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 (Date of earliest event reported): April 27, 1999
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BROOKDALE LIVING COMMUNITIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-22253 36-4103821
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
77 West Wacker Drive, Suite 4400, Chicago, Illinois 60601
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 977-3700.
NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On May 14, 1999, Brookdale Living Communities, Inc., a Delaware
corporation ("Brookdale"), closed the sale of $100 million of its 5 1/2%
Convertible Subordinated Notes due 2009 (the "Notes") in a private placement
pursuant to a Note Purchase Agreement, dated as of April 27, 1999, between
Brookdale and Health Partners, an investment vehicle sponsored by Capital Z
Financial Services Fund II, L.P. ("Cap Z"). Brookdale intends to use the net
proceeds of the private placement for repayment of indebtedness, for working
capital and general corporate purposes.
The Notes are convertible at any time into the Common Stock, par value
$.01 per share, of Brookdale at an initial conversion price of $18.25 per share.
In addition, the Notes are redeemable, as a whole, but not in part, at the
election of Brookdale on or after May 14, 2002 at the following redemption
prices (expressed as percentages of the principal amount), together with accrued
and unpaid interest, if redeemed during the 12-month period beginning May 14 of
the years indicated below:
Redemption
Year Price
---- ----------
2002..................................103.0%
2003..................................101.5%
2004 and thereafter...................100.0%
No sinking fund is provided for the Notes.
In the event that a merger not otherwise permitted by the terms of the
Notes (a "Designated Merger") has been approved by the requisite vote of
Brookdale's stockholders entitled to the vote thereon, Brookdale may
nevertheless consummate such Designated Merger to the extent Brookdale (i)
offers to purchase all of the Notes at a purchase price equal to 110% of the
principal amount thereof plus accrued and unpaid interest and (ii) repurchases
all of the Notes tendered for such repurchase on the effective date of the
Designated Merger.
The payment of the principal of and premium, if any, and interest on
the Notes will, to the extent set forth in the Indenture governing the Notes
(the "Indenture"), be subordinated in right of payment to the prior payment in
full of all "Senior Debt" (as defined in the Indenture) of Brookdale and
effectively subordinated in right of payment to the prior payment in full of all
indebtedness and other liabilities of Brookdale's subsidiaries. The Indenture
does not restrict Brookdale's ability to incur Senior Debt.
Brookdale has agreed pursuant to a Registration Rights Agreement to (i)
file a shelf registration statement with respect to resale of the Notes and the
Common Stock issuable upon the conversion thereof within 90 days following the
date of issuance of the Notes, (ii) use its best efforts to cause the shelf
registration statement to be declared effective within 180 days after the date
of issuance of the Notes, and (iii) keep the shelf registration statement
effective after its effective date for a period ending ten years following the
date of issuance of the Notes, or such shorter period
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ending when either (i) all securities covered by the shelf registration
statement have been sold in the manner set forth and as contemplated in the
shelf registration statement or pursuant to Rule 144 promulgated under the
Securities Act of 1933 or (ii) there ceases to be outstanding any of the
securities covered by the shelf registration statement.
Pursuant to a Stockholders Agreement entered into in connection with
the private placement of the Notes, Brookdale has appointed Paul H. Warren, a
partner of Cap Z, to Brookdale's Board of Directors as a Class I director.
Brookdale also expects, following its May 20, 1999 annual meeting of
stockholders and pursuant to the Stockholders Agreement, to appoint Mark H.
Tabak, a partner of Health Partners, to Brookdale's Board of Directors as a
Class II director. As a result of these appointments, Brookdale's Board of
Directors will be increased from seven to nine members.
The Notes and the Common Stock issuable upon conversion thereof have
not been registered under the Securities Act of 1933 and may not be offered or
sold in the United States absent registration or an applicable exemption from
registration requirements.
Copies of the Indenture, the related Supplemental Indenture, the
Registration Rights Agreement, the Stockholders Agreement and the press release
announcing the closing of the transaction are attached hereto as Exhibit 10.2,
10.3, 10.4, 10.5 and Exhibit 99.1, respectively, and are incorporated herein by
reference. A corrected copy of the Note Purchase Agreement is attached hereto as
Exhibit 10.1 and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
Exhibit
No. Description
------- -----------
10.1 Note Purchase Agreement, dated as of April 27, 1999, by
and between Brookdale Living Communities, Inc. and
Health Partners
10.2 Indenture, dated as of May 14, 1999, between Brookdale
Living Communities, Inc. and State Street Bank and
Trust Company, as Trustee
10.3 Supplemental Indenture, dated as of May 14, 1999,
between Brookdale Living Communities, Inc. and State
Street Bank and Trust Company, as Trustee
10.4 Registration Rights Agreement, dated as of May 14,
1999, between Brookdale Living Communities, Inc. and
Health Partners
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10.5 Stockholders Agreement, dated as of May 14, 1999, among
Brookdale Living Communities, Inc. and the signatories
listed therein
99.1 Press Release of Brookdale Living Communities, Inc.,
dated May 14, 1999
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SIGNATURE
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.
BROOKDALE LIVING COMMUNITIES, INC.
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(Registrant)
Dated: May 19, 1999 By: /s/ Robert J. Rudnik
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Robert J. Rudnik
Executive Vice President
General Counsel and Secretary
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EXHIBIT INDEX
Number Description
------ -----------
10.1 Note Purchase Agreement, dated April 27, 1999, by
and between Brookdale Living Communities, Inc. and
Health Partners
10.2 Indenture, dated as of May 14, 1999, between
Brookdale Living Communities, Inc. and State Street
Bank ans Trust Company, as Trustee
10.3 Supplemental Indenture, dated as of May 14, 1999,
between Brookdale Living Communities, Inc. and State
Street Bank and Trust Company, as Trustee
10.4 Registration Rights Agreement, dated as of May 14,
1999, between Brookdale Living Communities, Inc. and
Health Partners
10.5 Stockholders Agreement, dated as of May 14, 1999,
among Brookdale Living Communities, Inc. and the
signatories listed therein
99.1 Press Release of Brookdale Living Communities, Inc.,
dated May 14, 1999.
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NOTE PURCHASE AGREEMENT
dated as of April 27, 1999
by and between
BROOKDALE LIVING COMMUNITIES, INC.
and
HEALTH PARTNERS
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TABLE OF CONTENTS
NOTE PURCHASE AGREEMENT
Section Page
1. DEFINITIONS..........................................................1
2. PURCHASE OF NOTE.....................................................9
2.1 Purchase of Note............................................9
2.2 Use of Proceeds.............................................9
2.3 Closing.....................................................9
2.4 Indemnity...................................................9
2.5 Access.....................................................10
3. PURCHASER'S REPRESENTATIONS AND WARRANTIES..........................11
3.1 Investment Intention.......................................11
3.2 Accredited Investor........................................11
3.3 Partnership Existence......................................11
3.4 Partnership Power; Authorization;
Enforceable Obligations .................................11
3.5 Receipt of Information.....................................12
4. COMPANY'S REPRESENTATIONS AND WARRANTIES............................12
4.1 Authorized and Outstanding Shares of Capital Stock.........12
4.2 Authorization and Issuance of Note.........................12
4.3 Securities Laws............................................13
4.4 Existence; Compliance with Law.............................13
4.5 Subsidiaries...............................................13
4.6 Corporate Power; Authorization;
Enforceable Obligations .................................13
4.7 Financial Statements.......................................14
4.8 Ownership of Property......................................15
4.9 Material Contracts; Indebtedness...........................15
4.10 Environmental Protection...................................16
4.11 Labor Matters..............................................17
4.12 Other Ventures.............................................17
4.13 Taxes......................................................17
4.14 No Litigation..............................................18
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TABLE OF CONTENTS
NOTE PURCHASE AGREEMENT
4.15 Brokers....................................................18
4.16 Employment and Labor Agreements............................18
4.17 Patents, Trademarks, Copyrights and Licenses...............18
4.18 No Material Adverse Effect.................................19
4.19 ERISA......................................................19
4.20 SEC Documents..............................................21
4.21 Ordinary Course of Business................................21
4.22 Insurance..................................................21
4.23 Accounts Receivable........................................22
4.24 Minute Books...............................................22
4.25 Year 2000 Compliance.......................................22
4.26 Full Disclosure............................................22
4.27 No Stockholder Vote Requirement............................23
4.28 Delaware Section 203.......................................23
5. PRE-CLOSING COVENANTS...............................................23
5.1 Maintenance of Existence and Conduct of Business...........23
5.2 Access.....................................................23
5.3 Acquisitions and Investments...............................23
5.4 Sales of Assets; Liquidation...............................23
5.5 Material Contracts.........................................24
5.6 Securities.................................................24
5.7 Transactions with Affiliates...............................24
5.8 Indebtedness...............................................24
5.9 Mergers and Subsidiaries...................................24
5.10 Management Compensation....................................24
5.11 Amendments to Certificate of Incorporation and By-Laws.....24
5.12 Compliance With Covenants.................................25
5.13 Satisfaction of Closing Conditions.........................25
6. CLOSING CONDITIONS..................................................25
6.1 Conditions to Obligation of Purchaser to Closing...........25
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TABLE OF CONTENTS
NOTE PURCHASE AGREEMENT
6.2 Conditions to Obligation of Company to Close...............26
7. TERMINATION.........................................................26
7.1 Termination................................................26
7.2 Effect of Termination......................................26
8. MISCELLANEOUS.......................................................26
8.1 Complete Agreement; Modification of Agreement;
Sale of Interest ........................................26
8.2 Fees and Expenses..........................................27
8.3 No Waiver by Purchaser.....................................28
8.4 Remedies...................................................29
8.5 Waiver of Jury Trial.......................................29
8.6 Severability...............................................29
8.7 Binding Effect; Benefits...................................29
8.8 Conflict of Terms..........................................29
8.9 Governing Law..............................................29
8.10 Notices....................................................29
8.11 Survival...................................................31
8.12 Section and Other Headings.................................31
8.13 Counterparts...............................................31
8.14 Publicity..................................................31
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TABLE OF CONTENTS
NOTE PURCHASE AGREEMENT
SCHEDULES
Schedule 1 - Permitted Liens
Schedule 4.1 - Stock, Warrants and Preemptive Rights
Schedule 4.4 - Material Licenses
Schedule 4.5 - Subsidiaries
Schedule 4.6 - Governmental Consents
Schedule 4.7 - Financial Statements; Other Obligations;
Schedule 4.8 - Ownership and Properties
Schedule 4.9 - Material Contracts and Indebtedness
Schedule 4.10 - Environmental Matters
Schedule 4.11 - Labor and Employment Matters
Schedule 4.13 - Taxes
Schedule 4.14 - Litigation
Schedule 4.15 - Brokers
Schedule 4.16 - Employment Contracts
Schedule 4.17 - Patents, Trademarks, Etc.
Schedule 4.19 - ERISA
Schedule 4.20 - SEC Documents
Schedule 4.22 - Insurance
EXHIBITS
Exhibit A Indenture
Exhibit B Registration Rights Agreement
Exhibit C Stockholders Agreement
Exhibit D Supplemental Indenture
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NOTE PURCHASE AGREEMENT
-----------------------
NOTE PURCHASE AGREEMENT (this "Agreement"), dated as of April
27, 1999, by and between Brookdale Living Communities, Inc., a Delaware
corporation ("Company"), and Health Partners ("Purchaser"), a general
partnership organized under the laws of Bermuda.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Company has agreed to issue and sell to Purchaser,
and Purchaser has agreed to purchase or caused to be purchased from Company,
upon the terms and conditions hereinafter provided, one or more 5 1/2%
convertible subordinated promissory notes in the aggregate principal amount of
$100,000,000, and due April 2009 which are initially convertible into 5,479,452
shares of Common Stock (as defined herein) of Company (such notes being referred
to herein collectively as the "Note").
NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties and covenants hereinafter contained, it is
agreed as follows:
1. DEFINITIONS
-----------
"Affiliate" shall mean, with respect to any Person, (i) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, 5% or more of the Stock having
ordinary voting power in the election of directors of such Person, (ii) each
Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person, (iii) each of such Person's officers,
directors, joint venturers and partners, (iv) any trust or beneficiary of a
trust of which such Person is the sole trustee or (v) any lineal descendants,
ancestors, spouse or former spouses (as part of a marital dissolution) of such
Person (or any trust for the benefit of such Person). For the purpose of this
definition, (i) "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise and (ii) limited partners of one or more of Purchaser's Affiliates and
such limited partners' respective officers, directors and joint venture partners
are specifically excluded (unless such Person is otherwise an "Affiliate" in
some other capacity) from the definition of "Affiliate" unless otherwise
specifically indicated.
"Agreement" shall mean this Note Purchase Agreement including
all amendments, modifications and supplements hereto and any appendices,
exhibits and schedules hereto or thereto, and shall refer to the Agreement as
the same may be in effect at the time such reference becomes operative.
"Balance Sheets" shall have the meaning set forth in Section
4.7(a) hereof.
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"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of New York, in the State of Illinois or in the City of Chicago, Illinois.
"Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as lessee
that, in accordance with GAAP, either would be required to be classified and
accounted for as a capital lease on a balance sheet of such Person or otherwise
be disclosed as a capital lease in a note to such balance sheet, other than, in
the case of Company or a Subsidiary of Company, any such lease under which
Company or such Subsidiary is the lessor.
"Capital Lease Obligation" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease or otherwise be disclosed in a note to such balance sheet.
"Certificate of Incorporation" shall mean the Restated
Certificate of Incorporation of Company.
"Charges" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental (including, without limitation,
PBGC) taxes at the time due and payable, levies, assessments, charges, liens,
claims or encumbrances upon or relating to (i) Company's or any of its
Subsidiaries' employees, payroll, income or gross receipts, (ii) Company's or
any of its Subsidiaries' ownership or use of any of its assets, or (iii) any
other aspect of Company's or any of the Subsidiaries' business.
"Closing" shall have the meaning set forth in Section 2.3
hereof.
"Closing Date" shall have the meaning set forth in Section 2.3
hereof.
"COBRA" shall have the meaning set forth in Section 4.19(m)
hereof.
"Common Stock" shall mean the common stock, par value $0.01
per share, of Company.
"Company SEC Documents" shall have the meaning set forth in
Section 4.20 hereof.
"Environmental Laws" shall mean all federal, state and local
laws, statutes, ordinances and regulations, now or hereafter in effect, and in
each case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment,
relative to the applicable Real Estate, relating to the regulation and
protection of human health, safety, the environment and natural resources
(including, without limitation, ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species and
vegetation). Environmental Laws include but are not limited to the Comprehensive
Environmental
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Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. ss.
