedness exists as of the date of the
Indenture or is created, incurred, assumed or guaranteed after such date. There
is no limit on the amount of Senior Indebtedness that the Company may incur.
"Indebtedness" with respect to any Person is defined to mean:
(i) all indebtedness for money borrowed whether or not evidenced by a
promissory note, draft or similar instrument;
(ii) that portion of obligations with respect to leases that is
properly classified as a liability on a balance sheet in accordance with
generally accepted accounting principles;
(iii) notes payable and drafts accepted representing extensions of
credit;
(iv) any balance owed for all or any part of the deferred purchase
price or services which purchase price is due more than six months from the
date of incurrence of the obligation in respect thereof (except any such
balance that constitutes (a) a trade payable or an accrued liability
arising in the ordinary course of business or (b) a trade draft or note
payable issued in the ordinary course of business in connection
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<PAGE> 21
with the purchase of goods or services), if and to the extent such debt
would appear as a liability upon a balance sheet of such person prepared in
accordance with generally accepted accounting principles; and
(v) any deferral, amendment, renewal, extension, supplement or
refunding of any liability of the kind described in any of the preceding
clauses (i) through (iv);
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, there shall have been deposited with a depositary in trust money (or
evidence of indebtedness if permitted by the instrument creating such
indebtedness) in the necessary amount to pay, redeem or satisfy such
indebtedness as it becomes due, and the amount so deposited shall not be
included in any computation of the assets of such Person.
DIVIDENDS, DISTRIBUTIONS AND ACQUISITIONS OF COMMON STOCK
The Company will not (i) declare or pay any dividend, or make any
distribution on its Common Stock to its stockholders (other than dividends or
distributions payable in Common Stock of the Company) or (ii) purchase, redeem,
or otherwise acquire or retire for value any of its Common Stock, or any
warrants, rights, or options to purchase or acquire any shares of its Common
Stock (other than the Debt Securities of any series or any other convertible
indebtedness of the Company that is neither secured nor subordinated to the Debt
Securities of any series), if at the time of such action an Event of Default has
occurred and is continuing or would exist immediately after such action. The
foregoing, however, will not prevent (i) the payment of any dividend within 60
days after the date of declaration when the payment would have complied with the
foregoing provision on the date of declaration; or (ii) the Company's retirement
of any of its Common Stock by exchange for, or out of the proceeds of the
substantially concurrent sale of, other Common Stock.
ADDITIONAL COVENANTS
Any additional covenants of the Company with respect to a series of the
Debt Securities will be set forth in the Prospectus Supplement relating thereto.
MODIFICATION OF THE INDENTURE
Under the Indenture, with certain exceptions, the rights and obligations of
the Company with respect to any series of Debt Securities and the rights of
Holders of such series may only be modified by the Company and the Trustee with
the consent of the Holders of at least a majority in principal amount of the
outstanding Debt Securities of such series. However, without the consent of each
Holder of any Debt Securities affected, an amendment, waiver or supplement may
not (i) reduce the principal of, or rate of interest on, any Debt Securities;
(ii) change the stated maturity date of the principal of, or any installment of
interest on, any Debt Securities; (iii) waive a default in the payment of the
principal amount of, or the interest on, or any premium payable on redemption
of, any Debt Securities; (iv) change the currency for payment of the principal
of, or premium or interest on, any Debt Securities; (v) impair the right to
institute suit for the enforcement of any such payment when due; (vi) adversely
affect any right to convert any Debt Securities; (vii) reduce the amount of
outstanding Debt Securities necessary to consent to an amendment, supplement or
waiver provided for in the Indenture; or (viii) modify any provisions of the
Indenture relating to the modification and amendment of the Indenture or waivers
of past defaults, except as otherwise specified.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Except as otherwise set forth in the accompanying Prospectus Supplement,
the following is a summary of certain provisions of the Indenture relating to
Events of Default, notice and waiver.
The following are Events of Default under the Indenture with respect to any
series of Debt Securities: (i) default in the payment of interest on the Debt
Securities of such series when due and payable, which continues for 30 days;
(ii) default in the payment of principal of (and premium, if any) on the Debt
Securities when due and payable, at maturity, upon redemption or otherwise,
which continues for five Business Days;
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<PAGE> 22
(iii) failure to perform any other covenant of the Company contained in the
Indenture or the Debt Securities of such series which continues for 60 days
after written notice as provided in the Indenture; (iv) default under any bond,
debenture or other Indebtedness (as defined in the Indenture) of the Company or
any subsidiary if (a) either (x) such Event of Default results from the failure
to pay any such Indebtedness at maturity or (y) as a result of such Event of
Default, the maturity of such Indebtedness has been accelerated prior to its
expressed maturity and such acceleration shall not be rescinded or annulled or
the accelerated amount paid within 10 days after notice to the Company of such
acceleration, or such Indebtedness having been discharged, and (b) the principal
amount of such Indebtedness, together with the principal amount of any other
such Indebtedness in default for failure to pay principal or interest thereon,
or the maturity of which has been so accelerated, aggregates $10 million or
more; and (v) certain events of bankruptcy, insolvency or reorganization
relating to the Company.
If an Event of Default occurs and is continuing with respect to the Debt
Securities of any series, either the Trustee or the Holders of a majority in
aggregate principal amount of the outstanding Debt Securities of such series may
declare the Debt Securities due and payable immediately.
The Indenture provides that the Trustee will, within 90 days after the
occurrence of any Default or Event of Default with respect to the Debt
Securities of any series, give to the Holders of Debt Securities notice of all
uncured Defaults and Events of Default known to it, but the Trustee will be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of such Holders, except in the
case of a default in the payment of the principal of (or premium, if any) or
interest on any of the Debt Securities of such series.
The Indenture provides that the Holders of a majority in aggregate
principal amount of the Debt Securities of any series then outstanding may
direct the time, method and place of conducting any proceedings for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee with respect to the Debt Securities of such series. The right of a
Holder to institute a proceeding with respect to the Indenture is subject to
certain conditions precedent including notice and indemnity to the Trustee, but
the Holder has an absolute right to receipt of principal of (and premium, if
any) and interest on such Holder's Debt Securities on or after the respective
due dates expressed in the Debt Securities, and to institute suit for the
enforcement of any such payments.
The Holders of a majority in principal amount of the outstanding Debt
Securities of any series then outstanding may on behalf of the Holders of all
Debt Securities of such series waive certain past defaults, except a default in
payment of the principal of (or premium, if any) or interest on any Debt
Securities of such series or in respect of certain provisions of the Indenture
which cannot be modified or amended without the consent of the Holder of each
outstanding Debt Security of such series affected thereby.
The Company will be required to furnish to the Trustee annually a statement
of certain officers of the Company stating whether or not they know of any
Default or Events of Default and, if they have knowledge of a Default or Event
of Default, a description of the efforts to remedy the same.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Indenture provides that the Company may merge or consolidate with, or
sell or convey all, or substantially all, of its assets to any other trust or
corporation, provided that (i) either the Company shall be the continuing
entity, or the successor entity (if other than the Company) shall be any entity
organized and existing under the laws of the United States or a state thereof or
the District of Columbia (although it may, in truth, be owned by a foreign
entity) and such entity shall expressly assume by supplemental indenture all of
the obligations of the Company under the Debt Securities of any series and the
Indenture; (ii) immediately after giving effect to such transactions, no Default
or Event of Default shall have occurred and be continuing; and (iii) the Company
shall have delivered to the Trustee an Officers' Certificate and opinion of
counsel, stating that the transaction and supplemental indenture comply with the
Indenture.
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GLOBAL SECURITIES
The Debt Securities may be issued in whole or in part in global form (the
"Global Securities"). The Global Securities will be deposited with a depository
(the "Depository"), or with a nominee for a Depository, identified in the
Prospectus Supplement. In such case, one or more Global Securities will be
issued in a denomination or aggregate denominations equal to the portion of the
aggregate principal amount of outstanding Debt Securities to be represented by
such Global Security or Securities. Unless and until it is exchanged in whole or
in part for Debt Securities in definitive form, a Global Security may not be
transferred except as a whole by the Depository for such Global Security to a
nominee of such Depository or by a nominee of such Depository to such Depository
or another nominee of such Depository or by such Depository or any such nominee
to a successor for such Depository or a nominee of such successor.
The specific material terms of the depository arrangement with respect to
any portion of a series of Debt Securities to be represented by a Global
Security will be described in the Prospectus Supplement. The Company anticipates
that the following provisions will apply to all depository arrangements.
So long as the Depository for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depository or such nominee as the
case may be, will be considered the sole owner or Holder of the Debt Securities
represented by such Global Security for all purposes under the Indenture;
provided, however, that for purposes of obtaining any consents or directions
required to be given by the Holders of the Debt Securities, the Company, the
Trustee and its agents will treat a person as the holder of such principal
amount of Debt Securities as specified in a written statement of the Depository.
Principal, premium, if any, and interest payments, if any, on Debt
Securities represented by a Global Security registered in the name of a
Depository or its nominee will be made directly to the owners of beneficial
interests of such Global Security, except as may be limited by the terms of the
resolution of the Board of Directors of the Company that authorizes such series
of Debt Securities.
The Company expects that the depository for any Debt Securities represented
by a Global Security, upon receipt of any payment of principal, premium, if any,
or interest will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of such Depository. The
Company also expects that payments by participants will be governed by standing
instructions and customary practices, as is now the case with the securities
held for the accounts of customers registered in "street names," and will be the
responsibility of such participants.
If the Depository for any Debt Securities represented by a Global Security
is at any time unwilling or unable to continue as Depository and a successor
Depository is not appointed by the Company within 90 days, the Company will
issue each Debt Security in definitive form to the beneficial owners thereof in
exchange for such Global Security. In addition, the Company may at any time and
in its sole discretion determine not to have any of the Debt Securities of a
series represented by one or more Global Securities and, in such event, will
issue Debt Securities of such series in definitive form in exchange for all of
the Global Security or Securities representing such Debt Securities.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by and construed in
accordance with the laws of the State of New York.
PLAN OF DISTRIBUTION
The Company may sell Securities in any of three ways; (i) directly to
investors; (ii) through underwriting syndicates represented by one or more
managing underwriters, or by one or more underwriters without a syndicate; or
(iii) through agents designated from time to time. The names of any underwriters
or agents of the Company involved in the sale of the Securities in respect of
which this Prospectus is being delivered and
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any applicable commissions or discounts will be set forth in the Prospectus
Supplement. The net proceeds to the Company from each such sale will also be set
forth in the Prospectus Supplement.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may engage in transactions with or perform
services for the Company in the ordinary course of business.
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for the
Company by Rogers & Hardin LLP, Atlanta, Georgia.
EXPERTS
The (i) consolidated financial statements of Alternative Living Services,
Inc. and subsidiaries as of December 31, 1995 and 1996 and for the years ended
December 31, 1994, 1995 and 1996 have been included in the Company's Form 10-K
for the year ended December 31, 1996 and (ii) supplemental consolidated
financial statements of Alternative Living Services, Inc. and subsidiaries as of
December 31, 1995 and 1996 and for the years ended December 31, 1994, 1995 and
1996 have been included in the Form 8-K/A filed by the Company on November 6,
1997; and each such financial statements have been incorporated by reference in
the Prospectus in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, appearing therein upon the authority of said firm
as experts in accounting and auditing.
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======================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, ANY OF THE
SECURITIES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Forward Looking Statements............ 3
Risk Factors.......................... 4
The Company........................... 12
Ratio of Earnings to Fixed Charges.... 12
Use of Proceeds....................... 13
Dilution.............................. 13
Description of the Company's Capital
Stock............................... 13
Description of Debt Securities........ 17
Plan of Distribution.................. 22
Legal Matters......................... 23
Experts............................... 23
</TABLE>
======================================================
======================================================
ALTERNATIVE LIVING
SERVICES, INC.
SECURITIES
-------------------------
PROSPECTUS
-------------------------
NOVEMBER , 1997
======================================================
<PAGE> 26
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses to be paid in connection with
the issuance and distribution of the securities being registered hereby, other
than underwriting discounts and commissions, and all such expenses will be borne
by the Registrant. All amounts are estimates except for the SEC registration
fee. It is estimated that the Registrant will incur the following expenses in
connection with the offering of the securities being registered.
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 98,485.00
AMEX Filing Fee............................................. 17,500.00
Accounting Fees and Expenses................................ 35,000.00
Blue Sky Fees and Expenses.................................. 5,000.00
Legal Fees and Expenses..................................... 100,000.00
Printing and Mailing Expenses............................... 80,000.00
Transfer Agent Fees and Expenses............................ 20,000.00
Miscellaneous Expenses...................................... 19,015.00
-----------
Total............................................. $375,000.00
===========
</TABLE>
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ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102 of the Delaware General Corporation Law ("DGCL") allows a
corporation to eliminate or limit the personal liability of directors of a
corporation to the corporation or to any of its stockholders for monetary
damages for a breach of fiduciary duty as a director, except (i) for breach of
the director's duty of loyalty, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
certain unlawful dividends and stock repurchases, or (iv) for any transaction
from which the director derived an improper personal benefit.
Section 145 of the DGCL provides that in the case of any action other than
one by or in the right of the corporation, a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
in such capacity on behalf of another corporation or enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
Section 145 of the DGCL provides that in the case of an action by or in the
right of a corporation to procure a judgment in its favor, a corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any action or suit by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation in such capacity on behalf of another corporation
or enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted under standards similar to those set forth in the
proceeding paragraph, except that no indemnification may be made in respect of
any action or claim as to which such person shall have been adjudged to be
liable to the corporation unless a court determines that such person is fairly
and reasonably entitled to indemnification.
Articles VIII and IX of the Company's Restated Certificate of
Incorporation, as amended, provides for indemnification of directors, officers
and employees to the fullest extent permissible under the DGCL.
II-1
<PAGE> 27
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement.
3.1 -- Restated Certificate of Incorporation of the Registrant
(incorporated herein by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form S-1,
Registration No. 333-04595, filed with Commission on July
30, 1996 (the "Form S-1")).
3.2 -- Certificate of Merger, dated May 24, 1996 (incorporated
herein by reference to Exhibit 3.1 to the Registrant's
Registration Statement on Form S-3, Registration No. 333-
37737, filed with the Commission on October 14, 1997 (the
"Form S-3")).
3.3 -- Certificate of Amendment to the Restated Certificate of
Incorporation, dated August 1, 1996 (incorporated herein by
reference to Exhibit 3.2 to the Form S-3).
3.4 -- Restated Bylaws of the Registrant.*
4.1 -- Form of Common Stock Certificate (incorporated by reference
to Exhibit 4.2 to the Form S-1).
4.2 -- Indenture dated as of May 21, 1997 by and between
Alternative Living Services, Inc. and IBJ Schroder Bank &
Trust Company, as Trustee (incorporated by reference to
Exhibit 4.1 to the Registrant's Current Report on Form 8-K
(No. 1-11999) filed on May 27, 1997).
4.3 -- Form of Registration Rights Agreement dated as of May 21,
1997 by and between Alternative Living Services, Inc. and
the purchasers of the 7% Convertible Subordinated Debentures
due 2004 (incorporated by reference to Exhibit 99.2 to the
Registrant's Current Report on Form 8-K (No. 1-11999) filed
on May 27, 1997).
4.4 -- Form of Indenture with respect to the Debt Securities that
are, among other things, the subject of this Registration
Statement.
4.5 -- See Articles Four, Six, Seven, Eight, Nine, Ten and Eleven
of the Registrant's Restated Certificate of Incorporation
(incorporated herein by reference to Exhibit 3.1 to the Form
S-1) and the Certificate of Amendment to the Restated
Certificate of Incorporation (incorporated by reference to
Exhibit 3.2 to the Form S-3).
4.6 -- See Articles 2, 3, 5, 7 and 8 of the Registrant's Restated
Bylaws (filed herewith as Exhibit 3.4).
4.7 -- Indenture dated as of May 23, 1996 by and between Sterling
House Corporation ("Sterling") and Fleet National Bank, as
Trustee (incorporated by reference to Exhibit 4.11 to
Sterling's Registration Statement on Form S-3 (Registration
No. 333-15329 filed on November 1, 1996 (the "Sterling
S-3")).
4.8 -- Form of Registration Rights Agreement dated as of May 17,
1996 by and between Sterling and the initial purchasers of
the 6.75% Convertible Subordinated Debentures due 2006
(incorporated by reference to Exhibit 4.9 to the Sterling
S-3).
4.9 -- First Supplemental Indenture dated as of October 23, 1997
among the Registrant, Sterling and State Street Bank and
Trust Company, as successor Trustee (filed herewith as
Exhibit 4.9).*
5.1 -- Opinion of Rogers & Hardin LLP.
12.1 -- Computation of ratios of earnings to fixed charges.
23.1 -- Consent of Rogers & Hardin LLP (included in Exhibit 5.1).
23.2 -- Consent of KPMG Peat Marwick LLP.
23.3 -- Consent of KPMG Peat Marwick LLP.
24.1 -- Power of Attorney. See signature pages to the original
filing of this Registration Statement.*
25.1 -- Statement of Eligibility and Qualification of Trustee under
the Trust Indenture Act of 1939 on Form T-1.
</TABLE>
- ---------------
* Previously filed.
II-2
<PAGE> 28
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in the post-effective amendment by those paragraphs is contained
in periodic reports filed by the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-3
<PAGE> 29
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 30
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Brookfield, State of Wisconsin, on
this 25th day of November, 1997.
ALTERNATIVE LIVING SERVICES, INC.
By: /s/ WILLIAM F. LASKY
------------------------------------
William F. Lasky
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and as of the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<C> <S> <C>
/s/ WILLIAM F. LASKY Chief Executive Officer and November 25, 1997
- ----------------------------------------------------- Director (Principal
William F. Lasky Executive Officer)
* President and Director November 25, 1997
- -----------------------------------------------------
Timothy J. Buchanan
/s/ THOMAS E. KOMULA Senior Vice President, November 25, 1997
- ----------------------------------------------------- Treasurer, Chief Financial
Thomas E. Komula Officer and Secretary
(Principal Financial
Officer)
/s/ JOHN D. PETERSON Vice President and November 25, 1997
- ----------------------------------------------------- Controller (Principal
John D. Peterson Accounting Officer)
* Chairman of the Board and November 25, 1997
- ----------------------------------------------------- Director
William G. Petty, Jr.
* Vice Chairman of the Board November 25, 1997
- ----------------------------------------------------- and Director
Richard W. Boehlke
* Director November 25, 1997
- -----------------------------------------------------
Gene E. Burleson
Director
- -----------------------------------------------------
D. Ray Cook, M.D.
Director
- -----------------------------------------------------
Robert Haveman
Director
- -----------------------------------------------------
Ronald G. Kenny
</TABLE>
II-5
<PAGE> 31
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<C> <S> <C>
Director
- -----------------------------------------------------
Jerry L. Tubergen
* Director November 25, 1997
- -----------------------------------------------------
Steven L. Vick
*By: /s/ THOMAS E. KOMULA
-----------------------------------------------
Thomas E. Komula
As Attorney-in-Fact
</TABLE>
II-6
<PAGE> 32
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBIT NUMBER
- ------- ---------------------- ------
<C> <C> <S> <C>
1.1 -- Form of Underwriting Agreement..............................
3.1 -- Restated Certificate of Incorporation of the Registrant
(incorporated herein by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form S-1,
Registration No. 333-04595, filed with Commission on July
30, 1996 (the "Form S-1"))..................................
3.2 -- Certificate of Merger, dated May 24, 1996 (incorporated
herein by reference to Exhibit 3.1 to the Registrant's
Registration Statement on Form S-3, Registration No.
333-37737, filed with the Commission on October 14, 1997
(the "Form S-3"))...........................................
3.3 -- Certificate of Amendment to the Restated Certificate of
Incorporation, dated August 1, 1996 (incorporated herein by
reference to Exhibit 3.2 to the Form S-3)...................
3.4 -- Restated Bylaws of the Registrant.*.........................
4.1 -- Form of Common Stock Certificate (incorporated by reference
to Exhibit 4.2 to the Form S-1).............................
4.2 -- Indenture dated as of May 21, 1997 by and between
Alternative Living Services, Inc. and IBJ Schroder Bank &
Trust Company, as Trustee (incorporated by reference to
Exhibit 4.1 to the Registrant's Current Report on Form 8-K
(No. 1-11999) filed on May 27, 1997)........................
4.3 -- Form of Registration Rights Agreement dated as of May 21,
1997 by and between Alternative Living Services, Inc. and
the purchasers of the 7% Convertible Subordinated Debentures
due 2004 (incorporated by reference to Exhibit 99.2 to the
Registrant's Current Report on Form 8-K (No. 1-11999) filed
on May 27, 1997)............................................
4.4 -- Form of Indenture with respect to the Debt Securities that
are, among other things, the subject of this Registration
Statement...................................................
4.5 -- See Articles Four, Six, Seven, Eight, Nine, Ten and Eleven
of the Registrant's Restated Certificate of Incorporation
(incorporated herein by reference to Exhibit 3.1 to the Form
S-1) and the Certificate of Amendment to the Restated
Certificate of Incorporation (incorporated by reference to
Exhibit 3.2 to the Form S-3)................................
4.6 -- See Articles 2, 3, 5, 7 and 8 of the Registrant's Restated
Bylaws (filed herewith as Exhibit 3.4)......................
4.7 -- Indenture dated as of May 23, 1996 by and between Sterling
House Corporation ("Sterling") and Fleet National Bank, as
Trustee (incorporated by reference to Exhibit 4.11 to
Sterling's Registration Statement on Form S-3 (Registration
No. 333-15329 filed on November 1, 1996 (the "Sterling
S-3"))......................................................
4.8 -- Form of Registration Rights Agreement dated as of May 17,
1996 by and between Sterling and the initial purchasers of
the 6.75% Convertible Subordinated Debentures due 2006
(incorporated by reference to Exhibit 4.9 to the Sterling
S-3)........................................................
4.9 -- First Supplemental Indenture dated as of October 23, 1997
among the Registrant, Sterling and State Street Bank and
Trust Company, as successor Trustee (filed herewith as
Exhibit 4.9).*..............................................
5.1 -- Opinion of Rogers & Hardin LLP..............................
