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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: December 19, 1997
(Date of earliest event reported)
----------------------
ALTERNATIVE LIVING SERVICES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-11999 39-1771281
(State or other jurisdiction of (Commission file number) (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
450 N. SUNNYSLOPE ROAD, SUITE 300
BROOKFIELD, WISCONSIN 53005
(Address of principal executive offices)
(414) 789-9565
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On December 19, 1997, Alternative Living Services, Inc. (the "Company")
consummated the sale of 2,800,000 shares of its common stock, $.01 par value per
share (the "Common Stock"), and $125 million aggregate principal amount of its
5.25% Convertible Subordinated Debentures due 2002 (the "Debentures"), each
pursuant to underwritten public offerings. In connection therewith, the Company
received net proceeds (before deduction of expenses) of approximately
$183 million.
On January 2, 1998, the Company consummated the sale of an additional
$18.75 million aggregate principal amount of the Debentures as a result of the
exercise by the underwriters of the over-allotment option granted to them and,
in connection therewith, the Company received net proceeds (before deduction of
expenses) of approximately $18.3 million.
On January 15, 1998, the Company consummated the sale of an additional
420,000 shares of Common Stock as a result of the exercise by the underwriters
of the over-allotment option granted to them and, in connection therewith, the
Company received net proceeds (before deduction of expenses) of approximately
$9.2 million.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
1.1 Underwriting Agreement dated as of December 15, 1997 by and
between Alternative Living Services, Inc. and the Underwriters
identified on Schedule 1 thereto relating to the purchase and
sale of Common Stock.
1.2 Underwriting Agreement dated as of December 15, 1997 by and
between Alternative Living Services, Inc. and the Underwriters
identified on Schedule 1 thereto relating to the purchase and
sale of 5.25% Convertible Subordinated Debentures due 2002.
4.1 Indenture dated as of December 19, 1997 by and between
Alternative Living Services, Inc. and United States Trust
Company of New York, as Trustee (the "Indenture")
4.2 First Supplemental Indenture to the Indenture dated as of
December 19, 1997 between Alternative Living Services, Inc.
and United States Trust Company of New York, as Trustee.
4.3 Second Supplemental Indenture to the Indenture dated as of
January 2, 1998 between Alternative Living Services, Inc. and
United States Trust Company of New York, as Trustee.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: January 28, 1998
ALTERNATIVE LIVING SERVICES, INC.
-------------------------------------------
(Registrant)
By:/s/ THOMAS E. KOMULA
----------------------------------------
Thomas E. Komula, Senior Vice President,
Treasurer and Chief Financial Officer
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EXHIBIT INDEX
1.1 Underwriting Agreement dated as of December 15, 1997 by and between
Alternative Living Services, Inc. and the Underwriters identified on
Schedule 1 thereto relating to the purchase and sale of Common Stock.
1.2 Underwriting Agreement dated as of December 15, 1997 by and between
Alternative Living Services, Inc. and the Underwriters identified on
Schedule 1 thereto relating to the purchase and sale of 5.25%
Convertible Subordinated Debentures due 2002.
4.1 Indenture dated as of December 19, 1997 by and between Alternative
Living Services, Inc. and United States Trust Company of New York, as
Trustee (the "Indenture")
4.2 First Supplemental Indenture to the Indenture dated as of December 19,
1997 between Alternative Living Services, Inc. and United States Trust
Company of New York, as Trustee.
4.3 Second Supplemental Indenture to the Indenture dated as of January 2,
1998 between Alternative Living Services, Inc. and United States Trust
Company of New York, as Trustee.
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EXHIBIT 1.1
EXECUTION COPY
ALTERNATIVE LIVING SERVICES, INC.
2,800,000 SHARES OF COMMON STOCK*
UNDERWRITING AGREEMENT
December 15, 1997
SCHRODER & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
SMITH BARNEY INC.
COWEN & COMPANY
MCDONALD & COMPANY SECURITIES, INC.
as Representatives of the
several Underwriters
c/o Schroder & Co. Inc.
787 Seventh Avenue
5th Floor
New York, New York 10019
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 representatives (in such capacity, the "Representatives"), an
aggregate of 2,800,000 shares (the "Firm Securities") of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"). The Company has also
agreed to issue and sell pursuant to an option, subject to the terms and
conditions hereof, up to 420,000 additional shares of Common Stock. Any and all
shares of Common Stock 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
Company hereby confirms its agreement with the several Underwriters, as set
forth below. If you are the only Underwriters, all references herein to the
Representatives 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
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*/ Plus an option to purchase from the Company up to 420,000 shares to
cover over-allotments.
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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 $21.85 per share, the number of Firm Securities set forth
opposite the name of such Underwriter in Schedule 1 hereto. The Company shall
deliver, or cause to be delivered, to the Representatives 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 Representatives 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 wire
transfer of same-day funds. Such delivery of and payment for the Firm Securities
shall be made at the offices of Schroder & Co. Inc., 787 Seventh Avenue, 5th
Floor, New York, New York 10019 at 9:30 a.m., New York time, on December 19,
1997, or at such other place, time or date as the Representatives and the
Company may agree upon or as the Representatives may determine pursuant to
Section 8 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 Representatives 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 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 Representatives 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
Representatives 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 Representatives and the
Company may agree upon or as the Representatives 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 of the Option Securities as to which the
several Underwriters are then exercising the option, as such Underwriter is
obligated to purchase of the aggregate number of Firm Securities, as adjusted by
the Representatives 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
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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 and 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 you, individually and not as the
Representatives, 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. 333-39705), which has become effective, relating to shares of Common Stock,
certain debt securities and shares of the Company's Preferred Stock. The Company
has also filed 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 dated November 28, 1997 constituting a part of the Registration
Statement. The term "Prospectus" means the Basic Prospectus together with the
final 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 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,
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(ii) contained, contains and will contain, as the case may be, all statements
required to be stated therein in accordance with, and complied, complies and
will comply in all material respects with the requirements of, the Act, the
Exchange Act and the respective rules and regulations of the Commission
thereunder and (iii) did not, does not and will not, as the case may be, include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading. As of the date hereof,
and when the Prospectus is filed with the Commission pursuant to Rule 424(b), on
the date when the Prospectus is otherwise supplemented and on the Firm Closing
Date and any Option Closing Date, the Prospectus (as supplemented as of any such
time), (i) contains and will contain, as the case may be, all statements
required to be stated therein in accordance with, and complies and will comply
in all material respects with the requirements of, the Act, the Exchange Act and
the respective rules and regulations of the Commission thereunder and (ii) does
not and will not, as the case may be, include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing provisions of this paragraph (b) do not
apply to statements or omissions made in the Prospectus or the Registration
Statement or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein. The Company has not
distributed, and, prior to the later to occur of (i) the Closing Date or, if
later, the Option Closing Date and (ii) completion of the distribution of the
Securities, will not distribute, any offering material in connection with the
offering or sale of the Securities other than the Registration Statement, the
Prospectus or any other materials, if any, permitted by the Act.
iii) The Company's subsidiaries (excluding those subsidiaries
that do not own or operate, directly or indirectly, residences) are listed on
Schedule II hereto (the "Subsidiaries"). Except with respect to the
Subsidiaries, the Company does not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation or
have any equity interest in any firm, partnership, joint venture, association or
other entity (excluding those subsidiaries that do not own or operate, directly
or indirectly, residences). The Company is duly organized, validly existing and
in good standing under the laws of the State of Delaware. Each of the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the state of its incorporation or formation. The Company and each of the
Subsidiaries has full corporate or other power and authority to conduct all the
activities conducted by it, to own or lease all the properties and assets owned
or leased by it and to conduct its business as described in the Registration
Statement and the Prospectus. The Company and each of its Subsidiaries is duly
licensed or qualified to do business and in good standing as a foreign
corporation or partnership, as the case may be, in all jurisdictions in which
the nature of the activities conducted by it or the character of the properties
and assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to so qualify would not have a material
adverse effect on the Company and its Subsidiaries, taken as a whole. The
Company beneficially owns the percentage indicated on Schedule II hereto of the
outstanding equity interests in each of the Subsidiaries, free and clear of all
liens, security interests, restrictions, pledges, encumbrances, charges,
equities, claims, easements, assessments and tenancies (collectively,
"Encumbrances") other than Encumbrances described in the Registration Statement
and the Prospectus and other
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than those Encumbrances that do not materially affect the value of the equity
interests of such Subsidiaries as reflected in the consolidated financial
statements of the Company. All of the equity interests held by the Company in
each of the Subsidiaries have been duly authorized and are validly issued, fully
paid and nonassessable and were not issued in violation of any preemptive or
similar rights. Complete and correct copies of (i) the Restated Certificate of
Incorporation and the Restated Bylaws of the Company and all amendments thereto
and (ii) the organizational documents of each of the Subsidiaries and all
amendments thereto, have been made available to the Representatives or Stroock &
Stroock & Lavan LLP, counsel for the Underwriters, and no changes therein will
be made subsequent to the date hereof and prior to the Closing Date or the
Option Closing Date.
iv) The outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights arising by or through the Company. The shares to be issued and sold by
the Company are duly authorized and, upon such issuance and payment therefor in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable and are not the subject of any preemptive or similar rights
arising by or through the Company. The Company has, and upon completion of the
sale of the Shares will have, an authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus.
The description of the securities of the Company in the Registration Statement
and the Prospectus is complete and accurate in all material respects. Except as
set forth in the Registration Statement and the Prospectus, the Company does not
have outstanding any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into or exchangeable for, or
any contracts or commitments to issue or sell, any shares of its capital stock
or any such warrants, convertible securities or obligations. Except as described
below or as set forth in the Registration Statement and the Prospectus, no
person has any right to have any securities of the Company held by them
registered under the Act. All holders of securities of the Company who had a
right to register shares held by them as a result of the filing of the
Registration Statement have waived any such rights to the registration of any
securities of the Company.
v) The consolidated financial statements and the related
notes of the Company and its subsidiaries set forth or incorporated by reference
in the Registration Statement and the Prospectus present fairly the financial
condition of the Company and its subsidiaries as of the dates indicated and the
consolidated results of operations, stockholders' equity and cash flows of the
Company and its subsidiaries for the periods covered thereby, all in conformity
with generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the entire period involved. The supplemental consolidated
financial statements and related notes of the Company set forth or incorporated
by reference in the Registration Statement and Prospectus present fairly the
consolidated financial condition of the Company, Sterling House Corporation
("Sterling") and their respective subsidiaries and their respective subsidiaries
as of the dates indicated and the combined results of operations, stockholders'
equity and cash flows of the Company, Sterling and their respective subsidiaries
for the periods covered thereby, all in conformity with GAAP applied on a
consistent basis throughout the entire period involved. The selected
supplemental consolidated financial data for the Company, Sterling and their
respective
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subsidiaries set forth under the captions "Prospectus Summary--Summary
Supplemental Consolidated Financial and Other Data" and "Selected Supplemental
Consolidated Financial Data" in the Prospectus have been prepared on a basis
consistent with the historical consolidated financial statements of the Company.
The pro forma condensed combined financial information of the Company and the
related notes incorporated by reference in the Registration Statement and the
Prospectus comply in all material respects with the applicable requirements of
Rules 11-01 and 11-02 of Regulation S-X of the Commission and present fairly the
information shown therein; and the pro forma adjustments have been properly
applied to the historical amounts in the compilation of such statements. No
other financial statements or schedules of the Company and Sterling or any other
entity are required by the Act or the Rules and Regulations to be included in
the Registration Statement, any preliminary Prospectus or the Prospectus. KPMG
Peat Marwick LLP ("KPMG"), who have reported on certain of such financial
statements and schedules which are audited, are independent accountants with
respect to the Company and its subsidiaries, as required by the Act and the
Rules and Regulations.
vi) The Company and its Subsidiaries maintain a system of
internal accounting control sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization, (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain accountability
for assets, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
vii) Except as set forth or described in the Registration
Statement or the Prospectus, subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i) there
has not been, and will not have been, any material change in the capitalization
of the Company or any Subsidiary or any material adverse change in the business,
properties, prospects, condition (financial or otherwise), net worth or results
of operations of the Company and its Subsidiaries, taken as a whole, arising for
any reason whatsoever, (ii) neither the Company nor any of its Subsidiaries has
incurred, nor will it have incurred, any material liabilities or obligations,
direct or contingent, not in the ordinary course of business, (iii) neither the
Company nor any of its Subsidiaries has entered into, nor will it have entered
into any material transactions not in the ordinary course of business other than
pursuant to this Agreement, and (iv) neither the Company nor any Subsidiary has,
or will have, paid or declared any dividends or other distributions of any kind
on any class of its capital stock.
viii) The Company (either directly or through the
Subsidiaries) has good and indefeasible title to all properties and assets
described in the Registration Statement and Prospectus as owned by it, free and
clear of all Encumbrances other than those described in the Registration
Statement and Prospectus and other than those that do not materially adversely
affect the value of such properties and assets and do not materially interfere
with the use made or proposed to be made of such properties and assets. The
Company (either directly or through its Subsidiaries) has valid and subsisting
leasehold interests in the properties and assets described in the Registration
Statement and Prospectus as leased by it, free and clear of all Encumbrances,
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other than those described in the Registration Statement and Prospectus and
those that do not materially adversely affect the value of such properties and
assets and do not interfere with the use made, or proposed to be made, of such
properties and assets. Title insurance in favor of the Company or its
Subsidiaries (or, with respect to leased residences, in favor of its lessor) is
in full force and effect with respect to each parcel of real property and assets
thereon described in the Registration Statement and Prospectus (i) listed as
owned or leased by the Company (either directly or through its Subsidiaries) in
the chart captioned "Operating Residences" under the caption
"Business-Residences" and (ii) reflected as being under construction in the
chart captioned "Residences Under Construction or Development" under the caption
"Business-Residences" in amounts at least equal to the purchase price paid by
the Company or any Subsidiary for such property and assets thereon, except where
the failure to obtain such title insurance could not reasonably be expected to
have a material adverse effect on the business, properties, prospects, condition
(financial or otherwise), net worth or results of operations of the Company and
its Subsidiaries, taken as a whole. Except as set forth in the Registration
Statements and Prospectus, none of the mortgages encumbering any property owned
by the Company (either directly or through its Subsidiaries) (i) is convertible
into equity interests in the Company, any Subsidiary or any property owned by
the Company or any Subsidiary (other than such mortgaged property) or (ii)
cross-defaulted or cross-collateralized to any other property, except where such
cross-collateralization could not reasonably be expected to have a material
adverse effect on the business, properties, prospects, condition (financial or
otherwise), net worth or results of operations of the Company and its
Subsidiaries, taken as a whole.
ix) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms as defined in the Investment Company Act of
1940, as amended (the "Investment Company Act").
x) Except as set forth in the Registration Statement and
Prospectus, there are no actions, suits or proceedings pending or, to the
Company's knowledge, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective directors, officers or stockholders in
their capacity as such, or any of the properties or assets owned, leased or
operated by the Company or any of its Subsidiaries, before or by any Federal or
state court, commission, regulatory body, administrative agency or other
governmental body, domestic or foreign (collectively, a "Governmental Body"),
wherein an unfavorable ruling, decision or finding would have a material adverse
effect on the business, properties, prospects, condition (financial or
otherwise), net worth or results of operations of the Company and its
Subsidiaries, taken as a whole. There is no pending litigation or governmental
proceeding required to be described in the Registration Statement and the
Prospectus that is not described as required.
xi) Each of the Company and its Subsidiaries has all
governmental licenses, permits, consents, orders, approvals, franchises,
certificates and other authorizations (collectively, "Licenses") necessary to
carry on its business and own or lease its properties as contemplated in the
Registration Statement and Prospectus, except such Licenses, the failure to so
have would not have a material adverse effect on the business, properties,
prospects, condition (financial or otherwise), net worth or results of
operations of the Company and its Subsidiaries, taken as a whole. Each of the
Company and its Subsidiaries has complied in all material respects
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<PAGE> 8
with all laws, regulations and order applicable to it or its business, assets
and properties. Each of the Company and its Subsidiaries is not in breach or
default (nor has any event occurred which, with notice or lapse of time or both,
would constitute a default) in the due performance and observation of any term,
covenant or condition of any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument (collectively, a
"contract or other agreement") to which it is a party or by which its properties
are bound or affected, which default could reasonably be expected, individually
or in the aggregate, to have a material adverse effect on the business,
properties, prospects, condition (financial or otherwise), net worth or results
of operations of the Company and its Subsidiaries, taken as a whole. To the best
knowledge of the Company, no other party under any such contract or other
agreement is in default in any respect thereunder which default could reasonably
be expected, individually or in the aggregate, to have a material adverse effect
on the business, properties, prospects, condition (financial or otherwise), net
worth or results of operations of the Company and its Subsidiaries, taken as a
whole. Except as otherwise described in the Registration Statement and
Prospectus, there are no governmental proceedings or actions pending or, to the
Company's knowledge, threatened for the purpose of suspending, modifying or
revoking any License held by the Company or any of its Subsidiaries which could
reasonably be expected, individually or in the aggregate, to have a material
adverse effect on the business, properties, prospects, condition (financial or
otherwise), net worth or results of operations of the Company and its
Subsidiaries, taken as a whole. The Company is not in violation of any provision
of its Restated Certificate of Incorporation or Restated Bylaws, as amended.
None of the Subsidiaries is in violation of its organizational documents, as
amended.
xii) No consent, approval, authorization or order of, or any
filing or declaration with, any Governmental Body is required for the
consummation of the transactions contemplated by this Agreement or in connection
with the issuance and sale of the shares by the Company, except such as have
been obtained under the Act or the Rules and Regulations.
xiii) The Company has full power and authority to enter into
this Agreement and to carry out all the terms and provisions hereof to be
carried out by it. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with the terms
hereof. The execution, delivery and the performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
creation or imposition of any Encumbrance upon any of the properties or assets
of the Company or any of its Subsidiaries pursuant to the terms or provisions
of, or result in a breach or violation of or conflict with any of the terms or
provisions of, or constitute a default under, or give any other party a right to
terminate any of its obligations under, or result in the acceleration of any
obligation under, (i) the Restated Certificate of Incorporation or Restated
Bylaws of the Company, in each case as amended, (ii) the organizational or
charter documents of any of the Subsidiaries, as amended, (iii) any contract or
other agreement to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective assets
or properties are bound or affected, or (iv) any judgment, ruling, decree,
order, law, statute, rule or regulation of any Governmental Body applicable to
the Company or any of its Subsidiaries or
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<PAGE> 9
their business or properties, except, in the case of clauses (iii) and (iv), any
violation which could not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the business, properties,
prospects, condition (financial or otherwise), net worth or results of
operations of the Company and its Subsidiaries, taken as a whole. The Company
has full power and authority to authorize, issue, offer and sell the shares to
be sold by it, as contemplated by this Agreement, free of any preemptive or
similar rights.
xiv) There is no document or contract of a character
required to be described in the Registration Statement or Prospectus or in any
document incorporated by reference therein, or to be filed as an exhibit to the
Registration Statement, which is not described or filed as required.
xv) No statement, representation, warranty or covenant made
by the Company in this Agreement or made in any certificate or document required
by this Agreement to be delivered to the Representatives is or will be, when
made, inaccurate, untrue or incorrect.
xvi) Neither the Company nor any of its directors, officers
or affiliates (within the meaning of the Rules and Regulations) has taken, nor
will he, she or it take, directly or indirectly, any action designed, or which
might reasonably be expected in the future to cause or result in, under the Act
or otherwise, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares or otherwise.
xvii) The Securities have been approved for listing on the
American Stock Exchange, Inc. (the "AMEX"), subject only to notice of issuance.
xviii) Neither the Company nor any of its Subsidiaries is
involved in any labor dispute with its employees which could reasonably be
expected, individually or in the aggregate, to have a material adverse effect on
the business, properties, prospects, condition (financial or otherwise), net
worth or results of operations of the Company and its Subsidiaries, taken as a
whole nor, to the Company's knowledge, is any such dispute threatened or
imminent.
xix) Each of the Company and its Subsidiaries owns, or is
licensed or otherwise has the right to use, all material trademarks and trade
names which are used in or necessary for the conduct of its business as
described in the Registration Statement and Prospectus. To the Company's
knowledge, no claims have been asserted by any person to the use of any such
trademarks or trade names or challenging or questioning the validity or
effectiveness of any such trademark or trade name. The use of such trademarks
and trade names in connection with the business and operations of the Company
and its Subsidiaries does not, to the Company's knowledge, infringe on the
rights of any person.
xx) Neither the Company nor any of its Subsidiaries nor any
employee or agent of the Company or any Subsidiaries has made any payment of
funds of the Company or any Subsidiary or received or retained any funds of the
Company or any Subsidiary in violation of any law, rule or regulation or of a
character required to be disclosed in the Registration Statement and Prospectus
or in a document incorporated by reference.
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<PAGE> 10
xxi) The Company and its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; and the Company has no reason to believe that it and its
Subsidiaries will not be able to renew their existing insurance coverage as and
when such coverage expires.
xxii) The business, operations and facilities of the Company
and its Subsidiaries have been and are being conducted in compliance in all
material respects with all applicable laws, ordinances, rules, regulations,
Licenses, permits, approvals, plans, authorizations or requirements relating to
occupational safety and health, or pollution, or protection of health or the
environment (including, without limitation, those relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants or
hazardous or toxic substances, materials or wastes into ambient air, surface
water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
chemical substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes, whether solid, gaseous or liquid in nature) of any
governmental department, commission, board, bureau, agency or instrumentality of
the United States or any state or political subdivision thereof, and all
applicable judicial or administrative agency or regulatory decrees, awards,
judgments and orders relating thereto; and none of the Company or any of its
Subsidiaries has received any notice from any governmental instrumentality or
any third party alleging any violation thereof or liability thereunder
(including, without limitation, liability for costs of investigating or
remediating sites containing hazardous substances and/or damages to natural
resources), which violation would have, or could reasonably be expected to have,
a material adverse effect on the business, properties, prospectus, condition
(financial or otherwise), net worth or results of operations of the Company and
its Subsidiaries, taken as a whole. The intended use and occupancy of each of
the facilities owned or operated by the Company or any of its Subsidiaries
complies in all material respects with applicable codes and zoning laws and
regulations and there is no pending or, to the knowledge of the Company,
threatened condemnation, zoning change, environmental or other proceeding or
action that will in any material respect adversely affect the size of, use of,
improvements on, construction on, or access to such facilities.
xxiii) The Company and each of its Subsidiaries has filed all
foreign, federal, state and local tax returns that are required to be filed or
has requested extensions thereof and has paid all taxes required to be paid by
it and any other assessment, fine or penalty levied against it, to the extent
due and payable, except where such failure to file or pay could not reasonably
be expected, individually or in the aggregate, to have a material adverse effect
on the business, properties, prospects, condition (financial or otherwise), net
worth or results of operations of the Company and its subsidiaries, taken as a
whole.
xxiv) Each executive officer and director of the Company has
delivered or prior to the Closing Date will deliver, to Schroder & Co. Inc. an
agreement (the "Lockup Agreement") in the form of Exhibit C attached hereto.