9601 et seq.) ("CERCLA"); the Hazardous Material Transportation Act, as amended
(49 U.S.C. ss. 1801 et seq.); the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended (7 U.S.C. ss. 136 et seq.); the Resource
Conservation and Recovery Act, as amended (42 U.S.C. ss. 6901 et seq.) ("RCRA");
the Toxic Substance Control Act, as amended (15 U.S.C. ss. 2601 et seq.); the
Clean Air Act, as amended (42 U.S.C. ss. 740 et seq.); the Federal Water
Pollution Control Act, as amended (33 U.S.C. ss. 1251 et seq.); the Occupational
Safety and Health Act, as amended (29 U.S.C. ss. 651 et seq.) ("OSHA"); and the
Safe Drinking Water Act, as amended (42 U.S.C. ss. 300f et seq.), and any and
all regulations promulgated thereunder, and all analogous state and local
counterparts or equivalents and any transfer of ownership notification or
approval statutes.
"Environmental Liabilities and Costs" shall mean all
liabilities, obligations, responsibilities, remedial actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all fees, disbursements and expenses of counsel,
experts and consultants and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any claim,
suit, action or demand by any person or entity, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute or
common law (including, without limitation, any thereof arising under any
Environmental Law, permit, order or agreement with any Governmental Authority)
and which relate to any health or safety condition regulated under any
Environmental Law or in connection with any other environmental matter or Spill
or the presence of a hazardous substance or threatened Spill of any Hazardous
Substance.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to time and
any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to Company, any
trade or business (whether or not incorporated) under common control with
Company and which, together with Company, are treated as a single employer
within the meaning of Sections 414(b), (c), (m) or (o) of the IRC, excluding
Purchaser and each other person which would not be an ERISA Affiliate if
Purchaser did not own any issued and outstanding shares of Stock of Company.
"Event of Default" shall have the meaning ascribed to it in
the Indenture.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and all rules and regulations promulgated thereunder.
"Financials" shall mean the financial statements referred to
in Section 4.7(a) hereof.
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"Fiscal Year" shall mean the twelve month period ending
December 31. Subsequent changes of the fiscal year of Company shall not change
the term "Fiscal Year," unless the Required Holders shall consent in writing to
such changes.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department,
board, commission or other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any Indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person (the "primary
obligor") in any manner including, without limitation, any obligation or
arrangement of such Person (a) to purchase or repurchase any such primary
obligation, (b) to advance or supply funds (i) for the purchase or payment of
any such primary obligation or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) to indemnify the owner of such
primary obligation against loss in respect thereof.
"Hazardous Substance" shall have the meaning set forth in
Section 4.10(a) hereof.
"Holder" shall have the meaning ascribed to it in the
Indenture.
"Indebtedness" of any Person shall mean (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services (including, without limitation, reimbursement and all other
obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured, but not including obligations to trade
creditors incurred in the ordinary course of business), (ii) all obligations
evidenced by notes, bonds, debentures or similar instruments, (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreements with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (iv)
all Capital Lease Obligations, (v) all Guaranteed Indebtedness, (vi) all
Indebtedness referred to in clause (i), (ii), (iii), (iv) or (v) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness and (vii) all liabilities under Title IV of ERISA.
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"Indemnified Party" shall have the meaning set forth in
Section 2.4(b) hereof.
"Indenture" shall mean that Indenture to be dated as of the
Closing Date, by and between Brookdale Living Communities, Inc. and State Street
Bank and Trust Company, as Trustee, substantially in the form attached hereto as
Exhibit A.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any
successor thereto.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest as to assets owned by the relevant Person under the Uniform
Commercial Code or comparable law of any jurisdiction).
"Material Adverse Effect" shall mean any event or
circumstance, condition, fact, effect, or other matter which has had or could
reasonably be expected to have a material adverse effect (i) on the business,
assets, results of operations, prospects or financial or other condition of
Company and its Subsidiaries, taken as a whole; (ii) Company's ability to pay
the Obligations in accordance with the terms hereof; or (iii) the ability of
Company and its Subsidiaries to perform on a timely basis any material
obligation under this Agreement or to consummate the transactions contemplated
hereby.
"Material Contracts" means (i) all of Company's and its
Subsidiaries' contracts, agreements, leases or other instruments to which
Company or any of its Subsidiaries is a party or by which Company, its
Subsidiaries or its properties are bound, which involve payments by or to
Company or its Subsidiaries of more than $100,000 or which extend for a term of
more than a year from the date hereof, excluding all residency agreements with a
term of more than one (1) year to which Company or any of its Subsidiaries is a
party, (ii) all of Company's and its Subsidiaries' loan agreements, bank lines
of credit agreements, indentures, mortgages, deeds of trust, pledge and security
agreements, factoring agreements, conditional sales contracts, letters of credit
or other debt instruments, (iii) all material operating or capital leases for
equipment or property to which Company or any of its Subsidiaries is a party
(including without limitation any Sale leaseback or similar arrangements), (iv)
all non-competition and similar agreements to which Company is a party, (v) all
contracts for the employment of any officer or employee, (vi) all consulting
agreements, (vii) any guarantees by Company or any of its Subsidiaries, (viii)
all distributor and sales agency agreements and (ix) all other material
contracts not made in the ordinary course of business.
5
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"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which Company, any of its
Subsidiaries or any ERISA Affiliate is making, is obligated to make, has made or
been obligated to make, contributions on behalf of participants who are or were
employed by any of them.
"Note" shall mean the 5 1/2% convertible subordinated
promissory note of Company in the principal amount of $100,000,000, due April
2009, to be issued pursuant to the Indenture and the Supplemental Indenture to
Purchaser hereunder, substantially in the form of Exhibit A to the Supplemental
Indenture.
"Obligations" shall mean all amounts owing by Company to
Purchaser and any of its assignees pursuant hereto or the Note, including,
without limitation, all principal, interest, fees, expenses, attorneys' fees and
any other sum chargeable to Company under any of the Transaction Documents.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Pension Plan" shall have the meaning set forth in Section
4.19(a) hereof.
"Permitted Indebtedness" means, with respect to Company, (i)
taxes or assessments or other governmental charges or levies, either not yet due
and payable or to the extent that nonpayment thereof is permitted by the terms
of this Agreement; (ii) obligations under workmen's compensation, unemployment
insurance, social security or public liability laws or similar legislation;
(iii) bids, tenders, contracts (other than contracts for the payment of money)
or leases to which Company or any of its Subsidiaries is a party as lessee made
in the ordinary course of business; (iv) public or statutory obligations of
Company or any of its Subsidiaries; (v) all deferred taxes and (vi) all unfunded
pension fund and other employee benefit plan obligations and liabilities but
only to the extent permitted to remain unfunded under applicable law.
"Permitted Liens" shall mean the following: (i) Liens for
taxes or assessments or other governmental charges or levies, either not yet due
and payable or to the extent that nonpayment thereof is permitted by the terms
of this Agreement; (ii) pledges or deposits securing obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (iii) pledges or deposits securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which
Company or any of its Subsidiaries is a party as lessee made in the ordinary
course of business; (iv) Liens arising solely by virtue of any statutory or
common law provision relating to bankers' liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with a
creditor depository institution; (v) workers, mechanics, suppliers, carriers,
warehousemen's or other similar liens arising in the ordinary course of business
and securing indebtedness, not yet due and payable; (vi) deposits securing or in
lieu of surety, appeal or customs bonds in proceedings to which Company or any
of its Subsidiaries is a party; (vii) Liens arising in the ordinary course of
business in connection with obligations that are not
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overdue or which are being contested in good faith and by appropriate
proceedings, including, but not limited to, Liens under bid, performance and
other surety bonds, supersedeas and appeal bonds, landlord Liens arising under
leases of real property, Liens on advance or progress payments received from
customers under contracts for the sale, lease or license of goods, software or
services and upon the products being sold or licensed, in each case securing
performance of the underlying contract or the repayment of such advances in the
event final acceptance of performance under such contracts does not occur, and
Liens upon funds collected temporarily from others pending payment or remittance
on their behalf; (viii) zoning restrictions, easements, licenses, or other
restrictions on the use of real property or other minor irregularities in title
(including leasehold title) thereto and other matters of record, so long as the
same do not materially impair the use, value, or marketability of such real
property, leases or leasehold estates; and (ix) Liens existing on the date
hereof and described on Schedule 1 hereto.
"Person" shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).
"Plan" shall have the meaning set forth in Section 4.19(a)
hereof.
"Purchaser" shall have the meaning set forth in the first
paragraph of this Agreement.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement by and between Company and Purchaser, substantially in the form
attached hereto as Exhibit B, as such agreement may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"Retiree Welfare Plan" shall refer to any Welfare Plan
providing for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.
"SEC" shall mean the U.S. Securities and Exchange Commission,
or any successor thereto.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and all rules and regulations promulgated thereunder.
"Spill" shall have the meaning set forth in Section 4.10(a)
hereof.
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests, limited liability company membership interest,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership,
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limited liability company or equivalent entity whether voting or nonvoting,
including, without limitation, common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Exchange Act).
"Stockholders Agreement" shall mean the Stockholders Agreement
by and among Company, Purchaser, The Prime Group, Inc. and certain Affiliates of
The Prime Group, Inc., substantially in the form attached hereto as Exhibit C,
as such agreement may be amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof.
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, and (b) any partnership or other entity in which such Person and/or
one or more Subsidiaries of such Person shall have an interest (whether in the
form of voting or participation in profits or capital contribution) of more than
50%.
"Supplemental Indenture" shall mean the Supplemental
Indenture, to be dated as of the Closing Date, by and between Brookdale Living
Communities, Inc. and State Street Bank and Trust Company, as Trustee, providing
for the issuance of the Notes, substantially in the form attached hereto as
Exhibit D.
"System" shall have the meaning set forth in Section 4.25(a)
hereof.
"Third Party Action" shall have the meaning set forth in
Section 2.4(b) hereof.
"Transaction Documents" shall mean this Agreement, the
Indenture, the Supplemental Indenture, the Note, the Registration Rights
Agreement and the Stockholders Agreement.
"Welfare Plan" shall mean any welfare plan, as defined in
Section 3(1) of ERISA, which is maintained or contributed to by Company, any of
its Subsidiaries or any ERISA Affiliate.
"Withdrawal Liability" means, at any time, the aggregate
amount of the liabilities, if any, pursuant to Section 4201 of ERISA, and any
increase in contributions pursuant to Section 4243 of ERISA with respect to all
Multiemployer Plans.
"Year 2000 Compliant" shall have the meaning set forth in
Section 4.25(a) hereof.
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References to this "Agreement" shall mean this Purchase
Agreement, including all amendments, modifications and supplements and any
exhibits or schedules to any of the foregoing, and shall refer to the Agreement
as the same may be in effect at the time such reference becomes operative.
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended, modified or
supplemented, and not to any particular section, subsection or clause contained
in this Agreement. Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter.
2. PURCHASE OF NOTE
2.1 Purchase of Note. Subject to the terms and conditions
set forth in this Agreement, Purchaser concurrently herewith is purchasing from
Company, and Company is issuing and selling to Purchaser the Note for a purchase
price of $100,000,000. The Note will be issued pursuant to, and will contain the
terms set forth in, the Indenture and the Supplemental Indenture and will be
issued to Purchaser in the principal amount of $100,000,000.
2.2 Use of Proceeds. Company shall use the proceeds of the
purchase price hereunder for the repayment of indebtedness and for working
capital and other general corporate purposes.
2.3 Closing. The closing of the purchase and sale of the
Note (the "Closing") shall take place as soon as practicable following
Purchaser's receipt of the requisite funds from its investors, but in no event
later than May 14, 1999, or such other date and time as shall be mutually agreed
to by the parties hereto (the "Closing Date") at the offices of Weil, Gotshal &
Manges LLP, 767 Fifth Avenue, New York, New York, or such other place as shall
be mutually agreed to by the parties hereto. On the Closing Date, Company will
issue and deliver to Purchaser the Note to be purchased by Purchaser against
delivery by Purchaser of the purchase price therefor by wire transfer of funds
to the account of Company.
2.4 Indemnity. (a) Company shall indemnify and hold
Purchaser and each of its officers, directors and Affiliates harmless from and
against any and all suits, actions, proceedings, claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable attorneys'
fees and disbursements, including those incurred upon
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any appeal) which may be instituted or asserted against or incurred by Purchaser
or such other indemnified person relating to or arising out of any untrue
representation, breach of warranty or failure to perform any covenants or
agreement by Company contained herein or in any Transaction Document or
otherwise relating to or arising out of the transactions contemplated hereby.
(b) Any person entitled to indemnification hereunder (an
"Indemnified Party") shall give prompt written notice to Company of the
commencement or assertion of any action, proceeding, demand or claim by a third
party (collectively, a "Third-party Action") in respect of which such
Indemnified Party shall seek indemnification hereunder. Any failure so to notify
Company shall not relieve Company from any liability that it may have to such
Indemnified Party under this Section 2.4 except to the extent Company is
materially prejudiced thereby. Company shall have the right to assume control of
the defense of, settle, or otherwise dispose of such Third-party Action on such
terms as it deems appropriate; provided, however, that (i) the Indemnified Party
shall be entitled, at his, her or its own expense, to participate in the defense
of such Third-party Action; (ii) unless the Indemnified Party is unconditionally
released, Company shall obtain the prior written approval of the Indemnified
Party before entering into or making any settlement, compromise, admission or
acknowledgment of the validity of such Third-party Action or any liability in
respect thereof, which written approval will not be unreasonably withheld; and
(iii) Company shall not be entitled to control (but shall be entitled to
participate at its own expense in the defense of), and the Indemnified Party
shall be entitled to have sole control over, the defense or settlement,
compromise, admission or acknowledgment of any Third-party Action (x) as to
which Company fails to assume the defense within a reasonable length of time or
(y) to the extent the Third-party Action seeks an order, injunction or other
equitable relief against the Indemnified Party which, if successful, would
materially adversely affect the business, operations, assets or financial
condition of the Indemnified Party; provided, however, that the Company shall
have the right to control its own defense to the extent it is a co-defendant in
any Third-party Action; provided, further, that the Indemnified Party shall make
no settlement, compromise, admission or acknowledgment which would give rise to
liability on the part of Company without the prior written consent of Company,
which consent shall not be unreasonably withheld.
The parties hereto shall extend reasonable cooperation in
connection with the defense of any Third-party Action pursuant to this Section
2.4 and, in connection therewith, shall furnish such records, information and
testimony and attend such conferences, discovery proceedings, hearings, trials
and appeals as may be reasonably requested. Notwithstanding Section 8.8 hereof,
to the extent any provision contained in this Section 2.4 is in conflict with,
or inconsistent with, any indemnification provision in the Registration Rights
Agreement, the provision contained in the Registration Rights Agreement shall
govern and control.