12.1 -- Computation of ratios of earnings to fixed charges..........
23.1 -- Consent of Rogers & Hardin LLP (included in Exhibit 5.1)....
23.2 -- Consent of KPMG Peat Marwick LLP............................
23.3 -- Consent of KPMG Peat Marwick LLP............................
</TABLE>
<PAGE> 33
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBIT NUMBER
- ------- ---------------------- ------
<C> <C> <S> <C>
24.1 -- Power of Attorney. See signature pages to the original
filing of this Registration Statement.......................
25.1 -- Statement of Eligibility and Qualification of Trustee under
the Trust Indenture Act of 1939 on Form T-1.................
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 1.1
ALTERNATIVE LIVING SERVICES, INC.
[________ SHARES OF _______ STOCK* ]
[$_______ AGGREGATE PRINCIPAL AMOUNT OF
__% __________ DUE ____* ]
UNDERWRITING AGREEMENT
Dear Ladies and Gentlemen:
Alternative Living Services, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several Underwriters named in
Schedule 1 hereto (the "Underwriters"), for whom you have been duly authorized
to act as representative[s] (in such capacit[y] [ies], the "Representative[s]"),
[an aggregate of ________ shares of the Company's Stock, par value $__ per share
(the "________ Stock")] [$__________ aggregate principal amount of __% _________
Due ___ (the "Debentures/Notes")] (the "Firm Securities"). The Company has also
agreed to issue and sell pursuant to an option, subject to the terms and
conditions hereof, up to [________ additional shares of ________ Stock]
[$__________ aggregate principal amount of Debenture/Notes]. Any and all [shares
of _____ Stock] [Debentures/Notes] to be issued and sold pursuant to such option
are referred to herein as the "Option Securities," and the Firm Securities and
any Option Securities are collectively referred to herein as the "Securities."
[The Securities are to be issued pursuant to an indenture dated , (the
"Indenture") between the Company and United States Trust Company of New York, as
Trustee (the "Trustee").] [The Securities will be convertible at the option of
the holder thereof at any time prior to the close of business on any date fixed
for redemption, unless earlier redeemed, into shares of the Company's Common
Stock, par value $0.01 per share (the "Common Stock").] The Company hereby
confirms its agreement with the several Underwriters, as set forth below. If you
are the only Underwriter[s], all references herein to the Representative[s]
shall be deemed to be the Underwriters.
1. Agreements to Sell and Purchase.
(a) The Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters, severally and not jointly, agrees to
purchase from the Company, upon
- ------------------------
* Plus an option to purchase from the Company up to [_________ shares]
[$________ aggregate principal amount of ___% ________ Due ___] to
cover over-allotments.
<PAGE> 2
the basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, and at a
purchase price of [$____ per share,] [equal to ___% of the principal amount
thereof, together with accrued interest, if any, from, to the Firm Closing Date
(as hereinafter defined),] the [number] [aggregate principal amount] of Firm
Securities set forth opposite the name of such Underwriter in Schedule1 hereto.
The Company shall deliver, or cause to be delivered, to the Representative[s]
for the respective accounts of the Underwriters, one or more certificates in
definitive form for the Firm Securities that the several Underwriters have
agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as the Representative[s] request upon notice to
the Company at least 48 hours prior to the Firm Closing Date (as hereinafter
defined), against payment by or on behalf of the Underwriters of the purchase
price therefor by certified or official bank check or checks drawn upon or by a
New York Clearing House bank and payable in next- day funds to the order of the
Company. Such delivery of and payment for the Firm Securities shall be made at
the offices of __________________, located at __________________, at 10:00 A.M.
New York City time, on ________, ____ or at such other place, time or date as
the Representative[s] and the Company may agree upon or as the Representative[s]
may determine pursuant to Section 9 hereof, such time and date of delivery
against payment being herein referred to as the "Firm Closing Date". The Company
will make such certificate or certificates for the Firm Securities available for
checking and packaging by the Representative[s] at the offices in New York, New
York of the Company's transfer agent or registrar at least 24 hours prior to the
Firm Closing Date.
(b) Solely for the purpose of covering any
over-allotments in connection with the distribution and sale of the Firm
Securities as contemplated by the Prospectus (as hereinafter defined), the
Company hereby grants to the several Underwriters an option to purchase,
severally and not jointly, the Option Securities. The purchase price to be paid
for any Option Securities shall be the same [price per share as the price per
share for the Firm Securities sold by the Company] [percentage of the principal
amount thereof as] set forth above in paragraph (a) of this Section 1. The
option granted hereby may be exercised as to all or any part of the Option
Securities from time to time within thirty days after the date of the
Prospectus. The Underwriters shall not be under any obligation to purchase any
of the Option Securities prior to any exercise of such option. The
Representative[s] may from time to time exercise the option granted hereby by
giving notice in writing or by telephone (confirmed in writing) to the Company
setting forth the aggregate amount of Option Securities as to which the several
Underwriters are then exercising the option and the date and time for delivery
of and payment for such Option Securities. Any such date of delivery shall be
determined by the Representative[s] but shall not be earlier than two business
days or later than seven business days after such exercise of the option and, in
any event, shall not be earlier than the Firm Closing Date. The time and date
set forth in such notice, or such other time on such other date as the
Representative[s] and the Company may agree upon or as the Representative[s] may
determine pursuant to Section 8 hereof, is herein called the "Option Closing
Date" with respect to such Option Securities. Upon exercise of the option as
provided herein, the Company shall become obligated to sell to each of the
several Underwriters, and, subject to the terms and conditions herein set forth,
each of the Underwriters (severally and not jointly) shall become obligated to
purchase from the Company the same percentage of the total [number] [principal
amount] of the Option Securities as to which the several Underwriters
2
<PAGE> 3
are then exercising the option, as such Underwriter is obligated to purchase of
the aggregate [number] [principal amount] of Firm Securities[.] [, as adjusted
by the Representative[s] in such manner as they deem advisable to avoid
fractional Shares]. If the option is exercised as to all or any portion of the
Option Securities, one or more certificates in definitive form for such Option
Securities, and payment therefor, shall be delivered on the related Option
Closing Date in the manner, and upon the terms and conditions, set forth in
paragraph (a) of this Section 1, except that reference therein to the Firm
Securities an the Firm Closing Date shall be deemed, for purposes of this
paragraph (b), to refer to such Option Securities and Option Closing Date,
respectively.
(c) It is understood that [any] [either] [of] you,
individually and not as one of the Representative[s], may (but shall not be
obligated to) make payment on behalf of any Underwriter or Underwriters for any
of the Securities to be purchased by such Underwriter or Underwriters. No such
payment shall relieve such Underwriter or Underwriters from any of its or their
obligations hereunder.
2. Representations and Warranties. The Company represents and
warrants to, and agrees with, each of the several Underwriters that:
(i) The Company has filed with the Securities and
Exchange Commission (the "Commission") a "shelf" registration statement on Form
S-3 (File No. 333-_______), which has become effective, relating to shares of
Common Stock, certain debt securities and shares of the Company's Preferred
Stock, $0.01 par value per share. The Company will promptly file with the
Commission a supplement to the form of prospectus included in such registration
statement specifically relating to the Securities pursuant to Rule 424 under the
Securities Act of 1933, as amended (the "Act"). Such registration statement, as
amended at the date hereof, meets the requirements of Rule 415 under the Act. As
used in this Agreement, the term "Registration Statement" means such
registration statement as amended at the date hereof, including exhibits,
financial statements, schedules and documents incorporated by reference therein.
The term "Basic Prospectus" means the prospectus included in the Registration
Statement. The term "Prospectus" means the Basic Prospectus together with the
prospectus supplement specifically relating to the Securities as filed with the
Commission pursuant to such Rule 424. Any reference herein to the Registration
Statement or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein as of the date hereof or the date of
the Prospectus, as the case may be, and any reference herein to any amendment or
supplement to the Registration Statement or the Prospectus shall be deemed to
refer to and include any documents filed after such date and through the date of
such amendment or supplement under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and so incorporated by reference. For purposes of
the preceding sentence, any reference to the "effective date" of an amendment to
a registration statement shall, if such amendment is effected by means of the
filing with the Commission under the Exchange Act of a document incorporated by
reference in such registration statement, be deemed to refer to the date on
which such document was so filed with the Commission.
(ii) When the Registration Statement or any amendment
thereto was declared effective, as of the date hereof, and at the time any
amendment to the Registration Statement
3
<PAGE> 4
filed after the date hereof becomes effective (including the filing of any
document incorporated by reference in the Registration Statement), the
Registration Statement (i) met, meets and will meet, as the case may be, the
requirements set forth in Rule 415(a)(1) under the Act and complied, complies
and will comply as the case may be, in all material respects with said Rule,
(ii) contained, contains and will contain, as the case may be, all statements
required to be stated therein in accordance with, and complied, complies and
will comply in all material respects with the requirements of, the Act, the
Exchange Act and the respective rules and regulations of the Commission
thereunder and (iii) did not, does not and will not, as the case may be, include
any untrue statement o f a material fact or omit to state any material fact
necessary to make the statements therein not misleading. As of the date hereof,
and when the Prospectus is filed with the Commission pursuant to Rule 424(b), on
the date when the Prospectus is otherwise supplemented and on the Firm Closing
Date and any Option Closing Date, the Prospectus (as supplemented as of any such
time), (i) contains and will contain, as the case may be, all statements
required to be stated therein in accordance with, and complies and will comply
in all material respects with the requirements of, the Act, the Exchange Act and
the respective rules and regulations of the Commission thereunder and (ii) does
not and will not, as the case may be, include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing provisions of this paragraph(b) do not apply
to statements or omissions made in the Prospectus or the Registration Statement
or any amendment or supplement thereto in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representative[s] specifically for use therein.
(iii) The Company is a Delaware corporation in good
standing under the laws of the State of Delaware. Each of the subsidiaries of
the Company (the "Subsidiaries") has been duly organized and is validly existing
in good standing under the laws of its jurisdiction of organization; and each of
the Company and its Subsidiaries is duly qualified to transact business as a
foreign organization and is in good standing under the laws of all other
jurisdictions where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not result in a material liability or disability to the Company
and its Subsidiaries, taken as a whole.
(iv) The Company and each of its Subsidiaries have full
power (corporate and other) to own or lease their respective properties and
conduct their respective businesses as described in the Registration Statement
and the Prospectus; and the Company has full power (corporate and other) to
enter into this Agreement and to carry out all the terms and provisions hereof
to be carried out by it.
(v) The shares of capital stock owned by the Company
which have been issued by the Company's corporate Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable and are owned
beneficially by the Company free and clear of any security interests, liens,
encumbrances, equities or claims, except for pledges of such shares in
connection with indebtedness included on the balance sheets of the Company and
its consolidated subsidiaries incorporated by reference into the Registration
Statement and the Prospectus.
4
<PAGE> 5
(vi) The Company has an authorized capitalization as set
forth in the Prospectus. All of the issued shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable. [The Firm Securities have been duly authorized and at the Firm
Closing Date, after payment therefor in accordance herewith, will be validly
issued, fully paid and nonassessable.] [The Firm Securities have been duly
authorized and the Common Stock initially issuable upon conversion of the Firm
Securities has been duly authorized and reserved for issuance, and when the
Indenture has been duly executed and delivered by the Company and the Trustee
(assuming the due authorization, execution and delivery of the Indenture by the
Trustee) and the Firm Securities have been duly executed by the Company,
authenticated by the Trustee, and issued and delivered in accordance with their
terms, the Firm Securities will constitute valid and legally binding obligations
of the Company enforceable against the Company in accordance with their terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors' rights and to
general principles of equity, the Firm Securities will be convertible into
Common Stock in accordance with the terms of the Indenture, and the Common Stock
initially issuable upon such conversion of the Firm Securities, when issued and
delivered in accordance with the provisions of the Indenture, will be validly
issued, fully paid and nonassessable; and the Firm Securities will conform to
the description of the Firm Securities contained in the Prospectus.] No holders
of outstanding shares of capital stock of the Company are entitled as such to
any preemptive or other rights to subscribe for any of the Securities , and no
holders of securities of the Company are entitled to have such securities
registered under the Registration Statement, except where such rights have been
waived.
[(vii) The Indenture has been duly authorized and has been
duly qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and when the Indenture has been duly executed and delivered by
the Company and the Trustee (assuming the due authorization, execution and
delivery of the Indenture by the Trustee), the Indenture will constitute a valid
and legally binding instrument of the Company, enforceable against the Company
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general principles of equity.]
(viii) The shares of capital stock of the Company conform to
the description thereof incorporated by reference in the Prospectus.
(ix) The consolidated financial statements and schedules
of the Company and its consolidated subsidiaries incorporated by reference into
the Registration Statement and the Prospectus fairly present the financial
condition, results of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries as of the dates and periods therein
specified. Such financial statements and schedules have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise noted therein). The
selected financial data set forth in the Company's (i) Annual Report on Form
10-K for the fiscal year ended December 31, 1996 and (ii) Quarterly Reports on
Form 10-Q for the fiscal quarters ended March 31, 1997, June 30, 1997 and
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<PAGE> 6
September 30, 1997, fairly present, on the basis stated in such Annual Report,
the information included therein.
(x) KPMG Peat Marwick LLP, who have audited certain
financial statements of the Company and its consolidated subsidiaries and
delivered their report with respect to the audited consolidated financial
statements and schedules incorporated in the Registration Statement and the
Prospectus, are independent public accountants as required by the Act, the
Exchange Act and the related published rules and regulations thereunder.
(xi) The execution and delivery of this Agreement has been
duly authorized by the Company and this Agreement has been duly executed and
delivered by the Company and is the valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights, to general principles
of equity and, with respect to indemnification, public policy.
(xii) No legal or governmental proceedings are pending to
which the Company or any of its Subsidiaries is a party or to which the property
of the Company or any of its Subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are not described
therein and no such proceedings have been threatened against the Company or any
of its Subsidiaries or with respect to any of their respective properties; and
no contract or other document is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement that is not described therein or filed as required.
(xiii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its Subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, (B) there have been
no transactions entered into by the Company or any of its Subsidiaries, other
than those in the ordinary course of business, which are material with respect
to the Company and its Subsidiaries considered as one enterprise, and (C) there
has been no dividend or distribution of any kind declared, paid or made by the
Company on any of its shares of Common Stock.
(xiv) The issuance, offering and sale of the Securities to
the Underwriters by the Company pursuant to this Agreement, the issuance of the
Common Stock issuable upon conversion of the Securities, the compliance by the
Company with the other provisions of this Agreement and the Indenture and the
consummation of the other transactions herein contemplated do not (i) require
the consent, approval, authorization, registration or qualification of or with
any governmental authority, except such as have been obtained and such as may be
required under state securities or blue sky laws or (ii) conflict with or result
in a breach or violation of any of the terms and provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, lease or other agreement
or instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their
6
<PAGE> 7
respective properties are bound, or the charter documents or by-laws of the
Company or any of its Subsidiaries, or any statute or any judgment, decree,
order, rule or regulation of any court or other governmental authority or any
arbitrator applicable to the Company or any of its Subsidiaries.
(xv) The Company is not required to be registered under
the Investment Company Act of 1940, as amended.
(xvi) The Company and each of its Subsidiaries have good
and marketable title to all real properties, and interests in real property,
described in the Prospectus (including the documents incorporated by reference
therein) as owned by each of them, in each case free and clear of all liens,
charges, encumbrances and restrictions except such as are described in the
Registration Statement or such as do not materially adversely affect the value
of such property or interests or interfere with the use made or proposed to be
made of such property or interests by the Company and each of its Subsidiaries;
the Company has obtained satisfactory confirmations, except as is otherwise
described in the Registration Statement, that the Company and each of its
Subsidiaries has the foregoing title to such real property and interests in real
property; and any real property and buildings held under lease by the Company or
any of its Subsidiaries, as the case may be, under valid, binding and
enforceable leases conforming to any applicable description thereof set forth in
or the documents incorporated by reference into the Registration Statement and
the Prospectus, with such exceptions as do not interfere with the use made and
proposed to be made of such property and buildings by the Company, its
Subsidiaries or any third party.
(xvii) No statement, representation, warranty or covenant
made by the Company in this Agreement or made in any certificate or document
required by this Agreement to be delivered to the Representative[s] was or will
be, when made, inaccurate, untrue or incorrect in any material respect.
(xviii) Neither the Company nor any of its directors,
officers or controlling persons has taken, directly or indirectly, any action
intended, or which might reasonably be expected, to cause or result, under the
Act or otherwise, in, or which has constituted, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Securities.
[(xix) The Company has been advised by the American Stock
Exchange that the Securities and the shares of Common Stock issuable upon
conversion of the Securities will be listed for trading on the American Stock
Exchange upon official notice of issuance.]
(xx) Neither the Company nor any of its Subsidiaries is
involved in any material labor dispute nor, to the best knowledge of the
Company, is any such dispute threatened.
(xxi) Neither the Company nor any of its Subsidiaries nor,
to the Company's best knowledge, any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any Subsidiary of the
Company or received or retained any
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<PAGE> 8
funds in violation of any law, rule or regulation or of a character required to
be disclosed in the Prospectus.
(xxii) Any certificate signed by any officer of the Company
and delivered to the Representative[s] or to counsel for the Underwriters in
connection with the transactions contemplated by this Agreement shall be deemed
a representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
(xxiii) No default exists, and no event has occurred which,
with notice or lapse of time or both, would constitute a default in the due
performance and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their respective properties is bound or may be
affected in any material adverse respect with regard to property, business or
operations of the Company and its subsidiaries which would require disclosure in
the Registration Statement and the Prospectus.
3. Representations and Warranties of the Underwriters. Upon your
authorization of the release of the Firm Securities, the several Underwriters
propose to offer the Firm Securities for sale to the public upon the terms set
forth in the Prospectus. Each of t he Representative[s] represent[s] and
agree[s] that (i) it has not offered or sold and will not offer or sell in the
United Kingdom, by means of any document, any Securities other than to persons
whose ordinary business it is to buy or sell shares or debentures (whether as
principal or agent) or in circumstances which do not constitute an offer to the
public within the meaning of the Companies Act 1985; (ii) it has complied and
will comply with all applicable provisions of the Financial Services Act 1986
with respect to anything done by it in relation to the Securities in, from or
otherwise involving the United Kingdom; and (iii) it has issued or passed on and
will issue or pass on to any person in the United Kingdom any document received
by it in connection with the issue of the Securities only if that person is of a
kind described in Article 9(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemption 3) Order 1988, as amended.
4. Agreements. (a) The Company covenants and agrees with each of
the Underwriters that:
(i) Subject to the next sentence, the Company will file
the Prospectus with the Commission pursuant to Rule 424 under the Act. During
any time when a prospectus relating to the Securities is required to be
delivered under the Act, the Company (i) will comply with all requirements
imposed upon it by the Act[,] [and] the Exchange Act [and the Trust Indenture
Act] and the respective rules and regulations of the Commission thereunder to
the extent necessary to permit the continuance of sales of or dealings in the
Securities in accordance with the provisions hereof and of the Prospectus, as
then amended or supplemented, and (ii) will not file with the Commission the
Prospectus, any amendment or supplement to the Prospectus, or any amendment to
the Registration Statement, of which the Representative[s] shall not previously
have been advised and furnished with a copy a reasonable period of time prior to
the proposed filing and as to which filing the Representative[s] shall not have
given their consent. The Company will
8
<PAGE> 9
advise the Representative[s], promptly after receiving notice thereof, of the
time when (i) the Prospectus has been filed with the Commission and (ii) any
amendment to the Registration Statement has been filed or declared effective or
any amendment or supplement to the Prospectus has been filed and will provide
evidence satisfactory to the Representative[s] of each such filing or
effectiveness.
(ii) The Company will advise the Representative[s],
promptly after receiving notice or obtaining knowledge thereof, of (i) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or any order
directed at any document incorporated by reference in the Registration Statement
or the Prospectus or any amendment or supplement thereto or any order preventing
or suspending the use of the Prospectus, (ii) the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, (iii)
the institution, threatening or contemplation of any proceeding for any such
purpose or (iv) any request made by the Commission for amending or supplementing
the Registration Statement, for amending the Prospectus or for additional
information. The Company will use its best efforts to prevent the issuance of
any such stop order and, if any such stop order is issued, to obtain the
withdrawal thereof as promptly as possible.
(iii) The Company will arrange for the qualification of the
Securities for offering and sale under the securities or blue sky laws of such
jurisdictions as the Representative[s] may designate and will continue such
qualifications in effect for as long as may be necessary to complete the
distribution of the Securities; provided, however, that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction.
(iv) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs as a
result of which the Prospectus, as then amended or supplemented, would include
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if for any other
reason it is necessary at any time to amend or supplement the Prospectus to
comply with the Act, the Exchange Act or the respective rules or regulations of
the Commission thereunder, the Company will promptly notify the
Representative[s] thereof and, subject to Section 4(a) hereof, will prepare and
file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment to the Basic Prospectus or the Prospectus
that corrects such statement or omission or effects such compliance.
(v) The Company will, without charge, provide (i) to the
Representative[s] and to counsel for the Underwriters, upon request, a signed
copy of the registration statement originally filed with respect to the
Securities and each amendment thereto (in each case including exhibits thereto),
(ii) to each Underwriter, a conformed copy of such registration statement and
each amendment thereto (in each case without exhibits thereto) and (iii) so long
as a prospectus relating to the Securities is required to be delivered under the
Act, as many copies of the Prospectus or any amendment or supplement thereto as
the Representative[s] may reasonably request.
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<PAGE> 10
(vi) The Company, as soon as practicable, will make
generally available to its security holders and to the Representative[s] a
consolidated earnings statement of the Company and its Subsidiaries (which need
not be audited) that satisfies the provisions of Section 11(a) of the Act and
Rule 158 thereunder.
[(vii) The Securities [and the shares of Common Stock
issuable upon conversion of the Securities] will be listed on the American Stock
Exchange, subject to notice of issuance.]
(viii) The Company and its executive officers will not,
directly or indirectly, offer, sell or otherwise dispose of any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for, or
any rights to purchase or acquire, Common Stock for a period of 90 days after
the date hereof without the prior written consent of the Representative[s].