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<PAGE> 11
xxv) Each certificate signed by an officer of the Company and
delivered to the Representatives or counsel for the Underwriters shall be deemed
to be a representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
xxvi) None of the Company, any Subsidiary or any affiliate
thereof does business with the government of Cuba or with any person or
affiliate located in Cuba and the Company and each Subsidiary has complied to
the extent necessary with the provisions of Florida H.B. 1771.
3. Representations and Warranties of the Underwriters. Upon your
authorization of the release of the Firm Shares, the several Underwriters
propose to offer the Firm Shares for sale to the public upon the terms set forth
in the Prospectus.
4. Agreements. (a) The Company covenants and agrees with each of the
Underwriters that:
i) Subject to the next sentence, the Company has filed, or
shall file in a timely manner in accordance with Rule 424 under the Act, 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 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 Representatives 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 Representatives
shall not have given their consent. The Company will advise the Representatives,
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
Representatives of each such filing or effectiveness.
ii) The Company will advise the Representatives, 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.
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<PAGE> 12
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 Representatives 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 Representatives
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
Representatives 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
Representatives may reasonably request.
vi) The Company, as soon as practicable, will make generally
available to its security holders and to the Representatives 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 will be listed on the American Stock
Exchange, subject to notice of issuance.
viii) The Company and its executive officers and directors
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
Schroder & Co., Inc. (other than the issuance by the Company of Common Stock
upon exercise of outstanding options and grants of employee stock options or
upon conversion of the Company's outstanding debentures).
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<PAGE> 13
ix) Concurrently with the sale of the Securities hereunder,
the Company is offering $125,000,000 aggregate principal amount of Convertible
Subordinated Debentures pursuant to an underwritten public offering (the
"Concurrent Offering"). The consummation of the Concurrent Offering is not a
condition to the consummation of the sale of the Securities hereunder and the
consummation of the sale of the Securities is not a condition to the
consummation of the Concurrent Offering. The Company intends to use the net
proceeds from the sale of the Securities sold by it hereunder, together with the
net proceeds of the Concurrent Offering, if any, as set forth under "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, including transfer
agent's and registrar's fees, (v) the qualification 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, (vii) the listing 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 Section 6 hereof is not satisfied, because this Agreement is
terminated pursuant to Section 10(i) hereof because trading in the Common Stock
has been suspended by the Commission or because of any failure, refusal or
inability on the part of the Company to perform all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder other than by
reason of a default by any of the Underwriters, the Company will reimburse the
Underwriters upon demand for all out-of-pocket expenses (including reasonable
fees and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities. The Company
shall not in any event be liable to any of the Underwriters for the loss of
anticipated profits from the transactions covered by this Agreement.
6. Conditions to the Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy in all
material respects of the representations and warranties of the Company contained
herein as of the date hereof and as of the Firm Closing Date as if made on and
as of the Firm Closing Date, to the accuracy in all material respects of the
statements of the Company's officers made pursuant to the provisions hereof, to
the performance by the Company of its covenants and agreements hereunder and to
the following additional conditions:
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<PAGE> 14
(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 Representatives, 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 Representatives shall have received an opinion, dated
the Firm Closing Date, of Rogers & Hardin LLP, to the effect set forth in
Exhibit A hereto.
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 is not admitted to practice, to the
extent satisfactory to counsel for the Underwriters, upon the opinion of local
counsel in such jurisdictions and in the case of the opinion described in this
section 6(b) 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 Representatives 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 date it became
effective 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.
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<PAGE> 15
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 Representatives shall have received an opinion, dated
the Firm Closing Date, of Stroock & Stroock & Lavan LLP, 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
Representatives 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.
(d) The Representatives shall have received one or more
opinions, dated the Closing Date and the Option Closing Date, from regulatory
counsel for the Company in each of the States listed on Exhibit B-1, which
counsel shall be acceptable to the Underwriters, each such opinion to relate to
matters involving health care licensing and to be substantially in the form
attached hereto as Exhibit B-2 or in such other form as is satisfactory to
counsel for the Underwriters.
(e) The Representatives 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 Representatives, to
the effect that:
i) they are independent accountants with respect
to the Company and its consolidated subsidiaries within the meaning of
the Act, the Exchange Act and the applicable rules and regulations
thereunder;
ii) in their opinion, the audited consolidated
financial statements and schedules examined by them and included in the
Registration Statement and the Prospectus comply in form and in all
material respects with the applicable accounting requirements of the
Act, the Exchange Act and the related published rules and regulations
thereunder;
iii) on the basis of a reading of the latest
available interim unaudited consolidated financial statements of the
Company and its consolidated subsidiaries, carrying out certain
specified procedures (which do not constitute an audit made in
accordance with generally 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
stockholders, 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 stockholders' equity of the Company and
its consolidated subsidiaries, in each case compared with amounts shown
on the September 30, 1997 consolidated balance
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<PAGE> 16
sheet included by incorporation by reference to the Company's Report on
Form 10-Q for the fiscal quarter ended September 30, 1997 in the
Registration Statement and the Prospectus, or for the period from
October 1, 1997 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 September 30, 1997, 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
Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Securities as contemplated by the Registration Statement, as amended as of the
date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (e) with respect to either letter referred to above shall include any
amendment thereto at the date of such letter.
(f) The Representatives 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;
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<PAGE> 17
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 and 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, taken as
whole, except in each case as described in or contemplated by the
Prospectus (exclusive of any amendment or supplement thereto after the
date hereof).
(g) On or before the Firm Closing Date, the Representatives
and counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
(h) The Securities shall have been accepted for listing on the
American Stock Exchange.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives 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
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<PAGE> 18
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 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 a 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 Representatives
specifically for use therein and provided, further, that the Company will not be
liable to any underwriter or any person controlling such underwriter with
respect to any such untrue statement or omission made in any preliminary
supplemental Prospectus that is corrected in the supplemental Prospectus (or any
amendment or supplement thereto) if the person asserting any such loss, claim,
damage or liability purchased Securities from such Underwriter but was not sent
or given a copy of the supplemental Prospectus (as amended or supplemented),
other than the document incorporated by reference therein, at or prior to the
written confirmation of the sale of such Securities to such person in any case
where such delivery of the supplemental Prospectus (as amended or supplemented)
as required by the Act, unless such failure to deliver the supplemental
Prospectus (as amended or supplemented) was the result of noncompliance by the
Company with Section 4(a)(v). This indemnity agreement will be in addition to
any liability which the Company may otherwise have. The Company will not,
without the prior written consent of each Underwriter, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought hereunder
(whether or not such Underwriter or any person who controls such Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of such Underwriter and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding.
(b) 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
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<PAGE> 19
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 Representatives
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.
(c) 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 failure so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 7. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 7 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Representatives in the case of
paragraph (a) of this Section 7, representing the indemnified parties under such
paragraph (a) who are parties to such action or
- 19 -
<PAGE> 20
actions) or (ii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party. After such
notice from the indemnifying party to such indemnified party, the indemnifying
party will not be liable for the costs and expenses of any settlement of such
action effected by such indemnified party without the consent of the
indemnifying party, unless such indemnified party waived its rights under this
Section 7, in which case the indemnified party may effect such a settlement
without such consent.
In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 7 is unavailable or insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total proceeds from
the offering (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the Underwriters. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters, the parties' relative intents,
knowledge, access to information and opportunity to correct or prevent 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,
- 20 -
<PAGE> 21
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 of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number 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 for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm 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 of Securities that is more than ten percent of the aggregate number 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 Representatives are not made within 36 hours after such default for the
purchase by other persons who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company other than as provided
in Section 10 hereof. In the event of any default by one or more Underwriters as
described in this Section 8, the Representatives 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
Representatives 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
fails to perform all obligations and satisfy all conditions on its part
- 21 -
<PAGE> 22
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
Representatives 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
Representatives to the Company for the purposes of Sections 2 and 7(b) hereof.
The Underwriters confirm that such statements (to such extent) are correct.
12. Notices. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be mailed or delivered or telegraphed and
confirmed in writing to Schroder & Co. Inc., 787 Seventh Avenue, 5th Floor, New
York, New York 10019, Attention: Bradley G. Razook, if sent to the Company,
shall be mailed, delivered or telegraphed and confirmed in writing to the
Company at 450 North Sunnyslope Road, Suite 300, Brookfield, Wisconsin 53005,
Attention: Chief Executive Officer.
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
- 22 -
<PAGE> 23
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.
- 23 -
<PAGE> 24
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.
SCHRODER & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
SMITH BARNEY INC.
COWEN & COMPANY
MCDONALD & COMPANY SECURITIES, INC.
For themselves and the other
several Underwriters, if any,
named in Schedule 1 to the
foregoing Agreement
By: SCHRODER & CO. INC.
By:
------------------------------
Name:
Title:
For itself and the other Representatives
- 24 -
<PAGE> 25
SCHEDULE 1
UNDERWRITERS' COMMITMENTS
<TABLE>
<CAPTION>
Number of
Firm Securities
to be Purchased
Underwriter from the Company
- ----------------------------- ----------------
<S> <C>
Schroder & Co. Inc........................................................................ 700,000
Donaldson, Lufkin & Jenrette Securities Corporation....................................... 700,000
Smith Barney Inc.......................................................................... 700,000
Cowen & Company........................................................................... 350,000
McDonald & Company Securities, Inc........................................................ 350,000
TOTAL......................................... 2,800,000
</TABLE>
1-1
<PAGE> 26
EXHIBIT A
FORM OF OPINION OF COMPANY COUNSEL
_______________, 1997
SCHRODER & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
SMITH BARNEY INC.
COWEN & COMPANY
McDONALD & COMPANY SECURITIES INC.
As Representatives of the Several Underwriters
c/o Schroder & Co. Inc.
787 Seventh Avenue
5th Floor
New York, New York 10019
Re: 2,800,000 Shares of Common Stock, par value
$.01 per share of Alternative Living Services, Inc.
Ladies and Gentlemen:
We have acted as counsel to Alternative Living Services, Inc., a
Delaware corporation (the "Company"), in connection with the purchase on this
date by you and the other underwriters (collectively, the "Underwriters") named
in Schedule I of that certain Underwriting Agreement dated December 19, 1997,
among the Underwriters and the Company (the "Underwriting Agreement") of an
aggregate of 2,800,000 shares (the "Firm Shares") of the Company's common stock,
par value $.01 (the "Common Stock"). This opinion is furnished to you pursuant
to Section 6(b) of the Underwriting Agreement. Terms used herein and not defined
herein are used as defined in the Underwriting Agreement.
In connection with this opinion, we have reviewed such documents and
matters of law as we have deemed necessary for the purposes of expressing the
opinions set forth herein. Based upon the foregoing, we are of the opinion that:
1. The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware. We are not aware of any
subsidiaries of the Company other than the Subsidiaries. Each of the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the state of its incorporation or formation. The Company and each of the
Subsidiaries has full corporate or other power and authority to conduct all the
activities conducted by it, to own or lease all the properties and assets owned
or leased by it and
A-1
<PAGE> 27
to conduct its business as described in the Registration Statement and the
Prospectus. The Company and each of its Subsidiaries is duly licensed or
qualified to do business and in good standing as a foreign corporation or
partnership, as the case may be, in all jurisdictions in which the nature of the
activities conducted by it or the character of the properties and assets owned
or leased by it makes such licensing or qualification necessary, except where
the failure to so qualify would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole. To the best of our knowledge
after due inquiry, the Company beneficially owns the percentage indicated in
Exhibit [___] of the Registration Statement of the outstanding equity interests
in each of the Subsidiaries, free and clear of all Encumbrances. All of the
equity interests held by the Company in each of the Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights.
2. The outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and nonassessable and
were not issued in violation of any preemptive or similar rights arising by or
through the Company. The shares to be issued and sold by the Company are duly
authorized and, upon such issuance and payment therefor in accordance with the
terms of the Underwriting Agreement will be, validly issued, fully paid and
nonassessable and are not the subject to any preemptive or similar rights
arising by or through the Company. The Company has, and, upon completion of the
sale of the shares, will have, an authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus.
The description of the securities of the Company in the Registration Statement
and the Prospectus is complete and accurate in all material respects.
3. To the best our knowledge after due inquiry, except as set
forth in the Registration Statement and the Prospectus, the Company does not
have outstanding any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into or exchangeable for, or
any contracts or commitments to issue or sell, any shares of its capital stock
or any such warrants, convertible securities or obligations.
4. To the best of our knowledge after due inquiry, except as
set forth in the Registration Statement and the Prospectus, no person has any
right to have any securities of the Company held by them registered under the
Act.
5. The Company (either directly or through its Subsidiaries)
has good and indefeasible title to all properties and assets described in the
Registration Statement and Prospectus as owned by it, free and clear of all
Encumbrances other than those described in the Registration Statement and
Prospectus and other than those that do not materially adversely affect the
value of such properties and assets and do not interfere with the use made or
proposed to be made of such properties and assets. The Company (either directly
or through its Subsidiaries) has valid and subsisting leasehold interests in the
properties and assets described in the Registration Statement and Prospectus as
leased by it, free and clear of all Encumbrances, other than those described in
the Registration Statement and Prospectus and those that do not materially
adversely affect the value of such properties and assets and do not materially
interfere with the use made, or proposed to be made, of such properties and
assets. The Company (either
A-2
<PAGE> 28
directly or through its Subsidiaries) has valid and subsisting options to
purchase the properties described in the Registration Statement and Prospectus
under the caption "Business - Properties- Properties Under
Construction/Development" as being under development.
6. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act.
7. Except as set forth in the Registration Statement and
Prospectus, there are no actions, suits or proceedings pending or, to the best
of our knowledge after due inquiry, threatened against or affecting the Company
or any of its Subsidiaries or any of their respective directors, officers or
stockholders in their capacity as such, or ally of the properties or assets
owned, leased or operated by the Company or any of its Subsidiaries, before or
by any Governmental Body, wherein an unfavorable ruling, decision or finding
would have- a material adverse effect on the business, properties, prospects,
condition (financial or otherwise), net worth or results of operations of the
Company and its Subsidiaries, taken as a whole. There is no pending litigation
or governmental proceeding required to be described in the Prospectus that is
not described as required.
8. To the best of our knowledge after due inquiry, none of
the Company and its Subsidiaries is in breach or default (nor has an event
occurred which, with notice or lapse of time or both, would constitute a
default) in the due performance and observation of any term, covenant or
condition of any contract or other agreement to which it is a party or by which
its properties is bound or affected, which default could reasonably be expected,
individually or in the aggregate, to have a material adverse effect on the
business, properties, prospects, condition (financial or otherwise), net worth
or results of operations of the Company and its Subsidiaries, taken as a whole.
To the best of our knowledge after due inquiry, (i) the Company is not in
violation of any provision of its Restated Certificate of Incorporation or
Reststed Bylaws, as amended, and (ii) none of the Subsidiaries is in violation
of its organizational documents, as amended.
9. No consent, approval, authorization or order of, or any
filing or declaration with, any Governmental Body is required for the
consummation of the transactions contemplated by the Underwriting Agreement or
in connection with the issuance and sale of the shares to be sold by the
Company, except such as have been obtained under the Act or the Rules and
Regulation d such as may be required under state securities or Blue Sky laws or
the bylaws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the shares to be sold by the Company.
10. The Company has full power and authority to enter into the
Underwriting Agreement and to carry out all the terms and provisions thereof to
be carried out by it. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company and is enforceable against the Company in accordance
with the terms thereof, except as limited by general principles of equity
A-3
<PAGE> 29
relating to the availability of remedies and except as rights to indemnity or
contribution may be limited by federal or state securities laws and the public
policy underlying such laws.
11. The execution, delivery and the performance of the
Underwriting Agreement and the consummation of the transactions contemplated
thereby will not result in the creation or imposition of any Encumbrance upon
any of the properties or assets of the Company or any of its Subsidiaries
pursuant to the terms or provisions of, or result in a breach or violation of or
conflict with any of the terms or provisions of, or constitute a default under,
or give any other party a right to terminate any of its obligations under, or
result in the acceleration of any obligation under, (i) the Restated Certificate
of Incorporation or Restated Bylaws of the Company, in each case as amended,
(ii) the organizational or charter documents of any of the Subsidiaries, as
amended, or (iii) any contract or other agreement to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its subsidiaries
or any of their respective assets or properties are bound or affected, or (iv)
any judgment, ruling, decree, order, law, statute, rule or regulation of any
Governmental Body applicable to the Company or any of its Subsidiaries or their
business or properties, except, in the case of clauses (iii) and (iv), any
violation which could not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the business, properties,
prospects, condition (financial or otherwise), net worth or results of
operations of the Company and its Subsidiaries, taken as a whole.
12. The Company has full power and authority to authorize,
issue, offer and sell the shares to be sold by it, as contemplated by the
Underwriting Agreement, free of any preemptive or similar rights.
13. All holders of securities of the Company have waived any
rights to the registration of any securities of the Company which they may have
as a result of the filing of the Registration Statement.
14. There is no document or contract of a character required
to be described in the Registration Statement or Prospectus or to be filed as a
exhibit to the Registration Statement which is not described or filed as
required.
15. Each of the Company and its Subsidiaries owns, or is
licensed or otherwise has the right to use, all material trademarks and trade
names which are used in or necessary for the conduct of its business as
described in the Registration Statement and Prospectus. To the best of our
knowledge after due inquiry, no claims have been asserted by any person to the
use of any such trademarks or trade names or challenging or questioning the
validity or effectiveness of any such trademark or trade name.
16. The Registration Statement has become effective under the
Act and, to the best of our knowledge after due inquiry, no stop order
preventing or suspending the use of the Registration Statement or Prospectus,
has been issued and no proceeding for that purpose has been instituted or is
pending or threatened by the Commission.
A-4
<PAGE> 30
17. The Registration Statement, as of the Effective Date, and
the Prospectus, as of its date and as of the date hereof, complied or complies,
as the case may be, in all material respects with the applicable requirements of
the Act and the Rules and Regulations of the Commission.
18. The form of certificate evidencing the shares has been
duly approved by all necessary corporate action of the Company and complies as
to form with the requirements of the Delaware General Corporation Law.
19. The statements in the Prospectus under the captions
"Business - Joint Ventures and Strategic Alliances," insofar as they purport to
summarize the provisions of documents referred to therein, and the statements in
the Prospectus under the captions "Description of Capital Stock" and insofar as
they purport to summarize the provisions of documents or matters of law referred
to therein or constitute legal conclusions, are accurate in all material
respects.
Very truly yours,
Rogers & Hardin
A-5
<PAGE> 31
EXHIBIT B
FORM OF OPINION OF COMPANY REGULATORY COUNSEL
__________________, 1997
SCHRODER & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
SMITH BARNEY INC.
COWEN & COMPANY
McDONALD & COMPANY SECURITIES INC.
As Representatives of Several Underwriters
c/o Schroder & Co. Inc.
787 Seventh Avenue
5th Floor
New York, New York 10019
Re: 2,800,000 Shares of Common Stock, par value $.01
per share of Alternative Living Services, Inc.
Ladies and Gentlemen:
We have acted as counsel to Alternative Living Services, Inc., a
Delaware corporation (the "Company"), in connection with the purchase on this
date by you and the other underwriters (collectively, the "Underwriters") named
in Schedule I of that certain Underwriting Agreement dated December 19, 1997,
among the Underwriters, the Company and the Selling Stockholders (as defined
therein) (the "Underwriting Agreement") of an aggregate of 2,800,000 shares (the
"Firm Shares") of the Company's common stock, par value $.01 (the "Common
Stock"). This opinion is furnished to you pursuant to Section 6(d) of the
Underwriting Agreement. Terms used herein and not defined herein are used as
defined in the Underwriting Agreement.
In connection with this opinion, we have reviewed such documents and
matters of law as we have deemed necessary for the purposes of expressing the
opinions set forth herein. Based upon the foregoing, we are of the opinion that:
1. Except as otherwise described in the Registration Statement
and Prospectus, each of the facilities described in the Registration Statement
under the captions "Business Residences" and located in the State of ___________
is organized, licensed and operated in conformity with the requirements for
qualification as a licensed facility of the type set forth next to the name of
such Facility in Exhibit A hereto under the applicable laws, rules and
regulations of the State of in which the Facilities are located and is therefore
able to conduct
B-1
<PAGE> 32
the Company's business of "assisted living" described as being conducted at each
such Facility in its beds as set forth more fully in the Prospectus.
Furthermore, the Company's ___________ facility in _____________, is not
currently a licensed facility but is operated as an independent living facility.
Those facilities listed herein which are not licensed under state law or which
contain unlicensed beds do not currently provide in those facilities or
unlicensed beds services of a nature which would require the Company or its
Subsidiaries to be duly licensed to provide the same.
2. The statements set forth under the headings "Risk
Factors-Governmental Regulation" and "Business-Government Regulation" in the
Registration Statement and the Prospectus, insofar as such statements constitute
a summary of the legal matters, documents or proceedings referred to therein,
provide accurate summaries of such legal matters, documents and proceedings.
3. To our knowledge after reasonable investigation, the
conduct of the business of the Company and its Subsidiaries is not in violation
of any federal, state or local statute, administrative regulation or other law,
which violation is likely to have a material adverse effect on the Company and
its Subsidiaries, taken as a whole; and each of the Company and its Subsidiaries
has either (i) obtained all Licenses which are necessary or required to be
issued to the Company and its Subsidiaries for the ownership, leasing and
operation of its Facilities and the conduct of its business as presently
conducted, except where the failure to obtain such Licenses would not have a
material adverse affect on each of the Company and its Subsidiaries or (ii)
taken all steps necessary to obtain such Licenses an depending issuance thereof
is lawfully operating its Facilities under Licenses issued in the name of the
prior operator thereof.
Although we assume no responsibility for the accuracy,
completeness and fairness of the statements contained in the Registration
Statement and Prospectus, we have participated in discussions with officers of
the Company regarding the provisions of the Prospectus described in Paragraph 2
of this opinion and no facts have come to our attention that lead us to believe
that the provisions of the Registration Statement described in Paragraph 2 of
this opinion as of the date it was declared effective and as of the date hereof
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the provisions of the
Prospectus described in Paragraph 2 of this opinion as of its date and the date
hereof, contained or contains any untrue statement of a material fact or omitted
or omits to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading (it being understood that we have not been requested
to comment on, and express no comment with respect to, financial, operating and
statistical data and the historical and pro forma financial statements,
including the notes and schedules thereto, in the Prospectus).