2.5 Access. So long as Purchaser has any representative on
the Board of Directors of Company, Purchaser and any of its officers, employees
and/or agents shall have the right during normal business hours, to visit and
inspect the properties and
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facilities of Company and its Subsidiaries and to inspect, audit and make
extracts from all of Company's and its Subsidiaries' records, files, corporate
books and books of account and to discuss the affairs, finances and accounts of
Company and its Subsidiaries with the principal officers of Company, all at such
reasonable times, upon reasonable notice and as often as Purchaser may
reasonably request. Company shall deliver to Purchaser any document or
instrument reasonably necessary, as Purchaser may request, for Purchaser to
obtain records from any service bureau maintaining records for Company or its
Subsidiaries. Company shall instruct its and its Subsidiaries' banking and other
financial institutions to make available to Purchaser such information and
records as Purchaser may reasonably request.
3. PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser makes the following representations and warranties
to Company as of the date hereof (and as of the Closing Date):
3.1 Investment Intention. Purchaser is purchasing the Note
for its own account, for investment purposes and not with a view to the resale
or distribution thereof. Purchaser will not, directly or indirectly, offer,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of the Note or
any shares of Common Stock acquired by it upon the conversion of all or any part
of the Note (or solicit any offers to buy, purchase, or otherwise acquire any of
the Note), except in compliance with the Securities Act.
3.2 Accredited Investor. Purchaser is an "accredited
investor" (as that term is defined in Rule 501 of Regulation D under the
Securities Act) and by reason of its business and financial experience, it has
such knowledge, sophistication and experience in business and financial matters
as to be capable of evaluating the merits and risks of its investment in the
Note, is able to bear the economic risk of such investment and is able to afford
a complete loss of such investment.
3.3 Partnership Existence. Purchaser is a general
partnership duly organized, validly existing and in good standing under the laws
of Bermuda.
3.4 Partnership Power; Authorization; Enforceable
Obligations. The execution, delivery and performance by Purchaser of this
Agreement and the other Transaction Documents to be executed by it: (i) have
been duly authorized by all necessary action of Purchaser; (ii) are not in
contravention of any provision of Purchaser's partnership agreement; (iii) will
not conflict with or result in the breach or termination of, constitute a
default under or accelerate any performance required by, any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which Purchaser
is a party or by which Purchaser or any of its property is bound, except where
such conflict, breach, default or acceleration would not be reasonably likely to
result in a material adverse effect on Purchaser's ability to perform its
obligations hereunder; and (iv) will not violate any law or regulation, or any
order or decree of any Governmental Authority binding on Purchaser. This
Agreement and the other Transaction Documents to which Purchaser is a party have
each been duly executed and delivered by Purchaser
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and constitute the legal, valid and binding obligations of Purchaser,
enforceable against it in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
3.5 Receipt of Information. Purchaser has been afforded the
opportunity to ask such questions as Purchaser has deemed necessary of, and to
receive answers from, representatives of Company concerning the terms and
conditions of the Note and the merits and risks of investing in the Note.
Purchaser has received all documents and information relating to an investment
in the Note requested by or on behalf of Purchaser, including such information
relating to Company as Purchaser has deemed appropriate in making an investment
decision with respect to the Note.
4. COMPANY'S REPRESENTATIONS AND WARRANTIES
Company makes the following representations and warranties to
Purchaser as of the date hereof (and as of the Closing Date):
4.1 Authorized and Outstanding Shares of Capital Stock.
After giving effect to the Closing, the authorized capital stock of Company
consists of 75,000,000 shares of Common Stock of which 11,572,082 shares are
issued and outstanding, and 20,000,000 shares of preferred stock, $.01 par value
per share, of which no shares are issued and outstanding. All of such issued and
outstanding shares are validly issued, fully paid and non-assessable. Except as
set forth on Schedule 4.1, (i) there is no existing option, warrant, call,
commitment or other agreement to which Company is a party requiring, and there
are no convertible securities of Company outstanding which upon conversion would
require, the issuance of any additional shares of Stock of Company or other
securities convertible into shares of equity securities of Company, other than
the Note, (ii) there are no agreements to which Company is a party with respect
to the voting or transfer of the Stock of Company, (iii) there are no preemptive
rights or rights of first refusal or other similar rights with respect to the
issuance of Stock by Company. True and correct copies of the Certificate of
Incorporation and by-laws of Company have been delivered to Purchaser.
4.2 Authorization and Issuance of Note. The issuance of the
Note has been duly authorized by all necessary corporate action on the part of
Company and, upon the execution and authentication of the Note in accordance
with the provisions of the Indenture and the Supplemental Indenture and delivery
to Purchaser of the Note against payment in accordance with the terms hereof,
the Note will have been validly issued, free and clear of all pledges, liens,
encumbrances and preemptive rights and will be entitled to the benefits of the
Indenture and the Supplemental Indenture. The issuance of shares of Common Stock
upon conversion of the Note has been duly authorized by all necessary corporate
action on the part of Company and, when issued upon conversion of the Note, such
Common Stock will have been validly issued and fully paid and non-assessable.
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Company has duly reserved 5,479,452 shares of Common Stock for issuance pursuant
to the terms of the Note.
4.3 Securities Laws. In reliance on the investment
representations contained in Sections 3.1, 3.2 and 3.5, the offer, issuance,
sale and delivery of the Note, as provided in this Agreement, are exempt from
the registration requirements of the Securities Act. Neither Company nor any
Person acting on its behalf has taken or will take any action (including,
without limitation, any offering of any securities of Company under
circumstances which would require the integration of such offering with the
offering of the Note under the Securities Act and the rules and regulations of
the SEC thereunder) which might subject the offering, issuance or sale of the
Note, to the registration requirements of Section 5 of the Securities Act.
4.4 Existence; Compliance with Law. Company and each of its
Subsidiaries, (i) is a corporation or partnership, as applicable, duly
organized, validly existing and in good standing under the laws of the State of
Delaware in the case of Company and as set forth on Schedule 4.5 in the case of
its Subsidiaries; (ii) is duly qualified as a foreign corporation or
partnership, as applicable, and in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification (except for jurisdictions in which such
failure to so qualify or to be in good standing would not have a Material
Adverse Effect); (iii) has the requisite corporate or partnership power and
authority, as applicable, and the legal right to own, pledge, mortgage or
otherwise encumber and operate its properties, to lease the property it operates
under lease, and to conduct its business as now being conducted; (iv) has, or
has applied for, all material licenses, permits, consents or approvals (a list
of such material licenses are set forth on Schedule 4.4 hereto) from or by, and
has made all material filings with, and has given all material notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (v) is in compliance with its certificate or
articles of incorporation, by-laws, partnership agreement or certificate of
limited partnership, as applicable; and (vi) is in compliance with all
applicable provisions of law (including, but not limited to, the anti-kick back
provisions of the Social Security Act and the Health Insurance Portability and
Accountability Act of 1996), except for such non-compliance which would not have
a Material Adverse Effect.
4.5 Subsidiaries. There currently exist no Subsidiaries of
Company other than as set forth on Schedule 4.5 hereto, which sets forth such
Subsidiaries, together with their respective jurisdictions of organization, and
the authorized and outstanding Stock of each such Subsidiary, by class and
number and percentage of each class owned by Company or a Subsidiary of Company
or any other Person. There are no options, warrants, rights to purchase or
similar rights covering capital Stock for any such Subsidiary.
4.6 Corporate Power; Authorization; Enforceable Obligations.
The execution, delivery and performance by Company of this Agreement, the other
Transaction Documents to which it is a party and all instruments and documents
to be
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delivered by Company, the issuance and sale of the Note (and the underlying
Common Stock to be issued upon conversion of the Note) and the consummation of
the other transactions contemplated by any of the foregoing: (i) are within
Company's corporate power and authority; (ii) have been duly authorized by all
necessary corporate action; (iii) are not in contravention of any provision of
the Certificate of Incorporation or by-laws of Company; (iv) will not violate
any law or regulation, or any order or decree of any court or governmental
instrumentality; (v) will not conflict with or result in the breach or
termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Company or any of its Subsidiaries is a party or by which
Company, any of its Subsidiaries or any of their property is bound, except where
any such conflict, breach, default or acceleration would not be reasonably
likely to result in a Material Adverse Effect; (vi) will not result in the
creation or imposition of any Lien upon any of the property of Company or any of
its Subsidiaries; and (vii) except as set forth on Schedule 4.6 with respect to
filings and/or approvals required for the conversion of the Note in connection
with certain permits maintained by Company and certain Subsidiaries, do not
require the consent or approval of, or any filing with, any Governmental
Authority or any other Person that has not been received or will not be received
prior to Closing, except those filings or approvals which the failure to make or
obtain will not result in a loss of, loss of benefit under or a material
liability to the Company or any of its Subsidiaries with respect to any of the
licenses set forth on Schedule 4.4 or would otherwise result in a Material
Adverse Effect. Each of this Agreement and the other Transaction Documents have
been duly executed and delivered by Company and each constitutes a legal, valid
and binding obligation of Company, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
4.7 Financial Statements. (a) The audited consolidated
balance sheets (the "Balance Sheets") of Company as at December 31, 1998 and
1997, and the related consolidated statements of operations, stockholders equity
and cash flows for the year ended December 31, 1998, the period from May 7, 1997
to December 31, 1997 and the combined statements of operations, changes in
partners' capital (deficit) and cash flows of the "Predecessor Properties" for
the period January 1, 1997 to May 6, 1997, with the opinions thereon of Ernst &
Young LLP, copies of which have previously been delivered or made available to
Purchaser, have been prepared in conformity with GAAP consistently applied
throughout the periods involved and present fairly the consolidated financial
position of Company as at the dates thereof, and the consolidated results of its
operations and cash flows for the periods then ended.
(b) Except as set forth on Schedule 4.7, neither Company nor
any of its Subsidiaries has any material obligations, contingent or otherwise,
including, without limitation, liabilities for Charges, long-term leases or
unusual forward or long-term
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commitments which are not reflected in the Balance Sheets, other than those
incurred since December 31, 1998, in the ordinary course of business.
(c) No dividends or other distributions have been declared,
paid or made upon any shares of Stock of Company, nor have any shares of Stock
of Company been redeemed, retired, purchased or otherwise acquired for value by
Company since December 31, 1998.
4.8 Ownership of Property. (a) Except as set forth on
Schedule 4.8, neither Company nor any of its Subsidiaries owns any real estate.
Each of Company and its Subsidiaries has good and marketable and insurable fee
simple title to its owned real property, free and clear of all Liens other than
Permitted Liens. Each of Company and its Subsidiaries has valid and marketable
leasehold interests in the leases of real estate described in Schedule 4.8
hereto, and, except as set forth on Schedule 4.8, good and marketable title to,
or valid leasehold interests in, all of its other properties and assets free and
clear of all Liens, except Permitted Liens.
(b) All real property leased by Company and its Subsidiaries
is set forth on Schedule 4.8. Each of such leases is valid and enforceable in
accordance with its terms (subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity)) and is in full force and effect. Company has
delivered or made available to Purchaser true and complete copies of each of
such leases set forth on Schedule 4.8 and all documents affecting the rights or
obligations of Company or any of its Subsidiaries, including, without
limitation, any non-disturbance and recognition agreements, subordination
agreements, attornment agreements and agreements regarding the term or rental of
any of the leases. Except as set forth on Schedule 4.8, none of Company, any of
its Subsidiaries nor, to its knowledge, any other party to any such lease is in
default of its obligations thereunder or has delivered or received any notice of
default under any such lease, nor has any event occurred which, with the giving
of notice, the passage of time or both, would constitute a default under any
such lease.
(c) Except as disclosed on Schedule 4.8, neither Company nor
any of its Subsidiaries is obligated under or a party to, any option, right of
first refusal or any other contractual right to purchase, acquire, sell, assign
or dispose of any real property owned or leased by Company or such Subsidiary,
except with respect to real property leased or being developed by Company or any
of its Subsidiaries with respect to which the Company or such Subsidiary has the
right or option to purchase.
4.9 Material Contracts; Indebtedness. Schedule 4.9 contains
a true, correct and complete list or description of all Material Contracts. Each
Material Contract is a valid and binding agreement of Company or its
Subsidiaries (as the case may be) enforceable against Company or such Subsidiary
in accordance with its terms (subject to
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applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity) and
neither Company nor any of its Subsidiaries has any knowledge that any Material
Contract is not a valid and binding agreement against the other parties thereto.
Company and each of its Subsidiaries has fulfilled in all material respects all
obligations required pursuant to the Material Contract to have been performed by
Company or such Subsidiary on its part to the extent required to have been
performed on or prior to the date hereof or the Closing Date. Except as set
forth in Schedule 4.9, neither Company nor any of its Subsidiaries is in default
or breach, nor to Company's or such Subsidiary's knowledge is any third party in
default or breach, under or with respect to any Material Contract. Except as set
forth on Schedule 4.9, neither Company nor any of its Subsidiaries has any
Indebtedness except Permitted Indebtedness.
4.10 Environmental Protection. (a) Except as set forth on
Schedule 4.10, to Company's and its Subsidiaries' knowledge, there has been no
disposal or release of Hazardous Substances on any real property owned, leased
or otherwise operated by Company and its Subsidiaries (each, a "Facility") which
is reasonably likely to have a Material Adverse Effect. "Hazardous Substance"
means any substance, waste or material (i) currently identified to be toxic or
hazardous pursuant to, or which could reasonably be expected to result in
liability under, any Environmental Law in existence as of the date hereof or
(ii) defined as toxic or hazardous under any Environmental Law in existence as
of the date hereof, including, without limitation, any asbestos, pcb,
radioactive substance, methane, volatile hydrocarbons, industrial solvents, oil
or petroleum or chemical liquids or solids, liquid or gaseous products, or any
other material or substance which has in the past caused or constituted a
health, safety, or environmental hazard to any Person or property or result in
any Environmental Liabilities and Costs. Except as set forth on Schedule 4.10,
neither Company nor any of its Subsidiaries has caused or suffered to occur any
release, spill, migration, leakage, discharge, spillage, uncontrolled loss,
seepage, or filtration of Hazard Substances at or from the Facility (a "Spill")
which could result in Environmental Liabilities and Costs reasonably likely to
have a Material Adverse Effect.
(b) Company and each Subsidiary has generated, treated,
stored and disposed of any Hazardous Substances in compliance with applicable
Environmental Laws in effect on the relevant date, except for such
non-compliances which would not have a Material Adverse Effect.
(c) Company and each Subsidiary has obtained, or has applied
for, and is in compliance with and in good standing under all permits required
under Environmental Laws (except for such failures which would not have a
Material Adverse Effect) and neither Company nor any of its Subsidiaries has any
knowledge of any proceedings to substantially modify or to revoke any such
permit.
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(d) Except as set forth on Schedule 4.10, there are no
investigations, proceedings or litigation pending or, to Company's or its
Subsidiaries' knowledge, threatened, affecting or against Company, any of its
Subsidiaries or the Facilities relating to Environmental Laws or Hazardous
Substances which is reasonably likely to have a Material Adverse Effect.
(e) Since January 1, 1997, except for communications in
connection with the matters listed on Schedule 4.10, neither Company nor any of
its Subsidiaries has received any communication or notice (including, without
limitation, requests for information) indicating the potential of Environmental
Liabilities and Costs against Company or its Subsidiaries which is reasonably
likely to have a Material Adverse Effect.