(ix) The Company intends to use, the net proceeds from the
sale of the Securities sold by it hereunder as set forth under the "Use of
Proceeds" in the Prospectus.
5. Expenses. The Company will pay all costs and expenses incident
to the performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 10 hereof, including all costs and expenses incident to (i)
the printing or other production of all documents with respect to the
transactions, including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment thereto and
the Prospectus and any amendment or supplement thereto, this Agreement and any
blue sky memoranda, (ii) all arrangements relating to the delivery to the
Underwriters of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, accountants and any other experts or advisors
retained by the Company, (iv) preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Securities [and the Common Stock
issuable upon conversion of the Securities], including transfer agent's and
registrar's fees and the fees of the Trustee , (v) the qualification of the
Securities [and the Common Stock issuable upon conversion of the Securities]
under state securities and blue sky laws, including filing fees and fees and
disbursements of counsel for the Underwriters relating thereto, (vi) the filing
fees of the Commission relating to the Securities [and the Common Stock issuable
upon conversion of the Securities], [(vii) the listing of the Securities and the
Common Stock issuable upon conversion of the Securities on the American Stock
Exchange] and (viii) expenses of Company personnel in connection with their
attendance at meetings with prospective investors in the Securities. If the sale
of the Securities provided for herein is not consummated because any condition
to the obligations of the Underwriters set forth in Section6 hereof is not
satisfied, because this Agreement is terminated pursuant to Section10 hereof or
because of any failure, refusal or inability on the part of the Company to
perform all obligations and satisfy all conditions on its part to be performed
or satisfied hereunder other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Securities. The Company shall not in any event be liable to any
of the Underwriters for the loss of anticipated profits from the transactions
covered by this Agreement.
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<PAGE> 11
6. Conditions to the Underwriters' Obligations. The obligations
of the several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy in all
material respects of the representations and warranties of the Company contained
herein as of the date hereof and as of the Firm Closing Date as if made on and
as of the Firm Closing Date, to the accuracy in all material respects of the
statements of the Company's officers made pursuant to the provisions hereof, to
the performance by the Company of its covenants and agreements hereunder and to
the following additional conditions:
(a) The Prospectus shall have been filed with the
Commission in the manner and within the time period required by Rule 424(b)
under the Act; no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto and no order directed at any
document incorporated by reference in the Registration Statement or the
Prospectus or any amendment or supplement thereto shall have been issued and no
proceedings for that purpose shall have been instituted or threatened or, to the
knowledge of the Company or the Representative[s], shall be contemplated by the
Commission; and the Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
(b) The Representative[s] shall have received opinions,
dated the Firm Closing Date, of _______________ [and/or _______________], to the
effect that:
(i) the Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Delaware. All
of its subsidiaries listed on Exhibit A to such counsel's opinion (the
"Subsidiaries") have been duly organized; and the Company and each of its
Subsidiaries are validly existing as organizations in good standing under the
laws of their respective jurisdictions of organization and are duly qualified to
transact business as foreign corporations and are in good standing under the
laws of the jurisdictions listed on Exhibit B to such counsel's opinion;
(ii) the Company and each of the Subsidiaries have
corporate power to own or lease their respective properties and conduct their
respective businesses as described in the Registration Statement and the
Prospectus, and the Company has corporate power to enter into this Agreement and
to carry out all the terms and provisions hereof to be carried out by it;
(iii) the issued shares of capital stock owned by the
Company which have been issued by each of the corporate Subsidiaries have been
duly authorized and validly issued, are fully paid and nonassessable and are
owned beneficially by the Company free and clear, to the best knowledge of such
counsel, of any security interests, liens, encumbrances, equities or claims,
except for pledges of such shares in connection with indebtedness included on
the balance sheets of the Company and its consolidated Subsidiaries incorporated
by reference into the Registration Statement and the Prospectus;
(iv) the Company has an authorized capitalization as set
forth in the Prospectus; all of the issued shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable; [the Firm
Securities sold by the Company hereunder have been duly authorized by all
necessary corporate action of the Company and, when issued
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<PAGE> 12
and delivered to and paid for by the Underwriters pursuant to this Agreement,
will be validly issued, fully paid and nonassessable;] [the Firm Securities sold
by the Company hereunder have been duly authorized and the Common Stock
initially issuable upon conversion of the Firm Securities has been duly and
validly authorized and reserved for issuance, and when the indenture has been
duly executed and delivered by the Company and the Trustee and the Firm
Securities have been duly executed by the Company, authenticated by the Trustee,
and issued and delivered in accordance with their terms, the Firm Securities
will then constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity, the Firm Securities will be convertible into Common Stock
in accordance with the terms of the Indenture, and the Common Stock initially
issuable upon such conversion, when issued and delivered in accordance with the
provisions of the Indenture, will be validly issued, fully paid and
nonassessable;] [the Securities [and the Common Stock issuable upon conversion
of the Securities] have been duly authorized for listing, subject to official
notice of issuance, on the American Stock Exchange; to such counsel's best
knowledge, no holders of outstanding shares of capital stock of the Company are
entitled as such to any preemptive or other rights to subscribe for any of the
Securities [or the Common Stock issuable upon conversion of the Securities]; and
to such counsel's best knowledge, no holders of securities of the Company are
entitled to have such securities registered under the Registration Statement;
[(v) the Indenture has been duly authorized and has been
duly qualified under the Trust Indenture Act, and when the Indenture has been
executed and delivered by the Company and the Trustee (and assuming the due
authorization, execution and delivery of the Indenture by the Trustee) the
Indenture will constitute a valid and legally binding instrument, enforceable
against the Company in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general principles of equity;]
(vi) the description of the Common Stock incorporated by
reference into the Prospectus, insofar as such statements purport to summarize
certain provisions of the Common Stock, provides a fair summary of such
provisions, [and the description of the Securities in the Prospectus, insofar as
such statements purport to summarize certain provisions of the Securities,
provides a fair summary of such provisions];
(vii) the execution and delivery of this Agreement have
been duly authorized by all necessary corporate action of the Company and this
Agreement has been duly executed and delivered by the Company, and is the valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general principles of equity and except as
right to indemnity and contribution may be limited by federal or state
securities laws or the public policy underlying such laws;
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<PAGE> 13
(viii) to such counsel's knowledge, no legal or governmental
proceedings are pending to which the Company or any of the Subsidiaries is a
party or to which the property of the Company or any of the Subsidiaries is
subject that are required to be described in the Registration Statement or the
Prospectus and are not described therein, and, to the best knowledge of such
counsel, no such proceedings have been threatened against the Company or any of
the Subsidiaries or with respect to any of their respective properties; and to
such counsel's best knowledge, no contract or other document is required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement that is not described therein or filed as
required;
(ix) the issuance, offering and sale of the Securities to
the Underwriters by the Company pursuant to this Agreement, [the issuance of the
Common Stock issuable upon conversion of the Securities,] the compliance by the
Company with the other provisions of this Agreement and the Indenture and the
consummation of the other transactions herein contemplated do not (A) require
the consent, approval, authorization, registration or qualification of or with
any governmental authority, except such as have been obtained and such as may be
required under state securities or blue sky laws, or (B) conflict with or result
in a breach or violation of any of the terms and provisions of, or constitute a
default under, any material contract filed as an exhibit to the Registration
Statement or the charter documents or by-laws of the Company or any of the
Subsidiaries, or any statute or any judgment, decree, order, rule or regulation
of any court or other governmental authority or any arbitrator known to such
counsel and applicable to the Company or any of the Subsidiaries.
(x) the Registration Statement is effective under the
Act; any required filing of the Prospectus pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule 424(b); and no stop
order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto and no order directed at any document
incorporated by reference in the Registration Statement or the Prospectus or any
amendment or supplement thereto has been issued, and no proceedings for that
purpose have been instituted or threatened or, to the best knowledge of such
counsel, are contemplated by the Commission.
(xi) the Company is not required to be registered under
the Investment Company Act of 1940, as amended; and
(xii) the registration statement originally filed with
respect to the Securities and each amendment thereto and the Basic Prospectus
and the Prospectus (in each case, including the documents incorporated by
reference therein but not including the financial statements and other financial
and statistical information contained therein, as to which such counsel need
express no opinion) comply as to form in all material respects with the
applicable requirements of the Act, the Exchange Act and the respective rules
and regulations of the Commission thereunder.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
laws of jurisdictions in which such counsel are not admitted to practice, to the
extent satisfactory to counsel for the Underwriters, upon the opinion
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<PAGE> 14
of local counsel in such jurisdictions and in the case of the opinion described
in paragraph (i) above upon certificates of public officials. The foregoing
opinion shall also state that the Underwriters are justified in relying upon any
such opinion of such local counsel, and copies of the opinion of such local
counsel shall be delivered to the Representative[s] and counsel for the
Underwriters.
In addition to the matters set forth above, such counsel shall also
state that in the course of the preparation of the Registration Statement and
the Prospectus, such counsel has participated in conferences with officers and
representatives of the Company and with the Company's independent auditors, your
representatives and your counsel, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed and
although they are not passing upon, and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus (except as set forth therein) and have
not made any independent check or verification thereof, during the course of
such participation (relying as to the factual matters underlying the
determination of materiality to a large extent upon the statements of officers
or other representatives of the Company), no facts came to their attention that
caused them to believe that the Registration Statement, as of the Effective Date
and as of the date of such opinion, contained or contains any untrue statement
of a material fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus, as of its date and the date of such opinion, included or
includes any untrue statement of a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. It is understood that
such counsel will express no belief with respect to the financial statements,
the notes thereto and related schedules and other financial, numerical,
statistical and accounting data included or omitted from the Registration
Statement or the Prospectus [and will express no belief with respect to the
Statement of Eligibility and Qualification of the Trustee on Form T-1].
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment thereto at the date of such opinion.
(c) The Representative[s] shall have received an opinion,
dated the Firm Closing Date, of , counsel for the Underwriters, with respect to
the issuance and sale of the Firm Securities, the Registration Statement, the
Prospectus, and such other related matters as the Representative[s] may
reasonably require, and the Company shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling them to
pass upon such matters. In rendering such opinion, such counsel may rely as to
all matters of ____________ law upon the opinion of _____________ referred to in
paragraph (b) above.
(d) The Representative[s] shall have received from KPMG
Peat Marwick LLP a letter or letters dated, respectively, the date hereof and
the Firm Closing Date, in form and substance satisfactory to the
Representative[s], to the effect that:
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<PAGE> 15
(i) they are independent accountants with respect to the
Company and its consolidated subsidiaries within the meaning of the Act, the
Exchange Act and the applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules examined by them and included in the Registration
Statement and the Prospectus comply in form and in all material respects with
the applicable accounting requirements of the Act, the Exchange Act and the
related published rules and regulations thereunder;
(iii) on the basis of a reading of the latest available
interim unaudited consolidated financial statements of the Company and its
consolidated subsidiaries, carrying out certain specified procedures (which do
not constitute an audit made in accordance with generally accepted auditing
standards) that would not necessarily reveal matters of significance with
respect to the comments set forth in this paragraph (iii), a reading of the
minute books of the shareholders, the board of directors and any committees
thereof of the Company and each of its consolidated subsidiaries, and inquiries
of certain officials of the Company and its consolidated subsidiaries who have
responsibility for financial and accounting matters, nothing came to their
attention that caused them to believe that at a specific date not more than five
business days prior to the date of such letter, there were any changes in the
shares of capital stock or indebtedness of the Company and its consolidated
subsidiaries or any decreases in total assets, current assets or shareholders'
equity of the Company and its consolidated subsidiaries, in each case compared
with amounts shown on the _____________ consolidated balance sheet included by
incorporation by reference to the Company's Report on Form 10-Q for the fiscal
quarter ended _____________ in the Registration Statement and the Prospectus, or
for the period from _____________ to such specified date there were any
decreases, as compared with the corresponding period of the preceding fiscal
year, in net revenues, net income before income taxes or total or per share
amounts of net income of the Company and its consolidated subsidiaries, except
in all instances for changes, decreases or increases set forth in such letter or
as set forth in or contemplated in the Prospectus; and
(iv) they have carried out certain specified procedures,
not constituting an audit, with respect to certain amounts, percentages and
financial information that are derived from the general accounting records of
the Company and its consolidated subsidiaries and are included in its Quarterly
Report on Form 10-Q for the fiscal quarter ended , incorporated by reference in
the Registration Statement and the Prospectus, and have compared such amounts,
percentages and financial information with such records of the Company and its
consolidated subsidiaries and with information derived from such records and
have found them to be in agreement, excluding any questions of legal
interpretation.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representative[s] deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representative[s],
make it impractical
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<PAGE> 16
or inadvisable to proceed with the purchase and delivery of the Securities as
contemplated by the Registration Statement, as amended as of the date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (d) with respect to either letter referred to above shall include any
amendment thereto at the date of such letter.
(e) The Representative[s] shall have received a
certificate, dated the Firm Closing Date, of the Chief Executive Officer and the
Chief Financial Officer of the Company to the effect that:
(i) the representations and warranties of the Company in
this Agreement are true and correct as if made on and as of the Firm Closing
Date; the Registration Statement, as amended as of the Firm Closing Date, does
not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading, and the
Prospectus, as amended or supplemented as of the Firm Closing Date, does not
include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and the Company has
performed all covenants and agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto and no order
directed at any document incorporated by reference in the Registration Statement
or any amendment thereto or the Prospectus has been issued, and no proceedings
for that purpose have been instituted or threatened or, to the best of the
Company's knowledge, are contemplated by the Commission; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement an the Prospectus, there has
not been any material adverse change, or any development involving a prospective
material adverse change (including without limitation a change in management or
control of the Company), in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and the
Subsidiaries, except in each case as described in or contemplated by the
Prospectus (exclusive of any amendment or supplement thereto after the date
hereof).
(f) On or before the Firm Closing Date, the
Representative sand counsel for the Underwriters shall have received such
further certificates, documents or other information as they may have reasonably
requested from the Company.
(g) Prior to the commencement of the offering of the
Securities, the Securities shall have been accepted for listing on the American
Stock Exchange and the Common Stock issuable upon conversion of the Securities
shall have been accepted for listing on the American Stock Exchange, subject to
notice of issuance.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects
16
<PAGE> 17
to the Representative[s] and counsel for the Underwriters. The Company shall
furnish to the Representative[s] such conformed copies of such opinions,
certificates, letters and documents in such quantities as the Representative[s]
and counsel for the Underwriters shall reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Option Securities shall be subject, in their discretion, to each of
the foregoing conditions to purchase the Firm Securities, except that all
references to the Firm Securities and the Firm Closing Date shall be deemed to
refer to such Option Securities and the related Option Closing Date,
respectively.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act against any losses, claims, damages or liabilities to
which such Underwriter or such controlling person may become subject under the
Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made
by the Company in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of
any material fact contained in (A) the registration statement originally filed
with respect to the Securities or any amendment thereto, the Prospectus or any
amendment thereto or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Securities or the Common Stock issuable upon conversion of the
Securities under the securities or blue sky laws thereof or filed with the
Commission or any securities association or securities exchange (each an
"Application") or
(iii) the omission or alleged omission to state in such
registration statement or any amendment thereto, the Prospectus or any amendment
or supplement thereto, or any Application as material fact required to be stated
therein or necessary to make the statements therein not misleading,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement or
any amendment thereto, the Prospectus or any amendment or supplement thereto, or
any Application in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representative[s]
specifically for use therein and provided, further, that the Company will not be
liable to any underwriter or any person controlling such underwriter with
respect to any such untrue statement or omission made in any preliminary
supplemental Prospectus that is corrected
17
<PAGE> 18
in the supplemental Prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage or liability purchased Securities
from such Underwriter but was not sent or given a copy of the supplemental
Prospectus (as amended or supplemented), other than the document incorporated by
reference therein, at or prior to the written confirmation of the sale of such
Securities to such person in any case where such delivery of the supplemental
Prospectus (as amended or supplemented) as required by the Act, unless such
failure to deliver the supplemental Prospectus (as amended or supplemented) was
the result of noncompliance by the Company with Section 4(a)(v). This indemnity
agreement will be in addition to any liability which the Company may otherwise
have. The Company will not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Underwriter or any
person who controls such Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of such Underwriter and each such controlling person from
all liability arising out of such claim, action, suit or proceeding.
(a) Each Underwriter will indemnify and hold harmless the Company,
each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act against any losses,
claims, damages or liabilities to which the Company and any such director,
officer or controlling person may become subject under the Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment thereto, the Prospectus or any amendment or
supplement thereto, or any Application or (ii) the omission or the alleged
omission to state therein a material fact required to be stated in the
Registration Statement or any amendment thereto, the Prospectus or any amendment
or supplement thereto, or any Application or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representative[s]
specifically for use therein; and, subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses reasonably incurred by the Company and any such director, officer
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability or any action in respect thereof. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have.
(b) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 7, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 7. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be
18
<PAGE> 19
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 7 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Representative[s] in the case of
paragraph (a) of this Section 7, representing the indemnified parties under such
paragraph (a) who are parties to such action or actions) or (ii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. After such notice from the
indemnifying party to such indemnified party, the indemnifying party will not be
liable for the costs and expenses of any settlement of such action effected by
such indemnified party without the consent of the indemnifying party, unless
such indemnified party waived its rights under this Section 7 in which case the
indemnified party may effect such a settlement without such consent.
In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 7 is unavailable or insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total proceeds from
the offering (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the Underwriters. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement
19
<PAGE> 20
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters, the parties'
relative intents, knowledge, access to information and opportunity to correct or
prevent such statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company and the Underwriters agree that it
would not be equitable if the amount of such contribution were determined by pro
rata or per capita allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that does not take
into account the equitable considerations referred to in the first sentence of
this paragraph (d). Notwithstanding any other provision of this paragraph (d),
no Underwriter shall be obligated to make contributions hereunder that in the
aggregate exceed the total underwriting discounts received by it with respect to
the Securities purchased by such Underwriter under this Agreement, less the
aggregate amount of any damages that such Underwriter has otherwise been
required to pay in respect of the same or any substantially similar claim, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute hereunder are several in proportion to their respective underwriting
obligations and not joint, and contributions among Underwriters shall be
governed by the provisions of the Agreement Among Underwriters. For purposes of
this paragraph (d), each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Underwriter, and each director of the
Company, each officer of the Company who signed the Registration Statement, each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company.
8. Default of Underwriters. If one or more Underwriters default
in their obligations to purchase Firm Securities or Option Securities hereunder
and the aggregate [number] [principal amount] of such Securities that such
defaulting Underwriter or Underwriters agreed but failed to purchase is ten
percent or less of the aggregate [number] [principal amount of Firm Securities
or Option Securities to be purchased by all of the Underwriters at such time
hereunder, the other Underwriters may make arrangements satisfactory to the
Representatives[s] for the purchase of such Securities by other persons (who may
include one or more of the non-defaulting Underwriters, including the
Representative[s] ), but if no such arrangements are made by the Firm Closing
Date or the related Option Closing Date, as the case may be, the other
Underwriters shall be obligated severally in proportion to their respective
commitments hereunder to purchase the Firm Securities or Option Securities that
such defaulting Underwriter or Underwriters agreed but failed to purchase. If
one or more Underwriters so default with respect to an aggregate [number]
[principal amount] of Securities that is more than ten percent of the aggregate
[number] [principal amount] of Firm Securities or Option Securities, as the case
may be, to be purchased by all of the Underwriters at such time hereunder, and
if arrangements satisfactory to the Representative[s] are not made within 36
hours after such default for the purchase by other persons who may include one
or more of the non-defaulting Underwriters, including the Representative[s]) of
the Securities with respect to which such default occurs, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company other than as provided in Section 10 hereof. In the event of any default
by one or more
20
<PAGE> 21
Underwriters as described in this Section 8, the Representative[s] shall have
the right to postpone the Firm Closing Date or the Option Closing Date, as the
case may be, established as provided in Section 1 hereof for not more than seven
business days in order that any necessary changes may be made in the
arrangements or documents for the purchase and delivery of the Firm Securities
or Option Securities, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 8. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
9. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers and the several Underwriters set forth in this Agreement or made by or
on behalf of them, respectively, pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, any Underwriter or any
controlling person referred to in Section 7 hereof and (ii) delivery of and
payment for the Securities. The respective agreements, covenants, indemnities
and other statements set forth in Sections 5 and 7 hereof shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement.
10. Termination. This Agreement may be terminated with respect to
the Firm Securities or any Option Securities in the sole discretion of the
Representative[s] by notice to the Company given prior to the Firm Closing Date
or the related Option Closing Date, respectively, in the event that the Company
obligations and satisfy all conditions on its part to be performed or satisfied
hereunder at or prior thereto or, if at or prior to the Firm closing Date or
such Option Closing Date, respectively, the Representative[s] determine in their
sole discretion that:
(i) trading in the Securities or trading in the Common
Stock shall have been suspended by the Commission or trading in securities
generally on the American Stock Exchange or the International Stock Exchange of
the United Kingdom shall have been suspended or minimum or maximum prices shall
have been established for the Common Stock on either such exchange;
(ii) a banking moratorium shall have been declared by New
York, United Kingdom or United States authorities; or
(iii) there shall have been (A) an outbreak or escalation
of hostilities between the United States or the United Kingdom and any foreign
power, (B) an outbreak or escalation of any other insurrection or armed conflict
involving the United States or the United Kingdom or (C) any other calamity or
crisis having an effect on the financial markets that makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
securities as contemplated by the Registration Statement.
11. Information Supplied by Underwriters. The statements set forth
in the last paragraph on the front cover page and under the heading
"Underwriting" in the Prospectus (to the extent such statements relate to the
Underwriters) constitute the only information furnished by any Underwriter
through the Representative[s] to the Company for the purposes of Sections 2 and
7(b) hereof. The Underwriters confirm that such statements (to such extent) are
correct.
21
<PAGE> 22
12. Notices. All communications hereunder shall be in writing and,
if sent to any of the Underwriters, shall be mailed or delivered or telegraphed
and confirmed in writing to ____________, if sent to the Company, shall be
mailed, delivered or telegraphed and confirmed in writing to the Company at 450
N. Sunnyslope Road, Suite 300, Brookfield, Wisconsin; Attn.: President.
13. Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Company and its respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 7 of this Agreement shall
also be for the benefit of any person or persons who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Underwriters contained in Section 7 of this
Agreement shall also be for the benefit of the directors of the Company, the
officers of the Company who have signed the Registration Statement and any
person or persons who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No purchaser of Securities from any
Underwriter shall be deemed a successor because of such purchase.
14. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
22
<PAGE> 23
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company and each
of the several Underwriters.
Very truly yours,
ALTERNATIVE LIVING SERVICES, INC.
By:
------------------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
[REPRESENTATIVE[s]]
as Representative[s] of the several Underwriters
By:
-------------------------------
Name:
Title:
23
<PAGE> 24
SCHEDULE 1
UNDERWRITER[']S['] COMMITMENTS
[Number] [Aggregate Principle Amount] of
Firm Securities to be Purchased from the
Underwriter[s] Company
Total:
---------------
===============
24
<PAGE> 1
EXHIBIT 4.4
ALTERNATIVE LIVING SERVICES, INC.
INDENTURE
Dated as of __________, 199_
UNITED STATES TRUST COMPANY OF NEW YORK,
AS TRUSTEE
Providing for Issuance of Securities in Series
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C> <C>
SECTION 1.01 Definitions....................................................1
SECTION 1.02 Other Definitions..............................................5
SECTION 1.03 Incorporation by Reference to Trust Indenture Act..............5
SECTION 1.04 Rules of Construction..........................................6
ARTICLE 2
THE SECURITIES
SECTION 2.01 Forms Generally................................................6
SECTION 2.02 Amount Unlimited; Issuable in Series...........................6
SECTION 2.03 Execution and Authentication...................................8
SECTION 2.04 Registrar and Agents...........................................9
SECTION 2.05 Paying Agent to Hold Money in Trust............................9
SECTION 2.06 Transfer and Exchange..........................................10
SECTION 2.07 Replacement Securities.........................................12
SECTION 2.08 Outstanding Securities.........................................12
SECTION 2.09 Temporary Securities...........................................13
SECTION 2.10 Cancellation...................................................13
SECTION 2.11 Defaulted Interest.............................................13
SECTION 2.12 Securityholder Lists...........................................14
SECTION 2.13 Persons Deemed Owners..........................................14
SECTION 2.14 CUSIP Number...................................................14
SECTION 2.15 Provisions in Global Security..................................15
ARTICLE 3
REDEMPTION
SECTION 3.01 Right of Redemption............................................16
SECTION 3.02 Selection of Securities to be Redeemed.........................16
SECTION 3.03 Notice of Redemption by the Company............................17
SECTION 3.04 Effect of Notice of Redemption.................................18
SECTION 3.05 Deposit of Redemption Price....................................18
SECTION 3.06 Securities Redeemed in Part....................................18
</TABLE>
-i-
<PAGE> 3
ARTICLE 4
COVENANTS
<TABLE>
<S> <C> <C> <C>
SECTION 4.01 Payment of the Securities......................................18
SECTION 4.02 Commission Reports.............................................19
SECTION 4.03 Waiver of Stay, Extension or Usury Laws........................19
SECTION 4.04 Notice of Default..............................................19
SECTION 4.05 Compliance Certificates........................................19
SECTION 4.06 Limitation on Dividends and Other Distributions................20
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When Company May Merge, etc....................................20
SECTION 5.02 Successor Corporation or Trust Substituted.....................21
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default..............................................21
SECTION 6.02 Acceleration...................................................23
SECTION 6.03 Other Remedies.................................................23
SECTION 6.04 Waiver of Defaults and Events of Default.......................24
SECTION 6.05 Control by Majority............................................24
SECTION 6.06 Rights of Holders to Receive Payment...........................24
SECTION 6.07 Collection Suit by Trustee.....................................24
SECTION 6.08 Trustee May File Proofs of Claim...............................25
SECTION 6.09 Priorities.....................................................25
SECTION 6.10 Undertaking for Costs..........................................26
SECTION 6.11 Limitations on Suits...........................................26
ARTICLE 7
TRUSTEE
SECTION 7.01 Duties of Trustee..............................................27
SECTION 7.02 Rights of Trustee..............................................28
SECTION 7.03 Individual Rights of Trustee...................................28
SECTION 7.04 Trustee's Disclaimer...........................................29
SECTION 7.05 Notice of Defaults.............................................29
SECTION 7.06 Reports by Trustee to Holders..................................29
SECTION 7.07 Compensation and Indemnity.....................................29
SECTION 7.08 Replacement of Trustee.........................................30
SECTION 7.09 Successor Trustee by Merger, etc...............................31
SECTION 7.10 Eligibility; Disqualification..................................31
SECTION 7.11 Preferential Collection of Claims Against Company..............32
</TABLE>
-ii-
<PAGE> 4
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SECTION 8.01 Satisfaction, Discharge and Defeasance of the Securities......32
SECTION 8.02 Satisfaction and Discharge of Indenture.......................33
SECTION 8.03 Survival of Certain Obligations...............................33
SECTION 8.04 Application of Trust Money....................................33
SECTION 8.05 Paying Agent to Repay Monies Held.............................34
SECTION 8.06 Return of Unclaimed Monies....................................34
SECTION 8.07 Reinstatement.................................................35
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.01 Supplemental Indentures Without Consent of Holders............35
SECTION 9.02 Supplemental Indentures with Consent of Holders...............36
SECTION 9.03 Compliance with Trust Indenture Act...........................37
SECTION 9.04 Revocation and Effect of Consents.............................37
SECTION 9.05 Notation on or Exchange of Securities.........................38
SECTION 9.06 Effect of Supplemental Indentures.............................38
SECTION 9.07 Reference in Securities to Supplemental Indentures............38
ARTICLE 10
CONVERSION OF SECURITIES
SECTION 10.01 Right of Conversion; Conversion Price........................39
SECTION 10.02 Issuance of Shares on Conversion.............................39
SECTION 10.03 No Adjustment for Interest or Dividends......................40
SECTION 10.04 Adjustment of Conversion Price...............................40
SECTION 10.05 Notice of Adjustment of Conversion Price.....................43
SECTION 10.06 Notice of Certain Corporate Action...........................44
SECTION 10.07 Taxes on Conversions.........................................45
SECTION 10.08 Fractional Shares............................................45
SECTION 10.09 Cancellation of Converted Securities.........................45
SECTION 10.10 Provisions in Case of Consolidation, Merger or
Sale of Assets...............................................45
SECTION 10.11 Disclaimer by Trustee of Responsibility for Certain Matters..46
SECTION 10.12 Covenant to Reserve Shares...................................46
</TABLE>
-iii-
<PAGE> 5
ARTICLE 11
SUBORDINATION; SENIORITY
<TABLE>
<S> <C> <C> <C>
SECTION 11.01 Securities Subordinated to Senior Indebtedness...............47
SECTION 11.02 Company Not to Make Payments with Respect to
Junior Securities in Certain Circumstances...................48
SECTION 11.03 Subrogation of Junior Securities.............................49
SECTION 11.04 Authorization by Holders of Junior Securities................50
SECTION 11.05 Notices to Trustee...........................................51
SECTION 11.06 Trustee's Relation to Senior Indebtedness....................51
SECTION 11.07 No Impairment of Subordination...............................52
SECTION 11.08 Article 11 Not To Prevent Events of Default..................52
SECTION 11.09 Paying Agents other than the Trustee.........................52
SECTION 11.10 Securities Senior to Subordinated Indebtedness...............53
ARTICLE 12
SINKING FUND
SECTION 12.01 Mandatory and Optional Sinking Fund Payments.................53
SECTION 12.02 Satisfaction of Sinking Fund Payments with Securities........53
SECTION 12.03 Redemption of Securities for Sinking Funds...................54
ARTICLE 13
MISCELLANEOUS
SECTION 13.01 Trust Indenture Act Controls.................................54
SECTION 13.02 Notices......................................................55
SECTION 13.03 Communications by Holders with Other Holders.................56
SECTION 13.04 Certificate and Opinion as to Conditions Precedent...........56
SECTION 13.05 Statements Required in Certificate and Opinion...............56
SECTION 13.06 Rules by Trustee and Agents..................................57
SECTION 13.07 Record Date..................................................57
SECTION 13.08 Legal Holidays...............................................57
SECTION 13.09 Governing Law................................................57
SECTION 13.10 No Adverse Interpretation of Other Agreements................58
SECTION 13.11 No Recourse Against Others...................................58
SECTION 13.12 Successors...................................................58
SECTION 13.13 Multiple Counterparts........................................58
SECTION 13.14 Table of Contents, Headings, etc.............................58
SECTION 13.15 Severability.................................................58
</TABLE>
-iv-
<PAGE> 6
CROSS-REFERENCE TABLE
ALTERNATIVE LIVING SERVICES,
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture
- --------------- ---------
<S> <C>
ss.310(a)(1) 7.10
(a)(2) 7.10
(a)(3) Not Applicable
(a)(4) Not Applicable
(b) 7.08; 7.10; 13.02
(c) Not Applicable
ss.311(a) 7.11
(b) 7.11
(c) Not Applicable
ss.312(a) 2.12
(b) 12.03
(c) 12.03
ss.313(a) 7.06
(b)(1) Not Applicable
(b)(2) 7.06
(c) 7.06; 13.02
(d) 7.06
ss.314(a) 4.02; 13.02
(b) Not Applicable
(c)(1) 12.04
(c)(2) 12.04
(c)(3) Not Applicable
(d) Not Applicable
(e) 12.05
(f) Not Applicable
ss.315(a) 7.01(b)
(b) 7.05; 13.02
(c) 7.01(a)
(d) 7.01(c)
(e) 6.10
ss.316(a)(last sentence) 13.06
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) Not Applicable
(b) 6.06
ss.317(a)(1) 6.07
(a)(2) 6.08
(b) 2.05
ss.318(a) 11.01
</TABLE>
- ----------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.
-v-
<PAGE> 7
INDENTURE dated as of __________, 199_ between Alternative Living
Services, Inc., a Delaware corporation ("Company"), and United Sates Trust
Company of New York ("Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its securities (hereinafter called the
"Securities") evidencing its unsecured indebtedness, to be issued in one or more
fully registered series.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
To set forth or to provide for the establishment of the terms and
conditions upon which the Securities are and are to be authenticated, issued and
delivered, and in consideration of the premises and the purchase of Securities
by the Holders thereof, it is mutually covenanted and agreed as follows, for the
equal and proportionate benefit of all Holders of the Securities or of a series
thereof, as the case may be:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities or by agreement
or otherwise.
"Agent" means any Registrar, Paying Agent, Conversion Agent,
co-registrar or agent for service of notices and demands.
"Bankruptcy Law" means Title 11 of the U.S. Code or any similar Federal
or State law for the relief of debtors.
"Board of Directors of the Company" means the Board of Directors of the
Company or any committee of the Board.
<PAGE> 8
"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.
"Closing Price" means with respect to the shares of common stock of the
Company on any day, (i) the last reported sales price regular way or, in case no
such reported sale takes place on such day, the average of the reported closing
bid and asked prices regular way, in either case on the New York Stock Exchange,
or (ii) if the shares of common stock are not listed or admitted to trading on
the New York Stock Exchange, the last reported sales price regular way, or in
case no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, on the principal national securities
exchange on which the shares of common stock are listed or admitted to trading,
or (iii) if the shares of common stock are not listed or admitted to trading on
any national securities exchange, the average of the closing bid and asked
prices as furnished by any New York Stock Exchange member firm selected from
time to time by the Company for that purpose.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 114 West 47th Street, 25th Floor, New York, New York 10036.
"Custodian" means any receiver, trustee, liquidator or similar official
under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Depositary" means, with respect to the Securities of any series issued
in whole or in part in the form of a Global Security, the Person designated as
Depositary by the Company pursuant to Section 2.02 until a successor Depositary
shall have become such pursuant to the applicable procedures of this Indenture,
and thereafter "Depositary" shall mean or include each Person who is then a
Depositary hereunder, and if at any time there is more than one Depositary with
respect to the Securities of any such series, "Depositary" shall mean the
Depositary with respect to the Securities of that series.
-2-
<PAGE> 9
"Dollar" or "$" means the lawful money of the United States of America.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Global Security" means a Security in the form prescribed in Section
2.15 evidencing all or part of a Securities, issued to the Depositary for such
series or its nominee, and registered in the name of such Depositary or nominee.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Indebtedness," as applied to any Person, means, without duplication
(i) all indebtedness for borrowed money whether or not evidenced by a promissory
note, draft or similar instrument, (ii) that portion of obligations with respect
to leases that is properly classified as a liability on a balance sheet in
accordance with generally accepted accounting principles, (iii) notes payable
and drafts accepted representing extensions of credit, (iv) any balance owed for
all or any part of the deferred purchase price of property or services, which
purchase price is due more than six months from the date of incurrence of the
obligation in respect thereof (except any such balance that constitutes (a) a
trade payable or an accrued liability arising in the ordinary course of business
or (b) a trade draft or note payable issued in the ordinary course of business
in connection with the purchase of goods or services), if and to the extent such
debt would appear as a liability upon a balance sheet of such Person prepared in
accordance with generally accepted accounting principles, and (v) any deferral,
amendment, renewal, extension, supplement or refunding of any of the foregoing
indebtedness; provided, however, that, in computing the "Indebtedness" of any
Person, there shall be excluded any particular indebtedness if, upon or prior to
the maturity thereof and at the time of determination of such indebtedness,
there shall have been deposited with a depository in trust money (or evidences
of indebtedness if permitted by the instrument creating such indebtedness) in
the necessary amount to pay, redeem or satisfy such indebtedness as it becomes
due, and the amount so deposited shall not be included in any computation of the
assets of such Person.
"Indenture" means this Indenture as originally executed or, if amended
or supplemented as provided in Article 9, as amended or supplemented from time
to time.
"Officer" means the Chairman of the Board, the Chief Executive Officer
the President, any Senior Vice President, the Treasurer, or the Secretary of the
Company.
"Officers' Certificate" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer, Assistant Secretary or Assistant
Controller of the Company. See Sections 13.04 and 13.05.
-3-
<PAGE> 10
"Opinion of Counsel" means a written opinion from Rogers & Hardin LLP
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 13.04 and 13.05.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Principal" of a Security means the principal of the Security plus,
when appropriate, the premium, if any, on the Security.
"Redemption Date" when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
as specified in such Security.
"Senior Indebtedness" means the principal, premium, if any, and unpaid
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for post-filing interest is allowed in such proceeding), fees, charges,
expenses, reimbursement and indemnification obligations, and all other amounts
payable under or in respect of Indebtedness of the Company for money borrowed,
(other than Subordininated Indebtedness) whether any such Indebtedness exists
as of the date of this Indenture or shall hereafter be created, incurred,
assumed or guaranteed.
"Subordinated Indebtedness" means the principal, premium, if any, and
interest on any Indebtedness of the Company which by its terms is expressly
subordinated in right of payment to the Securities.
"Subsidiary" means a corporation the majority of whose voting stock is
owned by the Company or a subsidiary of the Company. Voting stock is Capital
Stock having voting power under ordinary circumstances to elect directors.
"Trust Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice-president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any Trust Officer or assistant Trust Officer, the controller
or any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer of the Trustee to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
-4-
<PAGE> 11
"United States" means the United States of America.
SECTION 1.02 Other Definitions.
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Company Order" 2.03
"Conversion Agent" 2.04
"conversion price" 10.01
"current market price" 10.04
"Event of Default" 6.01
"Junior Securities" 11.01
"Legal Holiday" 13.08
"mandatory sinking fund payments" 12.01
"Market Price" 3.01
"optional sinking fund payments" 12.01
"Paying Agent" 2.04
"Payment or Distribution" 11.01
"Redemption Price" 3.01
"Registrar" 2.04
"Rule 13e-3 Transaction" 10.06
"Securities" Recitals
"TIA" 1.03
"U.S. Government Obligations" 8.01
</TABLE>
SECTION 1.03 Incorporation by Reference to Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture
Act of 1939 (the "TIA"), the provision is incorporated by reference in and made
a part of this Indenture. The following TIA terms used in this Indenture have
the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the indenture securities.
-5-
<PAGE> 12
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rules have
the meanings assigned to them therein.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with United States generally accepted accounting principles
in effect as of the time as to which such accounting principles are to be
applied;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and in the plural include
the singular.
ARTICLE 2
THE SECURITIES
SECTION 2.01 Forms Generally.
The Securities of each series shall be in substantially the form
(including any global form that is not inconsistent with this Indenture) as
shall be established from time to time by or pursuant to a Board Resolution or
in one or more indentures supplemental hereto, in each case with such variations
as are required or permitted by this Indenture (including such other provisions
as are necessary to reflect the global form of any Security, and the designation
of a Depositary for such Global Security) and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
of any securities exchange or to conform to general usage, all as may be
determined by the officers executing such Securities as evidenced by their
execution of the Securities.
SECTION 2.02 Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series:
-6-
<PAGE> 13
(1) the title of the Securities of the series (which
shall distinguish the Securities of the series from all other
Securities);
(2) the limit, if any, upon the aggregate principal
amount of the Securities of the series which may be
authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to this Indenture);
(3) the date or dates on which the principal of (and
premium, if any, on) the Securities of the series is payable;
(4) the rate or rates, if any, at which the
Securities of the series shall bear interest (or the method of
determining such rate or rates), the date or dates from which
such interest shall accrue, date or dates on which such
interest shall be payable and the record date or dates for the
interest payable;
(5) the place or places where the principal of (and
premium, if any) and interest on Securities of the series
shall be payable;
(6) the period or periods within which or the date or
dates on which, if any, the price or prices at which and the
terms and conditions upon which Securities of the series may
be redeemed, in whole or in part, at the option of the
Company;
(7) the obligation, if any, of the Company to redeem,
repay or purchase Securities of the series pursuant to any
sinking fund or analogous provisions or at the option of a
Securityholder thereof and the period or periods within which,
the price or prices at which and the terms and conditions upon
which Securities of the series shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation;
(8) the price at which Securities of any one series
are or may be converted into shares of Capital Stock of the
Company;
(9) if other than the principal amount thereof, the
portion of the principal amount of Securities of the series
which shall be payable upon declaration of acceleration of the
maturity thereof;
(10) whether any Securities of the series are to be
issued in whole or in part in the form of one or more Global
Securities and, if so, the Depositary for such Global Security
or Securities (which Depositary shall be, if then required by
applicable law or regulation, a clearing agency registered
under the Exchange Act
-7-
<PAGE> 14
and any other applicable statute or regulation) and whether
beneficial owners of interests in such Global Security or
Securities may exchange such interests for Securities of such
series and any authorized form and denomination of such
Securities and the circumstances under which any such
exchanges may occur (if other than in the manner provided in
Section 2.06);
(11) the identity of each Paying Agent, Conversion
Agent and Registrar (each as defined in Section 2.04) for the
Securities of such series; and
(12) any other terms of the series (which terms shall
not be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially
identical except as to denomination and except as may otherwise be provided in
or pursuant to such Board Resolution and set forth in such Officers' Certificate
or in any such indenture supplemental hereto.
If any of the terms of a series of Securities are established
by action taken pursuant to a Board Resolution, a copy of an appropriate record
of such action shall be certified by the Secretary or an Assistant Secretary of
the Company and delivered to the Trustee at or prior to the delivery to the
Trustee of the Officers' Certificate or supplemental indenture setting forth the
terms of the series.
SECTION 2.03 Execution and Authentication.
Two Officers shall sign the Securities for the Company by
manual or facsimile signature. The Company's seal shall be impressed, affixed,
imprinted or reproduced on the Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall nevertheless be valid.
A Security shall not be valid until the Trustee manually signs
the certificate of authentication on the Security. Such signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate Securities for original issue
upon written order or orders of the Company signed by two Officers or by an
Officer and an Assistant Treasurer of the Company (a "Company Order").
The Trustee may appoint an authenticating agent to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate.
-8-
<PAGE> 15
The Securities may be issued in registered form without
coupons. The Securities shall be issuable only in denominations of $1,000
principal amount and any integral multiple thereof.
The Trustee shall inform the Depositary with respect to the
Securities of any series that the Trustee has endorsed pursuant to the
provisions of Section 2.15.
SECTION 2.04 Registrar and Agents.
The Company shall maintain an office or agency where
Securities of any series may be presented for registration of transfer or for
exchange ("Registrar"), an office or agency where Securities of any series may
be presented for payment ("Paying Agent"), an office or agency where Securities
of any series may be presented for conversion ("Conversion Agent") and an office
or agency where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Registrar shall keep a register
of the Securities of each series and of their transfer and exchange. The Company
may have one or more co-registrars, one or more additional Paying Agents and one
or more additional Conversion Agents. The Company or any Subsidiary may act as
Paying Agent and/or Conversion Agent. The term "Paying Agent" includes any
additional paying agent and the term "Conversion Agent" includes any additional
conversion agent.
The Company may change any Paying Agent, Registrar, Conversion
Agent or Co-Registrar on sixty (60) days' prior written notice to the Trustee.
The Company shall notify the Trustee in writing of the name and address of any
such Agent. If the Company fails to maintain a Registrar, Paying Agent,
Conversion Agent or agent for service of notices and demands, or fails to give
the foregoing notice, the Trustee shall act as such.
The Company and the Trustee initially appoint the Trustee as
Registrar, Paying Agent, Conversion Agent and agent for service of notices and
demands.
SECTION 2.05 Paying Agent to Hold Money in Trust.
Prior to each due date of the principal of, premium if any,
and interest on any Securities of any series, the Company shall deposit with
each Paying Agent a sum sufficient to pay such principal, premium, if any, and
interest so becoming due. The Company shall require each Paying Agent other than
the Trustee to agree in writing that it will hold in trust for the benefit of
Holders of Securities of any series or the Trustee all money held by the Paying
Agent for the payment of principal of, premium if any, or interest on the
Securities of such series and to notify the Trustee in writing of any default by
the Company (or any other obligor on the Securities of such series) in making
any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall
on or before each due date of the principal of, premium, if any, or interest on
any Securities of any series segregate the money and hold it as a separate trust
fund. The Company at any time may require a Paying Agent to pay all money held
by it to the Trustee and
-9-
<PAGE> 16
the Trustee may at any time during the continuance of any payment default, upon
written request to a Paying Agent, require such Paying Agent to forthwith pay to
the Trustee all sums so held in trust by such Paying Agent. Upon doing so, the
Paying Agent (other than the Company or a Subsidiary thereof) shall have no
further liability for the money.