Sincerely,
B-2
<PAGE> 1
EXHIBIT 1.2
EXECUTION COPY
ALTERNATIVE LIVING SERVICES, INC.
$125,000,000 Aggregate Principal Amount of 5.25%
Convertible Subordinated Debentures Due 2002*
UNDERWRITING AGREEMENT
December 15, 1997
SCHRODER & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
SMITH BARNEY INC.
COWEN & COMPANY
MCDONALD & COMPANY SECURITIES, INC.
as Representatives of the
several Underwriters
c/o Schroder & Co. Inc.
787 Seventh Avenue
5th Floor
New York, New York 10019
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 representatives (in such capacity, the "Representatives"),
$125,000,000 aggregate principal amount of 5.25% Convertible Subordinated
Debentures Due 2002 (the "Firm Securities") pursuant to an Indenture dated as of
December 19, 1997 as supplemented by the First Supplemental Indenture (the
"Supplemental Indenture") thereto dated December 19, 1997 (as supplemented, the
"Indenture") by and between the Company and United States Trust Company of New
York as Trustee (the "Trustee"). The Company has also agreed to issue and sell
pursuant to an option, subject to the terms and conditions hereof, up to
$18,750,000 additional aggregate amount of 5.25% Convertible Subordinated
Debentures due 2002. Any and all convertible subordinated debentures 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." Subject to the provisions of Section 7
of the Supplemental Indenture, the Securities will be convertible at the option
of the holder thereof at any time commencing 180 days after issuance and
thereafter at any time prior to the close of business on any date fixed for
redemption, unless
- -----------------
*/ Plus an option to purchase from the Company up to $18,750,000 principal
amount of Securities to cover over-allotments.
<PAGE> 2
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 Underwriters, all
references herein to the Representatives 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 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 100% of the principal
amount thereof, the amount of Firm Securities set forth opposite the name of
such Underwriter in Schedule 1 hereto. The Company shall deliver, or cause to be
delivered, to the Representatives 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 Representatives 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 wire transfer of
same-day funds. Such delivery of and payment for the Firm Securities shall be
made at the offices of Schroder & Co. Inc., 787 Seventh Avenue, 5th Floor, New
York, New York 10019 at 9:30 a.m., New York time, on December 19, 1997, or at
such other place, time or date as the Representatives and the Company may agree
upon or as the Representatives may determine pursuant to Section 8 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 Representatives 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 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
Representatives 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 Representatives 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
Representatives and the Company may agree upon or as the Representatives 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
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<PAGE> 3
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 principal amount of the Option Securities as to which the several
Underwriters are then exercising the option, as such Underwriter is obligated to
purchase of the aggregate principal amount of Firm Securities. 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 and 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 you, individually and not as the
Representatives, 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. 333-39705), which has become effective, relating to shares of Common Stock,
certain debt securities and shares of the Company's Preferred Stock. The Company
has also filed 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 dated November 28, 1997 constituting a part of the Registration
Statement. The term "Prospectus" means the Basic Prospectus together with the
final prospectus supplement specifically relating to the Securities as filed
with the Commission pursuant to such Rule 424. Any reference herein to the
Registration Statement or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein as of the date hereof or the
date of the Prospectus, as the case may be, and any reference herein to any
amendment or supplement to the Registration Statement or the Prospectus shall be
deemed to refer to and include any documents filed after such date and through
the date of such amendment or supplement under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and so incorporated by reference. For
purposes of the preceding sentence, any reference to the "effective date" of an
amendment to a registration statement shall, if such amendment is effected by
means of the filing with the Commission under the Exchange Act of a document
incorporated by reference in such registration statement, be deemed to refer to
the date on which such document was so filed with the Commission.
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<PAGE> 4
ii) When the Registration Statement or any amendment thereto
was declared effective, as of the date hereof, and at the time any amendment to
the Registration Statement filed after the date hereof becomes effective
(including the filing of any document incorporated by reference in the
Registration Statement), the Registration Statement (i) met, meets and will
meet, as the case may be, the requirements set forth in Rule 415(a)(1) under the
Act and complied, complies and will comply as the case may be, in all material
respects with said Rule, (ii) contained, contains and will contain, as the case
may be, all statements required to be stated therein in accordance with, and
complied, complies and will comply in all material respects with the
requirements of, the Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder and (iii) did not, does not and will
not, as the case may be, include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading. As of the date hereof, and when the Prospectus is filed with the
Commission pursuant to Rule 424(b), on the date when the Prospectus is otherwise
supplemented and on the Firm Closing Date and any Option Closing Date, the
Prospectus (as supplemented as of any such time), (i) contains and will contain,
as the case may be, all statements required to be stated therein in accordance
with, and complies and will comply in all material respects with the
requirements of, the Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder and (ii) does not and will not, as the
case may be, include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (b) do not apply to statements or
omissions made in the Prospectus or the Registration Statement or any amendment
or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein. The Company has not distributed,
and, prior to the later to occur of (i) the Closing Date or, if later, the
Option Closing Date and (ii) completion of the distribution of the Securities,
will not distribute, any offering material in connection with the offering or
sale of the Securities other than the Registration Statement, the Prospectus or
any other materials, if any, permitted by the Act.
iii) The Company's subsidiaries (excluding those subsidiaries
that do not own or operate, directly or indirectly, residences) are listed on
Schedule II hereto (the "Subsidiaries"). Except with respect to the
Subsidiaries, the Company does not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation or
have any equity interest in any firm, partnership, joint venture, association or
other entity (excluding those subsidiaries that do not own or operate, directly
or indirectly, residences). The Company is duly organized, validly existing and
in good standing under the laws of the State of Delaware. Each of the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the state of its incorporation or formation. The Company and each of the
Subsidiaries has full corporate or other power and authority to conduct all the
activities conducted by it, to own or lease all the properties and assets owned
or leased by it and to conduct its business as described in the Registration
Statement and the Prospectus. The Company and each of its Subsidiaries is duly
licensed or qualified to do business and in good standing as a foreign
corporation or partnership, as the case may be, in all jurisdictions in which
the nature of the activities conducted by it or the character of the properties
and assets owned or leased by it makes such licensing or
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<PAGE> 5
qualification necessary, except where the failure to so qualify would not have a
material adverse effect on the Company and its Subsidiaries, taken as a whole.
The Company beneficially owns the percentage indicated on Schedule II hereto of
the outstanding equity interests in each of the Subsidiaries, free and clear of
all liens, security interests, restrictions, pledges, encumbrances, charges,
equities, claims, easements, assessments and tenancies (collectively,
"Encumbrances") other than Encumbrances described in the Registration Statement
and the Prospectus and other than those Encumbrances that do not materially
affect the value of the equity interests of such Subsidiaries as reflected in
the consolidated financial statements of the Company. All of the equity
interests held by the Company in each of the Subsidiaries have been duly
authorized and are validly issued, fully paid and nonassessable and were not
issued in violation of any preemptive or similar rights. Complete and correct
copies of (i) the Restated Certificate of Incorporation and the Restated Bylaws
of the Company and all amendments thereto and (ii) the organizational documents
of each of the Subsidiaries and all amendments thereto, have been made available
to the Representatives or Stroock & Stroock & Lavan LLP, counsel for the
Underwriters, and no changes therein will be made subsequent to the date hereof
and prior to the Closing Date or the Option Closing Date.
iv) 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 Securities have been duly authorized and such amount of Common Stock as is
currently authorized and issuable has been duly reserved for issuance upon
conversion of the Securities, 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 Securities have
been duly executed by the Company, and authenticated by the Trustee, the
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 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 Securities, when issued and delivered in
accordance with the provisions of the Indenture, will be validly issued, fully
paid and nonassessable; and the Securities will conform to the description of
the 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. Except as set
forth in the Registration Statement and the Prospectus, the Company does not
have outstanding, and at the Closing Date, and if later, the Option Closing Date
will not have outstanding, any options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell, any shares of its capital stock or
any such warrants, convertible securities or obligations.
v) 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
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<PAGE> 6
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, of reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
principles of equity.
vi) The consolidated financial statements and the related
notes of the Company and its subsidiaries set forth or incorporated by reference
in the Registration Statement and the Prospectus present fairly the financial
condition of the Company and its subsidiaries as of the dates indicated and the
consolidated results of operations, stockholders' equity and cash flows of the
Company and its subsidiaries for the periods covered thereby, all in conformity
with generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the entire period involved. The supplemental consolidated
financial statements and related notes of the Company set forth or incorporated
by reference in the Registration Statement and Prospectus present fairly the
consolidated financial condition of the Company, Sterling House Corporation
("Sterling") and their respective subsidiaries as of the dates indicated and the
combined results of operations, stockholders' equity and cash flows of the
Company, Sterling and their respective subsidiaries for the periods covered
thereby, all in conformity with GAAP applied on a consistent basis throughout
the entire period involved. The selected supplemental consolidated financial
data for the Company, Sterling and their respective subsidiaries set forth under
the captions "Prospectus Summary--Summary Supplemental Consolidated Financial
and Other Data" and "Selected Supplemental Consolidated Financial Data" in the
Prospectus have been prepared on a basis consistent with the historical
consolidated financial statements of the Company. The pro forma condensed
combined financial information of the Company and the related notes incorporated
by reference in the Registration Statement and the Prospectus comply in all
material respects with the applicable requirements of Rules 11-01 and 11-02 of
Regulation S-X of the Commission and present fairly the information shown
therein; and the pro forma adjustments have been properly applied to the
historical amounts in the compilation of such statements. No other financial
statements or schedules of the Company and Sterling or any other entity are
required by the Act or the Rules and Regulations to be included in the
Registration Statement, any preliminary Prospectus or the Prospectus. KPMG Peat
Marwick LLP ("KPMG"), who have reported on certain of such financial statements
and schedules which are audited, are independent accountants with respect to the
Company and its subsidiaries, as required by the Act and the Rules and
Regulations.
vii) The Company and its Subsidiaries maintain a system of
internal accounting control sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization, (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain accountability
for assets, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
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<PAGE> 7
viii) Except as set forth or described in the Registration
Statement or the Prospectus, subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i) there
has not been, and will not have been, any material change in the capitalization
of the Company or any Subsidiary or any material adverse change in the business,
properties, prospects, condition (financial or otherwise), net worth or results
of operations of the Company and its Subsidiaries, taken as a whole, arising for
any reason whatsoever, (ii) neither the Company nor any of its Subsidiaries has
incurred, nor will it have incurred, any material liabilities or obligations,
direct or contingent, not in the ordinary course of business, (iii) neither the
Company nor any of its Subsidiaries has entered into, nor will it have entered
into any material transactions not in the ordinary course of business other than
pursuant to this Agreement, and (iv) neither the Company nor any Subsidiary has,
or will have, paid or declared any dividends or other distributions of any kind
on any class of its capital stock.
ix) The Company (either directly or through the
Subsidiaries) has good and indefeasible title to all properties and assets
described in the Registration Statement and Prospectus as owned by it, free and
clear of all Encumbrances other than those described in the Registration
Statement and Prospectus and other than those that do not materially adversely
affect the value of such properties and assets and do not materially interfere
with the use made or proposed to be made of such properties and assets. The
Company (either directly or through its Subsidiaries) has valid and subsisting
leasehold interests in the properties and assets described in the Registration
Statement and Prospectus as leased by it, free and clear of all Encumbrances,
other than those described in the Registration Statement and Prospectus and
those that do not materially adversely affect the value of such properties and
assets and do not interfere with the use made, or proposed to be made, of such
properties and assets. Title insurance in favor of the Company or its
Subsidiaries (or, with respect to leased residences, in favor of its lessor) is
in full force and effect with respect to each parcel of real property and assets
thereon described in the Registration Statement and Prospectus (i) listed as
owned or leased by the Company (either directly or through its Subsidiaries) in
the chart captioned "Operating Residences" under the caption
"Business-Residences" and (ii) reflected as being under construction in the
chart captioned "Residences Under Construction or Development" under the caption
"Business-Residences" in amounts at least equal to the purchase price paid by
the Company or any Subsidiary for such property and assets thereon except where
the failure to obtain such title insurance could not reasonably be expected to
have a material adverse effect on the business, properties, prospects, condition
(financial or otherwise), net worth or results of operations of the Company and
its Subsidiaries, taken as a whole. Except as set forth in the Registration
Statements and Prospectus, none of the mortgages encumbering any property owned
by the Company (either directly or through its Subsidiaries) (i) is convertible
into equity interests in the Company, any Subsidiary or any property owned by
the Company or any Subsidiary (other than such mortgaged property) or (ii)
cross-defaulted or cross-collateralized to any other property except where such
cross-collaterialization could not be expected to have a material adverse effect
on the business, properties, prospects, condition (financial or otherwise), net
worth or results of operations of the Company and its Subsidiaries, taken as a
whole.
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<PAGE> 8
x) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms as defined in the Investment Company Act of
1940, as amended (the "Investment Company Act").
xi) Except as set forth in the Registration Statement and
Prospectus, there are no actions, suits or proceedings pending or, to the
Company's knowledge, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective directors, officers or stockholders in
their capacity as such, or any of the properties or assets owned, leased or
operated by the Company or any of its Subsidiaries, before or by any Federal or
state court, commission, regulatory body, administrative agency or other
governmental body, domestic or foreign (collectively, a "Governmental Body"),
wherein an unfavorable ruling, decision or finding would have a material adverse
effect on the business, properties, prospects, condition (financial or
otherwise), net worth or results of operations of the Company and its
Subsidiaries, taken as a whole. There is no pending litigation or governmental
proceeding required to be described in the Registration Statement and the
Prospectus that is not described as required.
xii) Each of the Company and its Subsidiaries has all
governmental licenses, permits, consents, orders, approvals, franchises,
certificates and other authorizations (collectively, "Licenses") necessary to
carry on its business and own or lease its properties as contemplated in the
Registration Statement and Prospectus, except such Licenses, the failure to so
have would not have a material adverse effect on the business, properties,
prospects, condition (financial or otherwise), net worth or results of
operations of the Company and its Subsidiaries, taken as a whole. Each of the
Company and its Subsidiaries has complied in all material respects with all
laws, regulations and order applicable to it or its business, assets and
properties. Each of the Company and its Subsidiaries is not in breach or default
(nor has any event occurred which, with notice or lapse of time or both, would
constitute a default) in the due performance and observation of any term,
covenant or condition of any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument (collectively, a
"contract or other agreement") to which it is a party or by which its properties
are bound or affected, which default could reasonably be expected, individually
or in the aggregate, to have a material adverse effect on the business,
properties, prospects, condition (financial or otherwise), net worth or results
of operations of the Company and its Subsidiaries, taken as a whole. To the best
knowledge of the Company, no other party under any such contract or other
agreement is in default in any respect thereunder which default could reasonably
be expected, individually or in the aggregate, to have a material adverse effect
on the business, properties, prospects, condition (financial or otherwise), net
worth or results of operations of the Company and its Subsidiaries, taken as a
whole. Except as otherwise described in the Registration Statement and
Prospectus, there are no governmental proceedings or actions pending or, to the
Company's knowledge, threatened for the purpose of suspending, modifying or
revoking any License held by the Company or any of its Subsidiaries which could
reasonably be expected, individually or in the aggregate, to have a material
adverse effect on the business, properties, prospects, condition (financial or
otherwise), net worth or results of operations of the Company and its
Subsidiaries, taken as a whole. The Company is not in violation of any provision
of its Restated Certificate of Incorporation or
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<PAGE> 9
Restated Bylaws, as amended. None of the Subsidiaries is in violation of its
organizational documents, as amended.
xiii) No consent, approval, authorization or order of, or any
filing or declaration with, any Governmental Body is required for the
consummation of the transactions contemplated by this Agreement or in connection
with the issuance and sale of the Securities by the Company, except such as have
been obtained under the Act or the Rules and Regulations.
xiv) The Company has full power and authority to enter into
this Agreement and to carry out all the terms and provisions hereof to be
carried out by it. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with the terms
hereof. The execution, delivery and the performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
creation or imposition of any Encumbrance upon any of the properties or assets
of the Company or any of its Subsidiaries pursuant to the terms or provisions
of, or result in a breach or violation of or conflict with any of the terms or
provisions of, or constitute a default under, or give any other party a right to
terminate any of its obligations under, or result in the acceleration of any
obligation under, (i) the Restated Certificate of Incorporation or Restated
Bylaws of the Company, in each case as amended, (ii) the organizational or
charter documents of any of the Subsidiaries, as amended, (iii) any contract or
other agreement to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective assets
or properties are bound or affected, or (iv) any judgment, ruling, decree,
order, law, statute, rule or regulation of any Governmental Body applicable to
the Company or any of its Subsidiaries or their business or properties, except,
in the case of clauses (iii) and (iv), any violation which could not reasonably
be expected, individually or in the aggregate, to have a material adverse effect
on the business, properties, prospects, condition (financial or otherwise), net
worth or results of operations of the Company and its Subsidiaries, taken as a
whole. The Company has full power and authority to authorize, issue, offer and
sell the Securities to be sold by it, as contemplated by this Agreement, free of
any preemptive or similar rights.
xv) There is no document or contract of a character required
to be described in the Registration Statement or Prospectus or in any document
incorporated by reference therein, or to be filed as an exhibit to the
Registration Statement, which is not described or filed as required.
xvi) No statement, representation, warranty or covenant made
by the Company in this Agreement or made in any certificate or document required
by this Agreement to be delivered to the Representatives is or will be, when
made, inaccurate, untrue or incorrect.
xvii) Neither the Company nor any of its directors, officers
or affiliates (within the meaning of the Rules and Regulations) has taken, nor
will he, she or it take, directly or indirectly, any action designed, or which
might reasonably be expected in the future to cause or result in, under the Act
or otherwise, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares or otherwise.
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<PAGE> 10
xviii) The Securities have been approved for listing on the
American Stock Exchange, Inc. (the "AMEX"), subject only to notice of issuance.
xix) Neither the Company nor any of its Subsidiaries is
involved in any labor dispute with its employees which could reasonably be
expected, individually or in the aggregate, to have a material adverse effect on
the business, properties, prospects, condition (financial or otherwise), net
worth or results of operations of the Company and its Subsidiaries, taken as a
whole nor, to the Company's knowledge, is any such dispute threatened or
imminent.
xx) Each of the Company and its Subsidiaries owns, or is
licensed or otherwise has the right to use, all material trademarks and trade
names which are used in or necessary for the conduct of its business as
described in the Registration Statement and Prospectus. To the Company's
knowledge, no claims have been asserted by any person to the use of any such
trademarks or trade names or challenging or questioning the validity or
effectiveness of any such trademark or trade name. The use of such trademarks
and trade names in connection with the business and operations of the Company
and its Subsidiaries does not, to the Company's knowledge, infringe on the
rights of any person.
xxi) Neither the Company nor any of its Subsidiaries nor any
employee or agent of the Company or any Subsidiaries has made any payment of
funds of the Company or any Subsidiary or received or retained any funds of the
Company or any Subsidiary in violation of any law, rule or regulation or of a
character required to be disclosed in the Registration Statement and Prospectus
or in a document incorporated by reference.
xxii) The Company and its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; and the Company has no reason to believe that it and its
Subsidiaries will not be able to renew their existing insurance coverage as and
when such coverage expires.
xxiii) The business, operations and facilities of the Company
and its Subsidiaries have been and are being conducted in compliance in all
material respects with all applicable laws, ordinances, rules, regulations,
Licenses, permits, approvals, plans, authorizations or requirements relating to
occupational safety and health, or pollution, or protection of health or the
environment (including, without limitation, those relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants or
hazardous or toxic substances, materials or wastes into ambient air, surface
water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
chemical substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes, whether solid, gaseous or liquid in nature) of any
governmental department, commission, board, bureau, agency or instrumentality of
the United States or any state or political subdivision thereof, and all
applicable judicial or administrative agency or regulatory decrees, awards,
judgments and orders relating thereto; and none of the Company or any of its
Subsidiaries has received any notice from any governmental instrumentality or
any third party alleging any violation thereof or liability thereunder
(including, without limitation, liability for costs of
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<PAGE> 11
investigating or remediating sites containing hazardous substances and/or
damages to natural resources), which violation would have, or could reasonably
be expected to have, a material adverse effect on the business, properties,
prospectus, condition (financial or otherwise), net worth or results of
operations of the Company and its Subsidiaries, taken as a whole. The intended
use and occupancy of each of the facilities owned or operated by the Company or
any of its Subsidiaries complies in all material respects with applicable codes
and zoning laws and regulations and there is no pending or, to the knowledge of
the Company, threatened condemnation, zoning change, environmental or other
proceeding or action that will in any material respect adversely affect the size
of, use of, improvements on, construction on, or access to such facilities.
xxiv) The Company and each of its Subsidiaries has filed all
foreign, federal, state and local tax returns that are required to be filed or
has requested extensions thereof and has paid all taxes required to be paid by
it and any other assessment, fine or penalty levied against it, to the extent
due and payable, except where such failure to file or pay could not reasonably
be expected, individually or in the aggregate, to have a material adverse effect
on the business, properties, prospects, condition (financial or otherwise), net
worth or results of operations of the Company and its subsidiaries, taken as a
whole.
xxv) Each executive officer and director of the Company has
delivered, or prior to the Closing Date will deliver, to Schroder & Co. Inc. an
agreement (the "Lockup Agreement") in the form of Exhibit C attached hereto.
xxvi) Each certificate signed by an officer of the Company
and delivered to the Representatives or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to each Underwriter as
to the matters covered thereby.
xxvii) None of the Company, any Subsidiary or any affiliate
thereof does business with the government of Cuba or with any person or
affiliate located in Cuba and the Company and each Subsidiary has complied to
the extent necessary with the provisions of Florida H.B. 1771.
3. Representations and Warranties of the Underwriters. Upon your
authorization of the release of the Firm Securities, the several Underwriters
propose to offer the Firm Securities for sale to the public upon the terms set
forth in the Prospectus.