4.11 Labor Matters. (a) Except as set forth in Schedule 4.11,
there are no strikes or other labor disputes against Company or any of its
Subsidiaries pending or, to Company's or its Subsidiaries' knowledge,
threatened. Hours worked by and payment made to employees of Company and its
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable law dealing with such matters. All payments due from Company
and each of its Subsidiaries on account of employee health and welfare insurance
have been paid or accrued as a liability on the books of Company or such
Subsidiary. Except as set forth in Schedule 4.11, there is no organizing
activity involving Company or any of its Subsidiaries pending or, to Company's
or its Subsidiaries' knowledge, threatened by any labor union or group of
employees. Except as set forth in Schedule 4.11, there are no representation
proceedings pending or, to Company's or its Subsidiaries' knowledge, threatened
with the National Labor Relations Board, and no labor organization or group of
employees of Company or its Subsidiaries has made a pending demand for
recognition. Except as set forth in Schedule 4.11, there are no complaints or
charges against Company or any of its Subsidiaries pending or, to Company's or
its Subsidiaries' knowledge, threatened to be filed with any federal, state,
local or foreign court, governmental agency or arbitrator based on, arising out
of, in connection with, or otherwise relating to the employment or termination
of employment by Company or any of its Subsidiaries of any individual.
(b) Except as set forth in Schedule 4.11, neither Company
nor any of its Subsidiaries is, or during the five years preceding the date
hereof was, a party to any labor or collective bargaining agreement and there
are no labor or collective bargaining agreements which pertain to employees of
Company or its Subsidiaries.
4.12 Other Ventures. Neither Company nor any of its
Subsidiaries is engaged in any joint venture or partnership with any other
Person.
4.13 Taxes. Except as set forth on Schedule 4.13, all
material federal, state, local and foreign tax returns, reports and statements
required to be filed by Company and its Subsidiaries have been timely filed with
the appropriate Governmental Authority and all such returns, reports and
statements are true, correct and complete in all material respects. All material
Charges and other impositions due and payable for the
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periods covered by such returns, reports and statements have been paid prior to
the date on which any fine, penalty, interest or late charge may be added
thereto for nonpayment thereof, or any such fine, penalty, interest, late charge
or loss has been paid. Proper and accurate amounts have been withheld by Company
and its Subsidiaries from its employees for all periods in compliance, in all
material respects, with the tax, social security and unemployment withholding
provisions of applicable federal, state, local and foreign law and such
withholdings have been timely paid to the respective governmental agencies. No
tax audits or other administrative or judicial proceedings are pending or
threatened with regard to any Charges for which Company or any Subsidiary may be
liable and no assessment of Charges is proposed against Company or any
Subsidiary. Except as set forth on Schedule 4.13, neither Company nor any of its
Subsidiaries has agreed or has been requested to make any adjustment under IRC
Section 481(a) by reason of a change in accounting method or otherwise. Neither
Company nor any of its Subsidiaries has any obligation under any written tax
sharing agreement.
4.14 No Litigation. Except as disclosed on Schedule 4.14, no
action, claim or proceeding is now pending or, to the knowledge of Company or
its Subsidiaries, threatened against Company or any of its Subsidiaries, at law,
in equity or otherwise, before any court, board, commission, agency or
instrumentality of any federal, state, or local government or of any agency or
subdivision thereof, or before any arbitrator or panel of arbitrators, except
any such action, claim, proceeding which, if adversely determined, is reasonably
likely to have a Material Adverse Effect.
4.15 Brokers. Except as set forth on Schedule 4.15, no broker
or finder acting on behalf of Company or any of its Subsidiaries brought about
the consummation of the transactions contemplated pursuant to this Agreement and
neither Company nor any of its Subsidiaries has any obligation to any Person in
respect of any finder's or brokerage fees (or any similar obligation) in
connection with the transactions contemplated by this Agreement. Except as
otherwise set forth herein, Company is solely responsible for the payment of all
such finder's or brokerage fees.
4.16 Employment and Labor Agreements. Except as set forth on
Schedule 4.16, there are no written (or material non-written) employment,
consulting or management agreements (other than letters offering employment)
covering management of Company or any of its Subsidiaries providing for payments
in excess of $150,000 in any year.
4.17 Patents, Trademarks, Copyrights and Licenses. Company
and each of its Subsidiaries owns all licenses, patents, patent applications,
copyrights, service marks, trademarks and registrations and applications for
registration thereof, and trade names necessary to continue to conduct its
business as heretofore conducted by it and now being conducted by it, each of
which is listed, together with Patent and Trademark Office or Copyright Office
application or registration numbers, where applicable, on Schedule 4.17 hereto.
To Company's knowledge, Company and each of its Subsidiaries conducts its
businesses without infringement or claim of infringement of any license, patent,
copyright, service mark, trademark, trade name, trade secret or other
intellectual
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property right of others. To Company's knowledge, there is no infringement by
others of any license, patent, copyright, service mark, trademark, trade name,
trade secret or other intellectual property right of Company or any of its
Subsidiaries.
4.18 No Material Adverse Effect. Since December 31, 1998 no
Material Adverse Effect has occurred.
4.19 ERISA. (a) Schedule 4.19 sets forth: (i) all material
"employee benefit plans", as defined in Section 3(3) of ERISA, and any other
material severance pay, deferred compensation or employee stock purchase plans,
programs or arrangements (the "Plans") maintained by Company and any of its
Subsidiaries or to which Company or any its Subsidiaries contributed or is
obligated to contribute thereunder, and (ii) all "employee pension plans", as
defined in Section 3(2) of ERISA (the "Pension Plans"), maintained by Company,
any of its Subsidiaries or any of its ERISA Affiliates to which Company, any of
its Subsidiaries or any of its ERISA Affiliates contributed or is obligated to
contribute thereunder.
(b) Purchaser will not have (i) any obligation to make any
contribution to any Multiemployer Plan or (ii) any withdrawal liability from any
such Multiemployer Plan under Section 4201 of ERISA which it would not have had
if it had not purchased the Note from Company at the Closing in accordance with
the terms of this Agreement.
(c) The Pension Plans intended to be qualified under Section
401 of the IRC are so qualified and the trusts maintained pursuant thereto are
exempt from federal income taxation under Section 501 of the IRC, and nothing
has occurred with respect to the operation of the Pension Plans which could
cause the loss of such qualification or exemption or the imposition of any
liability, penalty, or tax under ERISA or the IRC.
(d) All contributions required by law or pursuant to the
terms of the Plans (without regard to any waivers granted under Section 412 of
the IRC) to any funds or trusts established thereunder or in connection
therewith have been made by the due date thereof (including any valid extension)
and no accumulated funding deficiencies exist in any of the Pension Plans.
(e) There is no "amount of unfunded benefit liabilities" as
defined in Section 4001(a)(18) of ERISA in any of the respective Pension Plans.
Each of the respective Pension Plans are fully funded in accordance with the
actuarial assumptions used by the PBGC to determine the level of funding
required in the event of the termination of the Pension Plan and all benefit
liabilities do not exceed the assets of such Pension Plans.
(f) There has been no "reportable event" as that term is
defined in Section 4043 of ERISA and the regulations thereunder with respect to
the Pension Plans which would require the giving of notice, or any event
requiring disclosure under Sections 4041(c)(3)(C), 4063(a) or 4068(f) of ERISA.
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(g) There is no material violation of ERISA with respect to
the filing of applicable reports, documents, and notices regarding the Plans
with the Secretary of Labor and the Secretary of the Treasury or the furnishing
of such documents to the participants or beneficiaries of the Plans.
(h) True, correct and complete copies of the following
documents, with respect to each of the Plans, have been made available or
delivered to Purchaser by Company: (A) any plans and related trust documents,
and amendments thereto, (B) the most recent Forms 5500 (including any schedules
thereto) and the most recent actuarial valuation report, if any, (C) the last
IRS determination letter, (D) summary plan descriptions and (E) written
communications to employees relating to the Plans.
(i) There are no pending actions, claims or lawsuits which
have been asserted or instituted against the Plans, the assets of any of the
trusts under such Plans or the Plan sponsor or the Plan administrator, or
against any fiduciary of the Plans with respect to the operation of such Plans
(other than routine benefit claims), nor does Company or any of its Subsidiaries
have knowledge of facts which could form the basis for any such claim or
lawsuit.
(j) All amendments and actions required to bring the Plans
into conformity in all material respects with all of the applicable provisions
of ERISA and other applicable laws have been made or taken except to the extent
that such amendments or actions are not required by law to be made or taken
until a date after the Closing Date.
(k) The Plans have been maintained, in all material
respects, in accordance with their terms and with all provisions of ERISA
(including rules and regulations thereunder) and other applicable Federal and
state law, and neither Company nor any of its Subsidiaries or "party in
interest" or "disqualified person" with respect to the Plans has engaged in a
"prohibited transaction" within the meaning of Section 4975 of the IRC or
Section 406 of ERISA which is reasonably likely to have a Material Adverse
Effect.
(l) None of Company, any of its Subsidiaries or any ERISA
Affiliate has terminated any Pension Plan, or incurred any outstanding liability
under Section 4062 of ERISA to the PBGC, or to a trustee appointed under Section
4042 of ERISA.
(m) None of Company, any of its Subsidiaries or any ERISA
Affiliate maintains retired life and retired health insurance plans which are
Welfare Plans and which provide for continuing benefits or coverage for any
participant or any beneficiary of a participant except as may be required under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA")
and at the expense of the participant or the participant's beneficiary. Company,
all of its Subsidiaries and all ERISA Affiliates which maintains a Welfare Plan
has materially complied with the notice and continuation requirements of COBRA
and the regulations thereunder.
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(n) Except as set forth on Schedule 4.19, none of Company,
any of its Subsidiaries or any ERISA Affiliate has contributed or been obligated
to contribute to a Multiemployer Plan as of the Closing.
(o) None of Company, any of its Subsidiaries or any ERISA
Affiliate has withdrawn in a complete or partial withdrawal from any
Multiemployer Plan prior to the Closing Date, nor has any of them incurred any
liability due to the termination or reorganization of a Multiemployer Plan.
(p) None of Company, any of its Subsidiaries, any ERISA
Affiliate or any organization to which Company is a successor or parent
corporation, within the meaning of Section 4069(b) of ERISA, has engaged in any
transaction, within the meaning of Section 4069 of ERISA.
4.20 SEC Documents. Company has made available to Purchaser a
true and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by Company with the SEC since January 1, 1998
and prior to the date of this Agreement (the "Company SEC Documents"), which are
all the documents (other than preliminary material) that Company was required to
file with the SEC since such date, except as set forth on Schedule 4.20. Except
as set forth on Schedule 4.20, as of their respective dates, Company SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Company SEC Documents, and
none of Company SEC Documents contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. None of the matters described on Schedule 4.20 will
adversely impact in any significant respect the ability of Company to maintain
the effectiveness of the shelf registration provided for in the Registration
Rights Agreement for the periods provided therein or to otherwise fulfill any of
its obligations under the Registration Rights Agreement.
4.21 Ordinary Course of Business. Except as set forth on
Schedule 4.7 or in response to the events described therein, since December 31,
1998, Company and each of its Subsidiaries has conducted its operations only in
the ordinary course of business consistent with past practice.
4.22 Insurance. Schedule 4.22 hereto contains a complete and
correct list of all policies of insurance of any kind or nature covering Company
and its Subsidiaries, including, without limitation, policies of life, fire,
theft, employee fidelity and other casualty and liability insurance, indicating
the type of coverage, name of insured, the insurer, the premium, the expiration
date of each policy and the amount of coverage, and such policies are in full
force and effect. Complete and correct copies of each such policy have been
furnished or made available to Purchaser. Such policies are in amounts customary
for the industry in which Company or such Subsidiary operates.
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4.23 Accounts Receivable. Substantially all accounts
receivable of Company and its Subsidiaries as shown on the Balance Sheet are
collectible in the ordinary course of business by Company or such Subsidiary.
4.24 Minute Books. The minute books of Company and each
Subsidiary of Company, as previously made available to Purchaser accurately
reflect all formal corporate action of the stockholders and Board of Directors
of Company and each Subsidiary of Company.
4.25 Year 2000 Compliance. (a) To the Company's best
knowledge, after due inquiry, each system comprised of software, hardware,
databases or embedded control systems (microprocessor controlled or controlled
by any robotic or other device) (collectively, a "System") that constitutes any
material part of, or is used in connection with the use, operation or enjoyment
of, any material tangible or intangible asset or real property of Company or any
of its Subsidiaries will not be materially adversely affected by the advent of
the year 2000, the advent of the twenty-first century or the transition from the
twentieth century through the year 2000 and into the twenty-first century ("Year
2000 Compliant"). Company has no reason to believe that it or any of its
Subsidiaries may incur material expenses arising from or relating to the failure
of any of their Systems as a result of the advent of the year 2000, the advent
of the twenty-first century or the transition from the twentieth century through
the year 2000 and into the twenty-first century. Each System of Company and its
Subsidiaries is able to accurately process date, including, but not limited to,
calculating, comparing and sequencing from, into and between the twentieth
century (through year 1999), the year 2000 and the twenty-first century,
including leap year calculations.
(b) (1) All material vendors of products or services to
Company or any of its Subsidiaries, and their respective products, services and
operations, are, to the knowledge of Company, Year 2000 Compliant. To the
knowledge of Company after a reasonably diligent investigation, each such
material vendor will continue to furnish its products or services to Company or
its Subsidiaries, as applicable, without interruption or material delay, on and
after January 1, 2000.
(2) Company and its Subsidiaries have entered into
agreements with each of its material vendors certifying that all hardware,
software or firmware, and any other products and services furnished by such
vendor, including any and all enhancements, upgrades, customizations,
modifications, maintenance and the like, are Year 2000 Compliant. Either (i) all
such vendor agreements contain representations from such vendors that such
vendors or their products, services or operations are Year 2000 Compliant or
(ii) Company will have a valid claim for breach of contract if any such vendor
or its products, services or operations are not Year 2000 Compliant.
4.26 Full Disclosure. No information contained in this
Agreement, any other Transaction Document, the Financial Statements or any
written statement furnished by or on behalf of Company pursuant to the terms of
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the
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statements contained herein or therein not misleading in light of the
circumstances under which made.
4.27 No Stockholder Vote Requirement. No vote, consent or
other approval of Company's stockholders is, or will be, required by the rules
and regulations of NASDAQ or otherwise in connection with any of the
transactions contemplated the Transaction Documents, including the sale and
issuance of the Note to Purchaser and any conversion of the Note into shares of
Common Stock in accordance with the terms of the Note.
4.28 Delaware Section 203. The Company and its Board of
Directors have taken all the necessary actions to render inapplicable to the
transactions contemplated by the Transaction Documents (including, but not
limited to, the issuance of Common Stock upon conversion of the Note) the
provisions of Section 203 of the General Corporation Law of the State of
Delaware.