SECTION 2.06 Transfer and Exchange.
(a) When a Security of any series is presented to the
Registrar or a co-registrar with a request to register the transfer, the
Registrar or co-registrar shall register the transfer as requested and when
Securities of any series are presented to the Registrar or a co-registrar with a
request to exchange them for a like aggregate principal amount of Securities of
such series in other authorized denominations, the Registrar shall make the
exchange as requested, provided that every Security presented or surrendered for
registration or transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Registrar duly executed by the Holder thereof or his attorney-in-fact duly
authorized in writing. To permit registrations of transfers and exchanges, the
Company shall issue and the Trustee or any authenticating agent shall
authenticate Securities of such series at the Registrar's or co-registrar's
written request. No service charge shall be made for any registration of
transfer or exchange of Securities but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto, but this provision shall not apply to any exchange pursuant to
Section 2.09, 3.06, 9.05 or 10.02 not involving any transfer.
Unless and until a Global Security is exchanged in whole or in
part for Securities in definitive form in accordance with the provisions of this
Indenture, a Global Security may not be transferred, except as a whole, by the
Depositary to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor of such Depositary or nominee. Unless otherwise
provided as contemplated by Section 2.02 of this Indenture, the Depositary may
not sell, assign, transfer or otherwise convey any beneficial interest in a
Global Security evidencing all or part of the Securities of such series unless
such beneficial interest is in an amount equal to an authorized denomination for
Securities of such series.
At the option of the Holder, Securities of any series may be
exchanged for other Securities of such series of any authorized denominations
and of a like aggregate principal amount, upon surrender to the Registrar or a
co-registrar of the Securities to be exchanged. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, the Securities which the Holder
making the exchange is entitled to receive.
(b) The Registrar shall not be required (i) to issue, register
the transfer of, or exchange Securities of any series during a period beginning
at the opening of business 15 days before the day of any selection of Securities
of such series for redemption under Section 3.02 and ending at the close of
business on the day of selection, (ii) to register the transfer or exchange of
-10-
<PAGE> 17
any Security of any series so selected for redemption in whole or in part,
except the unredeemed portion of any Security being redeemed in part, or (iii)
to register the transfer or exchange of any Securities of any series during a
period beginning at the opening of business 15 days before the day of any
selection of Securities of such series for redemption under Section 3.02 and
ending at the close of business on the day interest is to be paid on Securities
of such series.
(c) If at any time the Depositary for any Securities of a
series issued in the form of one or more Global Securities notifies the Company
that it is unwilling or unable to continue as Depositary for such Securities or
if at any time the Depositary for the Securities of such series shall no longer
be eligible under Section 2.02 of this Indenture, the Company shall appoint a
successor Depositary with respect to such Securities. If a successor Depositary
for such Securities is not appointed by the Company within ninety (90) days
after the Company receives such notice or becomes aware of such ineligibility,
the Company's election to issue Global Securities pursuant to Section 2.02 shall
no longer be effective with respect to such Securities and the Company will
execute, and the Trustee, upon receipt of a Company Order for the authentication
and delivery of definitive Securities of such series, will authenticate
Securities of such series in definitive form, in authorized denominations, in an
aggregate principal amount equal to the principal amount of the Global Security
or Securities in exchange for such Global Security or Securities and deliver
such definitive Securities to the Securityholders of such series.
The Company may at any time and in its sole discretion
determine that the Securities of any series issued in the form of one or more
Global Securities shall no longer be represented by such Global Security or
Securities. The Company shall notify the Depositary and the Trustee of the date
and time of such exchange in a Company Order. The Depositary shall surrender the
Global Securities to the Trustee as the Company's agent for such purpose as
shall be specified in the Company Order. The Company will execute, and the
Trustee, upon receipt of a Company Order for the authentication and delivery of
definitive Securities of such series, will authenticate and deliver, Securities
of such series in definitive form, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Security
or Securities in exchange for such Global Security or Securities.
Notwithstanding the foregoing, except as otherwise specified
as contemplated by Section 2.02 of this Indenture, any Global Security shall be
exchangeable only as provided in this paragraph. If the owners of beneficial
interests in a Global Security of any series are entitled to exchange such
interests for Securities of such series, as may be specified in accordance with
Section 2.02 of this Indenture, then without unnecessary delay upon receipt of
notice therefrom so specified as contemplated by Section 2.02 of this Indenture
but in any event not later than one business day prior to the earliest date on
which such interests may be so exchanged, the Company shall deliver to the
Trustee definitive Securities of such series, in authorized denominations, and
in aggregate principal amount equal to the principal amount of such Global
Security, executed by the Company. On or after the earliest date on which such
interests may be so exchanged, such Global Security shall be surrendered by the
Depositary as shall be specified in the Company Order with respect thereto to
the Trustee, as the Company's agent for such purpose, to be exchanged, in whole
or from time to time in part, for definitive Securities of such
-11-
<PAGE> 18
series, without charge, and the Trustee shall authenticate and deliver, in
exchange for each portion of such Global Securities, a like aggregate principal
amount of definitive Securities of the same series in authorized denominations
as the portion of such Global Securities to be so exchanged; provided, however,
that no such exchanges may occur for a period of 15 days immediately preceding
the date notice is received by the Company requesting such changes.
SECTION 2.07 Replacement Securities.
If a mutilated Security of any series is surrendered to the
Trustee or if the Holder of a Security of any series presents evidence to the
satisfaction of the Company and the Trustee that the Security has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security of such series if the requirements of the
Trustee and the Company are met. An indemnity bond may be required by the
Company or the Trustee that is sufficient in the judgment of the Company to
protect the Company and is sufficient in the judgment of the Trustee to protect
the Trustee or any Agent from any loss which it may suffer if a Security of such
series is replaced. The Company may charge for its expense in replacing a
Security.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its sole
discretion may, instead of issuing a new Security, pay or authorize the payment
or convert or authorize the conversion of such Security.
Every new Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
SECTION 2.08 Outstanding Securities.
Securities of any series outstanding at any time are all
Securities of such series authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section 2.08 as not outstanding.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding until the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company or a Subsidiary)
holds on a Redemption Date or maturity date money deposited with it by or on
behalf of the Company sufficient to pay the principal of and accrued interest on
Securities of any series payable on that date, then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue.
-12-
<PAGE> 19
A Security does not cease to be outstanding because the
Company or an Affiliate holds the Security.
SECTION 2.09 Temporary Securities.
Until definitive Securities of any series are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Securities of such series. Temporary Securities of any series shall be
substantially in the form of definitive Securities of such series but may have
non-material variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Securities of any series in exchange for
temporary Securities of such series upon written order of the Company signed by
two Officers. Until so exchanged, temporary Securities of any series represent
the same rights as definitive Securities of such series. Upon request of the
Trustee, the Company shall provide a certificate to the effect that the
temporary Securities of any series meet the requirements of the second sentence
of this Section 2.09.
SECTION 2.10 Cancellation.
The Company at any time may deliver Securities of any series
to the Trustee for cancellation. The Registrar, the Paying Agent and the
Conversion Agent shall forward to the Trustee any Securities surrendered to them
for transfer, exchange, payment or conversion. The Trustee shall cancel all
Securities surrendered for transfer, exchange, payment or conversion and destroy
canceled Securities in accordance with its customary destruction procedures and
deliver a certificate of such destruction to the Company unless the Company
directs the Trustee in writing prior to such destruction to deliver canceled
Securities to the Company. Subject to Sections 2.07, 3.06 and the second
paragraph of Section 10.02, the Company may not issue Securities to replace
Securities that it has previously paid or delivered to the Trustee for
cancellation or that a Securityholder has converted pursuant to Article 10
hereof.
SECTION 2.11 Defaulted Interest.
If the Company defaults in a payment of interest on Securities
of any series, it shall pay the defaulted interest to the Persons who are
Holders of the Securities of such series on a subsequent special record date.
After the deposit by the Company with the Trustee of money sufficient to pay
such defaulted interest, the Trustee shall fix the record date and payment date.
Each such special record date shall be not less than 10 days prior to such
payment date. Each such payment date shall be not more than 60 days after the
deposit by the Company of money to pay the defaulted interest. At least 15 days
before the special record date, the Company shall mail to each Holder of a
Security of such series a notice that states the special record date, the
payment date, and the amount of defaulted interest to be paid. The Company may
pay defaulted interest in any other lawful manner if, after prior notice to the
Trustee, such payment shall be deemed operationally practicable by the Trustee.
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SECTION 2.12 Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders of Securities of each series. If the Trustee is not the
Registrar, the Company or other obligor, if any, shall furnish to the Trustee at
least seven Business Days prior to each semiannual interest payment date and at
such other times as the Trustee may request in writing a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of Holders of Securities of each series upon which the Trustee may conclusively
rely. The Trustee may destroy any such list upon receipt of a replacement list.
The Paying Agent will solicit from each Securityholder a certification of social
security number or taxpayer identification number in accordance with its
customary practice and as required by law, unless the Paying Agent is in
possession of such certification. Each Paying Agent is authorized to impose
back-up withholding with respect to payments to be made to Securityholders to
the extent required by law.
SECTION 2.13 Persons Deemed Owners.
Prior to presentment of a Security of any series for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name such Security is registered as
the owner of such Security and neither the Company, the Trustee nor any agent of
the Company or the Trustee shall be affected by notice to the contrary.
SECTION 2.14 CUSIP Number.
The Company may use a "CUSIP" number when issuing Securities
of any series, and if so, the Trustee may use the CUSIP number in notices of
redemption or exchange as a convenience to Holders of Securities of such series;
provided, that any such notice may state that no representation is made as to
the correctness or accuracy of the CUSIP number printed in the notice or on the
Securities, and that reliance may be placed only on the other identification
numbers printed on the Securities.
SECTION 2.15 Provisions in Global Security.
(a) If Securities of a series are issuable in whole or in part
as Global Securities, as may be specified in accordance with Section 2.02 of
this Indenture, then in accordance with any such Global Security, such Global
Security may represent such of the outstanding Securities of such series as
shall be specified therein and may also provide that it represents the aggregate
principal amount of outstanding Securities from time to time endorsed thereon
and that the aggregate principal amount of outstanding Securities represented
thereby may from time to time be reduced to reflect exchanges. Global Securities
may be permanent or temporary. Any endorsement of a Global Security to reflect
the amount, or any increase or decrease in the principal amount, of outstanding
Securities represented thereby shall be made by the Trustee in
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such manner and upon instructions given by such Person or Persons as shall be
specified therein or in the Company Order to be delivered to the Trustee and the
Depositary pursuant to Section 2.03 or Section 2.09. Subject to the provisions
of Section 2.03 and, if applicable, Section 2.09, the Depositary shall deliver
and redeliver any permanent Global Security in the manner and upon written
instructions given by the Person or Persons specified therein or in the
applicable Company Order.
(b) Notwithstanding the other provisions of this Indenture,
unless otherwise specified in accordance with Section 2.02, payment of principal
of (and premium, if any) and interest, if any, on any permanent Global
Securities shall be made directly to owners of beneficial interest of such
Global Security.
(c) Notwithstanding the provisions of Section 2.13 of this
Indenture, the Company, the Trustee and any agent of the Company or the Trustee
shall treat the owners of beneficial interest of such Global Security as the
Holders of such principal amounts of outstanding Securities represented by a
Global Security as shall be specified in writing by the Depositary and delivered
to the Company and the Trustee with respect to such Global Security only for
purposes of obtaining any consents or directions required to be given by the
Holders pursuant to this Indenture.
(d) Unless otherwise provided as contemplated by Section 2.02,
a Global Security of any series shall provide, in addition to the provisions
established pursuant to Sections 2.01, 2.02 and 2.15(a) through (c), that the
Depositary will not sell, assign, transfer or otherwise convey any beneficial
interest in such Global Security unless such beneficial interest is in an amount
equal to an authorized denomination for Securities of such series, and the
Depository, by accepting such Global Security, agrees to be bound by such
provision. Any Global Security shall also contain such other provisions as are
necessary to reflect the global form of such Security and the designation of a
Depositary for such Global Security.
ARTICLE 3
REDEMPTION
SECTION 3.01 Right of Redemption.
(a) The Company may, at its option, redeem Securities of any
series as permitted or required by the terms of such Securities, which
redemption shall be made in accordance with the terms of such Securities and
this Article. The purchase price for Securities of any series redeemed pursuant
the immediately preceding sentence (the "Redemption Price") shall be equal to
the lesser of (i) the Market Price on the date the Company mails the notice of
redemption required under Section 3.03 and (ii) 100% of the principal amount
thereof, in each case together with accrued interest, if any. For purposes of
the preceding sentence, the "Market Price" means,
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with respect to the Securities of any series on any day, (x) the last reported
sale price regular way or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices regular way, in
either case on the New York Stock Exchange, or (y) if the Securities of such
series are not listed or admitted to trading on the New York Stock Exchange, the
last reported sale price regular way, or in case no such reported sale takes
place on such day, the average of the reported closing bid and asked prices
regular way, on the principal national securities exchange on which the
Securities of such series are listed or admitted to trading, or (z) if the
Securities of such series are not listed or admitted to trading on any national
securities exchange, the average of the closing bid and asked prices as
furnished by any New York Stock Exchange member firm selected from time to time
by the Company for that purpose. The election of the Company to redeem any
Securities pursuant to this Section shall be evidenced by a Board Resolution.
The Company shall, at least 45 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and, in the case of any redemption at the
election of the Company of less than all the Securities of any series, of the
principal amount of Securities of that series to be redeemed.
(b) If the Company wants to redeem the Securities of any
series pursuant to the redemption provisions of the Securities of such series,
it shall notify the Trustee of the Redemption Date and the principal amount of
Securities of such series to be redeemed. The notice shall be in writing and
accompanied by an Officers' Certificate stating that the redemption complies
with the provisions of this Indenture and the provisions of the applicable Board
Resolution, if any, and in the Securities of such series.
The Company shall give each notice provided for in this
Section 3.01 in writing and at least 45 but not more than 90 days before the
Redemption Date or such other period as the Company and the Trustee may agree.
SECTION 3.02 Selection of Securities to be Redeemed.
If any part of a series of Securities is to be redeemed, the
Trustee shall select the Securities of such series 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 of such series to be so called for redemption. The Trustee shall make
the selection from Securities of such series outstanding and not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000 principal
amount. Securities and portions of them it selects shall be in principal amounts
of $1,000 or multiples thereof. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption. The Trustee's selection of Securities for redemption by any method
authorized by this Section 3.02 shall be conclusively deemed reasonable.
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SECTION 3.03 Notice of Redemption by the Company.
At least 30 days but not more than 60 days before a Redemption
Date with respect to Securities of any series, the Company shall mail a notice
of redemption by first-class mail to each Holder of Securities of such series to
be redeemed.
The notice shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent and the
Conversion Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the
redemption price;
(5) that interest on Securities called for redemption
ceases to accrue on and after the Redemption Date;
(6) if any Security is being redeemed in part, the
portion of the principal amount of such Security to
be redeemed and that, after the Redemption Date, upon
surrender of such Security, a new Security or
Securities of the same series in principal amount
equal to the unredeemed portion thereof will be
issued; and
(7) any conversion rights with respect to the Securities
and the applicable procedures required to be followed
in connection with a conversion of Securities.
At the Company's written request, the Trustee shall give the
notice of redemption in the Company's name and at the Company's expense. If a
CUSIP number is listed in such notice or printed on the Security, the notice
shall state that no representation is made as to the correctness or accuracy of
such CUSIP number.
SECTION 3.04 Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the applicable Redemption Date and at the
applicable Redemption Price. Upon surrender to the Paying Agent, such Securities
shall be paid at the Redemption Price, plus accrued interest to the Redemption
Date.
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SECTION 3.05 Deposit of Redemption Price.
On or before the Redemption Date with respect to any series of
Securities, the Company shall deposit with the Paying Agent (or if the Company
or a Subsidiary is the Paying Agent, shall segregate and hold in trust or cause
such Subsidiary to segregate and hold in trust) in immediately available funds
money sufficient to pay the Redemption Price of and accrued interest on all
Securities of such series to be redeemed on that date. The Trustee or the Paying
Agent shall return to the Company any money so received not required for that
purpose.
SECTION 3.06 Securities Redeemed in Part.
Upon surrender of a Security of any series that is redeemed in
part, the Trustee shall authenticate for the Holder, at the expense of the
Company, a new Security of such series equal in principal amount to the
unredeemed portion of the Security surrendered. If a Global Security is so
surrendered, such new Security so issued shall be a new Global Security.
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of the Securities.
The Company shall pay the principal of, premium, if any, and
interest on the Securities of any series on the dates and in the manner provided
in the Securities of such series and this Indenture. An installment of
principal, premium, if any, or interest shall be considered paid on the date it
is due if the Trustee or Paying Agent (other than the Company or a Subsidiary)
holds on that date money designated for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and premium, if any, at the
rate borne by the Security; it shall pay interest, including post-petition
interest in the event of a proceeding under the Bankruptcy Laws, on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02 Commission Reports.
The Company shall file with the Trustee, promptly after it
files them with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) which
the Company is required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act. The Company shall also comply with the other
provisions of TIA ss.314(a).
So long as the Securities remain outstanding, the Company
shall cause its annual reports to shareholders (containing audited financial
statements) and any other financial reports
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furnished by it to shareholders to be mailed to the Holders at their addresses
appearing in the register of Securities maintained by the Registrar.
SECTION 4.03 Waiver of Stay, Extension or Usury Laws.
The Company expressly waives (to the extent that it may
lawfully do so) any stay or extension law or any usury law or other law that
would prohibit or forgive the Company from paying all or any portion of the
principal of (premium, if any) or interest on Securities of any series as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
that may affect the covenants or the performance of this Indenture.
SECTION 4.04 Notice of Default.
The Company will, so long as any Securities of any series are
outstanding, deliver to the Trustee, within 10 days of becoming aware of any
Default or Event of Default in the performance of any covenant, agreement or
condition in this Indenture, an Officers' Certificate specifying such Default or
Event of Default.
SECTION 4.05 Compliance Certificates.
The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company (which as of the date hereof is
December 31), a written statement signed by the principal executive officer,
principal financial officer or principal accounting officer of the Company,
stating, as to each signer thereof, that
(1) a review of the activities of the Company during such year
and of performance under this Indenture has been made under his supervision and
(2) to the best of his knowledge, based on such review, the
Company has kept, observed, performed and fulfilled in all material respects
each and every condition and covenant contained in this Indenture throughout
such year, or, if there has been a default in the fulfillment of any such
condition or covenant, specifying each such default known to him and the nature
and status thereof.
The Company will give the Trustee written notice of a change
in the fiscal year of the Company, within a reasonable time after such change is
effected.
SECTION 4.06 Limitation on Dividends and Other Distributions.
The Company will not declare or pay any dividends or make any
distribution to holders of its Capital Stock (other than dividends or
distributions payable in Capital Stock of the Company), or purchase, redeem or
otherwise acquire or retire for value any of its Capital Stock or permit any
Subsidiary to purchase, redeem or otherwise acquire or retire for value any of
the
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Company's Capital Stock if at the time of any of the aforementioned actions
an Event of Default has occurred and is continuing or would exist immediately
after giving effect to such action.
Notwithstanding the foregoing, the provisions of this Section
4.06 will not prevent (i) the payment of any dividend within 60 days after the
date of declaration when the payment would have complied with the foregoing
provisions on the date of declaration; or (ii) the retirement of any share of
the Company's Capital Stock by exchange for, or out of the proceeds of the
substantially concurrent sale (other than to a Subsidiary) of, other shares of
its Capital Stock.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When Company May Merge, etc.
The Company shall not consolidate with or merge into, or
transfer all or substantially all of its assets to, another Person in any
transaction in which the Company is not the continuing or surviving entity
unless (i) the resulting, surviving or transferee Person is a corporation or
trust which assumes by supplemental indenture all the obligations of the Company
under the Securities of each series and this Indenture; (ii) such corporation or
trust is organized and existing under the laws of the United States, a State
thereof or the District of Columbia although it in turn may be owned by a
foreign entity; (iii) immediately after giving effect to such transaction no
Default or Event of Default shall have happened and be continuing, and the
Officers' Certificate referred to in the following clause reflects that such
Officers are not aware of any such Default or Event of Default that shall have
happened and be continuing, and (iv) the Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture comply
with this Indenture, and thereafter all obligations of the Company shall
terminate.
SECTION 5.02 Successor Corporation or Trust Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.01,
the successor corporation or trust formed by such consolidation or into which
the Company is merged or to which such transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation or trust
has been named as the Company herein.
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ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
An "Event of Default" occurs if, with respect to any series of
Securities:
(1) the Company defaults in the payment of interest
on any Security of such series when the same becomes due and
payable and the default continues for a period of 30 days;
(2) the Company defaults in the payment of the
principal of (and premium, if any, on) any Security of such
series when the same becomes due and payable at maturity, upon
redemption or otherwise, and the default continues for five
Business Days;
(3) the Company fails to comply with any of its other
agreements in the Securities of such series or this Indenture
and the default continues for the period and after the notice
specified in the last paragraph of this Section 6.01;
(4) there shall be a default under any bond,
debenture, note or other evidence of Indebtedness or under any
mortgage, indenture or other instrument under which there may
be issued or by which there may be secured or evidenced any
Indebtedness of the Company or any Subsidiary, whether any
such Indebtedness now exists or shall hereafter be created, if
(a) either (i) such event of default results from the failure
to pay any such Indebtedness at maturity or (ii) as a result
of such event of default, the maturity of such Indebtedness
has been accelerated prior to its stated maturity and such
acceleration shall not be rescinded or annulled or the
accelerated amount paid within ten days after notice to the
Company of such or acceleration, or such Indebtedness having
been discharged and (b) the principal amount of such
Indebtedness, together with the principal amount of any other
such Indebtedness in default for failure to pay principal or
interest thereon, or the maturity of which has been so
accelerated, aggregates $10,000,000 or more;
(5) the Company pursuant to or within the meaning of
any Bankruptcy Law:
(A) commences a voluntary case or
proceeding,
(B) consents to the entry of an order
for relief against it in an
involuntary case or proceeding,
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(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
(6) a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that:
(A) is for relief against the Company
in an involuntary case or
proceeding,
(B) appoints a Custodian of the Company
or for all or substantially all of
its property, or
(C) orders the liquidation of the
Company,
and the order or decree remains unstayed and in
effect for 90 days;
provided, however, that a default under this Section
6.01 is not an Event of Default with respect to any
series of Securities if a specified event is either
applicable to a particular series other than such
series or it is specifically deleted or modified in
the supplemental indenture creating such series of
Securities or in the form of Security for such
series.