4. Agreements. (a) The Company covenants and agrees with each of the
Underwriters that:
i) Subject to the next sentence, the Company has filed, or
shall file in a timely manner in accordance with Rule 424 under the Act, 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 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
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<PAGE> 12
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 Representatives 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 Representatives shall not have given their
consent. The Company will advise the Representatives, 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 Representatives of each such
filing or effectiveness.
ii) The Company will advise the Representatives, 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 Representatives 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 Representatives
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
Representatives 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
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<PAGE> 13
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 Representatives may reasonably request.
vi) The Company, as soon as practicable, will make generally
available to its security holders and to the Representatives 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 will be listed on the American Stock
Exchange, subject to notice of issuance.
viii) The Company and its executive officers and directors
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
Schroder & Co., Inc. (other than the issuance by the Company of Common Stock
upon exercise of outstanding options and grants of employee stock options or
upon conversion of the Company's outstanding debentures).
ix) Concurrently with the sale of the Securities hereunder,
the Company is offering 2,800,000 shares of Common Stock of the Company pursuant
to an underwritten public offering (the "Concurrent Offering"). The consummation
of the Concurrent Offering is not a condition to the consummation of the sale of
the Securities hereunder and the consummation of the sale of the Securities is
not a condition to the consummation of the Concurrent Offering. The Company
intends to use the net proceeds from the sale of the Securities sold by it
hereunder, together with the net proceeds of the Concurrent Offering, if any, as
set forth under "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, including trustee's
and registrar's fees, (v) the qualification 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, (vii) the listing of the Securities on
the American Stock Exchange and (viii) expenses of Company personnel in
connection with their
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<PAGE> 14
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 Section 6 hereof is not
satisfied, because this Agreement is terminated pursuant to Section 10(i) hereof
because trading in the Securities or Common Stock has been suspended by the
Commission or because of any failure, refusal or inability on the part of the
Company to perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Securities. The Company shall not in any event be liable to any
of the Underwriters for the loss of anticipated profits from the transactions
covered by this Agreement.
6. Conditions to the Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy in all
material respects of the representations and warranties of the Company contained
herein as of the date hereof and as of the Firm Closing Date as if made on and
as of the Firm Closing Date, to the accuracy in all material respects of the
statements of the Company's officers made pursuant to the provisions hereof, to
the performance by the Company of its covenants and agreements hereunder and to
the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
in the manner and within the time period required by Rule 424(b) under the Act;
no stop order suspending the 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 Representatives, 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 Representatives shall have received an opinion, dated
the Firm Closing Date, of Rogers & Hardin LLP, to the effect set forth in
Exhibit A hereto.
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 is not admitted to practice, to the
extent satisfactory to counsel for the Underwriters, upon the opinion of local
counsel in such jurisdictions and in the case of the opinion described in this
section 6(b) 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 Representatives 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
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<PAGE> 15
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 date it became effective 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 Representatives shall have received an opinion, dated
the Firm Closing Date, of Stroock & Stroock & Lavan LLP, 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
Representatives 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.
(d) The Representatives shall have received one or more
opinions, dated the Closing Date and the Option Closing Date, from regulatory
counsel for the Company in each of the States listed on Exhibit B-1, which
counsel shall be acceptable to the Underwriters, each such opinion to relate to
matters involving health care licensing and to be substantially in the form
attached hereto as Exhibit B-2 or in such other form as is satisfactory to
counsel for the Underwriters.
(e) The Representatives 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 Representatives, to
the effect that:
i) they are independent accountants with respect to
the Company and its consolidated subsidiaries within the meaning of the
Act, the Exchange Act and the applicable rules and regulations
thereunder;
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<PAGE> 16
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
stockholders, 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 stockholders' equity of the Company and
its consolidated subsidiaries, in each case compared with amounts shown
on the September 30, 1997 consolidated balance sheet included by
incorporation by reference to the Company's Report on Form 10-Q for the
fiscal quarter ended September 30, 1997 in the Registration Statement
and the Prospectus, or for the period from October 1, 1997 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 September 30, 1997, 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
Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or
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<PAGE> 17
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 (e) with respect to either letter referred to above shall include any
amendment thereto at the date of such letter.
(f) The Representatives 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 and 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, taken as a
whole, except in each case as described in or contemplated by the
Prospectus (exclusive of any amendment or supplement thereto after the
date hereof).
(g) On or before the Firm Closing Date, the Representatives
and counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
(h) The Securities shall have been accepted for listing on the
American Stock Exchange.
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<PAGE> 18
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives 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 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 a 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 Representatives
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
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<PAGE> 19
untrue statement or omission made in any preliminary supplemental Prospectus
that is corrected in the supplemental Prospectus (or any amendment or supplement
thereto) if the person asserting any such loss, claim, damage or liability
purchased Securities from such Underwriter but was not sent or given a copy of
the supplemental Prospectus (as amended or supplemented), other than the
document incorporated by reference therein, at or prior to the written
confirmation of the sale of such Securities to such person in any case where
such delivery of the supplemental Prospectus (as amended or supplemented) as
required by the Act, unless such failure to deliver the supplemental Prospectus
(as amended or supplemented) was the result of noncompliance by the Company with
Section 4(a)(v). This indemnity agreement will be in addition to any liability
which the Company may otherwise have. The Company will not, without the prior
written consent of each Underwriter, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such Underwriter or any person who controls such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act is a party to
such claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of such Underwriter and each such
controlling person from all liability arising out of such claim, action, suit or
proceeding.
(b) 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 Representatives
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.
(c) 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 failure 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
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<PAGE> 20
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 7 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Representatives in the case of
paragraph (a) of this Section 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
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<PAGE> 21
and commissions received by the Underwriters. The relative fault of the parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Underwriters, the parties' relative intents, knowledge, access to information
and opportunity to correct or prevent 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 of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number 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 for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm 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 of Securities that is more than ten percent of the aggregate number 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 Representatives are not made within 36 hours after such default for the
purchase by other persons who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the
- 21 -
<PAGE> 22
Company other than as provided in Section 10 hereof. In the event of any default
by one or more Underwriters as described in this Section 8, the Representatives
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
Representatives 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
fails to perform all 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 Representatives
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
- 22 -
<PAGE> 23
any Underwriter through the Representatives to the Company for the purposes of
Sections 2 and 7(b) hereof. The Underwriters confirm that such statements (to
such extent) are correct.
12. Notices. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be mailed or delivered or telegraphed and
confirmed in writing to Schroder & Co. Inc., 787 Seventh Avenue, 5th Floor, New
York, New York 10019, Attention: Bradley G. Razook, if sent to the Company,
shall be mailed, delivered or telegraphed and confirmed in writing to the
Company at 450 North Sunnyslope Road, Suite 300, Brookfield, Wisconsin 53005,
Attention: Chief Executive Officer.
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.
- 23 -
<PAGE> 24
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.
SCHRODER & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
SMITH BARNEY INC.
COWEN & COMPANY
MCDONALD & COMPANY SECURITIES, INC.
For themselves and the other
several Underwriters, if any,
named in Schedule 1 to the
foregoing Agreement
By: SCHRODER & CO. INC.
By:
------------------------------
Name:
Title:
For itself and the other Representatives
- 24 -
<PAGE> 25
SCHEDULE 1
UNDERWRITERS' COMMITMENTS
<TABLE>
<CAPTION>
Principal Amount
of Firm Securities
to be Purchased
Underwriter from the Company
- ----------------------------- ----------------
<S> <C>
Schroder & Co. Inc........................................................................ $ 31,250,000
Donaldson, Lufkin & Jenrette Securities Corporation....................................... 31,250,000
Smith Barney Inc.......................................................................... 31,250,000
Cowen & Company........................................................................... 15,625,000
McDonald & Company Securities, Inc........................................................ 15,625,000
------------
TOTAL......................................... $125,000,000
============
</TABLE>
1-1
<PAGE> 26
EXHIBIT A
FORM OF OPINION OF COMPANY COUNSEL
_______________, 1997
SCHRODER & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
SMITH BARNEY INC.
COWEN & COMPANY
McDONALD & COMPANY SECURITIES INC.
As Representatives of the Several Underwriters
c/o Schroder & Co. Inc.
787 Seventh Avenue
5th Floor
New York, New York 10019
Re: $125,000,000 Aggregate principal amount of [ ]%
Convertible Subordinated Debentures Due 2002 of Alternative
Living Services, Inc.
Ladies and Gentlemen:
We have acted as counsel to Alternative Living Services, Inc., a
Delaware corporation (the "Company"), in connection with the purchase on this
date by you and the other underwriters (collectively, the "Underwriters") named
in Schedule I of that certain Underwriting Agreement dated December 19, 1997,
among the Underwriters and the Company (the "Underwriting Agreement") of an
aggregate principal amount of $125,000,000 [ ]% Convertible Subordinated
Debentures due 2002 (the "Firm Securities"). This opinion is furnished to you
pursuant to Section 6(b) of the Underwriting Agreement. Terms used herein and
not defined herein are used as defined in the Underwriting Agreement.
In connection with this opinion, we have reviewed such documents and
matters of law as we have deemed necessary for the purposes of expressing the
opinions set forth herein. Based upon the foregoing, we are of the opinion that:
1. The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware. We are not aware of any
subsidiaries of the Company other than the Subsidiaries. Each of the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the state of its incorporation or formation. The Company and each of the
Subsidiaries has full corporate or other power and authority to conduct all the
activities conducted by it, to own or lease all the properties and assets owned
or leased by it and to conduct its business as described in the Registration
Statement and the Prospectus. The
A-1
<PAGE> 27
Company and each of its Subsidiaries is duly licensed or qualified to do
business and in good standing as a foreign corporation or partnership, as the
case may be, in all jurisdictions in which the nature of the activities
conducted by it or the character of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
so qualify would not have a material adverse effect on the Company and its
Subsidiaries, taken as a whole. To the best of our knowledge after due inquiry,
the Company beneficially owns the percentage indicated in Exhibit [___] of the
Registration Statement of the outstanding equity interests in each of the
Subsidiaries, free and clear of all Encumbrances. All of the equity interests
held by the Company in each of the Subsidiaries are duly authorized, validly
issued, fully paid and nonassessable and were not issued in violation of any
preemptive or similar rights.
2. The outstanding shares of Common Stock of the Company have
been duly authorized and are validly issued, fully paid and non-assessable, and,
except as otherwise set forth in the Registration Statement and Prospectus, are
free of preemptive rights or, to such counsel's knowledge, any other rights to
subscribe for any of the Firm Securities.
3. The Firm Securities to be issued and sold by the Company
pursuant to the Underwriting Agreement have been duly authorized and, when
issued, authenticated and delivered to the Representatives against payment
therefor in accordance with the terms of the Underwriting Agreement, will be
validly issued and binding obligations of the Company.
4. The Company has taken all necessary actions required to
reserve shares of Common Stock of the Company to be issued upon conversion of
the Firm Securities up to the amount of Common Stock currently authorized and
issuable.
5. To the best our knowledge after due inquiry, except as set
forth in the Registration Statement and the Prospectus, the Company does not
have outstanding any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into or exchangeable for, or
any contracts or commitments to issue or sell, any shares of its capital stock
or any such warrants, convertible securities or obligations.
6. To the best of our knowledge after due inquiry, except as
set forth in the Registration Statement and the Prospectus, no person has any
right to have any securities of the Company held by them registered under the
Act.
7. The Company (either directly or through its Subsidiaries)
has good and indefeasible title to all properties and assets described in the
Registration Statement and Prospectus as owned by it, free and clear of all
Encumbrances other than those described in the Registration Statement and
Prospectus and other than those that do not materially adversely affect the
value of such properties and assets and do not interfere with the use made or
proposed to be made of such properties and assets. The Company (either directly
or through its Subsidiaries) has valid and subsisting leasehold interests in the
properties and assets described in the Registration Statement and Prospectus as
leased by it, free and clear of all Encumbrances, other than those described in
the Registration Statement and Prospectus and those that do not materially
adversely affect the value of such properties and assets and do not materially
interfere
A-2
<PAGE> 28
with the use made, or proposed to be made, of such properties and assets. The
Company (either directly or through its Subsidiaries) has valid and subsisting
options to purchase the properties described in the Registration Statement and
Prospectus under the caption "Business - Properties- Properties Under
Construction/Development" as being under development.
8. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act.
9. Except as set forth in the Registration Statement and
Prospectus, there are no actions, suits or proceedings pending or, to the best
of our knowledge after due inquiry, threatened against or affecting the Company
or any of its Subsidiaries or any of their respective directors, officers or
stockholders in their capacity as such, or ally of the properties or assets
owned, leased or operated by the Company or any of its Subsidiaries, before or
by any Governmental Body, wherein an unfavorable ruling, decision or finding
would have- a material adverse effect on the business, properties, prospects,
condition (financial or otherwise), net worth or results of operations of the
Company and its Subsidiaries, taken as a whole. There is no pending litigation
or governmental proceeding required to be described in the Prospectus that is
not described as required.
10. To the best of our knowledge after due inquiry, none of
the Company and its Subsidiaries is in breach or default (nor has an event
occurred which, with notice or lapse of time or both, would constitute a
default) in the due performance and observation of any term, covenant or
condition of any contract or other agreement to which it is a party or by which
its properties is bound or affected, which default could reasonably be expected,
individually or in the aggregate, to have a material adverse effect on the
business, properties, prospects, condition (financial or otherwise), net worth
or results of operations of the Company and its Subsidiaries, taken as a whole.
To the best of our knowledge after due inquiry, (i) the Company is not in
violation of any provision of its Restated Certificate of Incorporation or
Restated Bylaws, as amended, and (ii) none of the Subsidiaries is in violation
of its organizational documents, as amended.
11. No consent, approval, authorization or order of, or any
filing or declaration with, any Governmental Body is required for the
consummation of the transactions contemplated by the Underwriting Agreement or
in connection with the issuance and sale of the Securities to be sold by the
Company, except such as have been obtained under the Act or the Rules and
Regulation d such as may be required under state securities or Blue Sky laws or
the bylaws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the Securities to be sold by the Company.
12. The Company has full power and authority to enter into the
Underwriting Agreement and to carry out all the terms and provisions thereof to
be carried out by it. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company and is enforceable against the Company in accordance
with the terms thereof, except as limited by general principles of equity
A-3
<PAGE> 29
relating to the availability of remedies and except as rights to indemnity or
contribution may be limited by federal or state securities laws and the public
policy underlying such laws.
13. The execution, delivery and the performance of the
Underwriting Agreement and the consummation of the transactions contemplated
thereby will not result in the creation or imposition of any Encumbrance upon
any of the properties or assets of the Company or any of its Subsidiaries
pursuant to the terms or provisions of, or result in a breach or violation of or
conflict with any of the terms or provisions of, or constitute a default under,
or give any other party a right to terminate any of its obligations under, or
result in the acceleration of any obligation under, (i) the Restated Certificate
of Incorporation or Restated Bylaws of the Company, in each case as amended,
(ii) the organizational or charter documents of any of the Subsidiaries, as
amended, or (iii) any contract or other agreement to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its subsidiaries
or any of their respective assets or properties are bound or affected, or (iv)
any judgment, ruling, decree, order, law, statute, rule or regulation of any
Governmental Body applicable to the Company or any of its Subsidiaries or their
business or properties, except, in the case of clauses (iii) and (iv), any
violation which could not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the business, properties,
prospects, condition (financial or otherwise), net worth or results of
operations of the Company and its Subsidiaries, taken as a whole.
14. The Company has full power and authority to authorize,
issue, offer and sell the Securities to be sold by it, as contemplated by the
Underwriting Agreement, free of any preemptive or similar rights.
15. All holders of securities of the Company have waived any
rights to the registration of any securities of the Company which they may have
as a result of the filing of the Registration Statement.
16. There is no document or contract of a character required
to be described in the Registration Statement or Prospectus or to be filed as a
exhibit to the Registration Statement which is not described or filed as
required.
17. Each of the Company and its Subsidiaries owns, or is
licensed or otherwise has the right to use, all material trademarks and trade
names which are used in or necessary for the conduct of its business as
described in the Registration Statement and Prospectus. To the best of our
knowledge after due inquiry, no claims have been asserted by any person to the
use of any such trademarks or trade names or challenging or questioning the
validity or effectiveness of any such trademark or trade name.
18. The Registration Statement has become effective under the
Act and, to the best of our knowledge after due inquiry, no stop order
preventing or suspending the use of the Registration Statement or Prospectus,
has been issued and no proceeding for that purpose has been instituted or is
pending or threatened by the Commission.
19. The Registration Statement, as of the Effective Date, and
the Prospectus, as of its date and as of the date hereof, complied or complies,
as the case may be, in all material
A-4
<PAGE> 30
respects with the applicable requirements of the Act and the Rules and
Regulations of the Commission.
20. The form of certificate evidencing the Securities has been
duly approved by all necessary corporate action of the Company and complies as
to form with the requirements of the Delaware General Corporation Law.
21. The statements in the Prospectus under the captions
"Business - Joint Ventures and Strategic Alliances," insofar as they purport to
summarize the provisions of documents referred to therein, and the statements in
the Prospectus under the captions "Description of Capital Stock" and insofar as
they purport to summarize the provisions of documents or matters of law referred
to therein or constitute legal conclusions, are accurate in all material
respects.
Very truly yours,
Rogers & Hardin
A-5
<PAGE> 31
EXHIBIT B
FORM OF OPINION OF COMPANY REGULATORY COUNSEL
__________________, 1997
SCHRODER & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
SMITH BARNEY INC.
COWEN & COMPANY
McDONALD & COMPANY SECURITIES INC.
As Representatives of Several Underwriters
c/o Schroder & Co. Inc.
787 Seventh Avenue
5th Floor
New York, New York 10019
Re: $125,000,000 Aggregate principal amount of [ ]%
Convertible Subordinated Debentures Due 2002 of Alternative
Living Services, Inc.
Ladies and Gentlemen:
We have acted as counsel to Alternative Living Services, Inc., a
Delaware corporation (the "Company"), in connection with the purchase on this
date by you and the other underwriters (collectively, the "Underwriters") named
in Schedule I of that certain Underwriting Agreement dated December 19, 1997,
among the Underwriters, the Company and the Selling Stockholders (as defined
therein) (the "Underwriting Agreement") of $125,000,000 aggregate principal
amount of [ ]% Convertible Subordinated Debentures due 2002 (the "Firm
Securities"). This opinion is furnished to you pursuant to Section 6(d) of the
Underwriting Agreement. Terms used herein and not defined herein are used as
defined in the Underwriting Agreement.
In connection with this opinion, we have reviewed such documents and
matters of law as we have deemed necessary for the purposes of expressing the
opinions set forth herein. Based upon the foregoing, we are of the opinion that:
1. Except as otherwise described in the Registration Statement
and Prospectus, each of the facilities described in the Registration Statement
under the captions "Business Residences" and located in the State of ___________
is organized, licensed and operated in conformity with the requirements for
qualification as a licensed facility of the type set forth next to the name of
such Facility in Exhibit A hereto under the applicable laws, rules and
regulations of the State of in which the Facilities are located and is therefore
able to conduct the Company's business of "assisted living" described as being
conducted at each such Facility in
B-1
<PAGE> 32
its beds as set forth more fully in the Prospectus. Furthermore, the Company's
___________ facility in _____________, is not currently a licensed facility but
is operated as an independent living facility. Those facilities listed herein
which are not licensed under state law or which contain unlicensed beds do not
currently provide in those facilities or unlicensed beds services of a nature
which would require the Company or its Subsidiaries to be duly licensed to
provide the same.
2. The statements set forth under the headings "Risk
Factors-Governmental Regulation" and "Business-Government Regulation" in the
Registration Statement and the Prospectus, insofar as such statements constitute
a summary of the legal matters, documents or proceedings referred to therein,
provide accurate summaries of such legal matters, documents and proceedings.
3. To our knowledge after reasonable investigation, the
conduct of the business of the Company and its Subsidiaries is not in violation
of any federal, state or local statute, administrative regulation or other law,
which violation is likely to have a material adverse effect on the Company and
its Subsidiaries, taken as a whole; and each of the Company and its Subsidiaries
has either (i) obtained all Licenses which are necessary or required to be
issued to the Company and its Subsidiaries for the ownership, leasing and
operation of its Facilities and the conduct of its business as presently
conducted, except where the failure to obtain such Licenses would not have a
material adverse affect on each of the Company and its Subsidiaries or (ii)
taken all steps necessary to obtain such Licenses an depending issuance thereof
is lawfully operating its Facilities under Licenses issued in the name of the
prior operator thereof.
Although we assume no responsibility for the accuracy,
completeness and fairness of the statements contained in the Registration
Statement and Prospectus, we have participated in discussions with officers of
the Company regarding the provisions of the Prospectus described in Paragraph 2
of this opinion and no facts have come to our attention that lead us to believe
that the provisions of the Registration Statement described in Paragraph 2 of
this opinion as of the date it was declared effective and as of the date hereof
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the provisions of the
Prospectus described in Paragraph 2 of this opinion as of its date and the date
hereof, contained or contains any untrue statement of a material fact or omitted
or omits to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading (it being understood that we have not been requested
to comment on, and express no comment with respect to, financial, operating and
statistical data and the historical and pro forma financial statements,
including the notes and schedules thereto, in the Prospectus).
Sincerely,
B-2
<PAGE> 1
EXHIBIT 4.1
EXECUTION COPY
ALTERNATIVE LIVING SERVICES, INC.