5. PRE-CLOSING COVENANTS
Company covenants and agrees that from and after the date
hereof (except as otherwise provided herein, or unless Purchaser has given its
prior written consent) until the Closing:
5.1 Maintenance of Existence and Conduct of Business.
Company shall, and shall cause each of its Subsidiaries to: (i) do or cause to
be done all things necessary to preserve and keep in full force and effect its
corporate or partnership existence, as applicable, and its rights and
franchises; (ii) at all times maintain, preserve and protect all of its material
assets, and keep the same in good repair, working order and condition (taking
into consideration ordinary wear and tear) and from time to time make, or cause
to be made, all needful and proper repairs, renewals and replacements,
betterments and improvements thereto consistent with industry practices and
(iii) continue to conduct its businesses in the ordinary course consistent with
past practices.
5.2 Access. Company shall permit representatives of
Purchaser to visit and inspect any of the properties of Company and its
Subsidiaries, to examine the corporate or partnership books and make copies or
extracts therefrom and to discuss the affairs, finances and accounts of Company
and its Subsidiaries with the principal officers of Company, all at such
reasonable times, upon reasonable notice and as often as Purchaser may
reasonably request.
5.3 Acquisitions and Investments. Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, make any
investment or acquire any assets except in the ordinary course of business
consistent with past practices, or acquire any security of another Person except
in connection with the formation of any Subsidiary in the ordinary course
consistent with past practices.
5.4 Sales of Assets; Liquidation. Company shall not, and
shall not permit any Subsidiary of Company to, (i) sell, transfer, convey or
otherwise dispose of
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any assets or properties or (ii) liquidate, dissolve or wind up Company, or any
of its Subsidiaries, except for transfers to Company, whether voluntary or
involuntary; provided, however, that the foregoing shall not prohibit (i) the
sale of inventory in the ordinary course of business, (ii) the sale of surplus
or obsolete equipment and fixtures or (iii) transfers resulting from any
casualty or condemnation of assets or properties.
5.5 Material Contracts. Company shall not and shall not
permit any Subsidiary of Company to enter into, modify or terminate any Material
Contract.
5.6 Securities. Company shall not, and shall not permit any
subsidiary of Company to, issue any Stock or other security except for the
issuance to Purchaser contemplated by the Transaction Documents or the issuance
of securities by a Subsidiary to the Company.
5.7 Transactions with Affiliates. Company shall not and
shall not permit any Subsidiary of Company to enter into or be a party to any
transaction with any Affiliate of Company or such Subsidiary, except (i)
transactions expressly contemplated hereby, (ii) transactions in the ordinary
course of and pursuant to the reasonable requirements of Company's or such
Subsidiary's business and upon fair and reasonable terms that are fully
disclosed to Purchaser and are no less favorable to Company or such Subsidiary
than would be obtained in a comparable arm's-length transaction with a Person
not an Affiliate of Company or such Subsidiary, (iii) transactions between
Company and its wholly-owned Subsidiaries or between such Subsidiaries and (iv)
payment of compensation to employees and directors' fees.
5.8 Indebtedness. Company shall not and shall not permit any
Subsidiary of Company to incur any additional Indebtedness in any material
amount.
5.9 Mergers and Subsidiaries. Neither Company nor any
Subsidiaries of Company shall directly or indirectly, by operation of law or
otherwise, merge with, consolidate with, or otherwise combine with any Person,
nor shall Company create any Subsidiary, other than (i) the creation of
wholly-owned Subsidiaries or (ii) mergers of wholly-owned Subsidiaries of
Company into Company or any other of its wholly-owned Subsidiaries.
5.10 Management Compensation. Company shall not and shall not
permit any Subsidiary of Company to, increase the salary, bonus or other
compensation of any officers or employees of Company and its Subsidiaries,
except to the extent as (i) is in the ordinary course of business consistent
with prior practice and (ii) has been disclosed by Company to Purchaser prior to
the date hereof.
5.11 Amendments to Certificate of Incorporation and By-Laws.
Company shall not, and shall not permit any Subsidiary of Company to, authorize,
adopt or approve an amendment to the certificate or articles of incorporation,
by-laws, partnership agreement or certificate of limited partnership, as
applicable, of such entity.
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5.12 Compliance With Covenants. The Company shall not take
any action which would have constituted a violation of any covenant in the
Indenture or Supplemental Indenture if the Indenture or Supplemental Indenture
were in effect at such time.
5.13 Satisfaction of Closing Conditions. Company shall use
commercially reasonable efforts to satisfy all conditions to the obligations of
the parties hereto to effect the Closing.
6. CLOSING CONDITIONS
6.1 Conditions to Obligation of Purchaser to Closing. The
obligation of Purchaser to purchase the Note pursuant to Section 2.1 hereof, is
subject to the satisfaction of the following conditions unless waived by
Purchaser:
(a) The Indenture, the Supplemental Indenture, the
Registration Rights Agreement and the Stockholders Agreement shall have been
duly executed and delivered by the parties thereto (other than Purchaser).
(b) All of the representations and warranties of Company
contained herein shall be true and correct (except that representations and
warranties that are not qualified by materiality or Material Adverse Effect
shall be true and correct in all material respects) on and as of the Closing
Date as if made on such date and no breach of any covenant contained in Article
V hereof shall have occurred or would result from the Closing hereunder, and
Purchaser shall have received a certificate of Company to such effect.
(c) Company shall have performed and complied in all
material respects with its covenants and agreements hereunder to be performed or
complied with prior to the Closing, and Purchaser shall have received a
certificate of Company to such effect.
(d) There shall not have occurred any event or condition
since December 31, 1998 which has had or which would be reasonably likely to
have a Material Adverse Effect. For the purposes of this Section 6.1(d) only,
the definition of "Material Adverse Effect" shall not include a decrease in the
market price of the Common Stock unless one or more of the factors causing such
decrease would, individually or in the aggregate, result in a Material Adverse
Effect.
(e) The Prime Group, Inc. and each of its Affiliates that
has been granted any registration rights by Company shall have executed and
delivered to Purchaser a waiver in form and substance reasonably satisfactory to
Purchaser of the applicability of such registration rights to the shelf
registration to be effected pursuant to the Registration Rights Agreement.
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6.2 Conditions to Obligation of Company to Close. The
obligation of Company to issue and sell to Purchaser the Note pursuant to
Section 2.1 hereof, is subject to the satisfaction of the following conditions
unless waived by Company:
(a) The Indenture, the Supplemental Indenture, the
Registration Rights Agreement and the Stockholders Agreement shall have been
duly executed and delivered by the parties thereto (other than Company).
(b) All of the representations and warranties of Purchaser
contained herein shall be true and correct (except that representations and
warranties that are not qualified by materiality or material adverse effect
shall be true and correct in all material respects) on and as of the Closing
Date as if made on such date, and Company shall have received a certificate of
Purchaser to such effect.
(c) Purchaser shall have performed and complied in all
material respects with its covenants and agreements hereunder to be performed or
complied with prior to the Closing, and Company shall have received a
certificate of Purchaser to such effect.
7. TERMINATION.
7.1 Termination. This Agreement may be terminated and
abandoned at any time (a) by mutual written consent of Purchaser and Company or
(b) if the Closing shall not have been consummated on or before the eleventh
Business Day after the date hereof; provided, however, that no party shall have
the right to terminate this Agreement pursuant to this clause (b) if such
party's breach of this Agreement is a cause for the Closing not having occurred.
7.2 Effect of Termination. In the event of termination of
this Agreement by either Purchaser or Company as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of any party hereto (or of any of its directors,
officers, employees, agents, legal and financial advisors or Affiliates).
Nothing contained in this Section 7.2 shall (i) relieve any party from any
liability resulting from any breach of this Agreement prior to such termination
or (ii) relieve Company of its expense reimbursement obligations under that
certain Letter Agreement, dated as of March 18, 1999, between Company and
Capital Z Financial Services Fund II, L.P., which obligation shall survive the
execution, delivery and termination of this Agreement.
8. MISCELLANEOUS
8.1 Complete Agreement; Modification of Agreement; Sale of
Interest. (a) Subject to the provisions of Section 7.2, the Transaction
Documents constitute the complete agreement between the parties with respect to
the subject matter hereof and may not be modified, altered or amended except as
provided therein. Company hereby consents to Purchaser's sale of participations,
assignment, transfer or other disposition, at any time or times, of any of the
Transaction Documents or of any portion thereof or
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interest therein, including, without limitation, Purchaser's rights, title,
interests, remedies, powers or duties thereunder, whether evidenced by a writing
or not.
(b) In the event Purchaser assigns or otherwise transfers
all or any part of the Note, Company shall, upon the request of Purchaser issue
new Notes to effectuate or evidence such assignment or transfer.
(c) Purchaser may sell, assign, transfer or negotiate to one
or more other lenders, commercial banks, insurance companies, other financial
institutions or any other Person acceptable to Purchaser all or a portion of its
rights and obligations under the Note held by Purchaser and this Agreement;
provided, however, that acceptance of such assignment by any assignee shall
constitute the agreement of such assignee to be bound by the terms of this
Agreement applicable to Purchaser. From and after the effective date of such an
assignment, (x) the assignees thereunder shall, in addition to the rights and
obligations hereunder held by it immediately prior to such effective date, have
the rights and obligations hereunder that have been assigned to it pursuant to
such assignment and (y) the assignor thereunder shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such assignment,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an assignment and acceptance covering all or the remaining
portion of an assignor's rights and obligations under this Agreement, such
assignor shall cease to be a party hereto).
(d) No amendment or waiver of any provision of this
Agreement shall in any event be effective unless the same shall be in writing
and signed by Purchaser, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
8.2 Fees and Expenses. (a) Subject to the provisions of
Section 8.2(b) hereof, Company shall pay all reasonable out-of-pocket expenses
of Purchaser in connection with the preparation of the Transaction Documents and
the transactions contemplated thereby, including all reasonable legal fees and
expenses, accounting fees and expenses and fees and expenses of consultants. If,
at any time or times, regardless of the existence of an Event of Default (except
with respect to paragraph (iii) below, which shall be subject to an Event of
Default having occurred and be continuing), Purchaser shall employ counsel or
other advisors for advice or other representation or shall incur reasonable
legal or other costs and expenses in connection with:
(i) any amendment, modification or waiver, or consent
with respect to, any of the Transaction Documents or advice in connection with
the administration of the loans made pursuant hereto or its rights hereunder or
thereunder;
(ii) any litigation, contest, dispute, suit, proceeding
or action (whether instituted by Purchaser, Company, any Subsidiary of Company
or any other Person) in any way relating to any of the Transaction Documents or
any other agreements to be executed or delivered in connection herewith; or
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(iii) any attempt to enforce any rights of Purchaser
against Company, any Subsidiary of Company or any other Person, that may be
obligated to Purchaser by virtue of any of the Transaction Documents;
then, and in any such event, the reasonable attorneys' and other parties'
reasonable fees arising from such services, including those of any appellate
proceedings, and all reasonable expenses, costs, charges and other fees incurred
by such counsel and others in any way or respect arising in connection with or
relating to any of the events or actions described in this Section 8.2 shall be
payable, on demand, by Company to Purchaser and shall be additional Obligations
under this Agreement and the other Transaction Documents; provided, however,
that Purchaser will repay Company for such amounts reimbursed by Company
resulting from any action or proceeding instituted by Purchaser against Company
in which Company ultimately prevails on the merits and all applicable periods
for appeal have expired. Without limiting the generality of the foregoing, such
expenses, costs, charges and fees may include: paralegal fees, costs and
expenses; accountants' and investment bankers' fees, costs and expenses; court
costs and expenses; photocopying and duplicating expenses; court reporter fees,
costs and expenses; long distance telephone charges; air express charges;
telegram charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal
services. Notwithstanding anything in this Section 8.2(a), Purchaser shall
reimburse Company for all reasonable attorneys' fees and expenses and other
reasonable out-of-pocket expenses incurred by Company in connection with (i) any
action or proceeding instituted by Purchaser against Company in which Company
ultimately prevails on the merits and all applicable periods for appeal have
expired or (ii) any declaratory judgment action instituted by Company against
Purchaser as a result of any declaration by Purchaser of any default under the
Note if Company ultimately prevails on the merits and all applicable periods of
appeal have expired.
(b) At the Closing, Company shall reimburse Capital Z
Financial Services Fund II, L.P. for fees and expenses, if any, owed to
Prudential Securities, Inc. in connection with the transactions contemplated by
this Agreement (provided, however, that the amount so reimbursed shall in no
event exceed $1,500,000 in the aggregate).
8.3 No Waiver by Purchaser. Purchaser's failure, at any time
or times, to require strict performance by Company of any provision of this
Agreement and any of the other Transaction Documents shall not waive, affect or
diminish any right of Purchaser thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by Purchaser of an Event of
Default by Company under the Transaction Documents shall not suspend, waive or
affect any other Event of Default by Company under this Agreement and any of the
other Transaction Documents whether the same is prior or subsequent thereto and
whether of the same or of a different type. None of the undertakings,
agreements, warranties, covenants and representations of Company contained in
this Agreement or any of the other Transaction Documents and no Event of Default
by Company under this Agreement and no defaults by Company under any of the
other Transaction Documents shall be deemed to have been suspended or waived by
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Purchaser, unless such suspension or waiver is by an instrument in writing
signed by an officer of Purchaser and directed to Company specifying such
suspension or waiver.
8.4 Remedies. Purchaser's rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
which Purchaser may have under any other agreement, including without
limitation, the Transaction Documents, the other Transaction Documents, by
operation of law or otherwise.
8.5 Waiver of Jury Trial. The parties hereto waive all right
to trial by jury in any action or proceeding to enforce or defend any rights
under the Transaction Documents.
8.6 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
8.7 Binding Effect; Benefits. This Agreement and the other
Transaction Documents shall be binding upon, and inure to the benefit of, the
successors of Company and Purchaser and the assigns, transferees and endorsees
of Purchaser.
8.8 Conflict of Terms. Except as otherwise provided in this
Agreement or any of the other Transaction Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of the
other Transaction Documents, the provision contained in this Agreement shall
govern and control.
8.9 Governing Law. Except as otherwise expressly provided in
any of the Transaction Documents, in all respects, including all matters of
construction, validity and performance, this Agreement and the Obligations
arising hereunder shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware applicable to contracts made and
performed in such state, without regard to the principles thereof regarding
conflict of laws, and any applicable laws of the United States of America.
Service of process on Purchaser or Company in any action arising out of or
relating to any of the Transaction Documents shall be effective if mailed to
such party at the address listed in Section 8.10 hereof. Nothing herein shall
preclude Purchaser or Company from bringing suit or taking other legal action in
any other jurisdiction.