A default under clause (3) is not an Event of Default with
respect to any series of Securities until the Trustee notifies the Company, or
the Holders of a majority in principal amount of the Securities of such series
then outstanding notify the Company and the Trustee in writing, of the default
and the Company does not cure the default within 60 days after receipt of such
notice. The notice must specify the default, demand that it be remedied and
state that the notice is a "Notice of Default." The Trustee shall give such
notice to the Company only if directed to do so in writing by the Holders of a
majority in principal amount of the Securities then outstanding. Such notice by
the Trustee shall not be deemed to be a certification by the Trustee as to
whether an Event of Default has occurred.
SECTION 6.02 Acceleration.
If an Event of Default occurs and is continuing with respect
to any series of Securities, the Trustee by notice to the Company, or the
Holders of a majority in principal amount of the Securities of such series then
outstanding by notice to the Company and the Trustee, may declare to be due and
payable immediately the principal amount of the Securities of such series plus
accrued interest to the date of acceleration. Upon any such declaration, such
amount shall be due and payable immediately, and upon payment of such amount all
of the
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Company's obligations with respect to the Securities of such series, other than
obligations under Section 7.07, shall terminate. The Holders of a majority in
principal amount of the outstanding Securities of such series by written notice
to the Trustee may rescind an acceleration and its consequences if (x) all
existing Events of Default with respect to the Securities of such series, other
than the non-payment of the principal of the Securities of such series, which
have become due solely by such declaration of acceleration, have been cured or
waived, (y) to the extent the payment of such interest is lawful, interest on
overdue installments of interest and overdue principal which has become due
otherwise than by such declaration of acceleration, has been paid, and (z) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction. The Trustee may rely upon such notice of rescission
without any independent investigation as to the satisfaction of conditions (x),
(y) and (z).
SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect the
payment of principal (and premium, if any) or interest on the Securities of such
series or to enforce the performance of any provision of the Securities of such
series or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04 Waiver of Defaults and Events of Default.
Subject to Section 9.02, the Holders of a majority in
principal amount of the Securities of any series then outstanding, on behalf of
the Holders of the Securities of such series, by written notice to the Trustee
may waive a Default or Event of Default with respect to the Securities of such
series and its consequences. When a Default or Event of Default is waived with
respect to the Securities of any series, it is cured and ceases.
SECTION 6.05 Control by Majority.
The Holders of a majority in principal amount of the
Securities of any series then outstanding may direct in writing the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on it with respect to the Securities
of such series. The Trustee, however, may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Securityholders or that may involve the
Trustee in personal liability or for which the Trustee does not have adequate
indemnification pursuant to Section 7.01(e); provided, that,
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the Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
SECTION 6.06 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security of any series to receive payment of principal
of, premium, if any, and interest on such Security, on or after the respective
due dates expressed in such Security, or to bring suit for the enforcement of
any such payment on or after such respective dates, is absolute and
unconditional and shall not be impaired or affected without the consent of the
Holder.
Notwithstanding any other provision of this Indenture (other
than Section 3.01), the right of any Holder of any Security to convert such
Security or to bring suit for the enforcement of such right shall not be
impaired or affected without the written consent of the Holder.
SECTION 6.07 Collection Suit by Trustee.
If an Event of Default with respect to any series of
Securities in payment of interest or principal (and premium, if any) specified
in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or any other obligor on the Securities of such series for the whole amount of
unpaid principal (and premium, if any) and accrued interest remaining unpaid on
the Securities of such series, together with interest on overdue principal (and
premium, if any) and to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate borne by
the Securities of such series and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 6.08 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of Securities of any series allowed in any judicial proceedings relative
to the Company (or any other obligor upon the Securities of any series), its
creditors or its property and shall be entitled and empowered to collect and
receive any monies or other property payable or deliverable on any such claims
and to distribute the same. Any Custodian in any such judicial proceeding is
hereby authorized by each Securityholder to make such payments to the Trustee,
and in the event that the Trustee shall consent to the making of such payments
directly to the Holders of Securities of any series, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07.
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Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan or reorganization, arrangement, adjustment or
composition affecting the Securities of any series or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceedings.
SECTION 6.09 Priorities.
If the Trustee collects any money pursuant to this Article 6
with respect to the Securities of any series, it shall pay out the money in the
following order:
FIRST: to the Trustee for amounts due under Section
7.07;
SECOND: to holders of any Senior Indebtedness as
required by Article 11; and
THIRD: to Holders of Securities of such series for
amounts due and unpaid on the Securities of such
series for principal of (and premium, if any) and
interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on
the Securities of such series for principal (and
premium, if any) and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Holders of Securities of any series pursuant to this Section 6.09.
SECTION 6.10 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorney's fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.10 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.06 or a suit by Holders of more than 10% in
principal amount of the Securities of any series then outstanding or a suit by
any holder of Senior Indebtedness.
SECTION 6.11 Limitations on Suits.
Subject to Section 6.06, a Holder of any series of Securities
may not pursue any remedy with respect to this Indenture or the Securities
unless:
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(1) the Holder has given the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal amount of such
series of Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or
expenses;
(4) The Trustee does not comply with the request within 60
days after receipt of the notice, request and offer of
indemnity; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60 day period by the
Holders of a majority in principal amount of such series of
Securities then outstanding.
A Holder of any Security may not use this Indenture to
prejudice the rights of another Securityholder or to obtain a preference or
priority over another Securityholder.
ARTICLE 7
TRUSTEE
SECTION 7.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise its rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent Person
would exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no implied
covenants or obligation shall be read into this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture.
The Trustee, however, shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
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(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section 7.01.
(2) The Trustee shall not be liable for any error
in judgment made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
(4) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) Subject to subsection (c), the Trustee may refuse to
perform any duty or exercise any right or power unless, subject to the
provisions of the TIA, it receives indemnity satisfactory to it against any
loss, liability, expense or fee.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02 Rights of Trustee.
(1) The Trustee may rely on and shall be protected in acting
or refraining from acting upon any document believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, or both, which shall
conform to Section 13.05. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such Officers' Certificate
or Opinion of Counsel.
(3) The Trustee may act through agents or attorneys and shall
not be responsible for the misconduct or negligence of such agents or attorneys
appointed with due care and shall not be responsible for their supervision.
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(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers.
(5) The Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by the Trustee hereunder in good faith and reliance thereon.
(6) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders of Securities of any series pursuant to this
Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
SECTION 7.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities of any series and may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. The Trustee, however, is
subject to Sections 7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities of any series, it shall not be
accountable for the Company's use of the proceeds from the Securities of any
series, and it shall not be responsible for any statement of the Company in the
Indenture or any statement in the Securities of any series other than its
certificate of authentication or in any document used in the sale of the
Securities of any series other than any statement in writing provided by the
Trustee expressly for use in such document.
SECTION 7.05 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and
if it is actually known to the Trustee with respect to the Securities of any
series, the Trustee shall mail to each Holder of Securities of such series
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a default in payment of principal of, premium, if any, or
interest on any Security, the Trustee may withhold the notice if and so long as
a committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Holders of Securities of such series.
Notwithstanding anything to the contrary expressed in this Indenture, the
Trustee shall not be deemed to have knowledge of any Event of Default hereunder
unless and until a Trust Officer shall have actual knowledge thereof, or shall
have received written notice thereof from the Company at its principal Corporate
Trust Office in Chicago, Illinois. The Trustee shall not be deemed to have
actual knowledge of an Event of Default hereunder, except in the case of an
Event of Default under Sections 6.01(1) or 6.01(2) (provided that the Trustee is
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the Paying Agent), until a Trust Officer receives written notice thereof from
the Company or any Securityholder that such an Event of Default has occurred.
SECTION 7.06 Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with May 15 of the
first year in which Securities are outstanding hereunder, the Trustee, if
required by the provisions of TIA ss.313(a), shall mail to each Securityholder a
brief report dated as of May 15 of such year that complies with TIA ss.313(a).
The Trustee also shall comply with TIA ss.313(b) and ss.313(c).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the Commission and each stock exchange on
which the Securities of any series are listed. The Company agrees to notify the
Trustee in writing whenever the Securities of any series become listed or
delisted on or from any stock exchange.
SECTION 7.07 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation for its services (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust). The Company shall reimburse the Trustee upon request for all
reasonable disbursements, expenses and advances incurred or made by it. Such
expenses may include, but shall not be limited to, the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it
harmless against, any loss or liability incurred by it in connection with the
acceptance or administration of this trust, including the costs and expenses of
defending itself against any claim or liability in connection with the
Securities or the exercise or performance of any of its powers or duties
hereunder. The Trustee shall notify the Company promptly of any claim asserted
against the Trustee for which it may seek indemnity and the Company may elect by
written notice to the Trustee to assume the defense of any such claim at the
Company's expense with counsel reasonably satisfactory to the Trustee.
The Company need not reimburse the Trustee for any expense or
indemnify it against any loss or liability incurred by it through the Trustee's
negligence, bad faith or willful misconduct. The Company shall not be liable for
any settlement of any claim or action effected without the Company's consent. To
secure the Company's payment obligations in this Section, the Trustee shall have
a lien prior to the Securities on all money or property held or collected by the
Trustee.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01 occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any applicable bankruptcy or comparable law.
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SECTION 7.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign with respect to any series of
Securities by so notifying the Company. The Holders of a majority in principal
amount of the Securities of any series then outstanding may remove the Trustee
with respect to such series of Securities by so notifying the Trustee and may
appoint a successor Trustee with respect to such series of Securities with the
Company's written consent. The Company may remove the Trustee with respect to
any series of Securities (or, if clause (4) applies, with respect to all series)
if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an
insolvent;
(3) a receiver or other public officer takes charge
of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting
with respect to any series of Securities.
If the Trustee resigns or is removed with respect to any
series of Securities or if a vacancy exists in the office of Trustee with
respect to any series of Securities for any reason, the Company shall promptly
appoint a successor Trustee with respect to such series.
If a successor Trustee with respect to any series of
Securities does not take office within 45 days after the retiring Trustee with
respect to such series resigns or is removed, the retiring Trustee, the Company
or the Holders of a majority in principal amount of the Securities of such
series then outstanding may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment with respect to any series of Securities to the retiring Trustee and
to the Company. Immediately after that, the retiring Trustee shall, upon payment
of its fees and expenses, transfer all property held by it as Trustee with
respect to such series to the successor Trustee, subject to the lien provided
for in Section 7.07, the resignation or removal of the retiring Trustee shall
become effective with respect to such series, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture with
respect to such series. Notwithstanding the replacement of the
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Trustee with respect to any series of Securities pursuant to this Section 7.08,
the Company's obligations under Section 7.07 shall continue for the benefit of
the retiring Trustee with respect to expenses and liabilities incurred by it and
compensation earned by it prior to such replacement or otherwise with respect to
the Securities of such series or the Indenture. A successor Trustee with respect
to any series of Securities shall mail notice of its succession to each Holder
of Securities of such series.
SECTION 7.09 Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss.310(a)(1). 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.
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01 Satisfaction, Discharge and Defeasance of the Securities.
The Company shall be deemed to have paid and discharged the
entire indebtedness on the Securities of any series after the date of the
deposit referred to in paragraph (a) below, the provisions of this Indenture
shall no longer be in effect in respect of the Securities of such series, and
the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of such indebtedness; provided that the
following conditions shall have been satisfied:
(a) the Company has deposited or caused to be
deposited with the Trustee irrevocably as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the Holders of
all Securities of such series, with reference to this Section 8.01, (i)
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money or (ii) U.S. Government Obligations or (iii) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge the entire indebtedness on all the Securities of
such series for principal, premium, if any, and interest, if any, to the
maturity date of such series of Securities as such principal, premium, if any,
or interest becomes due and payable in accordance with the terms of this
Indenture and the Securities;
(b) the Company has paid or caused to be paid all
other sums payable hereunder by the Company in connection with all of the
Securities of any series, including all fees and expenses of the Trustee; and
(c) the Company has delivered to the Trustee an
Officers' Certificate stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of the entire indebtedness on the
Securities and the discharge of this Indenture and the termination of the
Company's obligations hereunder have been complied with.
"U.S. Government Obligations" means direct, non-callable obligations
of, or non-callable obligations guaranteed by, the United States of America for
the timely payment of which obligation or guarantee the full faith and credit of
the United States of America is pledged.
SECTION 8.02 Satisfaction and Discharge of Indenture.
In addition to its rights under Section 8.01, the Company may terminate
all of its obligations under this Indenture when:
(a) All of the Securities of each series theretofore
authenticated and delivered (other than (A) Securities which have been
destroyed, lost or stolen and which have been replaced or paid as provided in
Section 2.07 hereof and (B) Securities for whose payment money has theretofore
been deposited with the Trustee or the Paying Agent in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 2.05 and Section 8.06 hereof) have been
delivered to the Trustee for cancellation; and
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company in connection with the outstanding Securities,
including all fees and expenses of the Trustee.
SECTION 8.03 Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this
Indenture pursuant to Section 8.01, the respective obligations of the Company
specified in Sections 2.04, 2.05, 2.06, 2.07, 2.12, 4.01, 7.07, 8.05, 8.06, 8.07
and in Article 10 shall survive until the Securities are no longer outstanding,
and after the Securities are no longer outstanding, or upon compliance with
Section 8.02, only the obligations of the Company in such Sections 7.07 and 8.06
shall survive.
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Nothing contained in this Article Eight shall abrogate any of the obligations or
duties of the Trustee under this Indenture.
SECTION 8.04 Application of Trust Money.
(a) Subject to the provisions of Section 8.06, all money and
U.S. Government Obligations deposited with the Trustee for the Securities of any
series pursuant to Section 8.01 or Section 8.02, and all money received by the
Trustee in respect of U.S. Government Obligations deposited with the Trustee for
the Securities of any series pursuant to Section 8.01 or Section 8.02 shall be
held in trust and reinvested by the Trustee in U.S. Government Obligations in
accordance with the Company's written instructions and applied by the Trustee in
accordance with the provisions of the Securities of such series and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal, premium, if any,
and interest, if any, on the Securities of such series; but such money need not
be segregated from other funds except to the extent required by law.
(b) The Trustee shall deliver or pay to the Company from time
to time upon the Company's written request any U.S. Government Obligations, or
money held by it as provided in Section 8.01 or Section 8.02 which, in the
written opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are then in excess of the amount thereof which then would have been
required to be deposited for the purpose for which such U.S. Government
Obligations, or money were deposited or received.
SECTION 8.05 Paying Agent to Repay Monies Held.
Upon the satisfaction and discharge of this Indenture with
respect to the Securities of any series, all monies then held by any Paying
Agent for the benefit of Securities of such series under the provisions of this
Indenture shall, upon written demand of the Company, be repaid to it or paid to
the Trustee, and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
SECTION 8.06 Return of Unclaimed Monies.
Any monies deposited with or paid to the Trustee or any Paying
Agent for the Securities of any series, or then held by the Company in trust,
for the payment of any principal, premium, if any, and interest, if any, on the
Securities of any series and not applied but remaining unclaimed by the Holders
of the Securities of such series for two years after the date upon which the
principal of and interest, if any, on the Securities of such series, as the case
may be, shall have become due and payable, shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Company by such Trustee or any Paying Agent on written
demand by the Company or (if then held by the Company) shall be discharged from
such trust; and the Holders of the Securities of such series
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entitled to receive such payment shall thereafter look only to the Company for
the payment thereof; provided, however, that, before being required to make any
such repayment, such Trustee may, or shall at the written request of the
Company, at the expense of the Company, cause to be published once in an
authorized newspaper in the same city in which the place of payment with respect
to the Securities of such series shall be located and in an authorized newspaper
in the City of New York, or mail to each such Holder, a notice (in such form as
may be deemed appropriate by such Trustee) that said monies remain unclaimed and
that, after a date named therein, any unclaimed balance of said monies then
remaining will be returned to the Company.
SECTION 8.07 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations with respect to the Securities of any series in
accordance with Section 8.01 by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's obligations
under this Indenture and the Securities of such series shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.01 until such
time as the Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with Section 8.04; provided, however, that
if the Company has made any payment of interest on or principal of any
Securities of any series because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.01 Supplemental Indentures Without Consent of Holders.
The Company, when authorized by Board Resolution, and the
Trustee at any time and from time to time, may amend this Indenture or enter
into one or more indentures supplemental hereto, to be in a form satisfactory to
the Trustee without notice to or consent of any Securityholder for any of the
following purposes:
(1) to comply with Section 5.01; or
(2) to provide for uncertificated Securities in addition to or
in place of certificated Securities; or
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(3) to add to the covenants of the Company, for the benefit of
the Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such series),
or to surrender any right or power herein conferred upon the Company; or
(4) to add any Events of Default (and if such Events of
Default are to be applicable to less than all series of Securities, stating that
such Events of Default are expressly being included solely to be applicable to
such series); or
(5) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall become effective
only when there is no Security outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit of
such provision; or
(6) to establish the form or terms of Securities of any series
as permitted by Sections 2.01 and 2.02; or
(7) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or questions
arising under this Indenture which shall not be inconsistent with any provision
of this Indenture, provided such other provisions shall not adversely affect the
interests of the Holders of Securities of any series in any material respect.
SECTION 9.02 Supplemental Indentures with Consent of Holders.
With the written consent of the Holders of not less than a
majority in aggregate principal amount of the Securities of each series at the
time outstanding affected by such supplemental indenture, the Company, when
authorized by Board Resolution, and the Trustee may amend this Indenture or from
time to time and at any time enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act of 1939
as in force at the date of the execution thereof) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture, except as otherwise permitted
by Section 9.01, or of modifying in any manner the rights of the Holders of the
Securities of each such series. Subject to Section 9.04, without the consent of
each Holder of Securities of any series affected, however, an amendment,
supplement or waiver, including a waiver pursuant to Section 6.04, may not:
(1) extend the fixed maturity of any Securities, or reduce the
principal amount thereof or premium, if any, or reduce the rate or extend the
time of payment of interest thereon, without the consent of the Holder of each
Security so affected;
(2) reduce the aforesaid percentage of Securities of each
series, the consent of the Holders of which is required for any such
supplemental indenture, without the consent of the Holders of all Securities
then outstanding affected thereby;
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(3) waive (except, unless theretofore cured) a default in the
payment of the principal of (and premium, if any on), interest on or redemption
amounts with respect to any Security;
(4) make any Security payable in money other than that stated
in the Security;
(5) make any change in Sections 6.04, 6.06 or 9.02 (this
sentence);
(6) make any change that adversely affects the right to
convert any Security; or
(7) make any change in Article 11 that adversely affects the
rights of any Securityholder.
Upon the request of the Company, accompanied by a copy of a
Board Resolution certified by the Secretary or an Assistant Secretary of the
Company authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of evidence of the consent of Securityholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
It shall not be necessary for the consent of the
Securityholders under this Section to approve the particular form of any
proposed amendment, supplement or waiver, but it shall be sufficient if such
consent shall approve the substance thereof.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Company shall mail a notice, setting forth in general terms the substance of
such supplemental indenture, to all Holders of Securities of each series so
affected as the names and addresses of such Holders shall appear on the registry
books. Any failure of the Company so to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
SECTION 9.03 Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.04 Revocation and Effect of Consents.
Subject to this Indenture, each amendment, supplement or
waiver evidencing other action shall become effective in accordance with its
terms. Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Security of any series is a continuing consent by the Holder
even if notation of the consent is not made on any Security.
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Any such Holder or subsequent Holder, however, may revoke the consent as to his
Security or portion of a Security, if the Trustee receives the notice of
revocation before the date the amendment, waiver or other action becomes
effective.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then notwithstanding
the provisions of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies) and only those
Persons, shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such Persons continue to
be Holders after such record date. No consent shall be valid or effective for
more than 90 days after such record date unless consent from Holders of the
principal amount of Securities of any series then outstanding required hereunder
for such amendment, supplement or waiver to be effective shall have also been
given and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder, unless it makes a change described in any of
clauses (1) through (6) of Section 9.02. In that case the amendment, supplement
or waiver shall only bind the Holders of a Security or portion of a Security of
the same series.
SECTION 9.05 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security of any series, the Trustee may request the Holder of the Security of
such series to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security about the changed terms and return it to the Holder.
Alternatively, if the Company or the Trustee so determine, the Company in
exchange for the Security of such series shall issue and the Trustee shall
authenticate a new Security of such series that reflects the changed terms the
cost and expense of which will be borne by the Company.
SECTION 9.06 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities of any applicable series theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
SECTION 9.07 Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Board of Directors of the Company, to any such
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supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Securities
outstanding of such series.
ARTICLE 10
CONVERSION OF SECURITIES
SECTION 10.01 Right of Conversion; Conversion Price.
If provided in the Board Resolution or supplemental indenture
with respect to such series of Securities, the Holder of any Security or
Securities of a particular series shall have the right, at his option, at any
time after such date as determined by such Board Resolution and before the close
of business on such date as determined by such Board Resolution (except that,
with respect to any Security or portion of a Security of such series which shall
be called for redemption, such right shall terminate at the close of business on
the date fixed for redemption of such Security or portion of a Security unless
the Company shall default in payment due upon redemption thereof), to convert,
subject to the terms and provisions of this Article 10, the principal of any
Security or Securities of such series or any portion thereof which is $1,000
principal amount or an integral multiple thereof into shares of common stock of
the Company or Securities of another series of Securities, initially at the
conversion price per share specified in the Securities of such series; or, in
case an adjustment of such price has taken place pursuant to the provisions of
Section 10.04, then at the price as last adjusted (such price or adjusted price
being referred to herein as the "conversion price"), upon surrender of the
Security or Securities, the principal of which is so to be converted,
accompanied by written notice of conversion duly executed, to the Company, at
any time during usual business hours at the office or agency maintained by it
for such purpose, and, if so required by the Conversion Agent or Registrar,
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Conversion Agent or Registrar duly executed by the Holder or
his duly authorized representative in writing. For convenience, the conversion
of any portion of the principal of any Security or Securities into shares of
common stock of the Company or other Securities is hereinafter sometimes
referred to as the conversion of such Security or Securities.