INDENTURE
Dated as of December 19, 1997
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>
SECTION 1.01 Definitions................................................................................1
SECTION 1.02 Other Definitions..........................................................................4
SECTION 1.03 Incorporation by Reference to Trust Indenture Act..........................................5
SECTION 1.04 Rules of Construction......................................................................5
ARTICLE 2
THE SECURITIES
SECTION 2.01 Forms Generally............................................................................6
SECTION 2.02 Amount Unlimited; Issuable in Series.......................................................6
SECTION 2.03 Execution and Authentication...............................................................8
SECTION 2.04 Registrar and Agents.......................................................................8
SECTION 2.05 Paying Agent to Hold Money in Trust........................................................9
SECTION 2.06 Transfer and Exchange......................................................................9
SECTION 2.07 Replacement Securities....................................................................11
SECTION 2.08 Outstanding Securities....................................................................12
SECTION 2.09 Temporary Securities......................................................................12
SECTION 2.10 Cancellation..............................................................................12
SECTION 2.11 Defaulted Interest........................................................................13
SECTION 2.12 Securityholder Lists......................................................................13
SECTION 2.13 Persons Deemed Owners.....................................................................13
SECTION 2.14 CUSIP Number..............................................................................13
SECTION 2.15 Provisions in Global Security.............................................................14
ARTICLE 3
REDEMPTION
SECTION 3.01 Right of Redemption.......................................................................15
SECTION 3.02 Selection of Securities to be Redeemed....................................................15
SECTION 3.03 Notice of Redemption by the Company.......................................................16
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 3.04 Effect of Notice of Redemption............................................................16
SECTION 3.05 Deposit of Redemption Price...............................................................17
SECTION 3.06 Securities Redeemed in Part...............................................................17
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of the Securities.................................................................17
SECTION 4.02 Commission Reports........................................................................17
SECTION 4.03 Waiver of Stay, Extension or Usury Laws...................................................18
SECTION 4.04 Notice of Default.........................................................................18
SECTION 4.05 Compliance Certificates...................................................................18
SECTION 4.06 Limitation on Dividends and Other Distributions...........................................18
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When Company May Merge, etc...............................................................19
SECTION 5.02 Successor Corporation or Trust Substituted................................................19
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.........................................................................19
SECTION 6.02 Acceleration..............................................................................21
SECTION 6.03 Other Remedies............................................................................22
SECTION 6.04 Waiver of Defaults and Events of Default..................................................22
SECTION 6.05 Control by Majority.......................................................................22
SECTION 6.06 Rights of Holders to Receive Payment......................................................22
SECTION 6.07 Collection Suit by Trustee................................................................23
SECTION 6.08 Trustee May File Proofs of Claim..........................................................23
SECTION 6.09 Priorities................................................................................23
SECTION 6.10 Undertaking for Costs.....................................................................25
SECTION 6.11 Limitations on Suits......................................................................25
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 7
TRUSTEE
SECTION 7.01 Duties of Trustee.........................................................................25
SECTION 7.02 Rights of Trustee.........................................................................26
SECTION 7.03 Individual Rights of Trustee..............................................................26
SECTION 7.04 Trustee's Disclaimer......................................................................27
SECTION 7.05 Notice of Defaults........................................................................27
SECTION 7.06 Reports by Trustee to Holders.............................................................27
SECTION 7.07 Compensation and Indemnity................................................................27
SECTION 7.08 Replacement of Trustee....................................................................28
SECTION 7.09 Successor Trustee by Merger, etc..........................................................29
SECTION 7.10 Eligibility; Disqualification.............................................................29
SECTION 7.11 Preferential Collection of Claims Against Company.........................................29
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01 Satisfaction, Discharge and Defeasance of the Securities..................................30
SECTION 8.02 Satisfaction and Discharge of Indenture...................................................30
SECTION 8.03 Survival of Certain Obligations...........................................................31
SECTION 8.04 Application of Trust Money................................................................31
SECTION 8.05 Paying Agent to Repay Monies Held.........................................................31
SECTION 8.06 Return of Unclaimed Monies................................................................32
SECTION 8.07 Reinstatement.............................................................................32
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.01 Supplemental Indentures Without Consent of Holders........................................32
SECTION 9.02 Supplemental Indentures with Consent of Holders...........................................33
SECTION 9.03 Compliance with Trust Indenture Act.......................................................34
SECTION 9.04 Revocation and Effect of Consents.........................................................34
SECTION 9.05 Notation on or Exchange of Securities.....................................................35
SECTION 9.06 Effect of Supplemental Indentures.........................................................35
SECTION 9.07 Reference in Securities to Supplemental Indentures........................................35
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE 10
CONVERSION OF SECURITIES
SECTION 10.01 Right of Conversion; Conversion Price....................................................36
SECTION 10.02 Issuance of Shares on Conversion.........................................................36
SECTION 10.03 No Adjustment for Interest or Dividends..................................................37
SECTION 10.04 Adjustment of Conversion Price...........................................................37
SECTION 10.05 Notice of Adjustment of Conversion Price.................................................40
SECTION 10.06 Notice of Certain Corporate Action.......................................................40
SECTION 10.07 Taxes on Conversions.....................................................................41
SECTION 10.08 Fractional Shares........................................................................42
SECTION 10.09 Cancellation of Converted Securities.....................................................42
SECTION 10.10 Provisions in Case of Consolidation, Merger or Sale of Assets............................42
SECTION 10.11 Disclaimer by Trustee of Responsibility for Certain Matters..............................42
ARTICLE 11
SUBORDINATION; SENIORITY
SECTION 11.01 Securities Subordinated to Senior Indebtedness...........................................43
SECTION 11.02 Company Not to Make Payments with Respect to Junior Securities in
Certain Circumstances....................................................................44
SECTION 11.03 Subrogation of Junior Securities.........................................................45
SECTION 11.04 Authorization by Holders of Junior Securities............................................46
SECTION 11.05 Notices to Trustee.......................................................................47
SECTION 11.06 Trustee's Relation to Senior Indebtedness................................................47
SECTION 11.07 No Impairment of Subordination...........................................................48
SECTION 11.08 Article 11 Not To Prevent Events of Default..............................................48
SECTION 11.09 Paying Agents other than the Trustee.....................................................48
SECTION 11.10 Securities Senior to Subordinated Indebtedness...........................................48
ARTICLE 12
SINKING FUND
SECTION 12.01 Mandatory and Optional Sinking Fund Payments.............................................49
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<S> <C> <C>
SECTION 12.02 Satisfaction of Sinking Fund Payments with Securities....................................50
SECTION 12.03 Redemption of Securities for Sinking Funds...............................................50
ARTICLE 13
MISCELLANEOUS
SECTION 13.01 Trust Indenture Act Controls.............................................................50
SECTION 13.02 Notices..................................................................................50
SECTION 13.03 Communications by Holders with Other Holders.............................................51
SECTION 13.04 Certificate and Opinion as to Conditions Precedent.......................................51
SECTION 13.05 Statements Required in Certificate and Opinion...........................................52
SECTION 13.06 Rules by Trustee and Agents..............................................................52
SECTION 13.07 Record Date..............................................................................52
SECTION 13.08 Legal Holidays...........................................................................52
SECTION 13.09 Governing Law............................................................................52
SECTION 13.10 No Adverse Interpretation of Other Agreements............................................53
SECTION 13.11 No Recourse Against Others...............................................................53
SECTION 13.12 Successors...............................................................................53
SECTION 13.13 Multiple Counterparts....................................................................53
SECTION 13.14 Table of Contents, Headings, etc.........................................................53
SECTION 13.15 Severability.............................................................................53
</TABLE>
-v-
<PAGE> 7
CROSS-REFERENCE TABLE
ALTERNATIVE LIVING SERVICES, INC.
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture
- --------------- ---------
<S> <C>
ss.310(a)(1)----------------------------------------------------------------------------7.10
(a)(2).........................................................................7.10
(a)(3).........................................................................Not Applicable
(a)(4).........................................................................Not Applicable
(a)(5).........................................................................7.10
(b)............................................................................7.08; 7.10
(c)............................................................................Not Applicable
ss.311(a)-------------------------------------------------------------------------------7.11
(b)............................................................................7.11
(c)............................................................................Not Applicable
ss.312(a)-------------------------------------------------------------------------------2.12
(b)............................................................................13.03
(c)............................................................................13.03
ss.313(a)-------------------------------------------------------------------------------7.06
(b)(1).........................................................................Not Applicable
(b)(2).........................................................................7.06
(c)............................................................................7.06; 13.02
(d)............................................................................7.06
ss.314(a)-------------------------------------------------------------------------------4.02; 13.02
(b)............................................................................Not Applicable
(c)(1).........................................................................13.04
(c)(2).........................................................................13.04
(c)(3).........................................................................Not Applicable
(d)............................................................................Not Applicable
(e)............................................................................13.05
(f)............................................................................Not Applicable
ss.315(a)-------------------------------------------------------------------------------7.01(b)
(b)............................................................................7.05; 13.02
(c)............................................................................7.01(a)
(d)............................................................................7.01(c); 6.05
(e)............................................................................6.10
ss.316(a)(last sentence)----------------------------------------------------------------13.06
(a)(1)(A)......................................................................6.05
(a)(1)(B)......................................................................6.04
(a)(2).........................................................................Not Applicable
(b)............................................................................6.06
(c)----------------------------------------------------------------------------13.07
ss.317(a)(1)----------------------------------------------------------------------------6.07
(a)(2).........................................................................6.08
(b)............................................................................2.05
ss.318(a)-------------------------------------------------------------------------------11.01
(b)............................................................................Not Applicable
(c)............................................................................Not Applicable
</TABLE>
- ----------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
-vi-
<PAGE> 8
INDENTURE dated as of December 19, 1997 between Alternative Living
Services, Inc., a Delaware corporation ("Company"), and United States 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.
"Board Resolution" means a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of
Directors of the Company and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means a day that is not a Legal Holiday.
<PAGE> 9
"Capital Stock" means any and all shares or other equivalents (however
designated) of capital stock, including all common stock and all preferred
stock.
"Closing Price" means with respect to the shares of common stock of the
Company on any day, (i) the last reported sales price regular way or, in case no
such reported sale takes place on such day, the average of the reported closing
bid and asked prices regular way, in either case on the American Stock Exchange,
or (ii) if the shares of common stock are not listed or admitted to trading on
the American 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.
"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
-2-
<PAGE> 10
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, the Secretary or the
Controller of the Company.
"Officers' Certificate" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer, Assistant Secretary or Assistant
Controller of the Company. See Sections 13.04 and 13.05.
"Opinion of Counsel" means a written opinion from Rogers & Hardin LLP,
or such other counsel as is acceptable to Trustee. The counsel may be an
employee of or counsel to the Company or the Trustee. See Sections 13.04 and
13.05.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Principal" of a Security means the principal of the Security plus,
when appropriate, the premium, if any, on the Security.
-3-
<PAGE> 11
"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,
whether any such Indebtedness exists as of the date of this Indenture or shall
hereafter be created, incurred, assumed or guaranteed (other than (i)
Indebtedness owed to a subsidiary of the Company, (ii) Indebtedness which is
expressly pari passu to the Securities, (iii) Subordinated Indebtedness, (iv)
the Company's 7% Convertible Subordinated Debentures due 2004 or (v) the
Company's 6.75% Convertible Subordinated Debentures due 2006).
"Subordinated Indebtedness" means the principal, premium, if any, and
interest on any Indebtedness of the Company which by its terms is expressly
subordinated in right of payment to the Securities.
"Subsidiary" means a corporation the majority of whose voting stock is
owned by the Company or a subsidiary of the Company. Voting stock is Capital
Stock having voting power under ordinary circumstances to elect directors.
"Trust Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any senior vice president, any
vice-president, any assistant vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier, any assistant
cashier, any Trust Officer or assistant Trust Officer, the controller or any
assistant controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer of the Trustee to whom such matter is referred because of his knowledge
of and familiarity with the particular subject.
"United States" means the United States of America.
SECTION 1.02 Other Definitions.
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Company Order" 2.03
"Conversion Agent" 2.04
"conversion price" 10.01
"current market price" 10.04
</TABLE>
-4-
<PAGE> 12
<TABLE>
<S> <C>
"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.
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;
-5-
<PAGE> 13
(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:
(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;
-6-
<PAGE> 14
(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) the period during which such conversion right may
be exercised and any other terms or conditions of such
conversion;
(10 if other than the principal amount thereof, the
portion of the principal amount of Securities of the series
which shall be payable upon declaration of acceleration of the
maturity thereof;
(11 whether any Securities of the series are to be
issued in whole or in part in the form of one or more Global
Securities and, if so, the Depositary for such Global Security
or Securities (which Depositary shall be, if then required by
applicable law or regulation, a clearing agency registered
under the Exchange Act and any other applicable statute or
regulation) and whether beneficial owners of interests in such
Global Security or Securities may exchange such interests for
Securities of such series and any authorized form and
denomination of such Securities and the circumstances under
which any such exchanges may occur (if other than in the
manner provided in Section 2.06);
(12 the identity of each Paying Agent, Conversion
Agent and Registrar (each as defined in Section 2.04) for the
Securities of such series; and
(13) any other terms of the series (which terms shall
not be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to such Board Resolution and set forth in such Officers' Certificate or in any
such indenture supplemental hereto.
If any of the terms of a series of Securities are established by action
taken pursuant to a
-7-
<PAGE> 15
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.
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
-8-
<PAGE> 16
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 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.
-9-
<PAGE> 17
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
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
-10-
<PAGE> 18
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 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
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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.
A Security does not cease to be outstanding because the Company or an
Affiliate holds the Security.
SECTION 2.09 Temporary Securities.
Until definitive Securities of any series are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities of
such series. Temporary Securities of any series shall be substantially in the
form of definitive Securities of such series but may have non-material
variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities of any series in exchange for temporary
Securities of such series upon written order of the Company signed by two
Officers. Until so exchanged, temporary Securities of any series represent the
same rights as definitive Securities of such series. Upon request of the
Trustee, the Company shall provide a certificate to the effect that the
temporary Securities of any series meet the requirements of the second sentence
of this Section 2.09.
SECTION 2.10 Cancellation.
The Company at any time may deliver Securities of any series to the
Trustee for cancellation. The Registrar, the Paying Agent and the Conversion
Agent shall forward to the Trustee any Securities surrendered to them for
transfer, exchange, payment or conversion. The Trustee shall cancel all
Securities surrendered for transfer, exchange, payment or conversion and destroy
canceled Securities in accordance with its customary destruction procedures and
deliver a certificate of such destruction to the Company unless the Company; by
written order signed by two officers of the Company, directs the Trustee in
writing prior to such destruction to deliver canceled Securities to the Company.
Subject to Sections 2.07, 3.06 and the second paragraph of Section 10.02, the
Company may not issue Securities to replace Securities that it has previously
paid or delivered to the Trustee for cancellation or that a Securityholder has
converted pursuant
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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.
SECTION 2.12 Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders of Securities of each series. If the Trustee is not the Registrar, the
Company or other obligor, if any, shall furnish to the Trustee at least seven
Business Days prior to each semiannual interest payment date and at such other
times as the Trustee may request in writing a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of Holders
of Securities of each series upon which the Trustee may conclusively rely. The
Trustee may destroy any such list upon receipt of a replacement list. The Paying
Agent will solicit from each Securityholder a certification of social security
number or taxpayer identification number in accordance with its customary
practice and as required by law, unless the Paying Agent is in possession of
such certification. Each Paying Agent is authorized to impose back-up
withholding with respect to payments to be made to Securityholders to the extent
required by law.
SECTION 2.13 Persons Deemed Owners.
Prior to presentment of a Security of any series for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security and neither the Company, the Trustee nor any agent of the Company
or the Trustee shall be affected by notice to the contrary.
SECTION 2.14 CUSIP Number.
The Company may use a "CUSIP" number when issuing Securities of any
series, and if so, the Trustee may use the CUSIP number in notices of redemption
or exchange as a convenience to Holders of Securities of such series; provided,
that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in the notice or on the
Securities, and that reliance may be placed only on the other identification
numbers printed on the Securities.
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SECTION 2.15 Provisions in Global Security.
(a) If Securities of a series are issuable in whole or in part as
Global Securities, as may be specified in accordance with Section 2.02 of this
Indenture, then in accordance with any such Global Security, such Global
Security may represent such of the outstanding Securities of such series as
shall be specified therein and may also provide that it represents the aggregate
principal amount of outstanding Securities from time to time endorsed thereon
and that the aggregate principal amount of outstanding Securities represented
thereby may from time to time be reduced to reflect exchanges. Global Securities
may be permanent or temporary. Any endorsement of a Global Security to reflect
the amount, or any increase or decrease in the principal amount, of outstanding
Securities represented thereby shall be made by the Trustee in such manner and
upon instructions given by such Person or Persons as shall be specified therein
or in the Company Order to be delivered to the Trustee and the Depositary
pursuant to Section 2.03 or Section 2.09. Subject to the provisions of Section
2.03 and, if applicable, Section 2.09, the Depositary shall deliver and
redeliver any permanent Global Security in the manner and upon written
instructions given by the Person or Persons specified therein or in the
applicable Company Order.
(b) Notwithstanding the other provisions of this Indenture, unless
otherwise specified in accordance with Section 2.02, payment of principal of
(and premium, if any) and interest, if any, on any permanent Global Securities
shall be made directly to owners of beneficial interest of such Global Security.
(c) Notwithstanding the provisions of Section 2.13 of this Indenture,
the Company, the Trustee and any agent of the Company or the Trustee shall treat
the owners of beneficial interest of such Global Security as the Holders of such
principal amounts of outstanding Securities represented by a Global Security as
shall be specified in writing by the Depositary and delivered to the Company and
the Trustee with respect to such Global Security only for purposes of obtaining
any consents or directions required to be given by the Holders pursuant to this
Indenture.
(d) Unless otherwise provided as contemplated by Section 2.02, a Global
Security of any series shall provide, in addition to the provisions established
pursuant to Sections 2.01, 2.02 and 2.15(a) through (c), that the Depositary
will not sell, assign, transfer or otherwise convey any beneficial interest in
such Global Security unless such beneficial interest is in an amount equal to an
authorized denomination for Securities of such series, and the Depository, by
accepting such Global Security, agrees to be bound by such provision. Any Global
Security shall also contain such other provisions as are necessary to reflect
the global form of such Security and the designation of a Depositary for such
Global Security.
ARTICLE 3
REDEMPTION
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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, 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 American Stock Exchange, or (y) if the
Securities of such series are not listed or admitted to trading on the American
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.
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
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shall be in principal amounts of $1,000 or multiples thereof. Provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption. The Trustee's selection of Securities for
redemption by any method authorized by this Section 3.02 shall be conclusively
deemed reasonable.
SECTION 3.03 Notice of Redemption by the Company.
At least 30 days but not more than 60 days before a Redemption Date
with respect to Securities of any series, the Company shall mail a notice of
redemption by first-class mail to each Holder of Securities of such series to be
redeemed.
The notice shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent and the
Conversion Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(5) that interest on Securities called for redemption ceases
to accrue on and after the Redemption Date;
(6) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
Redemption Date, upon surrender of such Security, a new Security or
Securities of the same series in principal amount equal to the
unredeemed portion thereof will be issued; and
(7) any conversion rights with respect to the Securities and the
applicable procedures required to be followed in connection with a
conversion of Securities.
At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. If a CUSIP number
is listed in such notice or printed on the Security, the notice shall state that
no representation is made as to the correctness or accuracy of such CUSIP
number.
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 stockholders (containing audited financial statements) and
any other financial reports furnished by it to stockholders to be mailed to the
Holders at their addresses appearing in the register of Securities maintained by
the Registrar.
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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 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
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any share of the Company's Capital Stock by exchange for, or out of the proceeds
of the substantially concurrent sale (other than to a Subsidiary) of, other
shares of its Capital Stock.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When Company May Merge, etc.
The Company shall not consolidate with or merge into, or transfer all
or substantially all of its assets to, another Person in any transaction in
which the Company is not the continuing or surviving entity unless (i) the
resulting, surviving or transferee Person (or the parent corporation of such
Person in the case of a triangular merger) is a corporation or trust which
assumes by supplemental indenture all the obligations of the Company under the
Securities of each series and this Indenture; (ii) such corporation or trust is
organized and existing under the laws of the United States, a State thereof or
the District of Columbia although it in turn may be owned by a foreign entity;
(iii) immediately after giving effect to such transaction no Default or Event of
Default shall have happened and be continuing, and the Officers' Certificate
referred to in the following clause reflects that such Officers are not aware of
any such Default or Event of Default that shall have happened and be continuing,
and (iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture comply with this Indenture,
and thereafter all obligations of the Company shall terminate.
SECTION 5.02 Successor Corporation or Trust Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.01,
the successor corporation or trust formed by such consolidation or into which
the Company is merged (or the parent corporation of such successor or surviving
corporation in the case of a triangular merger in which the Company is a
constituent corporation) or to which such transfer is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation or trust
has been named as the Company herein.
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
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such series when the same becomes due and payable and the
default continues for a period of 30 days;
(2) the Company defaults in the payment of the
principal of (and premium, if any, on) any Security of such
series when the same becomes due and payable at maturity, upon
redemption or otherwise, and the default continues for five
Business Days;
(3) the Company fails to comply with any of its other
agreements in the Securities of such series or this Indenture
and the default continues for the period and after the notice
specified in the last paragraph of this Section 6.01;
(4) there shall be a default under any bond,
debenture, note or other evidence of Indebtedness or under any
mortgage, indenture or other instrument under which there may
be issued or by which there may be secured or evidenced any
Indebtedness of the Company or any Subsidiary, whether any
such Indebtedness now exists or shall hereafter be created, if
(a) either (i) such event of default results from the failure
to pay any such Indebtedness at maturity or (ii) as a result
of such event of default, the maturity of such Indebtedness
has been accelerated prior to its stated maturity and such
acceleration shall not be rescinded or annulled or the
accelerated amount paid within ten days after notice to the
Company of such acceleration, or such Indebtedness having been
discharged and (b) the principal amount of such Indebtedness,
together with the principal amount of any other such
Indebtedness in default for failure to pay principal or
interest thereon, or the maturity of which has been so
accelerated, aggregates $10,000,000 or more;
(5) the Company pursuant to or within the meaning of
any Bankruptcy Law:
(A) commences a voluntary case or
proceeding,
(B) consents to the entry of an
order for relief against it in an
involuntary case or proceeding,
(C) consents to the appointment of
a Custodian of it or for all or
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:
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(A) is for relief against the
Company in an involuntary case or
proceeding,
(B) appoints a Custodian of the
Company or for all or substantially all of
its property, or
(C) orders the liquidation of the
Company, and the order or decree remains
unstayed and in effect for 90 days;
provided, however, that a default under this
Section 6.01 is not an Event of Default with respect
to any series of Securities if a specified event is
either applicable to a particular series other than
such series or it is specifically deleted or modified
in the supplemental indenture creating such series of
Securities or in the form of Security for such
series.
A default under clause (3) is not an Event of Default with respect to
any series of Securities until the Trustee notifies the Company, or the Holders
of a majority in principal amount of the Securities of such series then
outstanding notify the Company and the Trustee in writing, of the default and
the Company does not cure the default within 60 days after receipt of such
notice. The notice must specify the default, demand that it be remedied and
state that the notice is a "Notice of Default." The Trustee shall give such
notice to the Company only if directed to do so in writing by the Holders of a
majority in principal amount of the Securities then outstanding. Such notice by
the Trustee shall not be deemed to be a certification by the Trustee as to
whether an Event of Default has occurred.
SECTION 6.02 Acceleration.
If an Event of Default occurs and is continuing with respect
to any series of Securities, the Trustee by notice to the Company, or the
Holders of a majority in principal amount of the Securities of such series then
outstanding by notice to the Company and the Trustee, may declare to be due and
payable immediately the principal amount of the Securities of such series plus
accrued interest to the date of acceleration. Upon any such declaration, such
amount shall be due and payable immediately, and upon payment of such amount all
of the Company's obligations with respect to the Securities of such series,
other than obligations under Section 7.07, shall terminate. The Holders of a
majority in principal amount of the outstanding Securities of such series by
written notice to the Trustee may rescind an acceleration and its consequences
if (x) all existing Events of Default with respect to the Securities of such
series, other than the non-payment of the principal of the Securities of such
series, which have become 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).