8.10 Notices. Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by another, or whenever any of the parties desires to give or
serve upon another any such communication with respect to this Agreement, each
such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and either shall
29
<PAGE>
be delivered in person with receipt acknowledged, by nationally known commercial
courier service providing next day delivery service, by registered or certified
mail, return receipt requested, postage prepaid or by telecopy and confirmed by
telecopy answerback addressed as follows:
If to Company:
Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4400
Chicago, Illinois 60601
Attn: Mark J. Schulte
Telecopy Number: (312) 977-3699
with copies to:
Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4400
Chicago, Illinois 60601
Attn: Robert J. Rudnik, Esq.
Telecopy Number: (312) 977-3769
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Wayne D. Boberg, Esq.
Telecopy Number: (312) 558-5700
If to Purchaser:
Health Partners
One Chase Manhattan Plaza, 44th Floor
New York, New York 10005
Attn: David A. Spuria
Telecopy Number: (212) 898-8720
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Thomas A. Roberts, Esq.
Telecopy Number: (212) 310-8007
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the
30
<PAGE>
date on which personally delivered, with receipt acknowledged, telecopied and
confirmed by telecopy answerback, one (1) Business Day after the same shall have
been deposited with a nationally known commercial courier service providing next
day delivery service or three (3) Business Days after the same shall have been
deposited with the United States mail. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to the Persons designated above to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
8.11 Survival. The representations and warranties of Company
in this Agreement shall survive the execution, delivery and acceptance hereof by
the parties hereto and the closing of the transactions described herein or
related hereto.
8.12 Section and Other Headings. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
8.13 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
8.14 Publicity. Neither Purchaser nor Company shall issue any
press release or make any public disclosure regarding the transactions
contemplated hereby, if such press release or public disclosure is disapproved
by the other party within two (2) Business Days after its receipt of written
notice from the disclosing party of such contemplated disclosure.
Notwithstanding the foregoing, each of the parties hereto may, in documents
required to be filed by it with the SEC or other regulatory bodies, make such
statements with respect to the transactions contemplated hereby or file any of
the Transaction Documents as each may be advised by counsel is legally necessary
or advisable, and may make such disclosure as it is advised by its counsel is
required by law, subject to advance consultation with Purchaser.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
31
<PAGE>
IN WITNESS WHEREOF, Company and Purchaser have executed this
Agreement as of the day and year first above written.
COMPANY:
--------
BROOKDALE LIVING COMMUNITIES, INC.
By: /s/ Mark J. Schulte
---------------------------------------------
Mark J. Schulte
President and Chief Executive Officer
PURCHASER:
----------
HEALTH PARTNERS
By: Capital Z Financial Services Fund II, L.P.,
its general partner
By: Capital Z Partners, L.P.,
its general partner
By: Capital Z Partners, Ltd.,
its general partner
By: /s/ Paul H. Warren
-----------------------------
Paul H. Warren
Senior Vice President
<PAGE>
Each of the undersigned, by its execution below, hereby agrees
that, at the Closing, it will execute and deliver the Stockholders Agreement and
the waiver of certain registration rights referred to herein. None of the
undersigned are obligated with respect to any other provision of this Agreement.
THE PRIME GROUP, INC.
By: /s/ Robert J. Rudnik
--------------------------------------------
Robert J. Rudnik
Executive Vice President
PRIME GROUP II, L.P.
By: PGLP, Inc., its Managing General Partner
By: /s/ Robert J. Rudnik
---------------------------------------
Robert J. Rudnik
Vice President
PRIME GROUP III, L.P.
By: PGLP, Inc., its Managing General Partner
By: /s/ Robert J. Rudnik
----------------------------------
Robert J. Rudnik
Vice President
PRIME GROUP VI, L.P.
By: PGLP, Inc., its Managing General Partner
By: /s/ Robert J. Rudnik
---------------------------------------
Robert J. Rudnik
Vice President
PRIME GROUP LIMITED PARTNERSHIP
By: /s/ Michael W. Reschke
--------------------------------------------
Michael W. Reschke,
Managing General Partner
===============================================================================
BROOKDALE LIVING COMMUNITIES, INC.
AND
STATE STREET BANK AND TRUST COMPANY,
as Trustee
----------
INDENTURE
Dated as of May 14, 1999
Providing for Issuance of Subordinated
Debt Securities in Series
===============================================================================
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC.
Certain Sections of this Indenture relating to Sections 310
through 318, inclusive, of the Trust Indenture Act of 1939:
Trust Indenture
Act Section Indenture Section
(S) 310(a)(1) ..........................................................609
(a)(2) ..........................................................609
(a)(3) ...............................................Not Applicable
(a)(4) ...............................................Not Applicable
(b) .....................................................608, 610
(S) 311(a) ..........................................................613
(b) ..........................................................613
(S) 312(a) ..................................................701, 702(a)
(b) .......................................................702(b)
(c) .......................................................702(c)
(S) 313(a) .......................................................703(a)
(b) .......................................................703(a)
(c) .......................................................703(a)
(d) .......................................................703(b)
(S) 314(a) ..........................................................704
(a)(4) .........................................................1008
(b) ...............................................Not Applicable
(c)(1) ..........................................................102
(c)(2) ..........................................................102
(c)(3) ...............................................Not Applicable
(d) ...............................................Not Applicable
(e) ..........................................................102
(S) 315(a) ..........................................................601
(b) ..........................................................602
(c) ..........................................................601
(d) ..........................................................601
(e) ..........................................................514
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<PAGE>
(S) 316(a) (last sentence) ................................101 ("Outstanding")
(a)(1)(A).....................................................502, 512
(a)(1)(B)..........................................................513
(a)(2) ...............................................Not Applicable
(b) ..........................................................508
(c) .......................................................104(c)
(S) 317(a)(1) ..........................................................503
(a)(2) ..........................................................504
(b) .........................................................1003
(S) 318(a) ..........................................................107
NOTE: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of the Indenture.
ii
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE ONE
Definitions and Other Provisions of General Application..............1
Section 101. Definitions........................................1
Section 102. Compliance Certificates and Opinions...............9
Section 103. Form of Documents Delivered to Trustee.............9
Section 104. Acts of Holders; Record Dates.....................10
Section 105. Notices, Etc., to Trustee and Company.............11
Section 106. Notice to Holders; Waiver.........................11
Section 107. Conflict with Trust Indenture Act.................12
Section 108. Effect of Headings and Table of Contents..........12
Section 109. Successors and Assigns............................12
Section 110. Separability Clause...............................12
Section 111. Benefits of Indenture.............................12
Section 112. Governing Law.....................................12
Section 113. Legal Holidays....................................13
ARTICLE TWO
Security Forms......................................................13
Section 201. Forms Generally...................................13
Section 202. Form of Face of Security..........................13
Section 203. Form of Reverse of Security.......................15
Section 204. Additional Provisions Required in
Book-Entry Security...............................26
Section 205. Form of Trustee's Certificate of Authentication...26
ARTICLE THREE
The Securities.......................................................26
Section 301. Amount Unlimited; Issuable in Series...............26
Section 302. Denominations......................................29
Section 303. Execution, Authentication, Delivery and Dating.....29
Section 304. Temporary Securities...............................31
Section 305. Registration, Registration of Transfer and
Exchange; Restrictions on Transfer.................32
Section 306. Mutilated, Destroyed, Lost and
Stolen Securities..................................38
Section 307. Payment of Interest; Interest
Rights Preserved...................................39
Section 308. Persons Deemed Owners..............................41
Section 309. Cancellation.......................................41
Section 310. Computation of Interest............................42
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<PAGE>
Section 311. CUSIP Numbers......................................42
ARTICLE FOUR
Satisfaction and Discharge...........................................42
Section 401. Satisfaction and Discharge of Indenture............42
Section 402. Application of Trust Money.........................43
ARTICLE FIVE
Events of Default and Remedies.......................................44
Section 501. Events of Default..................................44
Section 502. Acceleration of Maturity; Rescission
and Annulment......................................45
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.............................46
Section 504. Trustee May File Proofs of Claim...................47
Section 505. Trustee May Enforce Claims Without
Possession of Securities...........................47
Section 506. Application of Money Collected.....................47
Section 507. Limitation on Suits................................48
Section 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest....................49
Section 509. Restoration of Rights and Remedies.................49
Section 510. Rights and Remedies Cumulative.....................49
Section 511. Delay or Omission Not Waiver.......................49
Section 512. Control by Holders.................................49
Section 513. Waiver of Past Defaults............................50
Section 514. Undertaking for Costs..............................50
ARTICLE SIX
The Trustee..........................................................51
Section 601. Certain Duties and Responsibilities................51
Section 602. Notice of Defaults.................................51
Section 603. Certain Rights of Trustee..........................51
Section 604. Not Responsible for Recitals or
Issuance of Securities.............................53
Section 605. May Hold Securities and Serve as Trustee
Under Other Indentures.............................53
Section 606. Money Held in Trust................................54
Section 607. Compensation and Reimbursement.....................54
Section 608. Disqualification; Conflicting Interests............55
Section 609. Corporate Trustee Required; Eligibility............55
Section 610. Resignation and Removal; Appointment
of Successor.......................................55
Section 611. Acceptance of Appointment by Successor.............57
Section 612. Merger, Conversion, Consolidation
or Succession to Business..........................58
Section 613. Preferential Collection of Claims
Against Company....................................58
Section 614. Investment of Certain Payments
Held by the Trustee................................58
iv
<PAGE>
Section 615. Appointment of Authenticating Agent................59
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company....................60
Section 701. Company to Furnish Trustee Names
and Addresses of Holders...........................60
Section 702. Preservation of Information; Communications
to Holders.........................................61
Section 703. Reports by Trustee.................................61
Section 704. Reports by Company.................................61
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease.................62
Section 801. Company May Consolidate, Etc., Only on
Certain Terms......................................62
Section 802. Successor Substituted..............................62
Section 803. Officers' Certificate and Opinion of Counsel.......63
ARTICLE NINE
Supplemental Indentures..............................................63
Section 901. Supplemental Indentures Without
Consent of Holders.................................63
Section 902. Supplemental Indentures with
Consent of Holders.................................64
Section 903. Execution of Supplemental Indentures...............65
Section 904. Effect of Supplemental Indentures..................65
Section 905. Conformity with Trust Indenture Act................66
Section 906. Reference in Securities to
Supplemental Indentures............................66
ARTICLE TEN
Covenants............................................................66
Section 1001. Payment of Principal, Premium
and Interest.......................................66
Section 1002. Maintenance of Office or Agency....................66
Section 1003. Money for Securities Payments to Be
Held in Trust......................................67
Section 1004. Payment of Taxes and Other Claims..................68
Section 1005. Maintenance of Properties..........................68
Section 1006. Corporate Existence................................68
Section 1007. Waiver of Certain Covenants........................68
Section 1008. Compliance Certificate.............................68
Section 1009. Insurance..........................................69
ARTICLE ELEVEN
Redemption of Securities.............................................70
Section 1101. Applicability of Article...........................70
Section 1102. Election to Redeem: Notice to Trust................70
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<PAGE>
Section 1103. Selection by Trustee of Securities to
Be Redeemed........................................70
Section 1104. Notice of Redemption...............................71
Section 1105. Deposit of Redemption Price........................72
Section 1106. Securities Payable on Redemption Date..............72
Section 1107. Securities Redeemed in Part........................72
ARTICLE TWELVE
Sinking Funds........................................................73
Section 1201. Applicability of Article...........................73
Section 1202. Satisfaction of Sinking Fund
Payments with Securities...........................73
Section 1203. Redemption of Securities for Sinking Fund..........73
ARTICLE THIRTEEN
Subordination of Securities..........................................74
Section 1301. Securities Subordinate to Senior Debt..............74
Section 1302. Payment Over of Proceeds Upon Dissolution, Etc.....74
Section 1303. Acceleration; Senior Debt in Default...............75
Section 1304. Payment Permitted If No Default....................76
Section 1305. Subrogation to Rights of Holders of
Senior Debt........................................77
Section 1306. Provisions Solely to Define Relative Rights........77
Section 1307. Trustee to Effectuate Subordination................77
Section 1308. No Waiver of Subordination Provisions..............78
Section 1309. Notice to Trustee..................................78
Section 1310. Reliance on Judicial Order or Certificate
of Liquidating Agent...............................79
Section 1311. Trustee Not Fiduciary for Holders of
Senior Debt........................................79
Section 1312. Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee's Rights...................79
Section 1313. Article Applicable to Paying Agents................79
Section 1314. Defeasance of this Article Thirteen................80
ARTICLE FOURTEEN
Conversion of Securities.............................................80
Section 1401. Applicability of Article...........................80
Section 1402. Conversion Privilege and Conversion Price..........80
Section 1403. Exercise of Conversion Privilege...................81
Section 1404. Fractions of Shares................................81
Section 1405. Adjustment of Conversion Price.....................82
Section 1406. Notice of Adjustments of Conversion Price..........86
Section 1407. Notice of Certain Corporate Action.................86
Section 1408. Company to Reserve Common Stock....................87
Section 1409. Taxes on Conversions...............................87
vi
<PAGE>
Section 1410. Covenant as to Common Stock........................87
Section 1411. Cancellation of Converted Securities...............87
Section 1412. Provisions in case of Consolidation, Merger
or Sale of Assets..................................87
ARTICLE FIFTEEN
Defeasance and Covenant Defeasance...................................88
Section 1501. Applicability of Article; Company's Option to
Effect Defeasance or Covenant Defeasance...........88
Section 1502. Defeasance and Discharge...........................89
Section 1503. Covenant Defeasance................................89
Section 1504. Conditions to Defeasance or Covenant
Defeasance.........................................90
Section 1505. Deposited Money and U.S. Government
Obligations to be Held in Trust;
Other Miscellaneous Provisions.....................92
Section 1506. Reinstatement......................................92
Section 1507. Qualifying Trustee.................................92
ARTICLE SIXTEEN
Immunity of Incorporators, Stockholders, Officers,
Directors and Employees..............................................93
Section 1601. Exemption from Individual Liability................93
NOTE: This table of contents shall not, for any purpose, be deemed
to be a part of the Indenture.
vii
<PAGE>
INDENTURE, dated as of May 14, 1999, between Brookdale Living
Communities, Inc., a corporation duly organized and existing under the laws of
the State of Delaware (herein called the "Company"), having its principal office
at 77 West Wacker Drive, Suite 4400, Chicago, Illinois 60601, and State Street
Bank and Trust Company, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of its subordinated
unsecured debentures, notes or other evidences of indebtedness (herein called
the "Securities"), to be issued in one or more series as provided in this
Indenture.
The Company has duly authorized the execution and delivery of
this Indenture to provide, among other things, for the authentication, delivery
and administration of the Securities.
All things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or each series thereof,
as follows:
ARTICLE ONE
Definitions and Other Provisions of General Application
Section 101. Definitions.
------------
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation in the United States of
America; and
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<PAGE>
(4) unless the context otherwise requires, any reference to
an "Article" or a "Section" refers to an Article or a Section, as the case may
be, of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104(a).