ECTION 10.02 Issuance of Shares on Conversion.
As promptly as practicable after the surrender, as herein
provided, of any Security or Securities of any series for conversion, the
Company shall deliver or cause to be delivered at its said office or agency, to
or upon the written order of the Holder of the Security or Securities so
surrendered, certificates representing the number of fully paid and
nonassessable shares of common stock of the Company or Securities of another
series of the Company into which such Security or Securities may be converted in
accordance with the provisions of this Article 10. Such conversion shall be
deemed to have been made as of the close of business on the date that such
Security or Securities shall have been surrendered for conversion by delivery
thereof with a
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written notice of conversion duly executed, so that the rights of the Holder of
such Security or Securities as a Securityholder shall cease at such time and,
subject to the following provisions of this paragraph, the Person or Persons
entitled to receive the shares of common stock or Securities of another series
upon conversion of such Security or Securities shall be treated for all purposes
as having become the record holder or holders of such shares of common stock or
Securities of another series at such time and such conversion shall be at the
conversion price in effect at such time; provided, however, that with respect to
shares of the Company's common stock, no such surrender on any date when the
stock transfer books of the Company shall be closed shall be effective to
constitute the Person or Persons entitled to receive the shares of common stock
upon such conversion as the record holder or holders of such shares of common
stock on such date, but such surrender shall be effective to constitute the
Person or Persons entitled to receive such shares of common stock as the record
holder or holders thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open; such conversion
shall be at the conversion price in effect on the date that such Security or
Securities shall have been surrendered for conversion by delivery thereof, as if
the stock transfer books of the Company had not been closed. The Company shall
give or cause to be given to the Trustee written notice whenever the stock
transfer books of the Company shall be closed.
Upon Conversion of any Security of any series which is
converted in part only, the Company shall execute and the Trustee shall
authenticate and deliver to or on the order of the Holder thereof, at the
expense of the Company, a new Security or Securities of such series of
authorized denominations in principal amount equal to the unconverted portion of
such Security.
SECTION 10.03 No Adjustment for Interest or Dividends.
No payment or adjustment in respect of interest on the
Securities of any series or dividends on the shares of common stock shall be
made upon the conversion of any Security or Securities; provided, however, that
if a Security of any series or any portion thereof shall be converted subsequent
to any regular record date and on or prior to the next succeeding interest
payment date, the interest falling due on such interest payment date shall be
payable on such interest payment date notwithstanding such conversion, and such
interest (whether or not punctually paid or duly provided for) shall be paid to
the Person in whose name such Security is registered at the close of business on
such regular record date and Securities surrendered for conversion during the
period from the close of business on any regular record date to the opening of
business on the corresponding interest payment date must be accompanied by
payment of an amount equal to the interest payable on such interest payment
date.
SECTION 10.04 Adjustment of Conversion Price.
(1) With respect to any series of Securities that is
convertible into shares of the Company's common stock, in case the Company shall
pay or make a dividend or other distribution on any class of Capital Stock of
the Company in shares of common stock, the conversion price for any series of
Securities in effect at the opening of business on the day following the date
fixed for the determination of shareholders entitled to receive such dividend or
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other distribution shall be reduced by multiplying such conversion price by a
fraction of which the numerator shall be the number of shares of common stock
outstanding at the close of business on the date fixed for such determination
and the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
reduction to become effective immediately after the opening of business on the
day following the date fixed for such determination.
(2) With respect to any series of Securities that is
convertible into shares of the Company's common stock, in case the Company shall
issue rights or warrants to all or substantially all holders of its shares of
common stock entitling them to subscribe for or purchase shares of common stock
at a price per share (or having a conversion price per share) less than the
current market price per share (determined as provided in paragraph (6) of this
Section) of the shares of common stock on the date fixed for the determination
of shareholders entitled to receive such rights or warrants, the conversion
price for any series of Securities in effect at the opening of business on the
day following the date fixed for such determination shall be reduced by
multiplying such conversion price by a fraction of which the numerator shall be
the number of shares of common stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of common stock
which the aggregate of the subscription price of the total number of shares of
common stock so offered for subscription or purchase would purchase at such
current market price and the denominator shall be the number of shares of common
stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of common stock so offered for
subscription or purchase, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. In the event that all of the shares of common stock subject to
such rights or warrants have not been issued when such rights or warrants
expire, then the conversion price shall promptly be readjusted to the conversion
price which would then be in effect had the adjustment upon the issuance of such
rights or warrants been made on the basis of the actual number of shares of
common stock issued upon the exercise of such rights or warrants. For the
purposes of this paragraph (2), the number of shares of common stock at any time
outstanding shall not include shares held in the treasury of the Company but
shall include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of common stock. The Company will not issue any rights or
warrants in respect of shares of common stock held in the treasury of the
Company.
(3) With respect to any series of Securities that is
convertible into shares of the Company's common stock, in case the outstanding
shares of common stock shall be subdivided into a greater number of shares, the
conversion price for any series of Securities in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely, in case outstanding
shares of common stock shall each be combined into a smaller number of shares,
the conversion price for any series of Securities in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
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(4) With respect to any series of Securities that is
convertible into shares of the Company's common stock, in case the Company
shall, by dividend or otherwise, distribute to all or substantially all holders
of shares of common stock evidences of indebtedness or assets (including
securities, but excluding (i) any rights or warrants referred to in paragraph
(2) of this Section, (ii) any dividend or distribution not prohibited by Section
4.06 hereof and (iii) any dividend or distribution referred to in paragraph (1)
of this Section), the conversion price for any series of Securities shall be
adjusted so that the same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the close of business on the day
fixed for the determination of shareholders entitled to receive such
distribution by a fraction of which the numerator shall be the current market
price per share (determined as provided in paragraph (6) of this Section) of the
shares of common stock on the date fixed for such determination less the then
fair market value as determined by the Board of Directors of the Company (whose
determination shall be conclusive and described in a resolution of the Board of
Directors of the Company filed with the Trustee) of the portion of the assets or
evidences of indebtedness so distributed allocable to one share of common stock
and the denominator shall be such current market price per share of the shares
of common stock, such adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for the determination of
shareholders entitled to receive such distribution.
(5) With respect to any series of Securities that is
convertible into shares of the Company's common stock, in case the shares of
common stock shall be changed into the same or a different number of shares of
any class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination of
shares or a stock dividend described in paragraph (1) or paragraph (3) of this
Section, or a consolidation, merger or sale of assets described in Section
10.10), then and in each such event the Holders of Securities of any series
shall have the right thereafter to convert such Securities into the kind and
amount of shares of stock and other securities and property receivable upon such
reorganization, reclassification or other change, by holders of the number of
shares of common stock into which such Securities might have been converted
immediately prior to such reorganization, reclassification or change.
(6) For the purpose of any computation under paragraphs (2)
and (4) of this Section, the current market price per share of common stock on
any date shall be deemed to be the average of the Closing Prices for the 15
consecutive Business Days selected by the Company commencing not more than 30
and not less than 20 Business Days before the date in question.
(7) No adjustment in the conversion price for the Securities
of any series shall be required unless such adjustment (plus any adjustments not
previously made by reason of this paragraph (7)) would require an increase or
decrease of at least 1% in such price; provided, however, that any adjustments
which by reason of this paragraph (7) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this paragraph (7) shall be made to the nearest cent.
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(8) The Company may, but shall not be required to, make such
reductions in the conversion price for the Securities of any series, in addition
to those required by paragraph (1), (2), (3) and (4) of this Section, as the
Board of Directors of the Company considers to be advisable in order to avoid or
diminish any income tax to any holders of shares of common stock resulting from
any dividend or distribution of stock or issuance of rights or warrants to
purchase or subscribe for stock or from any event treated as such for income tax
purposes or for any other reasons. The Company's Board of Directors of the
Company shall have the power to resolve any ambiguity or correct any error in
the adjustments made pursuant to this Section 10.04 and its actions in so doing
shall be final and conclusive.
(9) The adjustments provided for in this Section 10.04 shall
be made successively whenever any event listed above shall occur.
SECTION 10.05 Notice of Adjustment of Conversion Price.
Whenever the conversion price for the Securities of any series
is adjusted as herein provided:
(a) the Company shall compute the adjusted
conversion price in accordance with Section 10.04 and shall prepare an Officers'
Certificate setting forth the adjusted conversion price and showing the facts
upon which such adjustment is based and the computation thereof, and such
certificate shall forthwith be filed at each office or agency maintained for the
purpose of conversion of Securities pursuant to Section 2.04 and with the
Trustee; and
(b) a notice stating that the conversion price
has been adjusted and setting forth the adjusted conversion price shall as soon
as practicable be mailed by the Company to all Holders of Securities of such
series at their last addresses as they shall appear in the Security Register.
(c) If the conversion price is adjusted and the
Company fails to file an Officers' Certificate with the Trustee as provided by
Section 10.05(a) and the Trustee is acting as the Conversion Agent, the Trustee
shall be entitled to rely conclusively on the conversion price set forth in the
Officer's Certificate most recently received by the Trustee (or as set forth in
this Indenture if the conversion price shall not have been adjusted).
SECTION 10.06 Notice of Certain Corporate Action.
(1) In case:
(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
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(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 shareholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company; or
(c) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Securities of any series pursuant to Section 2.04
and shall cause to be mailed to all Holders of Securities of such series that
are convertible into shares of the Company's common stock at their last
addresses as they shall appear in the Security Register, at least 20 days (or 10
days in any case specified in clause (a) or (b) above) prior to the applicable
record date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which the Holders
of shares of common stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of shares of common stock of record shall be
entitled to exchange their shares of common stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up. Such notice shall also state
whether such transaction will result in any adjustment in the conversion price
applicable to the Securities of such series and, if so, shall state what the
adjusted conversion price will be and when it will become effective. Neither the
failure to give the notice required by this Section, nor any defect therein, to
any particular Holder shall affect the sufficiency of the notice or the legality
or validity of any such dividend, distribution, right, warrant,
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding-up, or the vote on any action authorizing such with
respect to the other Holders.
(2) In case the Company or any Affiliate of the Company shall
propose to engage in a "Rule 13e-3 Transaction" as defined in the Commission's
Rule 13e-3 under the Exchange Act, the Company shall, no later than the date on
which any information with respect to such Rule 13e-3 Transaction is first
required to be given to the Commission or any other Person pursuant to such Rule
13e-3, cause to be mailed to all Holders at their last addresses as they shall
appear in the Security Register, a copy of all information required to be given
to the holders of the Company's Capital Stock pursuant to such Rule 13e-3. The
information required to be given under this paragraph shall be in addition to
and not in lieu of any other information required to be given by the Company
pursuant to this Section 10.06 or any other provision of the Securities or this
Indenture.
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SECTION 10.07 Taxes on Conversions.
The Company will pay any and all stamp or similar taxes that
may be payable in respect of the issuance or delivery of shares of common stock
or Securities of another series on conversion of Securities pursuant hereto. The
Company shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of shares of
common stock in a name other than that of the Holder of the Security or
Securities to be converted, and no such issuance or delivery shall be made
unless and until the Person requesting such issuance has paid to the Company the
amount of any such tax, or has established to the satisfaction of the Company
that such tax has been paid.
SECTION 10.08 Fractional Shares.
No fractional shares or scrip representing fractional shares
shall be issued upon any conversion of Securities. If any such conversion would
otherwise require the issuance of a fractional share an amount equal to such
fraction multiplied by the current market price per share of common stock
(determined as provided in paragraph (6) of Section 10.04) on the day of
conversion shall be paid to the Holder in cash by the Company.
SECTION 10.09 Cancellation of Converted Securities.
All Securities delivered for conversion shall be delivered to
the Trustee or the Conversion Agent to be canceled by or at the direction of the
Trustee or the Conversion Agent, which shall dispose of the same as provided in
Section 2.10.
SECTION 10.010 Provisions in Case of Consolidation, Merger or Sale of Assets.
(1) In case of any consolidation of the Company with, or
merger of the Company into, any other corporation or trust, or in case of any
merger of another corporation or trust into the Company (other than a
consolidation or merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of common stock of
the Company), or in case of any sale or transfer of all or substantially all of
the assets of the Company, the corporation or trust formed by such consolidation
or resulting from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Trustee a supplemental indenture providing that
the Holder of each Security of any series then outstanding shall have the right
thereafter, during the period such Security shall be convertible as specified in
Section 10.01 to convert such Security only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer by a holder of the number of shares of common stock of the
Company into which such Security might have been converted immediately prior to
such consolidation, merger, sale or transfer. Such supplemental indenture shall
provide for adjustments which, for events subsequent to the effective date of
such supplemental indenture, shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Article. The above provisions of this
Section shall similarly apply to successive consolidations, mergers, sales or
transfers.
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(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 shall not at any time be under any duty or
responsibility to any Holder of Securities of any series to determine whether
any facts exist which may require any adjustment of the conversion price for
such series, or with respect to the nature or extent of any such adjustment when
made, or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. The Trustee shall not be
accountable with respect to the validity, value, kind or amount of any shares of
common stock, or of any securities or property, which may at any time be issued
or delivered upon the conversion of any Security; and it makes no representation
with respect thereto. The Trustee shall not be responsible for any failure of
the Company to issue, transfer or deliver any shares of common stock or stock
certificates or other securities or property upon the surrender of any Security
for the purpose of conversion or, subject to Section 7.01, to comply with any of
the covenants of the Company contained in this Article.
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 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.
ARTICLE 11
SUBORDINATION; SENIORITY
SECTION 11.01 Securities Subordinated to Senior Indebtedness.
(a) Securities of any series which by their terms are
subordinated and junior in right of payment of the principal of, premium, if
any, and interest (all of the foregoing, a
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"Payment or Distribution") on such Securities ("Junior Securities") to the prior
payment in full of any Senior Indebtedness whether outstanding on the date
hereof or hereafter created, incurred, assumed or guaranteed, shall comply with
the provisions of this Article 11, and each Holder of Junior Securities of such
series by his acceptance thereof likewise agrees.
A Payment or Distribution shall include any asset of any kind
or character, and may consist of cash, securities or other property, by set-off
or otherwise, and shall include, without limitation, any purchase, redemption or
other acquisition of Junior Securities of the series or the making of any
deposit of funds or securities pursuant to this Indenture (including, without
limitation, any deposit pursuant to Article 8 hereof).
(b) The Senior Indebtedness of the Company shall continue to
be Senior Indebtedness and entitled to the benefit of these subordination
provisions irrespective of any amendment, modification or waiver of any term of
any instrument relating to refinancing of the Senior Indebtedness.
(c) All the provisions of this Indenture and the Junior
Securities of any series shall be subject to the provisions of this Article 11
so far as they may be applicable thereto, except that nothing in this Article 11
shall apply to claims for, or payments to, the Trustee under or pursuant to
Section 7.07.
(d) No right of any holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time or in any way be
affected or impaired by any failure to act on the part of the Company, any
Paying Agent, the Holders of the Junior Securities of any series, the Trustee or
the holders of the Senior Indebtedness, or by any noncompliance by the Company,
any Paying Agent, the Holders of the Junior Securities of any series or the
Trustee with any of the terms, provisions and covenants of the Securities or
this Indenture, regardless of any knowledge thereof that any such holder of
Senior Indebtedness may have or be otherwise charged with.
(e) In the event that the Junior Securities of any series are
declared due and payable before their expressed maturity because of the
occurrence of a default hereunder, the Company will give prompt notice in
writing of such happening to the holders of Senior Indebtedness.
SECTION 11.02 Company Not to Make Payments with Respect to Junior Securities in
Certain Circumstances.
No Payment or Distribution shall be made by the Company, the
Trustee or the Paying Agent on account of principal of (or premium, if any) or
interest on the Junior Securities of any series, whether upon stated maturity,
upon redemption or acceleration, or otherwise, or on account of the purchase or
other acquisition of Junior Securities of such series, whether upon stated
maturity, upon redemption or acceleration, or otherwise, if there shall have
occurred and be continuing a default with respect to any Senior Indebtedness
permitting the acceleration
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thereof or with respect to the payment of any Senior Indebtedness and (a) such
default is the subject of a judicial proceeding or (b) notice of such default in
writing or by telegram has been given to the Company by any holder or holders of
any Senior Indebtedness, unless and until the Company shall have received
written notice from such holder or holders that such default or event of default
shall have been cured or waived or shall have ceased to exist.
Upon any acceleration of the principal of the Junior
Securities of any series or any payment by the Company or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, to creditors upon any dissolution or winding up or liquidation or
reorganization of the Company, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due or to
become due upon all Senior Indebtedness shall first be paid in full in cash, or
payment thereof provided for to the satisfaction of the holders thereof, before
any Payment or Distribution is made on account of the redemption price or
principal of (and premium, if any) or interest on the Junior Securities of such
series; and (subject to the power of a court of competent jurisdiction to make
other equitable provision, which shall have been determined by such court to
give effect to the rights conferred in this Article upon the Senior Indebtedness
and the holders thereof with respect to the Junior Securities of such series or
the Holders thereof or the Trustee, by a lawful plan of reorganization or
readjustment under applicable law) upon any such dissolution or winding up or
liquidation or reorganization, any Payment or Distribution by the Company or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Junior Securities of any
series or the Trustee would be entitled except for the provisions of this
Article, shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such Payment or Distribution
directly to the holders of Senior Indebtedness of the Company or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness in full in cash, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness, before any Payment or Distribution is made to the Holders of the
Securities of such series or to the Trustee, except that the Trustee will have a
lien for the payment of its fees and expenses.
In the event that, notwithstanding the foregoing, any Payment
or Distribution by the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee or the Holders of the Junior Securities of any series before all Senior
Indebtedness is paid in full in cash, or provision is made for such payment to
the satisfaction of the holders thereof, and if such fact shall then have been
or thereafter be made known to a Trust Officer of the Trustee or, as the case
may be, such Holder, then and in such event such Payment or Distribution shall
be paid over or delivered to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, for application
to the payment of all Senior Indebtedness remaining unpaid to the extent
necessary to pay all Senior Indebtedness in full in cash, after giving effect to
any concurrent Payment or Distribution to or for the holders of such
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Senior Indebtedness, and, until so delivered, the same shall be held in trust by
any Holder of a Junior Security as the property of the holders of Senior
Indebtedness.
The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution of the Company
following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided in Article Five shall not be deemed a dissolution, winding
up, liquidation or reorganization for the purposes of this Section if such other
Person shall, as a part of such consolidation, merger, conveyance or transfer,
comply with the conditions stated in Article Five. Nothing in this Section shall
apply to claims of, or payments to, the Trustee under or pursuant to Section
7.07.
The holders of Senior Indebtedness may, at any time and from
time to time, without the consent of or notice to the Holders of the Junior
Securities of any series, without incurring responsibility to the Holders of the
Junior Securities of such series and without impairing or releasing the
obligations of the Holders of the Junior Securities of such series hereunder to
the holders of Senior Indebtedness: (i) change the manner, place or terms of
payment or change or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend in any manner Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of Senior Indebtedness; and/or
(iv) exercise or refrain from exercising any rights against the Company and any
other Person.
SECTION 11.03 Subrogation of Junior Securities.
Subject to the payment in full in cash of all amounts then due
(whether by acceleration of the maturity thereof or otherwise) on account of all
Senior Indebtedness at the time outstanding, the Holders of the Junior
Securities of any series shall be subrogated to the rights of the holders of
Senior Indebtedness to receive Payments or Distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal of (and premium, if any) and interest on the Securities shall be paid
in full; and, for the purposes of such subrogation, no Payments or Distributions
to the holders of Senior Indebtedness to which the Holders of the Junior
Securities of any series or the Trustee would be entitled except for the
provisions of this Article, and no payments over pursuant to the provisions of
this Article to the holders of Senior Indebtedness by Holders of the Junior
Securities of any series or the Trustee, shall, as between the Company, the
Company's creditors other than holders of Senior Indebtedness, and the Holders
of the Junior Securities of such series, be deemed to be a payment by the
Company to or on account of the Senior Indebtedness. It is understood that the
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Junior Securities of any
series, on the one hand, and the holders of Senior Indebtedness, on the other
hand.
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Nothing contained in this Article or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company, its creditors other than the holders of Senior Indebtedness, and the
Holders of the Securities of each series, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the Securities of any
series the principal of (and premium, if any) and interest on the Securities of
such series as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders of the Junior Securities of any series and creditors of the Company
other than the holders of Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or the Holder of any Junior Security of any series
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article of the
holders of Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee, subject to the provisions of Section
7.01, and the Holders of the Junior Securities of any series shall be entitled
to rely upon any order or decree made by any court of competent jurisdiction in
which any dissolution, winding up, liquidation or reorganization proceedings are
pending, or certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or distribution, delivered to
the Trustee or to the Holders of the Junior Securities of such series, for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 11.04 Authorization by Holders of Junior Securities.
Each holder of a Junior Security of any series by his
acceptance thereof authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate, as between the Holder
of the Junior Security and the holders of Senior Indebtedness, the subordination
provided in this Article and appoints the Trustee his attorney-in-fact for any
and all such purposes including, without limitation, to execute, verify, deliver
and file any proofs of claim which any holder of Senior Indebtedness may at any
time require in order to prove and realize upon any rights or claims pertaining
to the Securities and to effectuate the full benefit of the subordination
contained herein. Upon failure of the Trustee so to do, any such holder of
Senior Indebtedness shall be deemed to be irrevocably appointed the agent and
attorney-in-fact of the Holder to execute, verify, deliver and file any such
proofs of claim.
SECTION 11.05 Notices to Trustee.