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SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy by proceeding at law or in equity to collect the payment of
principal (and premium, if any) or interest on the Securities of such series or
to enforce the performance of any provision of the Securities of such series or
this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04 Waiver of Defaults and Events of Default.
Subject to Section 9.02, the Holders of a majority in principal amount
of the Securities of any series then outstanding, on behalf of the Holders of
the Securities of such series, by written notice to the Trustee may waive a
Default or Event of Default with respect to the Securities of such series and
its consequences. When a Default or Event of Default is waived with respect to
the Securities of any series, it is cured and ceases.
SECTION 6.05 Control by Majority.
The Holders of a majority in principal amount of the Securities of any
series then outstanding may direct in writing the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on it with respect to the Securities of such
series. The Trustee, however, may refuse to follow any direction that conflicts
with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Securityholders or that may involve the
Trustee in personal liability or for which the Trustee does not have adequate
indemnification pursuant to Section 7.01(e); provided, that, the Trustee may
take any other action deemed proper by the Trustee which is not inconsistent
with such direction.
SECTION 6.06 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security of any series to receive payment of principal of, premium,
if any, and interest on such Security, on or after the respective due dates
expressed in such Security, or to bring suit for the enforcement of any such
payment on or after such respective dates, is absolute and unconditional 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.
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SECTION 6.07 Collection Suit by Trustee.
If an Event of Default with respect to any series of Securities in
payment of interest or principal (and premium, if any) specified in Section
6.01(1) or (2) occurs and is continuing, or an acceleration pursuant to Section
6.02 occurs and is continuing, the Trustee may recover judgment in its own name
and as trustee of an express trust against the Company or any other obligor on
the Securities of such series for the whole amount of unpaid principal (and
premium, if any) and accrued interest remaining unpaid on the Securities of such
series, together with interest on overdue principal (and premium, if any) and to
the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate borne by the Securities of
such series and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.08 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Holders of
Securities of any series allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Securities of any series), its creditors
or its property and shall be entitled and empowered to collect and receive any
monies or other property payable or deliverable on any such claims and to
distribute the same. Any Custodian in any such judicial proceeding is hereby
authorized by each Securityholder to make such payments to the Trustee, and in
the event that the Trustee shall consent to the making of such payments directly
to the Holders of Securities of any series, to pay to the Trustee any amount due
to it for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07. To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof out of the estate in any such
proceeding, shall be denied for any reason, payment of the same shall be secured
by a lien on, and shall be paid out of, any and all distributions, dividends,
money, securities and other properties which the Securityholders may be entitled
to receive in such proceeding whether in liquidation or under any plan or
reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan or reorganization, arrangement, adjustment or composition affecting the
Securities of any series or the rights of any Holder thereof, or to authorize
the Trustee to vote in respect of the claim of any Securityholder in any 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:
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FIRST: to the Trustee for amounts due under
Section 7.07;
SECOND: to holders of any Senior
Indebtedness as required by Article 11; and
THIRD: to Holders of Securities of such
series for amounts due and unpaid on the Securities
of such series for principal of (and premium, if any)
and interest, ratably, without preference or priority
of any kind, according to the amounts due and payable
on the Securities of such series for principal (and
premium, if any) and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders of Securities of any series pursuant to this Section 6.09.
SECTION 6.10 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorney's fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.10 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.06 or a suit by Holders of more than 10% in principal
amount of the Securities of any series then outstanding or a suit by any holder
of Senior Indebtedness.
SECTION 6.11 Limitations on Suits.
Subject to Section 6.06, a Holder of any series of Securities may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder has given the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal amount of such
series of Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or
expenses;
(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
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amount of such series of Securities then outstanding.
A Holder of any Security may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
ARTICLE 7
TRUSTEE
SECTION 7.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise its rights and powers vested in it by this Indenture and use the
same degree of care and skill in their exercise as a prudent Person would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied covenants
or obligation shall be read into this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. The Trustee,
however, shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 7.01.
(2) The Trustee shall not be liable for any error in judgment
made in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 6.05.
(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.
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(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) Subject to subsection (c), the Trustee may refuse to perform any
duty or exercise any right or power unless, subject to the provisions of the
TIA, it receives indemnity satisfactory to it against any loss, liability,
expense or fee.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02 Rights of Trustee.
(1) The Trustee may rely on and shall be protected in acting or
refraining from acting upon any document believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both, which shall conform to
Section 13.05. The Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on such Officers' Certificate or Opinion of
Counsel.
(3) The Trustee may act through agents or attorneys and shall not be
responsible for the misconduct or negligence of such agents or attorneys
appointed with due care and shall not be responsible for their supervision.
(4) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
(5) The Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by the Trustee
hereunder in good faith and reliance thereon.
(6) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders of Securities of any series pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction.
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.
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SECTION 7.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities of any series, it shall not be accountable for
the Company's use of the proceeds from the Securities of any series, and it
shall not be responsible for any statement of the Company in the Indenture or
any statement in the Securities of any series other than its certificate of
authentication or in any document used in the sale of the Securities of any
series other than any statement in writing provided by the Trustee expressly for
use in such document.
SECTION 7.05 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
actually known to the Trustee with respect to the Securities of any series, the
Trustee shall mail to each Holder of Securities of such series notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a default in payment of principal of, premium, if any, or interest on any
Security, the Trustee may withhold the notice if and so long as a committee of
its Trust Officers in good faith determines that withholding the notice is in
the interests of Holders of Securities of such series. Notwithstanding anything
to the contrary expressed in this Indenture, the Trustee shall not be deemed to
have knowledge of any Event of Default hereunder unless and until a Trust
Officer shall have actual knowledge thereof, or shall have received written
notice thereof from the Company at its Corporate Trust Office. The Trustee shall
not be deemed to have actual knowledge of an Event of Default hereunder, except
in the case of an Event of Default under Sections 6.01(1) or 6.01(2) (provided
that the Trustee is the Paying Agent), until a Trust Officer receives written
notice thereof from the Company or any Securityholder that such an Event of
Default has occurred.
SECTION 7.06 Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with May 15 of the first
year in which Securities are outstanding hereunder, the Trustee, if required by
the provisions of TIA ss.313(a), shall mail to each Securityholder a brief
report dated as of May 15 of such year that complies with TIA ss.313(a). The
Trustee also shall comply with TIA ss.313(b) and ss.313(c).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the Commission and each stock exchange on which the
Securities of any series are listed. The Company agrees to notify the Trustee in
writing whenever the Securities of any series become listed or delisted on or
from any stock exchange.
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.
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The Company shall indemnify the Trustee for, and hold it harmless
against, any loss or liability incurred by it in connection with the acceptance
or administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the Securities or the
exercise or performance of any of its powers or duties hereunder. The Trustee
shall notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity and the Company may elect by written notice to the
Trustee to assume the defense of any such claim at the Company's expense with
counsel reasonably satisfactory to the Trustee.
The Company need not reimburse the Trustee for any expense or indemnify
it against any loss or liability incurred by it through the Trustee's
negligence, bad faith or willful misconduct. The Company shall not be liable for
any settlement of any claim or action effected without the Company's consent. To
secure the Company's payment obligations in this Section, the Trustee shall have
a lien prior to the Securities on all money or property held or collected by the
Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01 occurs, the expenses and the compensation for
the services are intended to constitute expenses of administration under any
applicable bankruptcy or comparable law.
SECTION 7.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign with respect to any series of Securities by so
notifying the Company. The Holders of a majority in principal amount of the
Securities of any series then outstanding may remove the Trustee with respect to
such series of Securities by so notifying the Trustee and may appoint a
successor Trustee with respect to such series of Securities with the Company's
written consent. The Company may remove the Trustee with respect to any series
of Securities (or, if clause (4) applies, with respect to all series) if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of
the Trustee or its property; or
(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
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45 days after the retiring Trustee with respect to such series resigns or is
removed, the retiring Trustee, the Company or the Holders of a majority in
principal amount of the Securities of such series then outstanding may petition
any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment with respect to any series of Securities to the retiring Trustee and
to the Company. Immediately after that, the retiring Trustee shall, upon payment
of its fees and expenses, transfer all property held by it as Trustee with
respect to such series to the successor Trustee, subject to the lien provided
for in Section 7.07, the resignation or removal of the retiring Trustee shall
become effective with respect to such series, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture with
respect to such series. Notwithstanding the replacement of the Trustee with
respect to any series of Securities pursuant to this Section 7.08, the Company's
obligations under Section 7.07 shall continue for the benefit of the retiring
Trustee with respect to expenses and liabilities incurred by it and compensation
earned by it prior to such replacement or otherwise with respect to the
Securities of such series or the Indenture. A successor Trustee with respect to
any series of Securities shall mail notice of its succession to each Holder of
Securities of such series.
SECTION 7.09 Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust assets to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss.310(a)(1), (2) and (5). The Trustee shall have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA
ss.310(b), including the optional provision permitted by the second sentence of
TIA ss.310(b)(9). The provisions of TIA ss. 310 shall also apply to the Company
as obligor of the Securities.
SECTION 7.11 Preferential Collection of Claims Against Company.
The Trustee is subject to TIA ss.311(a), excluding any creditor
relationship listed in TIA ss.311(b). A Trustee who has resigned or been removed
shall be subject to TIA ss.311(a) to the extent indicated therein. The
provisions of TIA ss. 311 shall also apply to the Company as obligor of the
Securities.
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ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01 Satisfaction, Discharge and Defeasance of the Securities.
The Company shall be deemed to have paid and discharged the entire
indebtedness on the Securities of any series after the date of the deposit
referred to in paragraph (a) below, the provisions of this Indenture shall no
longer be in effect in respect of the Securities of such series, and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of such indebtedness; provided that the
following conditions shall have been satisfied:
(a) the Company has deposited or caused to be deposited with
the Trustee irrevocably as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of all
Securities of such series, with reference to this Section 8.01, (i) money or
(ii) U.S. Government Obligations or (iii) a combination thereof, sufficient, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge the entire indebtedness on all the Securities of such series for
principal, premium, if any, and interest, if any, to the maturity date of such
series of Securities as such principal, premium, if any, or interest becomes due
and payable in accordance with the terms of this Indenture and the Securities;
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company in connection with all of the Securities of any
series, including all fees and expenses of the Trustee; and
(c) the Company has delivered to the Trustee an Officers'
Certificate stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of the entire indebtedness on the Securities
and the discharge of this Indenture and the termination of the Company's
obligations hereunder have been complied with.
"U.S. Government Obligations" means direct, non-callable obligations
of, or non-callable obligations guaranteed by, the United States of America for
the timely payment of which obligation or guarantee the full faith and credit of
the United States of America is pledged.
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
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held in trust by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 2.05 and Section 8.06 hereof) have been
delivered to the Trustee for cancellation; and
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company in connection with the outstanding Securities,
including all fees and expenses of the Trustee.
SECTION 8.03 Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this Indenture
pursuant to Section 8.01, the respective obligations of the Company specified in
Sections 2.04, 2.05, 2.06, 2.07, 2.12, 4.01, 7.07, 8.05, 8.06, 8.07 and in
Article 10 shall survive until the Securities are no longer outstanding, and
after the Securities are no longer outstanding, or upon compliance with Section
8.02, only the obligations of the Company in such Sections 7.07 and 8.06 shall
survive. Nothing contained in this Article Eight shall abrogate any of the
obligations or duties of the Trustee under this Indenture.
SECTION 8.04 Application of Trust Money.
(a) Subject to the provisions of Section 8.06, all money and U.S.
Government Obligations deposited with the Trustee for the Securities of any
series pursuant to Section 8.01 or Section 8.02, and all money received by the
Trustee in respect of U.S. Government Obligations deposited with the Trustee for
the Securities of any series pursuant to Section 8.01 or Section 8.02 shall be
held in trust and reinvested by the Trustee in U.S. Government Obligations in
accordance with the Company's written instructions and applied by the Trustee in
accordance with the provisions of the Securities of such series and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal, premium, if any,
and interest, if any, on the Securities of such series; but such money need not
be segregated from other funds except to the extent required by law.
(b) The Trustee shall deliver or pay to the Company from time to time
upon the Company's written request any U.S. Government Obligations, or money
held by it as provided in Section 8.01 or Section 8.02 which, in the written
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are then
in excess of the amount thereof which then would have been required to be
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
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with respect to such monies.
SECTION 8.06 Return of Unclaimed Monies.
Any monies deposited with or paid to the Trustee or any Paying Agent
for the Securities of any series, or then held by the Company in trust, for the
payment of any principal, premium, if any, and interest, if any, on the
Securities of any series and not applied but remaining unclaimed by the Holders
of the Securities of such series for two years after the date upon which the
principal of and interest, if any, on the Securities of such series, as the case
may be, shall have become due and payable, shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Company by such Trustee or any Paying Agent on written
demand by the Company or (if then held by the Company) shall be discharged from
such trust; and the Holders of the Securities of such series entitled to receive
such payment shall thereafter look only to the Company for the payment thereof;
provided, however, that, before being required to make any such repayment, such
Trustee may, or shall at the written request of the Company, at the expense of
the Company, cause to be published once in an authorized newspaper in the same
city in which the place of payment with respect to the Securities of such series
shall be located and in an authorized newspaper in the City of New York, or mail
to each such Holder, a notice (in such form as may be deemed appropriate by such
Trustee) that said monies remain unclaimed and that, after a date named therein,
any unclaimed balance of said monies then remaining will be returned to the
Company.
SECTION 8.07 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations with respect to the Securities of any series in
accordance with Section 8.01 by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's obligations
under this Indenture and the Securities of such series shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.01 until such
time as the Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with Section 8.04; provided, however, that
if the Company has made any payment of interest on or principal of any
Securities of any series because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
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
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from time to time, may amend this Indenture or enter into one or
more indentures supplemental hereto, to be in a form satisfactory to the Trustee
without notice to or consent of any Securityholder for any of the following
purposes:
(1) to comply with Section 5.01; or
(2) to provide for uncertificated Securities in addition to or in place
of certificated Securities; or
(3) to add to the covenants of the Company, for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be for
the benefit of less than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of such series), or to
surrender any right or power herein conferred upon the Company; or
(4) to add any Events of Default (and if such Events of Default are to
be applicable to less than all series of Securities, stating that such Events of
Default are expressly being included solely to be applicable to such series); or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only when
there is no Security outstanding of any series created prior to the execution of
such supplemental indenture which is entitled to the benefit of such provision;
or
(6) to establish the form or terms of Securities of any series as
permitted by Sections 2.01 and 2.02; or
(7) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with any provision of this
Indenture, provided such other provisions shall not adversely affect the
interests of the Holders of Securities of any series in any material respect.
SECTION 9.02 Supplemental Indentures with Consent of Holders.
With the written consent of the Holders of not less than a majority in
aggregate principal amount of the Securities of each series at the time
outstanding affected by such supplemental indenture, the Company, when
authorized by Board Resolution, and the Trustee may amend this Indenture or from
time to time and at any time enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act of 1939
as in force at 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:
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(1) extend the fixed maturity of any Securities, or reduce the
principal amount thereof or premium, if any, or reduce the rate or extend the
time of payment of interest thereon, without the consent of the Holder of each
Security so affected;
(2) reduce the aforesaid percentage of Securities of each series, the
consent of the Holders of which is required for any such supplemental indenture,
without the consent of the Holders of all Securities then outstanding affected
thereby;
(3) waive (except, unless theretofore cured) a default in the payment
of the principal of (and premium, if any on), interest on or redemption amounts
with respect to any Security;
(4) make any Security payable in money other than that stated in the
Security;
(5) make any change in Sections 6.04, 6.06 or 9.02 (this sentence);
(6) make any change that adversely affects the right to convert any
Security; or
(7) make any change in Article 11 that adversely affects the rights of
any Securityholder.
Upon the request of the Company, accompanied by a copy of a Board
Resolution certified by the Secretary or an Assistant Secretary of the Company
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Securityholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
It shall not be necessary for the consent of the Securityholders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent shall approve
the substance thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Company
shall mail a notice, setting forth in general terms the substance of such
supplemental indenture, to all Holders of Securities of each series so affected
as the names and addresses of such Holders shall appear on the registry books.
Any failure of the Company so to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such supplemental
indenture.
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
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becomes effective, a consent to it by a Holder of a Security of any series is a
continuing consent by the Holder even if notation of the consent is not made on
any Security. Any such Holder or subsequent Holder, however, may revoke the
consent as to his Security or portion of a Security, if the Trustee receives the
notice of revocation before the date the amendment, waiver or other action
becomes effective.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies) and only those
Persons, shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such Persons continue to
be Holders after such record date. No consent shall be valid or effective for
more than 90 days after such record date unless consent from Holders of the
principal amount of Securities of any series then outstanding required hereunder
for such amendment, supplement or waiver to be effective shall have also been
given and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (6) of Section 9.02. In that case the amendment, supplement or
waiver shall only bind the Holders of a Security or portion of a Security of the
same series.
SECTION 9.05 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security
of any series, the Trustee may request the Holder of the Security of such series
to deliver it to the Trustee. The Trustee may place an appropriate notation on
the Security about the changed terms and return it to the Holder. Alternatively,
if the Company or the Trustee so determine, the Company in exchange for the
Security of such series shall issue and the Trustee shall authenticate a new
Security of such series that reflects the changed terms the cost and expense of
which will be borne by the Company.
SECTION 9.06 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities of any applicable series theretofore or 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 or supplemental indenture and
before the close of business on such date as determined by such Board Resolution
or supplemental indenture (except that, with respect to any Security or portion
of a Security of such series which shall be called for redemption, such right
shall terminate at the close of business on the date fixed for redemption of
such Security or portion of a Security unless the Company shall default in
payment due upon redemption thereof), to convert, subject to the terms and
provisions of this Article 10 and any other terms or provisions set forth in
such Board Resolution or supplemental indenture, the principal of any Security
or Securities of such series or any portion thereof which is $1,000 principal
amount or an integral multiple thereof into shares of common stock of the
Company or Securities of another series of Securities, initially at the
conversion price per share specified in the Securities of such series; or, in
case an adjustment of such price has taken place pursuant to the provisions of
Section 10.04, then at the price as last adjusted (such price or adjusted price
being referred to herein as the "conversion price"), upon surrender of the
Security or Securities, the principal of which is so to be converted,
accompanied by written notice of conversion duly executed, to the Company, at
any time during usual business hours at the office or agency maintained by it
for such purpose, and, if so required by the Conversion Agent or Registrar,
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Conversion Agent or Registrar duly executed by the Holder or
his duly authorized representative in writing. For convenience, the conversion
of any portion of the principal of any Security or Securities into shares of
common stock of the Company or other Securities is hereinafter sometimes
referred to as the conversion of such Security or Securities.
SECTION 10.02 Issuance of Shares on Conversion.
As promptly as practicable after the surrender, as herein provided, of
any Security or Securities of any series for conversion, the Company shall
deliver or cause to be delivered at its said office or agency, to or upon the
written order of the Holder of the Security or Securities so surrendered,
certificates representing the number of fully paid and nonassessable shares of
common stock of the Company or Securities of another series of the Company into
which such Security or Securities may be converted in accordance with the
provisions of this Article 10. Such conversion shall be deemed to have been made
as of the close of business on the date that such Security or Securities shall
have been surrendered for conversion by delivery thereof with a written notice
of conversion duly executed, so that the rights of the Holder of such Security
or Securities as a Securityholder shall cease at such time and, subject to the
following provisions of this paragraph, the Person or Persons entitled to
receive the shares of common stock or Securities of another series upon
conversion of such Security or
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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 stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such conversion price by a fraction
of which the numerator shall be the number of shares of common stock outstanding
at the close of
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business on the date fixed for such determination and the denominator shall be
the sum of such number of shares and the total number of shares constituting
such dividend or other distribution, such reduction to become effective
immediately after the opening of business on the day following the date fixed
for such determination.
(2) With respect to any series of Securities that is convertible into
shares of the Company's common stock, in case the Company shall issue rights or
warrants to all or substantially all holders of its shares of common stock
entitling them to subscribe for or purchase shares of common stock at a price
per share (or having a conversion price per share) less than the current market
price per share (determined as provided in paragraph (6) of this Section) of the
shares of common stock on the date fixed for the determination of stockholders
entitled to receive such rights or warrants, the conversion price for any series
of Securities in effect at the opening of business on the day following the date
fixed for such determination shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of shares of
common stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of common stock which the aggregate of
the subscription price of the total number of shares of common stock so offered
for subscription or purchase would purchase at such current market price and the
denominator shall be the number of shares of common stock outstanding at the
close of business on the date fixed for such determination plus the number of
shares of common stock so offered for subscription or purchase, such reduction
to become effective immediately after the opening of business on the day
following the date fixed for such determination. In the event that all of the
shares of common stock subject to such rights or warrants have not been issued
when such rights or warrants expire, then the conversion price shall promptly be
readjusted to the conversion price which would then be in effect had the
adjustment upon the issuance of such rights or warrants been made on the basis
of the actual number of shares of common stock issued upon the exercise of such
rights or warrants. For the purposes of this paragraph (2), the number of shares
of common stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of common stock. The Company
will not issue any rights or warrants in respect of shares of common stock held
in the treasury of the Company.
(3) With respect to any series of Securities that is convertible into
shares of the Company's common stock, in case the outstanding shares of common
stock shall be subdivided into a greater number of shares, the conversion price
for any series of Securities in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall be
proportionately reduced, and, conversely, in case outstanding shares of common
stock shall each be combined into a smaller number of shares, the conversion
price for any series of Securities in effect at the opening of business on the
day following the day upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
(4) With respect to any series of Securities that is convertible into
shares of the Company's common stock, in case the Company shall, by dividend or
otherwise, distribute to all
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or substantially all holders of shares of common stock evidences of indebtedness
or assets (including securities, but excluding (i) any rights or warrants
referred to in paragraph (2) of this Section, (ii) any dividend or distribution
not prohibited by Section 4.06 hereof and (iii) any dividend or distribution
referred to in paragraph (1) of this Section), the conversion price for any
series of Securities shall be adjusted so that the same shall equal the price
determined by multiplying the conversion price in effect immediately prior to
the close of business on the day fixed for the determination of shareholders
entitled to receive such distribution by a fraction of which the numerator shall
be the current market price per share (determined as provided in paragraph (6)
of this Section) of the shares of common stock on the date fixed for such
determination less the then fair market value as determined by the Board of
Directors of the Company (whose determination shall be conclusive and described
in a resolution of the Board of Directors of the Company filed with the Trustee)
of the portion of the assets or evidences of indebtedness so distributed
allocable to one share of common stock and the denominator shall be such current
market price per share of the shares of common stock, such adjustment to become
effective immediately prior to the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
distribution.