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities or other ownership interests,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 615 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Book-Entry Security" means a Security in the form prescribed
in Section 204 evidencing all or part of a series of Securities, issued to the
Depositary' for such series or its nominee, and registered in the name of such
Depositary or such nominee.
"Business Day", when used with respect to any Place of
Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not
a day on which banking institutions in that Place of Payment or the city in
which the principal corporate trust office of the Trustee is located are
authorized or obligated by law or executive order to close.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" means any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which is not subject to redemption by
2
<PAGE>
the Company. However, subject to the provisions of Section 1411, shares issuable
on conversion of Securities shall include only shares of the class designated as
Common Stock of the Company at the date of this instrument or shares of any
class or classes resulting from any reclassification or reclassifications
thereof and which have no preference in respect of dividends or distributions or
of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which are not subject to redemption
by the Company; provided that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, its Chief Financial Officer or a Vice
President, and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the
Trustee at which at any particular time its corporate trust business shall be
principally administered, which office at the date of original execution of this
Indenture is located at Goodwin Square, 23rd Floor, 225 Asylum Street, Hartford,
CT 06103, except that, with respect to presentation of the Securities for
payment or registration of transfers or exchanges and the location of the
register, such term means the office or agency of the Trustee at which at any
particular time its corporate agency business shall be conducted.
"Defaulted Interest" has the meaning specified in Section 307.
"Definitive Security" means Securities that are in the form of
the Securities set forth in Article Two, that do not include the information
called for by Section 204.
"Depositary" means, with respect to the Securities of any
series issuable or issued in whole or in part in the form of one or more
Book-Entry Securities, the Person designated as Depositary for such series by
the Company pursuant to Section 301(17), which Person shall be a clearing agency
registered under the Exchange Act; and if at any time there is more than one
such Person, "Depositary" as used with respect to the Securities of any series
shall mean the Depositary with respect to the Securities of such series.
"Designated Senior Debt" means the LaSalle Facility and any
other Senior Debt if the instrument creating or evidencing the same or the
assumption or guarantee thereof (or related agreements or documents to which the
Company is a party) expressly provides that such indebtedness shall be
"Designated Senior Debt" for purposes of this Indenture (provided that such
3
<PAGE>
instrument, agreement or other document may place limitations and conditions on
the right of such Senior Debt to exercise the rights of Designated Senior Debt).
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" means any registered exchange offer made by
the Company solely to facilitate the exchange of an outstanding series of
Securities for the related Exchange Securities.
"Exchange Securities" means any Securities issued by the
Company solely to facilitate a registered exchange of such Securities for any
series of Securities with substantially identical terms previously issued in a
private placement of such outstanding Securities.
"Expiration Time" has the meaning specified in Section
1405(6).
"Fair Market Value" means, with respect to any asset or
property, the price which could be negotiated in an arm's-length, free market
transaction, for cash, between a willing seller and a willing and able buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction. Unless the Trust Indenture Act otherwise requires, Fair Market
Value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Company delivered to the Trustee.
"Holder" means a Person in whose name a Security is registered
in the Security Register.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument, and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the forms and terms of
particular series of Securities established as contemplated by Section 301.
"Indexed Security" means any Security which provides that the
principal amount thereof payable at Stated Maturity may be more or less than the
principal face amount thereof at original issuance.
"Interest", when used with respect to an Original Issue
Discount Security which by its terms bears interest only after Maturity, means
interest payable after Maturity.
4
<PAGE>
"LaSalle Facility" means the Loan Agreement, dated as of April
27, 1998, as amended, between the Company and LaSalle National Bank, as the same
may be amended, refinanced or replaced from time to time.
"Interest Payment Date", when used with respect to any
Security, means the Stated Maturity of an installment of interest on such
Security.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the Chief Executive Officer, the President, the Chief
Financial Officer or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Company, and
delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company and who shall be acceptable to the Trustee, in
form and substance reasonably acceptable to the Trustee.
"Original Issue Discount Security" means any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502.
"Outstanding", when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any Paying
Agent (other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the Holders
of such Securities; provided, that if such Securities are to be redeemed, notice
of such redemption has been duly given pursuant to Section 1104 or provision
therefor satisfactory to the Trustee has been made;
(iii) Securities, except to the extent provided in Sections
1502 and 1503, with respect to which the Company has effected defeasance or
covenant defeasance as provided in Article Fifteen; and
(iv) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture,
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<PAGE>
other than any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such Securities are held
by a bona fide purchaser in whose hands such Securities are valid obligations of
the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder, or whether sufficient funds are available for redemption or
for any other purpose, and for the purpose of making the calculations required
by Section 313 of the Trust Indenture Act, (i) the principal amount of an
Original Issue Discount Security that shall be deemed to be Outstanding shall be
the amount of the principal thereof that would be due and payable as of the date
of such determination upon acceleration of the Maturity thereof pursuant to
Section 502, (ii) the principal amount of a Security denominated in one or more
foreign currencies or currency units shall be the U.S. dollar equivalent,
determined in the manner provided as contemplated by Section 301 on the date of
original issuance of such Security, of the principal amount (or, in the case of
an Original Issue Discount Security, the U.S. dollar equivalent on the date of
original issuance of such Security of the amount determined as provided in (i)
above) of such Security, (iii) the principal amount of any Indexed Security that
may be counted in making such determination or calculation and that shall be
deemed to be Outstanding for such purpose shall be equal to the principal face
amount of such Indexed Security at original issuance, unless otherwise provided
with respect to such Security pursuant to Section 301, and (iv) except for the
purpose of making the calculations required by Section 313 of the Trust
Indenture Act, Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent, waiver or other action, only
Securities which a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of or any premium or interest on any Securities on behalf of
the Company.
"Payment Blockage Notice" has the meaning specified in Section
1303.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities
of any series, means the place or places where the principal of and any premium
and interest on the Securities of that series are payable as specified as
contemplated by Sections 301 and 1002.
6
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"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Purchased Shares" has the meaning specified in Section
1405(6).
"Redemption Date", when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee,
means any vice president, any assistant vice president, any secretary, any
assistant secretary, any treasurer, any assistant treasurer, any senior trust
officer, any trust officer or assistant trust officer, 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 to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Securities" has the meaning stated in the first recital of
this Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Payment" has the meaning specified in Section
1302.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Senior Debt" means, without duplication, the principal,
premium (if any) and unpaid interest on all present and future (i) indebtedness
of the Company for borrowed money, (ii) obligations of the Company evidenced by
credit agreements, loan agreements, bonds, debentures, notes or similar
instruments, (iii) indebtedness incurred, assumed or guaranteed by the Company
in connection with the acquisition by it or a Subsidiary of any business,
properties or assets (including, without limitation, the acquisition of
leasehold interests), (iv) obligations of the Company as lessee under leases
required to be capitalized on the balance sheet of the lessee under generally
accepted accounting principles, (v) all indebtedness of the Company under
interest rate and currency swaps, caps, floors, collars, hedge agreements,
forward contracts or similar agreements and arrangements,
7
<PAGE>
(vi) reimbursement obligations of the Company in respect of letters of credit
relating to indebtedness or other obligations of the Company that qualify as
indebtedness or obligations of the kind referred to in clauses (i) through (v)
above, (vii) obligations of the Company under direct or indirect guarantees in
respect of, and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses (i)
through (vi) above and (viii) renewals, extensions, modifications, replacements,
restatements and refundings of, or any indebtedness or obligations issued in
exchange for, any such indebtedness or obligations described in clauses (i)
through (vii) above and in this clause (viii), in each case unless in the
instrument creating or evidencing the indebtedness or obligations or pursuant to
which the same is outstanding it is provided that such indebtedness or
obligations are not superior in right of payment to the Securities.
Notwithstanding the foregoing, Senior Debt shall not include indebtedness of the
Company for trade payables.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or
any installment of principal thereof or interest thereon, means the date
specified in such Security as the fixed date on which the principal of such
Security or such installment of principal or interest is due and payable.
"Subsidiary" means any corporation, partnership or limited
liability company of which at least a majority of the outstanding voting stock,
partnership interest or limited liability company interest, as the case may be,
is at the time directly or indirectly owned by the Company, or by one or more
other Subsidiaries, or by the Company and one or more other Subsidiaries. For
purposes of this definition, "voting stock" means stock having by the terms
thereof ordinary voting power for the election of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency).
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday, other than any day on which securities are not traded on the
applicable securities exchange or in the applicable securities market.
"Transfer Restricted Securities" means Securities that have
been or are required to bear the legend set forth in Section 305(h) hereof.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect to
Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture
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Act of 1939 is amended after such date, "Trust Indenture Act" means, to the
extent required by any such amendment, the Trust Indenture Act of 1939 as so
amended.
"U.S. Government Obligations" has the meaning specified in
Section 1504(1).
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president," including,
without limitation, "executive vice president" and "senior vice president."
Section 102. Compliance Certificates and Opinions.
-------------------------------------
Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture (except for the initial
issuances of Securities hereunder), the Company shall furnish to the Trustee
such certificates and opinions as may be required under the Trust Indenture Act.
Each such certificate or opinion shall be given in the form of an Officers'
Certificate, if to be given by an officer of the Company, or an Opinion of
Counsel, if to be given by counsel, and shall comply with the requirements of
the Trust Indenture Act and any other requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the definitions
herein relating thereto;
(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 each such
individual, 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, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 103. Form of Documents Delivered to Trustee.
---------------------------------------
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
9
<PAGE>
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or
representations by counsel or an opinion of counsel, unless such officer knows,
or in the exercise of reasonable care should know, that the certificate,
representations or opinion with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate or
representations of counsel or opinion of counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or representations
by, an officer or officers of the Company stating that the information with
respect to such factual matters is in the possession of the Company, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Section 104. Acts of Holders; Record Dates.
------------------------------
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 603) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The Company may fix any day as the record date for the
purpose of determining the Holders of Securities of any series entitled to give
or take any request, demand, authorization, direction, notice, consent, waiver
or other action, or to vote on any action, authorized or permitted to be given
or taken by Holders of Securities of such series. If not set by the Company
prior to the first solicitation of a Holder of Securities of such series made by
any Person in respect of any such action, or, in the case of any such vote,
prior to such vote, the record date for any such
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<PAGE>
action or vote shall be the 30th day (or, if later, the date of the most recent
list of Holders required to be provided pursuant to Section 701) prior to such
first solicitation or vote, as the case may be. With regard to any record date
for action to be taken by the Holders of one or more series of Securities, only
the Holders of Securities of such series on such date (or their duly designated
proxies) shall be entitled to give or take, or vote on, the relevant action.
(d) The ownership of Securities shall be proved by the
Security Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
Section 105. Notices, Etc., to Trustee and Company.
--------------------------------------
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, Attention:
Corporate Trust Department, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the first
paragraph of this instrument or at any other address previously furnished in
writing to the Trustee by the Company, Attention: President, with a copy to the
Company at the address of its principal office specified in the first paragraph
of this instrument or at any other address previously furnished in writing to
the Trustee by the Company, Attention: General Counsel.
Section 106. Notice to Holders; Waiver.
--------------------------
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at such Holder's address as it appears in
the Security Register, not later than the latest date (if any), and not earlier
than the earliest date (if any), prescribed for the giving of such notice. In
any case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders. Any
notice mailed to a Holder in the manner herein prescribed shall be conclusively
deemed to have been received by such Holder, whether or not such Holder actually
receives such notice. Where this Indenture provides for notice in any manner,
such notice may be waived in writing by the Person entitled to
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<PAGE>
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
Section 107. Conflict with Trust Indenture Act.
----------------------------------
If any provision of this Indenture limits, qualifies or
conflicts with a provision of the Trust Indenture Act that is required under
such Act to be a part of and govern this Indenture, the provision of the Trust
Indenture Act shall control. If any provision of this Indenture modifies or
excludes any provision of the Trust Indenture Act that may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or to be excluded, as the case may be.
Section 108. Effect of Headings and Table of Contents.
-----------------------------------------
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
Section 109. Successors and Assigns.
-----------------------
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
Section 110. Separability Clause.
--------------------
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 111. Benefits of Indenture.
----------------------
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
Section 112. Governing Law.
--------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF.
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Section 113. Legal Holidays.
---------------
In any case where any Interest Payment Date, Redemption Date,
Stated Maturity or Maturity of any Security shall not be a Business Day at any
Place of Payment, then (notwithstanding any other provision of this Indenture or
of the Securities (other than a provision of the Securities of any series which
specifically states that such provision shall apply in lieu of this Section))
payment of interest or principal (and premium, if any) need not be made at such
Place of Payment on such day, but may be made on the next succeeding Business
Day at such Place of Payment with the same force and effect as if made on the
Interest Payment Date, the Redemption Date, or at the Stated Maturity or
Maturity; provided, that no interest shall accrue for the intervening period.
ARTICLE TWO
Security Forms
Section 201. Forms Generally.
----------------
The Securities of each series shall be in substantially the
form set forth in this Article, or in such other form as shall be established by
or pursuant to a Board Resolution or in one or more indentures supplemental
hereto, in each case with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture, and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution of the Securities. If the form of Securities of any series is
established by, or by action taken pursuant to, a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 303 for the
authentication and delivery of such Securities.
The definitive Securities shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner
permitted by the rules of any securities exchange on which the Securities may be
listed, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
Section 202. Form of Face of Security.
-------------------------
[Insert any legend required by the Internal Revenue Code and
the regulations thereunder.]
[Insert any legend required by the Depositary, if applicable.]
BROOKDALE LIVING COMMUNITIES, INC.
----------------------------------
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<PAGE>
[Insert designation of the series of Security.]
No. $
-------------- --------------
CUSIP No.
-------------
Brookdale Living Communities, Inc., a corporation duly
organized and existing under the laws of Delaware (herein called the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to -------- , or
registered assigns, the principal sum [if Book-Entry Security, insert -- set
forth above or such other principal sum on the Schedule attached hereto (which
shall not exceed $------)] [of ------ Dollars] on --------- [if the Security is
to bear interest prior to Maturity, insert, and to pay interest thereon from
- ------------ or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, semi-annually on ------------ and ------------
in each year, commencing ----------, at the rate of ---% per annum, until the
principal hereof is paid or made available for payment [if applicable, insert --
and (to the extent that the payment of such interest shall be legally
enforceable) at the rate of % per annum on any overdue principal and premium and
on any overdue installment of interest]. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the ------- or -------
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided
for will forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture].
[If the Security is not to bear interest prior to Maturity,
insert -- The principal of this Security shall not bear interest except in the
case of a default in payment of principal upon acceleration, upon redemption or
at Stated Maturity and in such case the overdue principal of this Security shall
bear interest at the rate of % per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
default in payment to the date payment of such principal has been made or duly
provided for. Interest on any overdue principal shall be payable on demand. [Any
such interest on any overdue principal that is not so paid on demand shall bear
interest at the rate of % per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
demand for payment to the date payment of such interest has been made or duly
provided for, and such interest shall also be payable on demand.]]