The Company shall give prompt written notice to the Trustee of
any fact known to it which would prohibit the making of any payment of moneys to
or by the Trustee in respect of the Junior Securities of any series pursuant to
the provisions of this Article. Notwithstanding the provisions of this Article
or any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
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<PAGE> 56
payment of moneys to or by the Trustee in respect of the Junior Securities of
any series pursuant to the provisions of this Article, unless and until a Trust
Officer of the Trustee shall have received at its Corporate Trust Office written
notice thereof from the Company or a holder or holders of Senior Indebtedness or
from any trustee or agent therefor; and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of Section 7.01, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if a Trust Officer of the Trustee shall not have received at least three
Business Days prior to the date upon which by the terms hereof any such moneys
may become payable for any purpose (including, without limitation, the payment
of the principal of (premium, if any) or interest on any Junior Security of any
series) with respect to such moneys the notice provided for in this Section,
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have the full power and authority to receive such moneys and to apply the
same to the purpose for which they were received and shall not be affected by
any notice to the contrary which may be received by it within three Business
Days prior to such date.
The Trustee shall be entitled to rely conclusively on the
delivery to it of a written notice by a Person representing himself to be a
holder of Senior Indebtedness (or a trustee on behalf of such holder) to
establish that such notice has been given by a holder of Senior Indebtedness or
a trustee or agent on behalf of any such holder. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness to participate in any
payment or distribution pursuant to this Article, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 11.06 Trustee's Relation to Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article in respect of any Senior Indebtedness
at any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in Section 7.11 or elsewhere in this Indenture shall
deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not owe
any fiduciary duty to the holders of Senior Indebtedness and shall not be liable
to any such holder if it shall mistakenly pay over or distribute to Holders of
the Junior Securities of any series or the Company or any other Person money or
assets to which any holder of Senior Indebtedness shall be entitled by virtue of
this Article or otherwise.
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<PAGE> 57
SECTION 11.07 No Impairment of Subordination.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company, the Trustee or the Holder of any of the Securities of any series or
by any act, or failure to act, in good faith, by any such holder of Senior
Indebtedness, or by any noncompliance by the Company, the Trustee or the Holder
of any of the Securities of any series with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof which any such holder may
have or otherwise be charged with.
SECTION 11.08 Article 11 Not To Prevent Events of Default.
The failure to make a payment on account of principal of
(premium, if any) or interest on the Junior Securities of any series by reason
of any provision in this Article 11 shall not be construed as preventing the
occurrence of an Event of Default with respect to such series under Section
6.01.
SECTION 11.09 Paying Agents other than the Trustee.
In any case at any time any Paying Agent other than the
Trustee shall have been appointed by the Company and be then acting hereunder,
the term "Trustee" as used in this Article 11 shall in such case (unless the
context shall otherwise require) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article 11 in addition to or in place of the
Trustee.
SECTION 11.10 Securities Senior to Subordinated Indebtedness.
The indebtedness represented by the Securities of any series
will be senior and prior in right of payment to all Subordinated Indebtedness,
to the extent and in the manner provided in such Subordinated Indebtedness.
ARTICLE 12
SINKING FUND
SECTION 12.01 Mandatory and Optional Sinking Fund Payments.
The provisions of this Article shall be applicable to any
sinking fund for the retirement of Securities of any series, except as otherwise
permitted or required by any form of Security of a series issued pursuant to
this Indenture.
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<PAGE> 58
The minimum amounts of any sinking fund payments provided for
by the terms of Securities of any series are herein referred to as "mandatory
sinking fund payments", and any payments in excess of those minimum amounts
provided for by the terms of Securities of that series are herein referred to as
"optional sinking fund payments". If provided for by the terms of the Securities
of any series, the cash amount of any sinking fund payment may be subject to
reduction as provided in Section 12.02. Each sinking fund payment shall be
applied to the redemption of Securities of any series as provided for by the
terms of Securities of that series.
SECTION 12.02 Satisfaction of Sinking Fund Payments with Securities.
The Company may, in satisfaction of all or any part of any
sinking fund payment with respect to the Securities of any series, as provided
for by the terms of that series (1) deliver to the Holders of outstanding
Securities of that series (other than any of such Securities previously called
for redemption or any of such Securities by mandatory sinking fund payment in
respect of which cash shall have been released to the Company), (2) apply as a
credit Securities of that series which have been redeemed either at the election
of the Company pursuant to the terms of that series of Securities or through the
application of permitted optional sinking fund payments pursuant to the terms of
such Securities, provided that no Securities of such series have been previously
so credited and (3) apply as a credit Securities of that series which have been
converted or exchanged into shares of the Company's common stock or Securities
of another series pursuant to the terms of that series of Securities, provided
that such series of Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly. If as a result of the delivery or credit of Securities of any
series in lieu of cash payments pursuant to this Section, the principal amount
of Securities of that series to be redeemed in order to exhaust the aforesaid
cash payment shall be less than $100,000, the Trustee need not call Securities
of that series for redemption, except upon the request of the Company, and such
cash payment shall be held by the Trustee or a Paying Agent and applied to the
next succeeding sinking fund payment, provided, however, that the Trustee or
such Paying Agent shall at the request of the Company from time to time pay over
and deliver to the Company any cash payment so being held by the Trustee or such
Paying Agent upon delivery by the Company to the Trustee of Securities of that
series purchase by the Company having an unpaid principal amount equal to the
cash payment requested to be released to the Company.
SECTION 12.03 Redemption of Securities for Sinking Funds.
Not less than 60 days prior to each mandatory sinking fund
payment date for any series of Securities, the Company will deliver to the
Trustee an Officers' Certificate specifying the amount of the mandatory sinking
fund payment for that series pursuant to the terms of that series, the portion
thereof, if any, which is to be satisfied by payment of cash and the portion
thereof, if any, which is to be satisfied by delivery or credit of Securities
pursuant to Section 12.02 hereof, and the optional amount, if any, to be added
in cash to the mandatory sinking fund payment, and will also deliver to the
Trustee any Securities to be so credited and not theretofore
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<PAGE> 59
delivered. If such Officers' Certificate shall specify an optional amount to be
added in cash to the mandatory sinking fund payment, the Company shall thereupon
be obligated to pay the amount therein specified. Not less than 30 days before
each such sinking fund payment date the Trustee shall select the Securities to
be redeemed upon such sinking fund payment date in the manner specified in
Section 3.02 hereof and cause notice of the redemption thereof to be given in
the name of and at the expense of the Company in the manner provided in Section
3.03 hereof.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provisions shall control.
SECTION 13.02 Notices.
Any notices or other communications required or permitted
hereunder shall be in writing, and shall be sufficiently given if made by hand
delivery, or first class mail, postage prepaid (except that any notice by the
Trustee to the Company of a default or an Event of Default under this Indenture
shall be by registered or certified mail, postage prepaid, return receipt
requested), or by a nationally-recognized overnight express courier service
(which notices or communications shall be deemed received the business day after
the receipt thereof by such service), addressed as follows:
if to the Company:
Alternative Living Services, Inc.
450 North Sunnyslope Road
Suite 300
Brookfield, WI 53005
Attention: President
Telephone: (414) 789-9565
Facsimile: (414) 789-6677
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<PAGE> 60
if to the Trustee:
United States Trust Company of New York
114 West 47th Street,
25th Floor
New York, New York 10036
Attention: Corporate Trust Department
Telephone: (212) 852-1000
Facsimile: (212) ________
The Company or the Trustee by notice to the other may designate additional or
different addresses as shall be furnished in writing by either party. Any notice
or communication to the Company or the Trustee shall be deemed to have been
given or made as of the date so delivered if personally delivered, and five (5)
calendar days after mailing if sent by registered or certified mail (except that
a notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Securityholder shall
be mailed to the address of such Securityholder as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service,
or by reason of any other cause, it shall be impossible to mail any notice, as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
If the Company mails any notice or communication to
Securityholders, it shall mail a copy to the Trustee and all Agents at the same
time.
SECTION 13.03 Communications by Holders with Other Holders.
Securityholders of any series may communicate pursuant to TIA
ss.312(b) with other Securityholders of such series with respect to their rights
under this Indenture or the Securities of such series. The Company, the Trustee,
the Registrar and anyone else shall have the protection of TIA ss.312(c).
SECTION 13.04 Certificate and Opinion as to Conditions Precedent.
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<PAGE> 61
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 13.05) stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel (which shall include the statements
set forth in Section 13.05) stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
SECTION 13.05 Statements Required in Certificate and Opinion.
Each 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.
SECTION 13.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Registrar, Paying Agent or Conversion Agent may
make reasonable rules for its functions.
SECTION 13.07 Record Date.
Whenever the Company or the Trustee solicits an act of
Securityholders of any series, the Company or the Trustee may fix in advance of
the solicitation of such act a date as the record date for determining
Securityholders of such series entitled to perform said act. The record date
shall be not more than 15 days prior to the date fixed for the solicitation of
said act.
SECTION 13.08 Legal Holidays.
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<PAGE> 62
A "Legal Holiday" is a Saturday, a Sunday or a day on which
banks or trust companies in the city in which either the Trustee or the Company
is located are not required to be open. If a payment date is a Legal Holiday at
a place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
SECTION 13.09 Governing Law.
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE
AND THE SECURITIES WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 13.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 13.11 No Recourse Against Others.
No shareholder, director or officer, as such, past, present or
future, of the Company or of any successor corporation or trust shall have any
liability for any obligation of the Company under the Securities or the
Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of a Security of any series by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
SECTION 13.12 Successors.
All agreements of the Company in this Indenture and the
Securities shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 13.13 Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture.
Each signed counterpart shall be deemed an original, but all of them together
represent the same agreement.
SECTION 13.14 Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
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<PAGE> 63
SECTION 13.15 Severability.
In case any provision in this Indenture or in the Securities
of any series 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.
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<PAGE> 64
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.
By:
--------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By:
--------------------------------
Authorized Officer
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<PAGE> 1
EXHIBIT 5.1
[The following text appears as letterhead:
Rogers & Hardin
Attorneys At Law
A Limited Liability Partnership
2700 International Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303-1601
(404) 522-4700
FACSIMILE: (404) 525-2224]
November 26, 1997
Alternative Living Services, Inc.
450 N. Sunnyslope Road, Suite 300
Brookfield, Wisconsin 53005
RE: REGISTRATION STATEMENT ON FORM S-3 (REGISTRATION NO. 333-39705)
Ladies and Gentlemen:
At your request, we have examined the registration statement on Form
S-3 (the "Registration Statement") filed by you with the Securities and
Exchange Commission in connection with the registration under the Securities
Act of 1933, as amended, (the "Securities Act") of up to $325,000,000 aggregate
offering price of securities (the "Securities"), consisting of one or more
series of debt securities (the "Debt Securities"), one or more series of shares
of preferred stock, par value $.01 per share (the "Preferred Stock"), and
shares of common stock, par value $.01 per share (the "Common Stock"). We also
have examined the form of indenture by and between Alternative Living Services,
Inc. (the "Company") and United States Trust Company of New York, as trustee,
relating to the Debt Securities (the "Indenture").
In our capacity as your counsel in connection with such registration,
we are familiar with the proceedings taken and proposed to be taken by the
Company in connection with the authorization and issuance of the Securities
and, for the purposes of this opinion, have assumed such proceedings will be
timely completed in the manner presently proposed. In addition, we have made
such legal and factual examinations and inquiries, including an examination of
originals or copies certified or otherwise identified to our satisfaction of
such documents, corporate records and instruments, as we have deemed necessary
or appropriate for purposes of this opinion.
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity to authentic original documents of all documents submitted to us as
copies.
We are members of the Bar of the State of Georgia, and the opinions
given herein are limited to present laws of the State of Georgia and the
General Corporation Law of the State of Delaware (the "DGCL"). To the extent
that any opinion herein may relate to matters governed by the laws of any
jurisdiction other than the DGCL or the laws of the State of Georgia, we have
assumed with your consent for the purposes of such opinion that the laws of the
State of
<PAGE> 2
Alternative Living Services
November 26, 1997
Page 2
- ----------------------------
Georgia (other than with respect to conflicts of law) shall be controlling with
respect thereto. We shall have no continuing obligation to inform you of
changes in law or facts subsequent to the date hereof, or of facts of which we
become aware after the date hereof.
Subject to the foregoing and the other matters set forth herein, it is
our opinion that, as of the date hereof:
1. When the sale of any Debt Securities by the Company has been
authorized, when the Indenture shall be duly executed and
delivered by the Company, and such Debt Securities have been
authorized by the Board of Directors of the Company, and when
such Debt Securities have been established by the Indenture,
duly authenticated by the Trustee and executed and delivered
on behalf of the Company against payment therefor in
accordance with the terms and provisions of the Indenture and
as contemplated by the Registration Statement which shall
have become effective under the Securities Act, such Debt
Securities will constitute legally valid and binding
obligations of the Company.
2. When the sale of any Preferred Stock by the Company has been
authorized, and such Preferred Stock has been authorized by
the Company and when such Preferred Stock has been
established in accordance with the terms of the Company's
Restated Certificate of Incorporation, as amended, and
applicable law and, upon issuance, delivery and payment
therefor in the manner contemplated by the Registration
Statement which shall have become effective under the
Securities Act, such Preferred Stock will be validly issued,
fully paid and nonassessable.
3. When the sale of any Common Stock by the Company has been
authorized, including any Common Stock that may be issuable
pursuant to the conversion of any Debt Securities or
Preferred Stock by the Company, and when such Common Stock
has been authorized by the Company, and upon issuance,
delivery and payment therefor in the manner contemplated by
the Registration Statement which shall have become effective
under the Securities Act, such Common Stock will be validly
issued, fully paid and nonassessable.
This opinion rendered in paragraph 1 above is subject to the following
exceptions, limitations and qualifications: (i) the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to or affecting the rights and remedies of creditors; (ii)
the effect of general principles of equity, whether enforcement is considered
in a proceeding in equity or law, the discretion of the court before which any
proceeding therefor may be brought; and (iii) we express no opinion with
respect to whether acceleration of Debt Securities may affect the
collectibility of any portion of the stated principal amount thereof which
might be determined to constitute unearned interest thereon.
To the extent that the obligations of the Company under the Indenture
may be dependent upon such matters, we assume for purposes of this opinion that
the Trustee is duly organized,
<PAGE> 3
Alternative Living Services
November 26, 1997
Page 3
- ----------------------------
validly existing and in good standing under the laws of its jurisdiction of
organization; that the Trustee is duly qualified to engage in the activities
contemplated by the Indenture; that the Indenture has been duly authorized,
executed and delivered by the Trustee and constitutes the legally valid,
binding and enforceable obligation of the Trustee enforceable against the
Trustee in accordance with its terms; that the Trustee is in compliance,
generally with respect to acting as a trustee under the Indenture, with all
applicable laws and regulations; and that the Trustee has the requisite
organizational and legal power and authority to perform its obligations under
the Indenture.
We consent to your filing this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the prospectus included therein.
Very truly yours,
ROGERS & HARDIN
<PAGE> 1
EXHIBIT 12.1
ALTERNATIVE LIVING SERVICES, INC.
STATEMENTS REGARDING COMPUTATION OF EARNINGS TO FIXED CHARGES
FOR THE YEARS ENDED DECEMBER 31, 1992, 1993, 1994, 1995 AND 1996 AND
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
(In Thousands Except Ratios)
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
--------------------------------------------- ------------------
1992 1993 1994 1995 1996 1996 1997
--------------------------------------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Net loss from continuing operations $(130) $(180) $(643) $(1,746) $(7,811) $(6,211) $ (57)
Fixed charges 209 250 533 1,172 6,249 4,415 9,309
Capitalized interest -- -- -- (62) (491) (368) (2,865)
Equity in losses of unconsolidated affiliates -- -- 1 438 52 56 195
Minority interest in losses of consolidated
subsidiaries -- -- (49) (112) (76) (24) (4,758)
--------------------------------------------- ------------------
Total Earnings $ 79 $ 70 $(158) $ (310) $(2,077) $(2,132) $ 1,824
============================================= ==================
Fixed Charges:
Capitalized interest $ -- $ -- $ -- $ 62 $ 491 $ 368 $ 2,865
Lease expense(1) 182 194 232 297 2,018 1,296 3,564
Interest expense, net 27 56 301 813 3,740 2,751 2,880
--------------------------------------------- ------------------
Total Fixed Charges $ 209 $ 250 $ 533 $ 1,172 $ 6,249 $ 4,415 $ 9,309
============================================= ==================
Ratio of earnings to fixed charges -- -- -- -- -- -- --
============================================= ==================
Fixed charge deficiancy $ 130 $ 180 $ 691 $ 1,482 $ 8,326 $ 6,547 $ 7,485
============================================= ==================
</TABLE>
- --------------------------------
(1) Management estimates that one-third (1/3) of its lease expense
represents interest, and such amount is included in the calculation of
Fixed Charges.
<PAGE> 1
EXHIBIT 23.2
The Board of Directors
Alternative Living Services, Inc.
We consent to incorporation by reference in the registration statement on Form
S-3 (Amendment No. 1) (No. 333-39705) of our report dated February 21, 1997,
except for note 1, which is as of November 3, 1997, relating to the supplemental
consolidated financial statements of Alternative Living Services, Inc. and
subsidiaries as of December 31, 1996 and 1995 and for each of the years in the
three-year period ended December 31, 1996, which report appears in the Form
8-K/A of Alternative Living Services, Inc.
Our report dated February 21, 1997, except for Note 1, which is as of November
3, 1997, contains an explanatory paragraph that states that the supplemental
consolidated financial statements give retroactive effect to the merger of
Alternative Living Services, Inc. and Sterling House Corporation on October 23,
1997 which has been accounted for as a pooling-of-interests as described in note
1 to the supplemental consolidated financial statements. Generally accepted
accounting principles proscribe giving effect to a consummated business
combination accounted for by the pooling-of-interests method in financial
statements that do not include the date of consummation. These financial
statements do not extend through the date of consummation. However, they will
become the historical consolidated financial statements of Alternative Living
Services, Inc. and subsidiaries after financial statements covering the date of
consummation of the business are issued.
KPMG Peat Marwick LLP
Chicago, Illinois
November 25, 1997
<PAGE> 1
EXHIBIT 23.3
The Board of Directors
Alternative Living Services, Inc.:
We consent to the use of our report dated February 21, 1997, incorporated herein
by reference, with respect to the consolidated financial statements of
Alternative Living services, Inc., and subsidiaries as of December 31, 1996
and 1995 and for each of the years in the three-year period ended December 31,
1996 which report is incorporated by reference in the December 31, 1996, annual
report on Form 10-K (as amended as of May 12, 1997) of Alternative Living
Services, Inc., and to the reference included herein to our firm under the
heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Chicago, Illinois
November 25, 1997
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
--------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
--------------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
--------------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I. R. S. Employer
if not a U. S. national bank) Identification No.)
114 West 47th Street 10036
New York, New York (Zip Code)
(Address of principal
executive offices)
--------------------------
ALTERNATIVE LIVING SERVICES, INC.
(Exact name of OBLIGOR as specified in its charter)
Delaware 39-1771281
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
450 North Sunnyslope Road 53005
Suite 300 (Zip code)
Brookfield, Wisconsin
(Address of principal executive offices)
--------------------------
Debt Securities Issuable in Series
(Title of the indenture securities)
===============================================================================
<PAGE> 2
- 2 -
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Reserve Bank of New York (2nd District), New York, New
York (Board of Governors of the Federal Reserve System).
Federal Deposit Insurance Corporation, Washington, D. C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3,4,5,6,7,8,9,10,11,12,13,14 and 15.
Alternative Living Services, Inc. is currently not in default under
any of its outstanding securities for which United States Trust
Company of New York is Trustee. Accordingly, responses to Items 3, 4,
5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 of Form T-1 are not required
under General Instruction B.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by
the State of New York Banking Department to transact
business as a Trust Company, is incorporated by
reference to Exhibit T-1.1 to Form T-1 filed on
September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
<PAGE> 3
- 3 -
16. List of Exhibits
(cont'd)
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
T-1.4 -- The By-Laws of United States Trust Company of New
York, as amended, is incorporated by reference to
Exhibit T-1.4 to Form T-1 filed on September 15,
1995 with the Commission pursuant to the Trust
Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.6 -- The consent of the trustee required by Section
321(b) of the Trust Indenture Act of 1939, as
amended by the Trust Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the
trustee pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of November 25, 1997, the trustee had 2,999,020 shares of Common
Stock outstanding, all of which are owned by its parent company,
U.S. Trust Corporation. The term "trustee" in Item 2, refers to each of
United States Trust Company of New York and its parent company, U. S.
Trust Corporation.
In answering Item 2 in this statement of eligibility, as to matters
peculiarly within the knowledge of the obligor or its directors, the
trustee has relied upon information furnished to it by the obligor and
will rely on information to be furnished by the obligor and the
trustee disclaims responsibility for the accuracy or completeness of
such information.
---------------------
<PAGE> 4
- 4 -
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, United States Trust Company of New York, a corporation
organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in the City of New
York, and State of New York, on the 25th day of November, 1997.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
By: /s/ Gerard F. Ganey
------------------------------
Gerard F. Ganey
Senior Vice President
RFL/pg
<PAGE> 5
EXHIBIT T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of
1939, as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/ Gerard F. Ganey
--------------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE> 6
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
SEPTEMBER 30, 1997
($ IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and Due from Banks $ 116,582
Short-Term Investments 183,652
Securities, Available for Sale 691,965
Loans 1,669,611
Less: Allowance for Credit Losses 16,067
----------
Net Loans 1,653,544
Premises and Equipment 61,796
Other Assets 125,121
----------
TOTAL ASSETS $2,832,660
==========
LIABILITIES
Deposits:
Non-Interest Bearing $ 541,619
Interest Bearing 1,617,028
----------
Total Deposits 2,158,647
Short-Term Credit Facilities 365,235
Accounts Payable and Accrued Liabilities 141,793
----------
TOTAL LIABILITIES $2,665,675
==========
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 49,542
Retained Earnings 99,601
Unrealized Gains (Losses) on Securities
Available for Sale, Net of Taxes 2,847
----------
TOTAL STOCKHOLDER'S EQUITY 166,985
TOTAL LIABILITIES AND ----------
STOCKHOLDER'S EQUITY $2,832,660
==========
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory
authority and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
November 13, 1997