(5) With respect to any series of Securities that is convertible into
shares of the Company's common stock, in case the shares of common stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or a stock dividend described
in paragraph (1) or paragraph (3) of this Section, or a consolidation, merger or
sale of assets described in Section 10.10), then and in each such event the
Holders of Securities of any series shall have the right thereafter to convert
such Securities into the kind and amount of shares of stock and other securities
and property receivable upon such reorganization, reclassification or other
change, by holders of the number of shares of common stock into which such
Securities might have been converted immediately prior to such reorganization,
reclassification or change.
(6) For the purpose of any computation under paragraphs (2) and (4) of
this Section, the current market price per share of common stock on any date
shall be deemed to be the average of the Closing Prices for the 15 consecutive
Business Days selected by the Company commencing not more than 30 and not less
than 20 Business Days before the date in question.
(7) No adjustment in the conversion price for the Securities of any
series shall be required unless such adjustment (plus any adjustments not
previously made by reason of this paragraph (7)) would require an increase or
decrease of at least 1% in such price; provided, however, that any adjustments
which by reason of this paragraph (7) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this paragraph (7) shall be made to the nearest cent.
(8) The Company may, but shall not be required to, make such reductions
in the conversion price for the Securities of any series, in addition to those
required by paragraph (1), (2), (3) and (4) of this Section, as the Board of
Directors of the Company considers to be advisable in order to avoid or diminish
any income tax to any holders of shares of common stock
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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
(b) of any reclassification of the shares of common stock of
the Company, or of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
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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.
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.
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SECTION 10.08 Fractional Shares.
No fractional shares or scrip representing fractional shares shall be
issued upon any conversion of Securities. If any such conversion would otherwise
require the issuance of a fractional share an amount equal to such fraction
multiplied by the current market price per share of common stock (determined as
provided in paragraph (6) of Section 10.04) on the day of conversion shall be
paid to the Holder in cash by the Company.
SECTION 10.09 Cancellation of Converted Securities.
All Securities delivered for conversion shall be delivered to the
Trustee or the Conversion Agent to be canceled by or at the direction of the
Trustee or the Conversion Agent, which shall dispose of the same as provided in
Section 2.10.
SECTION 10.10 Provisions in Case of Consolidation, Merger or Sale of Assets.
(1) In case of any consolidation of the Company with, or merger of the
Company into, any other corporation or trust, or in case of any merger of
another corporation or trust into the Company (other than a consolidation or
merger which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of common stock of the Company), or in case
of any sale or transfer of all or substantially all of the assets of the
Company, the corporation or trust formed by such consolidation or resulting from
such merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security of any series then outstanding shall have the right thereafter,
during the period such Security shall be convertible as specified in Section
10.01 to convert such Security only into the kind and amount of securities, cash
and other property receivable upon such consolidation, merger, sale or transfer
by a holder of the number of shares of common stock of the Company into which
such Security might have been converted immediately prior to such consolidation,
merger, sale or transfer. Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Article. The above provisions of this
Section shall similarly apply to successive consolidations, mergers, sales or
transfers.
(2) The Trustee shall not be under any responsibility to determine the
correctness of any 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
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supplemental indenture provided to be employed, in making the same. The Trustee
shall not be accountable with respect to the validity, value, kind or amount of
any shares of common stock, or of any securities or property, which may at any
time be issued or delivered upon the conversion of any Security; and it makes no
representation with respect thereto. The Trustee shall not be responsible for
any failure of the Company to issue, transfer or deliver any shares of common
stock or stock certificates or other securities or property upon the surrender
of any Security for the purpose of conversion or, subject to Section 7.01, to
comply with any of the covenants of the Company contained in this Article.
ARTICLE 11
SUBORDINATION; SENIORITY
SECTION 11.01 Securities Subordinated to Senior Indebtedness.
(a) Securities of any series which by their terms are subordinated and
junior in right of payment of the principal of, premium, if any, and interest
(all of the foregoing, a "Payment or Distribution") on such Securities ("Junior
Securities") to the prior payment in full of any Senior Indebtedness whether
outstanding on the date hereof or hereafter created, incurred, assumed or
guaranteed, shall comply with the provisions of this Article 11, and each Holder
of Junior Securities of such series by his acceptance thereof likewise agrees.
A Payment or Distribution shall include any asset of any kind or
character, and may consist of cash, securities or other property, by set-off or
otherwise, and shall include, without limitation, any purchase, redemption or
other acquisition of Junior Securities of the series or the making of any
deposit of funds or securities pursuant to this Indenture (including, without
limitation, any deposit pursuant to Article 8 hereof).
(b) The Senior Indebtedness of the Company shall continue to be Senior
Indebtedness and entitled to the benefit of these subordination provisions
irrespective of any amendment, modification or waiver of any term of any
instrument relating to refinancing of the Senior Indebtedness.
(c) All the provisions of this Indenture and the Junior Securities of
any series shall be 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.
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(e) In the event that the Junior Securities of any series are declared
due and payable before their expressed maturity because of the occurrence of a
default hereunder, the Company will give prompt notice in writing of such
happening to the holders of Senior Indebtedness.
SECTION 11.02 Company Not to Make Payments with Respect to Junior Securities in
Certain Circumstances.
No Payment or Distribution shall be made by the Company, the Trustee or
the Paying Agent on account of principal of (or premium, if any) or interest on
the Junior Securities of any series, whether upon stated maturity, upon
redemption or acceleration, or otherwise, or on account of the purchase or other
acquisition of Junior Securities of such series, whether upon stated maturity,
upon redemption or acceleration, or otherwise, if there shall have occurred and
be continuing a default with respect to any Senior Indebtedness permitting the
acceleration thereof or with respect to the payment of any Senior Indebtedness
and (a) such default is the subject of a judicial proceeding or (b) notice of
such default in writing or by telegram has been given to the Company by any
holder or holders of any Senior Indebtedness, unless and until the Company shall
have received written notice from such holder or holders that such default or
event of default shall have been cured or waived or shall have ceased to exist.
Upon any acceleration of the principal of the Junior Securities of any
series or any payment by the Company or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding up or liquidation or reorganization of the
Company, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full in cash, or payment thereof
provided for to the satisfaction of the holders thereof, before any Payment or
Distribution is made on account of the redemption price or principal of (and
premium, if any) or interest on the Junior Securities of such series; and
(subject to the power of a court of competent jurisdiction to make other
equitable provision, which shall have been determined by such court to give
effect to the rights conferred in this Article upon the Senior Indebtedness and
the holders thereof with respect to the Junior Securities of such series or the
Holders thereof or the Trustee, by a lawful plan of reorganization or
readjustment under applicable law) upon any such dissolution or winding up or
liquidation or reorganization, any Payment or Distribution by the Company or
distribution of assets of the 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.
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In the event that, notwithstanding the foregoing, any Payment or
Distribution by the Company of any kind or character, whether in cash, property
or securities, prohibited by the foregoing, shall be received by the Trustee or
the Holders of the Junior Securities of any series before all Senior
Indebtedness is paid in full in cash, or provision is made for such payment to
the satisfaction of the holders thereof, and if such fact shall then have been
or thereafter be made known to a Trust Officer of the Trustee or, as the case
may be, such Holder, then and in such event such Payment or Distribution shall
be paid over or delivered to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, for application
to the payment of all Senior Indebtedness remaining unpaid to the extent
necessary to pay all Senior Indebtedness in full in cash, after giving effect to
any concurrent Payment or Distribution to or for the holders of such Senior
Indebtedness, and, until so delivered, the same shall be held in trust by any
Holder of a Junior Security as the property of the holders of Senior
Indebtedness.
The consolidation of the Company with, or the merger of the Company
into, another Person or the liquidation or dissolution of the Company following
the conveyance or transfer of its property as an entirety, or substantially as
an entirety, to another corporation upon the terms and conditions provided in
Article Five shall not be deemed a dissolution, winding up, liquidation or
reorganization for the purposes of this Section if such other Person shall, as a
part of such consolidation, merger, conveyance or transfer, comply with the
conditions stated in Article Five. Nothing in this Section shall apply to claims
of, or payments to, the Trustee under or pursuant to Section 7.07.
The holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Holders of the Junior Securities
of any series, without incurring responsibility to the Holders of the Junior
Securities of such series and without impairing or releasing the obligations of
the Holders of the Junior Securities of such series hereunder to the holders of
Senior Indebtedness: (i) change the manner, place or terms of payment or change
or extend the time of payment of, or renew or alter, Senior Indebtedness, or
otherwise amend in any manner Senior Indebtedness or any instrument evidencing
the same or any agreement under which Senior Indebtedness is outstanding; (ii)
sell, exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing Senior Indebtedness; (iii) release any Person 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
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Junior Securities of any series or the Trustee would be entitled except for the
provisions of this Article, and no payments over pursuant to the provisions of
this Article to the holders of Senior Indebtedness by Holders of the Junior
Securities of any series or the Trustee, shall, as between the Company, the
Company's creditors other than holders of Senior Indebtedness, and the Holders
of the Junior Securities of such series, be deemed to be a payment by the
Company to or on account of the Senior Indebtedness. It is understood that the
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Junior Securities of any
series, on the one hand, and the holders of Senior Indebtedness, on the other
hand.
Nothing contained in this Article or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of the
Securities of each series, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities of any series the
principal of (and premium, if any) and interest on the Securities of such series
as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the Holders of
the Junior Securities of any series and creditors of the Company other than the
holders of Senior Indebtedness, nor shall anything herein or therein prevent the
Trustee or the Holder of any Junior Security of any series from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article of the holders of
Senior Indebtedness in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 7.01, and the
Holders of the Junior Securities of any series shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which any
dissolution, winding up, liquidation or reorganization proceedings are pending,
or certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the Junior Securities of such series, for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
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
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of the Holder to execute, verify, deliver and file any such proofs of claim.
SECTION 11.05 Notices to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to it which would prohibit the making of any payment of moneys to or by
the Trustee in respect of the Junior Securities of any series pursuant to the
provisions of this Article. Notwithstanding the provisions of this Article or
any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment of moneys to or by the Trustee in respect of the Junior Securities of
any series pursuant to the provisions of this Article, unless and until a Trust
Officer of the Trustee shall have received at its Corporate Trust Office written
notice thereof from the Company or a holder or holders of Senior Indebtedness or
from any trustee or agent therefor; and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of Section 7.01, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if a Trust Officer of the Trustee shall not have received at least three
Business Days prior to the date upon which by the terms hereof any such moneys
may become payable for any purpose (including, without limitation, the payment
of the principal of (premium, if any) or interest on any Junior Security of any
series) with respect to such moneys the notice provided for in this Section,
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have the full power and authority to receive such moneys and to apply the
same to the purpose for which they were received and shall not be affected by
any notice to the contrary which may be received by it within three Business
Days prior to such date.
The Trustee shall be entitled to rely conclusively on the delivery to
it of a written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior Indebtedness or a trustee or agent
on behalf of any such holder. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any 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,
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and no implied covenants or obligations with respect to the holders of Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not owe any fiduciary duty to the holders of Senior Indebtedness and shall
not be liable to any such holder if it shall mistakenly pay over or distribute
to Holders of the Junior Securities of any series or the Company or any other
Person money or assets to which any holder of Senior Indebtedness shall be
entitled by virtue of this Article or otherwise.
SECTION 11.07 No Impairment of Subordination.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company,
the Trustee or the Holder of any of the Securities of any series or by any act,
or failure to act, in good faith, by any such holder of Senior Indebtedness, or
by any noncompliance by the Company, the Trustee or the Holder of any of the
Securities of any series with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with.
SECTION 11.08 Article 11 Not To Prevent Events of Default.
The failure to make a payment on account of principal of (premium, if
any) or interest on the Junior Securities of any series by reason of any
provision in this Article 11 shall not be construed as preventing the occurrence
of an Event of Default with respect to such series under Section 6.01.
SECTION 11.09 Paying Agents other than the Trustee.
In any case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 11 shall in such case (unless the context
shall otherwise require) be construed as extending to and including such Paying
Agent within its meaning as fully for all intents and purposes as if such Paying
Agent were named in this Article 11 in addition to or in place of the Trustee.
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
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SECTION 12.01 Mandatory and Optional Sinking Fund Payments.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of any series, except as otherwise permitted or
required by any form of Security of a series issued pursuant to this Indenture.
The minimum amounts of any sinking fund payments provided for by the
terms of Securities of any series are herein referred to as "mandatory sinking
fund payments", and any payments in excess of those minimum amounts provided for
by the terms of Securities of that series are herein referred to as "optional
sinking fund payments". If provided for by the terms of the Securities of any
series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 12.02. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of that series.
SECTION 12.02 Satisfaction of Sinking Fund Payments with Securities.
The Company may, in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of any series, as provided for by the
terms of that series (1) deliver to the Holders of outstanding Securities of
that series (other than any of such Securities previously called for redemption
or any of such Securities by mandatory sinking fund payment in respect of which
cash shall have been released to the Company), (2) apply as a credit Securities
of that series which have been redeemed either at the election of the Company
pursuant to the terms of that series of Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, provided that no Securities of such series have been previously so
credited and (3) apply as a credit Securities of that series which have been
converted or exchanged into shares of the Company's common stock or Securities
of another series pursuant to the terms of that series of Securities, provided
that such series of Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly. If as a result of the delivery or credit of Securities of any
series in lieu of cash payments pursuant to this Section, the principal amount
of Securities of that series to be redeemed in order to exhaust the aforesaid
cash payment shall be less than $100,000, the Trustee need not call Securities
of that series for redemption, except upon the request of the Company, 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
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the portion thereof, if any, which is to be satisfied by payment of cash and the
portion thereof, if any, which is to be satisfied by delivery or credit of
Securities pursuant to Section 12.02 hereof, and the optional amount, if any, to
be added in cash to the mandatory sinking fund payment, and will also deliver to
the Trustee any Securities to be so credited and not theretofore delivered. If
such Officers' Certificate shall specify an optional amount to be added in cash
to the mandatory sinking fund payment, the Company shall thereupon be obligated
to pay the amount therein specified. Not less than 30 days before each such
sinking fund payment date the Trustee shall select the Securities to be redeemed
upon such sinking fund payment date in the manner specified in Section 3.02
hereof and cause notice of the redemption thereof to be given in the name of and
at the expense of the Company in the manner provided in Section 3.03 hereof.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provisions shall control.
SECTION 13.02 Notices.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
or first class mail, postage prepaid (except that any notice by the Trustee to
the Company of a default or an Event of Default under this Indenture shall be by
registered or certified mail, postage prepaid, return receipt requested), or by
a nationally-recognized overnight express courier service (which notices or
communications shall be deemed received the business day after the receipt
thereof by such service), addressed as follows:
if to the Company:
Alternative Living Services, Inc.
450 North Sunnyslope Road
Suite 300
Brookfield, WI 53005
Attention: Chief Executive Officer
Telephone: (414) 789-9565
Facsimile: (414) 789-6677
if to the Trustee:
United States Trust Company of New York
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<PAGE> 58
114 West 47th Street,
25th Floor
New York, New York 10036
Attention: Corporate Trust Department
Telephone: (212) 852-1000
Facsimile: (212) 852-1626
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.
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
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(2) an Opinion of Counsel (which shall include the statements set forth
in Section 13.05) stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
SECTION 13.05 Statements Required in Certificate and Opinion.
Each Officers' Certificate and Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(1) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such Person,
such covenant or condition has been complied with.
SECTION 13.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Registrar, Paying Agent or Conversion Agent may make
reasonable rules for its functions.
SECTION 13.07 Record Date.
Whenever the Company or the Trustee solicits an act of Securityholders
of any series, the Company or the Trustee may fix in advance of the solicitation
of such act a date as the record date for determining Securityholders of such
series entitled to perform said act. The record date shall be not more than 15
days prior to the date fixed for the solicitation of said act.
SECTION 13.08 Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banks or
trust companies in the city in which either the Trustee or the Company is
located are not required to be open. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
SECTION 13.09 Governing Law.
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND THE
SECURITIES WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
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SECTION 13.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 13.11 No Recourse Against Others.
No stockholder, director or officer, as such, past, present or future,
of the Company or of any successor corporation or trust shall have any liability
for any obligation of the Company under the Securities or the Indenture or for
any claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder of a Security of any series by accepting a Security waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
SECTION 13.12 Successors.
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture shall
bind its successor.
SECTION 13.13 Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of them together
represent the same agreement.
SECTION 13.14 Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 13.15 Severability.
In case any provision in this Indenture or in the Securities of any
series shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, and a Holder shall have no claim therefor against any party
hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
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 4.2
EXECUTION COPY
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF DECEMBER 19, 1997
TO
INDENTURE
DATED AS OF DECEMBER 19, 1997
BETWEEN
ALTERNATIVE LIVING SERVICES, INC.
AND
UNITED STATES TRUST COMPANY OF NEW YORK
AS TRUSTEE
----------------------------------
5.25% CONVERTIBLE SUBORDINATED DEBENTURES
DUE 2002
----------------------------------
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE, dated as of December 19, 1997 between
Alternative Living Services, Inc., a Delaware corporation (the "Company"), and
United States Trust Company of New York, a New York State banking corporation
(the "Trustee"), to that certain Indenture, dated as of December 19, 1997,
between the Company and the Trustee (the "Indenture").
WHEREAS, the parties hereto have entered into the Indenture which
provides for the issuance by the Company of the individual series of securities
thereunder, upon the Company and Trustee entering into a supplemental indenture
to the Indenture authorizing such series; and
WHEREAS, the Company wishes to issue its first series of securities
thereunder, designated its 5.25% Convertible Subordinated Debentures Due 2002
(the "Debentures"); and
WHEREAS, all acts necessary to constitute this First Supplemental
Indenture as a valid, binding and legal obligation of the Company have been done
and performed.
NOW, THEREFORE, witnesseth that, in consideration of the premises and
of the covenants contained herein, it is hereby agreed as follows:
ARTICLE ONE
The Terms of the Debentures
In accordance with Sections 2.01 and 2.02 of the Indenture, the Company
will issue a Global Debenture in the aggregate principal amount of $125,000,000.
Each Debenture shall be substantially in the following form:
<PAGE> 3
ALTERNATIVE LIVING SERVICES, INC.
5.25% Convertible Subordinated Debenture Due 2002
ALTERNATIVE LIVING SERVICES, INC., a Delaware corporation, promises to pay to
S P E C I M E N
or registered assigns, the principal sum of 125,000,000 Dollars, on December 15,
2002
Cusip 02145K AB3
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: December 19, 1997
ALTERNATIVE LIVING SERVICES, INC.
By:
--------------------------------------------------------
William F. Lasky
Chief Executive Officer and Director
By:
--------------------------------------------------------
John Peterson
Vice President, Assistant Secretary and Controller
[SEAL]
CERTIFICATE OF AUTHENTICATION
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee, certifies that this is one
of the Securities referred to in the within mentioned Indenture.
By:
-----------------------------------
Authorized Signatory
[SEAL]
Dated: ______________, 1997
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<PAGE> 4
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE
DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THIS
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
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<PAGE> 5
ALTERNATIVE LIVING SERVICES, INC.
5.25% Convertible Subordinated Debenture Due 2002
1. Interest. Alternative Living Services, Inc., a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
this Security at the rate per annum shown above. The Company will pay interest
semiannually on June 15 and December 15 of each year beginning June 15, 1998.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from January 2, 1998;
provided that, if there is no existing Default in the payment of interest, and
if this Security is authenticated between a record date referred to on the face
hereof and the next succeeding interest payment date, interest shall accrue from
such interest payment date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the
Securities (except defaulted interest) to the Persons who are the registered
Holders of the Securities at the close of business on the June 1 or December 1
next preceding the interest payment date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company will pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Company, however, may pay
principal and interest by its check payable in such money. It may mail an
interest check to a Holder's registered address.
The final installment of principal of and premium, if any, on
this Security shall be payable only upon surrender of this Security at the
office or agency of the Trustee in the Borough of Manhattan, City and State of
New York. Payments of principal of and premium, if any, and interest on this
Security shall be made at the office or agency of the Trustee maintained in the
Borough of Manhattan, City and State of New York or, in the case of any such
payments other than the final payment of principal and premium, if any, at the
Company's option, by check mailed to the Person entitled thereto at such
Person's address last appearing on the Company's register.
3. Registrar and Agents. Initially, United States Trust
Company of New York will act as Registrar, Paying Agent, Conversion Agent and
agent for service of notices and demands. The Company may change any Registrar,
co-registrar, Paying Agent, Conversion Agent and agent for service of notices
and demands without notice. The Company or any of its Subsidiaries may act as
Paying Agent or Conversion Agent. The address of United States Trust Company of
New York is 114 West 47th Street, New York, New York 10036-1532.
4. Indenture; Limitations. The Company issued the Securities
under an Indenture dated as of December 19, 1997 (the "Indenture") between the
Company and United States Trust Company of New York (the "Trustee"). Capitalized
terms herein are used as defined in the Indenture unless otherwise defined
herein. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S. Code " 77aaa-77bbbb) as in effect on the date of the Indenture. The
Securities are
Reverse of Security
Page 1 of 7
<PAGE> 6
subject to all such terms, and the Holders of the Securities are referred to the
Indenture and said Act for a statement of them.
The Securities are general unsecured obligations of the
Company limited to $125,000,000 aggregate principal amount. The Indenture
imposes certain limitations on the ability of the Company to, among other
things, make payments in respect of its Capital Stock, merge or consolidate with
any other Person and sell, lease, transfer or otherwise dispose of its
properties or assets.
In the event the Company issues any additional 5.25%
Convertible Subordinated Debentures Due 2002 pursuant to another Supplemental
Indenture (the "Additional Debentures") in substantially the form hereof within
30 days of the date hereof, such Additional Debentures shall be of the same
series as the Securities issued hereunder.
5. Redemption by the Company. Subject to Section 7 herein, the
Company may redeem the Securities, in whole or from time to time in part, at its
option at any time on or after December 31, 2000, at a redemption price equal to
100% of the principal amount thereof, plus accrued interest to the redemption
date.
6. Notice of Redemption. Notice of redemption will be mailed
at least 30 days, but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 principal amount may be redeemed in part, but
only in whole multiples thereof. On and after the Redemption Date interest
ceases to accrue on Securities or portions of them called for redemption.
7. Conversion. A Holder of a Security may convert such
Security into shares of common stock of the Company commencing 180 days after
December 19, 1997 and thereafter at any time prior to maturity, subject to the
following provisions of this Section 7. If the Security is called for
redemption, the Holder may convert it at any time before the close of business
on the date fixed for such redemption. The initial conversion price is $28.75
per share, subject to adjustment in certain events. In the event the holder of
this Security seeks to convert all or any portion of this Security into Common
Stock at a time when the Company does not have sufficient authorized shares of
Common Stock to satisfy such conversion, such conversion shall not be permitted,
in which event the holder will have the right to require the Company to
repurchase this Security for an amount payable in cash equal to the principal
amount of this Security plus accrued interest. The Company has agreed to seek
stockholder approval at its 1998 Annual Meeting of Stockholders of an amendment
to its Restated Certificate of Incorporation ("Certificate") increasing the
number of authorized shares of Common Stock to an amount at least sufficient to
permit the conversion of all the Securities. Until such date as the Company's
Certificate has been so amended, the Company will not (i) exercise its right to
voluntarily redeem the Debentures pursuant to Section 5 hereof or (ii) issue
additional shares of Common Stock or securities convertible into or exchangeable
for Common Stock except for (A) employee stock options to acquire Common Stock
granted under the Company's existing stock option plans and
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Page 2 of 7
<PAGE> 7
(B) shares of Common Stock issuable upon conversion of any Security or Other
Debentures or upon the exercise of stock options.
To convert a Security, a Holder must (1) complete and sign the
conversion notice on the back of the Security, (2) surrender the Security to the
Conversion Agent, (3) furnish appropriate endorsements and transfer documents if
required by the Registrar or Conversion Agent and (4) pay any transfer or
similar tax if required. No payment or adjustment is to be made on conversion
for interest accrued hereon or for dividends on shares of common stock issued on
conversion; provided, however, that if a Security is surrendered for conversion
after the record date for a payment of interest and on or before the interest
payment date, then, notwithstanding such conversion, the interest falling due to
such interest payment date will be paid to the Person in whose name the Security
is registered at the close of business on such record date and any Security
surrendered for conversion during the period from the close of business on any
regular record payment date to the opening of business on the corresponding
interest payment date must be accompanied by payment of an amount equal to the
interest payable on such interest payment date. A Holder may convert a portion
of a Security if the portion is $1,000 principal amount or an integral multiple
thereof.
To determine the number of shares issuable upon conversion of
a Security, divide the principal amount to be converted by the conversion price
in effect on the conversion date. The Company will deliver a check for any
fractional share.
If the Company is a party to a consolidation or merger or a
transfer or lease of all or substantially all of its assets, the right to
convert a Security into shares of common stock may be changed into a right to
convert it into securities, cash or other assets of the Company or another
Person.
8. Subordination. This Security is subordinated to all Senior
Indebtedness of the Company. To the extent and in the manner provided in the
Indenture, Senior Indebtedness must be paid before any payment may be made to
any Holders of Securities. Any Securityholder by accepting this Security agrees
to the subordination and authorizes the Trustee to give it effect.
In addition to all other rights of Senior Indebtedness
described in the Indenture, the Senior Indebtedness shall continue to be Senior
Indebtedness and entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any term of any
instrument relating to the Senior Indebtedness or extension or renewal of the
Senior Indebtedness.
This Security shall rank pari passu with the Company's 7%
Convertible Subordinated Debentures due 2004 and 6.75% Convertible Subordinated
Debentures due 2006 (collectively, the "Other Debentures").
9. Denominations, Transfer, Exchange. This Security is one of
a duly authorized issue of Securities of the Company designated as its 5.25%
Convertible Subordinated Debentures due 2002 limited in aggregate principal
amount to $125,000,000. The Securities are in registered
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Page 3 of 7
<PAGE> 8
form without coupons in denominations of $1,000 principal amount and integral
multiples thereof. A Holder may register the transfer of or exchange Securities
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer of or exchange any Securities selected
for redemption or register the transfer of or exchange any Securities for a
period of 15 days before a selection of Securities to be redeemed.
10. Persons Deemed Owners. The registered Holder of a Security
may be treated as its owner for all purposes.
11. Unclaimed Money. If money for the payment of principal or
interest on any Securities remains unclaimed for three years, the Trustee and
the Paying Agent will pay the money back to the Company at its request. After
that, Holders may look only to the Company for payment.
12. Discharge Prior to Redemption or Maturity. The Indenture
will be discharged and canceled except for certain sections thereof upon payment
of all the Securities, or upon the irrevocable deposit with the Trustee of funds
or U.S. Government Obligations maturing on or before such payment date or
Redemption Date, sufficient to pay principal, premium, if any, and interest on
such payment or redemption.
13. Amendment and Waiver. Subject to certain exceptions,
without notice to the Holders of the Securities, the Indenture or the Securities
may be amended with the consent of the Holders of at least a majority in
principal amount of the Securities then outstanding and any existing default or
compliance with any provision may be waived with the consent of the Holders of a
majority in principal amount of the Securities then outstanding. Without the
consent of or notice to any Securityholder, the Company may amend the Indenture
or the Securities to, among other things, provide for uncertificated Securities,
to establish another series of securities as permitted by the Indenture, to cure
any ambiguity, defect or inconsistency or make any other change that does not
adversely affect the rights of any Securityholder.
14. Successors. When a successor assumes all the obligations
of its predecessor under the Securities and the Indenture, the predecessor will
be released from those obligations.
15. Defaults and Remedies. If an Event of Default, as defined
in the Indenture, occurs and is continuing, the Trustee or the Holders of a
majority in principal amount of Securities may declare all the Securities to be
due and payable immediately in the manner and with the effect provided in the
Indenture. Holders of Securities may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it, subject to the provisions of the TIA, before it enforces the
Indenture or the Securities. Subject to certain limitations, Holders of a
majority in principal amount of the Securities then outstanding may direct the
Trustee in its exercise of any trust or power with
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Page 4 of 7
<PAGE> 9
respect to the Securities. The Company is required to file periodic reports with
the Trustee as to the absence of any Default or Event of Default.
16. Trustee Dealings with the Company. United States Trust
Company of New York, the Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not Trustee.
17. No Recourse Against Others. No stockholder, director,
officer or incorporator, as such, past, present or future, of the Company or any
successor corporation or trust shall have any liability for any obligation of
the Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of, such obligations or their creation. Each Holder of a
Security by accepting a Security waives and releases all such liability. This
waiver and release are part of the consideration for the issuance of the
Securities.
18. Authentication. This Security shall not be valid until the
Trustee or an authenticating agent appointed by the Trustee signs the
certificate of authentication on the other side of this Security.
19. Abbreviations. Customary abbreviations may be used in the
name of a Securityholder or an assignee, such as: TEN COM (=tenants in common),
TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (=Custodian), and U/G/M/A
(=Uniform Gifts to Minors Act).
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE. IT ALSO WILL FURNISH THE
TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: ALTERNATIVE
LIVING SERVICES, INC., 450 NORTH SUNNYSLOPE ROAD, SUITE 300, BROOKFIELD,
WISCONSIN 53005, ATTENTION: CHIEF FINANCIAL OFFICER.
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Page 5 of 7
<PAGE> 10
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the form below and have
your signature guaranteed:
For value received, I or we assign and transfer this Security to
(INSERT ASSIGNEE'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
-----------------------------------------------------------
-----------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
-------------------------------------------------------
agent to transfer this
- -------------------------------------------------------
Security on the books of the Company. The agent may substitute another to act
for him.
- -------------------------------------------------------------------------------
Date:
--------------------------------------------------------------------------
Your signature:
----------------------------------------------------------------
(Sign exactly as your name appears on the other
side of this Security)
Signature Guarantee:
------------------------------------------------------------
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Page 6 of 7
<PAGE> 11
CONVERSION NOTICE
To convert this Security into shares of common stock of the Company, check the
box:
-------------
-------------
To convert only part of this Security, state the principal amount to be
converted (which must be a minimum of $1,000 or any multiple thereof):
-----------------------------------------------------
$
-----------------------------------------------------
If you want the Security certificate, if any, made out in another person's name,
fill in the form below:
(INSERT OTHER PERSON'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
---------------------------------------------------
---------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type other person's name, address and zip code)
- -------------------------------------------------------------------------------
Date:
--------------------------------------------------------------------------
Your signature:
----------------------------------------------------------------
(Sign exactly as your name appears on the other
side of this Security)
Signature Guaranteed By:
----------------------------
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Page 7 of 7
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental 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 Signatory
<PAGE> 1
EXHIBIT 4.3
EXECUTION COPY
SECOND SUPPLEMENTAL INDENTURE
DATED AS OF JANUARY 2, 1998
TO
INDENTURE
DATED AS OF DECEMBER 19, 1997
BETWEEN
ALTERNATIVE LIVING SERVICES, INC.
AND
UNITED STATES TRUST COMPANY OF NEW YORK
AS TRUSTEE
----------------------------------
5.25% CONVERTIBLE SUBORDINATED DEBENTURES
DUE 2002
----------------------------------
<PAGE> 2
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE, dated as of January 2, 1998
between Alternative Living Services, Inc., a Delaware corporation (the
"Company"), and United States Trust Company of New York, a New York State
banking corporation (the "Trustee"), to that certain Indenture, dated as of
December 19, 1997, between the Company and the Trustee (the "Indenture").
WHEREAS, the parties hereto have entered into the Indenture
which provides for the issuance by the Company of the individual series of
securities thereunder, upon the Company and Trustee entering into a supplemental
indenture to the Indenture authorizing such series; and
WHEREAS, the Company wishes to issue its second series of
securities thereunder, designated its 5.25% Convertible Subordinated Debentures
Due 2002 (the "Debentures"); and
WHEREAS, all acts necessary to constitute this Second
Supplemental Indenture as a valid, binding and legal obligation of the Company
have been done and performed.
NOW, THEREFORE, witnesseth that, in consideration of the
premises and of the covenants contained herein, it is hereby agreed as follows:
ARTICLE ONE
The Terms of the Debentures
In accordance with Sections 2.01 and 2.02 of the Indenture,
the Company will issue a Global Debenture in the aggregate principal amount of
$18,750,000. Each Debenture shall be substantially in the following form:
<PAGE> 3
ALTERNATIVE LIVING SERVICES, INC.
5.25% Convertible Subordinated Debenture Due 2002
ALTERNATIVE LIVING SERVICES, INC., a Delaware corporation,
promises to pay to
S P E C I M E N
or registered assigns, the principal sum of 18,750,000 Dollars, on December 15,
2002
Cusip 02145K AB3
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: January 2, 1998
ALTERNATIVE LIVING SERVICES, INC.
By:
---------------------------------------------------
William F. Lasky
Chief Executive Officer and Director
By:
---------------------------------------------------
John Peterson
Vice President, Assistant Secretary and Controller
[SEAL]
CERTIFICATE OF AUTHENTICATION
UNITED STATES TRUST COMPANY OF NEW YORK, as
Trustee, certifies that this is one of the
Securities referred to in the within
mentioned Indenture.
By:
--------------------------------
Authorized Signatory
[SEAL]
Dated: January 2, 1998
-2-
<PAGE> 4
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE
DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THIS
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
-3-
<PAGE> 5
ALTERNATIVE LIVING SERVICES, INC.
5.25% Convertible Subordinated Debenture Due 2002
1. Interest. Alternative Living Services, Inc., a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
this Security at the rate per annum shown above. The Company will pay interest
semiannually on June 15 and December 15 of each year beginning June 15, 1998.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from December 19, 1997;
provided that, if there is no existing Default in the payment of interest, and
if this Security is authenticated between a record date referred to on the face
hereof and the next succeeding interest payment date, interest shall accrue from
such interest payment date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the
Securities (except defaulted interest) to the Persons who are the registered
Holders of the Securities at the close of business on the June 1 or December 1
next preceding the interest payment date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company will pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Company, however, may pay
principal and interest by its check payable in such money. It may mail an
interest check to a Holder's registered address.
The final installment of principal of and premium, if any, on
this Security shall be payable only upon surrender of this Security at the
office or agency of the Trustee in the Borough of Manhattan, City and State of
New York. Payments of principal of and premium, if any, and interest on this
Security shall be made at the office or agency of the Trustee maintained in the
Borough of Manhattan, City and State of New York or, in the case of any such
payments other than the final payment of principal and premium, if any, at the
Company's option, by check mailed to the Person entitled thereto at such
Person's address last appearing on the Company's register.
3. Registrar and Agents. Initially, United States Trust
Company of New York will act as Registrar, Paying Agent, Conversion Agent and
agent for service of notices and demands. The Company may change any Registrar,
co-registrar, Paying Agent, Conversion Agent and agent for service of notices
and demands without notice. The Company or any of its Subsidiaries may act as
Paying Agent or Conversion Agent. The address of United States Trust Company of
New York is 114 West 47th Street, New York, New York 10036-1532.
4. Indenture; Limitations. The Company issued the Securities
under an Indenture dated as of December 19, 1997 (the "Indenture") between the
Company and United States Trust Company of New York (the "Trustee"). Capitalized
terms herein are used as defined in the Indenture unless otherwise defined
herein. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S. Code " 77aaa-77bbbb) as in effect on the date of the Indenture. The
Securities are
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Page 1 of 7
<PAGE> 6
subject to all such terms, and the Holders of the Securities are referred to the
Indenture and said Act for a statement of them.
The Securities are general unsecured obligations of the
Company limited to $18,750,000 aggregate principal amount. The Indenture imposes
certain limitations on the ability of the Company to, among other things, make
payments in respect of its Capital Stock, merge or consolidate with any other
Person and sell, lease, transfer or otherwise dispose of its properties or
assets.
The Securities shall be deemed to be of the same series as the
$125,000,000 principal amount of 5.25% Convertible Subordinated Debentures Due
2002 issued by the Company on December 19, 1997 pursuant to that certain
Supplemental Indenture dated as of December 19, 1997.
5. Redemption by the Company. Subject to Section 7 herein, the
Company may redeem the Securities, in whole or from time to time in part, at its
option at any time on or after December 31, 2000, at a redemption price equal to
100% of the principal amount thereof, plus accrued interest to the redemption
date.
6. Notice of Redemption. Notice of redemption will be mailed
at least 30 days, but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 principal amount may be redeemed in part, but
only in whole multiples thereof. On and after the Redemption Date interest
ceases to accrue on Securities or portions of them called for redemption.
7. Conversion. A Holder of a Security may convert such
Security into shares of common stock of the Company commencing 180 days after
December 19, 1997 and thereafter at any time prior to maturity, subject to the
following provisions of this Section 7. If the Security is called for
redemption, the Holder may convert it at any time before the close of business
on the date fixed for such redemption. The initial conversion price is $28.75
per share, subject to adjustment in certain events. In the event the holder of
this Security seeks to convert all or any portion of this Security into Common
Stock at a time when the Company does not have sufficient authorized shares of
Common Stock to satisfy such conversion, such conversion shall not be permitted,
in which event the holder will have the right to require the Company to
repurchase this Security for an amount payable in cash equal to the principal
amount of this Security plus accrued interest. The Company has agreed to seek
stockholder approval at its 1998 Annual Meeting of Stockholders of an amendment
to its Restated Certificate of Incorporation ("Certificate") increasing the
number of authorized shares of Common Stock to an amount at least sufficient to
permit the conversion of all the Securities. Until such date as the Company's
Certificate has been so amended, the Company will not (i) exercise its right to
voluntarily redeem the Debentures pursuant to Section 5 hereof or (ii) issue
additional shares of Common Stock or securities convertible into or exchangeable
for Common Stock except for (A) employee stock options to acquire Common Stock
granted under the Company's existing stock option plans and
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Page 2 of 7
<PAGE> 7
(B) shares of Common Stock issuable upon conversion of any Security or Other
Debentures or upon the exercise of stock options.
To convert a Security, a Holder must (1) complete and sign the
conversion notice on the back of the Security, (2) surrender the Security to the
Conversion Agent, (3) furnish appropriate endorsements and transfer documents if
required by the Registrar or Conversion Agent and (4) pay any transfer or
similar tax if required. No payment or adjustment is to be made on conversion
for interest accrued hereon or for dividends on shares of common stock issued on
conversion; provided, however, that if a Security is surrendered for conversion
after the record date for a payment of interest and on or before the interest
payment date, then, notwithstanding such conversion, the interest falling due to
such interest payment date will be paid to the Person in whose name the Security
is registered at the close of business on such record date and any Security
surrendered for conversion during the period from the close of business on any
regular record payment date to the opening of business on the corresponding
interest payment date must be accompanied by payment of an amount equal to the
interest payable on such interest payment date. A Holder may convert a portion
of a Security if the portion is $1,000 principal amount or an integral multiple
thereof.
To determine the number of shares issuable upon conversion of
a Security, divide the principal amount to be converted by the conversion price
in effect on the conversion date. The Company will deliver a check for any
fractional share.
If the Company is a party to a consolidation or merger or a
transfer or lease of all or substantially all of its assets, the right to
convert a Security into shares of common stock may be changed into a right to
convert it into securities, cash or other assets of the Company or another
Person.
8. Subordination. This Security is subordinated to all Senior
Indebtedness of the Company. To the extent and in the manner provided in the
Indenture, Senior Indebtedness must be paid before any payment may be made to
any Holders of Securities. Any Securityholder by accepting this Security agrees
to the subordination and authorizes the Trustee to give it effect.
In addition to all other rights of Senior Indebtedness
described in the Indenture, the Senior Indebtedness shall continue to be Senior
Indebtedness and entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any term of any
instrument relating to the Senior Indebtedness or extension or renewal of the
Senior Indebtedness.
This Security shall rank pari passu with the Company's 7%
Convertible Subordinated Debentures due 2004 and 6.75% Convertible Subordinated
Debentures due 2006 (collectively, the "Other Debentures").
9. Denominations, Transfer, Exchange. This Security is one of
a duly authorized issue of Securities of the Company designated as its 5.25%
Convertible Subordinated Debentures due 2002 limited in aggregate principal
amount to $143,750,000 (including the $125,000,000
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Page 3 of 7
<PAGE> 8
principal amount of 5.25% Convertible Subordinated Debentures due 2002 issued on
December 19, 1997). The Securities are in registered form without coupons in
denominations of $1,000 principal amount and integral multiples thereof. A
Holder may register the transfer of or exchange Securities in accordance with
the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption or
register the transfer of or exchange any Securities for a period of 15 days
before a selection of Securities to be redeemed.
10. Persons Deemed Owners. The registered Holder of a Security
may be treated as its owner for all purposes.
11. Unclaimed Money. If money for the payment of principal or
interest on any Securities remains unclaimed for three years, the Trustee and
the Paying Agent will pay the money back to the Company at its request. After
that, Holders may look only to the Company for payment.
12. Discharge Prior to Redemption or Maturity. The Indenture
will be discharged and canceled except for certain sections thereof upon payment
of all the Securities, or upon the irrevocable deposit with the Trustee of funds
or U.S. Government Obligations maturing on or before such payment date or
Redemption Date, sufficient to pay principal, premium, if any, and interest on
such payment or redemption.
13. Amendment and Waiver. Subject to certain exceptions,
without notice to the Holders of the Securities, the Indenture or the Securities
may be amended with the consent of the Holders of at least a majority in
principal amount of the Securities then outstanding and any existing default or
compliance with any provision may be waived with the consent of the Holders of a
majority in principal amount of the Securities then outstanding. Without the
consent of or notice to any Securityholder, the Company may amend the Indenture
or the Securities to, among other things, provide for uncertificated Securities,
to establish another series of securities as permitted by the Indenture, to cure
any ambiguity, defect or inconsistency or make any other change that does not
adversely affect the rights of any Securityholder.
14. Successors. When a successor assumes all the obligations
of its predecessor under the Securities and the Indenture, the predecessor will
be released from those obligations.
15. Defaults and Remedies. If an Event of Default, as defined
in the Indenture, occurs and is continuing, the Trustee or the Holders of a
majority in principal amount of Securities may declare all the Securities to be
due and payable immediately in the manner and with the effect provided in the
Indenture. Holders of Securities may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it, subject to the provisions of the TIA, before it enforces the
Indenture or the Securities. Subject to certain limitations, Holders of a
majority in principal amount of the Securities then outstanding may direct the
Trustee in its exercise of any trust or power with
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Page 4 of 7
<PAGE> 9
respect to the Securities. The Company is required to file periodic reports with
the Trustee as to the absence of any Default or Event of Default.
16. Trustee Dealings with the Company. United States Trust
Company of New York, the Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not Trustee.
17. No Recourse Against Others. No stockholder, director,
officer or incorporator, as such, past, present or future, of the Company or any
successor corporation or trust shall have any liability for any obligation of
the Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of, such obligations or their creation. Each Holder of a
Security by accepting a Security waives and releases all such liability. This
waiver and release are part of the consideration for the issuance of the
Securities.
18. Authentication. This Security shall not be valid until the
Trustee or an authenticating agent appointed by the Trustee signs the
certificate of authentication on the other side of this Security.
19. Abbreviations. Customary abbreviations may be used in the
name of a Securityholder or an assignee, such as: TEN COM (=tenants in common),
TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (=Custodian), and U/G/M/A
(=Uniform Gifts to Minors Act).
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE. IT ALSO WILL FURNISH THE
TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: ALTERNATIVE
LIVING SERVICES, INC., 450 NORTH SUNNYSLOPE ROAD, SUITE 300, BROOKFIELD,
WISCONSIN 53005, ATTENTION: CHIEF FINANCIAL OFFICER.
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Page 5 of 7
<PAGE> 10
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the form below and have
your signature guaranteed:
For value received, I or we assign and transfer this Security to
(INSERT ASSIGNEE'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
------------------------------------------------------------
------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
agent to transfer this
- ---------------------------------------------------------
Security on the books of the Company. The agent may substitute another to act
for him.
- -------------------------------------------------------------------------------
Date:
--------------------------------------------------------------------------
Your signature:
-----------------------------------------------------------------
(Sign exactly as your name appears on the other
side of this Security)
Signature Guarantee:
------------------------------------------------------------
Reverse of Security
Page 6 of 7
<PAGE> 11
CONVERSION NOTICE
To convert this Security into shares of common stock of the Company, check the
box:
-------------
-------------
To convert only part of this Security, state the principal amount to be
converted (which must be a minimum of $1,000 or any multiple thereof):
------------------------------------------------------------------------
$
------------------------------------------------------------------------
If you want the Security certificate, if any, made out in another person's name,
fill in the form below:
(INSERT OTHER PERSON'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
-------------------------------------------------------------
--------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type other person's name, address and zip code)
- -------------------------------------------------------------------------------
Date:--------------------------------------------------------------------------
Your signature:----------------------------------------------------------------
(Sign exactly as your name appears on the other
side of this Security)
Signature Guaranteed By:
-------------------------------------
Reverse of Security
Page 7 of 7
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental 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 Signatory