Payment of the principal of (and premium, if any, on) [if
applicable, insert -- and any such interest on] this Security will be made at
the office or agency of the Company maintained for that
14
<PAGE>
purpose in --------------, in such coin or currency of [the United States of
America] as at the time of payment is legal tender for payment of public and
private debts [if applicable, insert --; provided, however, that at the option
of the Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register or by wire transfer to an account maintained by the Person entitled
thereto as specified in the Security Register, provided that such Person shall
have given the Trustee written wire instructions at least five Business Days
prior to the applicable Interest Payment Date.]
[If the Security is payable in a foreign currency, insert --
the appropriate provision.]
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
BROOKDALE LIVING COMMUNITIES, INC.
By:
-----------------------------
Title:
Attest:
- -------------------------
Title:
Section 203. Form of Reverse of Security.
----------------------------
This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities"), issued and to be issued in one
or more series under an Indenture, dated as of ----------, ----- (herein,
together with all indentures supplemental thereto, called the "Indenture"),
between the Company and State Street Bank and Trust Company, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture). [This Security is one of a series [, limited in aggregate principal
amount to $-------] designated as [------] (herein called "[---------]"),
[created by a supplemental indenture, dated as of ------- (the "Supplemental
Indenture"), duly executed and delivered by the Company to such Trustee.]
Reference is hereby made to the Indenture for a statement of the respective
rights, limitations of rights, duties
15
<PAGE>
and immunities thereunder of the Company, the Trustee, the holders of Senior
Debt and the Holders of the Securities (including the Holders of the [-------])
and of the terms upon which the Securities are, and are to be, authenticated and
delivered.
[If applicable, insert -- The Securities are redeemable, as a
whole or in part, at the option of the Company, at any time or from time to
time, on at least 30 days, but not more than 60 days, prior notice mailed to the
registered address of each holder of Securities. The redemption prices will be
equal to the greater of (1) 100% of the principal amount of the Securities to be
redeemed or (2) the sum of the present values of the Remaining Scheduled
Payments (as defined below) discounted, on a semiannual basis (assuming a
360-day year consisting of twelve 30-day months), at a rate equal to the sum of
the applicable Treasury Rate (as defined below) plus -- basis points, plus
accrued interest to the date of redemption.
"Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to the semiannual equivalent yield to maturity
(computed as of the second business day immediately preceding such redemption
date) of the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker as having a maturity
comparable to the remaining term of such series of Securities to be redeemed
that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of such series of Securities.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Company.
"Comparable Treasury Price" means, with respect to any
redemption date, the average of the Reference Treasury Dealer Quotations for
such redemption date. "Reference Treasury Dealer Quotations" means, with respect
to each Reference Treasury Dealer and any redemption date, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 3:30 p.m.,
New York City time, on the third business day preceding such redemption date.
"Reference Treasury Dealer" means each of ----------- and
- ---------- and their respective successors. If any of the foregoing shall cease
to be a primary U.S. Government securities dealer (a "Primary Treasury Dealer"),
the Company shall substitute another nationally recognized investment banking
firm that is a Primary Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to
Securities to be redeemed, the remaining scheduled payments of principal of and
interest on such Securities that would be due after the related redemption date
but for such redemption. If such redemption date is not an interest payment date
with respect to such Securities, the amount of the next succeeding scheduled
interest
16
<PAGE>
payment on such Securities will be reduced by the amount of interest accrued on
such Securities to such redemption date.
On and after the redemption date, interest will cease to
accrue on the Securities or any portion of the Securities called for redemption
(unless the Company defaults in the payment of the redemption price and accrued
interest). On or before the redemption date, the Company will deposit with a
paying agent (or the Trustee) money sufficient to pay the redemption price of
and accrued interest on the Securities to be redeemed on such date. If less than
all of the Securities of any series are to be redeemed, the Securities to be
redeemed shall be selected by the Trustee by such method as the Trustee shall
deem fair and appropriate.]
[If applicable, insert -- The Securities of this series are
subject to redemption upon not less than 30 nor more than 60 days' notice by
mail, such 30 or 60 days, as the case may be, to be counted from the date notice
is mailed, [if applicable, insert -- (1) on ----------- in any year commencing
with the year and ending with the year ------ through operation of the sinking
fund for this series at a Redemption Price equal to 100% of the principal
amount, and (2)] at any time [on or after -----------, 19--], as a whole or in
part, at the election of the Company, [at Redemption Prices determined as
follows:] [at the following Redemption Prices (expressed as percentages of the
principal amount): If redeemed [on or before ---------%, and if redeemed] during
the 12-month period beginning --------- of the years indicated,
Redemption Redemption
Year Price Year Price
---- ---------- ---- ----------
and thereafter at a Redemption Price equal to % of the principal amount,]
together in the case of any such redemption [if applicable, insert -- (whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Regular Record Dates [or Special Record Dates] referred to on the face
hereof, all as provided in the Indenture.]
[If applicable insert -- The Securities of this series are
subject to redemption upon not less than 30 nor more than 60 days' notice by
mail, such 30 or 60 days, as the case may be, to be counted from the date notice
is mailed, (1) on -------------- in any year commencing with the year
- ----------- and ending with the year ------------ through operation of the
sinking fund for this series at the Redemption Prices for redemption through
operation of the sinking fund (expressed as percentages of the principal amount)
set forth in the table below, and (2) at any time [on or after ------------], as
a whole or in part, at the election of the Company, at the Redemption Prices for
redemption otherwise than through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table below: If redeemed
during the 12-month period beginning ------------ of the years indicated,
17
<PAGE>
Redemption Price Redemption Price for
For Redemption Redemption Otherwise
Through Operation Than Through Operation
Year of the Sinking Fund of the Sinking Fund
- ---- ------------------- ----------------------
and thereafter at a Redemption Price equal to % of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Regular Record Dates or Special Record Dates referred to on the face hereof, all
as provided in the Indenture.]
[Notwithstanding the foregoing, the Company may not, prior to
- ---------- redeem any Securities of this series as contemplated by [Clause (2)
of] the preceding paragraph as a part of, or in anticipation of, any refunding
operation by the application, directly or indirectly, of moneys borrowed having
an interest cost to the Company (calculated in accordance with generally
accepted financial practice) of less than % per annum.]
[The sinking fund for this series provides for the redemption
on -------- in each year beginning with the year ----------- and ending with the
year of ----------- [not less than $--------- ("mandatory sinking fund") and not
more than] $ aggregate principal amount of Securities of this series. Securities
of this series acquired or redeemed by the Company otherwise than through
[mandatory] sinking fund payments may be credited against subsequent [mandatory]
sinking fund payments otherwise required to be made [in the inverse order in
which they become due].]
[If the Securities do not have a sinking fund, then insert --
the Securities do not have the benefit of any sinking fund obligations.]
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Debt, and this Security is issued subject to
the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effect the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
[If the Security is subject to redemption, insert -- In the
event of redemption of this Security in part only, a new Security or Securities
of this series and of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]
18
<PAGE>
[If the Security is not subject to redemption, insert -- The
Securities of this series are not redeemable prior to Stated Maturity.]
[If applicable, insert -- The Indenture contains provisions
for defeasance at any time of [the entire indebtedness of this Security]
[and/or] [certain restrictive covenants and Events of Default with respect to
this Security] [, in each case] upon compliance with certain conditions set
forth in the Indenture.]
[If applicable, insert -- The Securities of this series are
not subject to [Section 1502 of the Indenture concerning the defeasance of the
indebtedness represented by this Security][and/or][Section 1503 of the Indenture
concerning covenant defeasance of this Security.]
[If the Security is not an Original Issue Discount Security,
insert -- If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.]
[If the Security is an Original Issue Discount Security,
insert -- If an Event of Default with respect to Securities of this series shall
occur and be continuing, an amount of principal of the Securities of this series
may be declared due and payable in the manner and with the effect provided in
the Indenture. Such amount shall be equal to - insert formula for determining
the amount. Upon payment (i) of the amount of principal so declared due and
payable and (ii) of interest on any overdue principal, premium and interest (in
each case to the extent that the payment of such interest shall be legally
enforceable), all of the Company's obligations in respect of the payment of the
principal of and premium and interest, if any, on the Securities of this series
shall terminate.]
[If the Security is an Indexed Security, insert -- the
appropriate provision.]
[If the Security is convertible, insert -- Subject to and upon
compliance with the provisions of the Indenture, the Holder of this Security is
entitled, at its option, at any time on or after the opening of business on
- ---------, ------------- and on or before the close of business on ----------,
or in case this Security or a portion hereof is called for redemption, then in
respect of this Security or such portion hereof until and including, but (unless
the Company defaults in making the payment due upon redemption) not after, the
close of business on the Redemption Date, to convert this Security (or any
portion of the principal amount hereof which is $ ---------- or an integral
multiple thereof), at the principal amount hereof, or of such portion, into
fully paid and nonassessable shares (calculated as to each conversion to the
nearest 1/100 of a share) of [Common Stock] [Preferred Stock] of the Company at
a conversion price equal to $--------- aggregate principal amount of Securities
for each share of [Common Stock] [Preferred Stock] (or at the current adjusted
conversion price if an adjustment has been made as provided in the Indenture) by
surrender of this Security, duly endorsed or assigned to the Company or in
blank, to the Company at its office or agency in ----------------------,
accompanied by a completed and signed "Form of Election to Convert" below, which
will constitute written notice to the Company that the Holder hereof elects to
convert this Security, of if less than the entire principal amount hereof is to
be converted, the
19
<PAGE>
portion hereof to be converted, and, in case such surrender shall be made during
the period from the close of business on any Regular Record Date next preceding
any Interest Payment Date to the opening of business on such Interest Payment
Date (unless this Security or the portion hereof being converted has been called
for redemption on a Redemption Date within such period), also accompanied by
payment in immediately available funds or other funds acceptable to the Company
of an amount equal to the interest payable on such Interest Payment Date on the
principal amount of this Security then being converted. Subject to the aforesaid
requirement for payment and, in the case of a conversion after the Regular
Record Date next preceding any Interest Payment Date and on or before such
Interest Payment Date, to the right of the Holder of this Security (or any
Predecessor Security) of record at such Regular Record Date to receive an
installment of interest (with certain exceptions provided in the Indenture), no
payment or adjustment is to be made on conversion for interest accrued hereon or
for dividends on the Common Stock issued on conversion. No fractions of shares
or scrip representing fractions of shares will be issued on conversion, but
instead of any fractional interest the Company shall pay a cash adjustment as
provided in the Indenture. The conversion price is subject to adjustment as
provided in the Indenture. In addition, the Indenture provides that in case of
certain consolidations or mergers to which the Company is a party or the
transfer of substantially all of the assets of the Company, the Indenture shall
be amended, without the consent of any Holders of Securities, so that this
Security, if then outstanding, will be convertible thereafter, during the period
this Security shall be convertible as specified above, only into the kind and
amount of securities, cash and other property receivable upon the consolidation,
merger or transfer by a holder of the number of shares of [Common Stock]
[Preferred Stock] into which this Security might have been converted immediately
prior to such consolidation, merger or transfer (assuming such holder of [Common
Stock] [Preferred Stock] failed to exercise any rights of election and received
per share the kind and amount received per share by a plurality of non-electing
shares), assuming, if such consolidation, merger or transfer is prior to [insert
date upon which the Securities first become convertible], that this Security was
convertible at the time of such consolidation, merger or transfer at the initial
conversion price specified above as adjusted from [date of issuance], to such
time pursuant to the Indenture.]
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities under
the Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in principal amount of the Securities at the time
Outstanding of each series to be adversely affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional,
20
<PAGE>
to pay the principal of and any premium and interest on this Security at the
times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the principal
of and any premium and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered
form without coupons in denominations of $----------- [and any integral multiple
thereof]. As provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
No recourse shall be had for the payment of the principal of
(or premium, if any) or the interest on this Security, or for any claim based
hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture or any indenture supplemental thereto, against any incorporator,
stockholder, officer, director or employee, as such, past, present or future, of
the Company or any successor entity, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes (subject to Section 307 of the Indenture), whether or
not this Security be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
[If applicable, insert -- Interest on this Security shall be
computed on the basis of a 360-day year of twelve 30-day months.]
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture. The
Indenture and this Security shall be governed by and construed in accordance
with the laws of the State of New York without regard to the conflicts of laws
principles thereof.
21
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of
the face of this Note, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the entireties ---------------------- Custodian
(Cust)
JT TEN - as joint tenants with right of ---------------------- under
survivorship and not as (Minor)
tenants in common
Uniform Gifts to
Minors Act-----------------
(State)
Additional abbreviations may also be used
though not in the above list.
[If the Security is convertible, insert - -
FORM OF ELECTION TO CONVERT
I(we) hereby irrevocably exercise the option to convert this
Security, or the principal portion below designated, into [Common Shares]
[Preferred Shares] in accordance with the terms of the Indenture referred to in
this Security, and direct that the shares issuable and deliverable upon
conversion, together with any check in payment for fractional shares, be issued
in the name of and delivered to the undersigned registered Holder hereof and any
Security representing any unconverted principal amount hereof, unless a
different name has been indicated below. If shares and/or any Security
representing any unconverted principal amount hereof are to be issued in the
name of a Person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto.
Portion of this Security
to be converted (if partial
conversion, $1,000 or an
integral multiple thereof): $---------
Signature: ----------------------
(exactly as your name
appears on the face
of this Security)
Name:
------------------------
22
<PAGE>
Title:
------------------------
Address: -----------------------
Phone No.:
---------------------
Date:
-------------------------
If shares and/or any Security representing any unconverted principal amount
hereof, are to be issued and registered in the name of a Person other than the
undersigned, please print the name and address, including zip code, and social
security or other taxpayer identification number of such Person below.
Name:
------------------------------------
Address:
-------------------------------------
TIN/Social Security No.:
--------------------
Signature Guaranteed (if [Common Shares]
[Preferred Shares] to be issued to other
than the registered holder(s)):
By:
---------------------------------
This signature shall be guaranteed by
an eligible guarantor institution (a
bank or trust company having an office
or correspondent in the United States
or a broker or dealer which is a
member of a registered securities
exchange or the National Association
of Securities Dealers, Inc.) with
membership in an approved signature
guaranty medallion program pursuant to
SEC Rule 17 Ad-15.]
ASSIGNMENT FORM
(I) or (we) assign and transfer this Security to:
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
23
<PAGE>
and irrevocably appoint --------------------------- agent to transfer this
Security on the Register. The agent may substitute another to act for him.
Date:
----------------------
Signature:
---------------------------------
(exactly as your name appears on
the face of this Security)
Name:
-------------------------------------
Title:
------------------------------------
Address:
----------------------------------
Phone No.:
--------------------------------
Date:
-------------------------------------
Signature Guaranteed:
By:
-----------------------------------
This signature shall be guaranteed by
an eligible guarantor institution (a
bank or trust company having an office
or correspondent in the United States
or a broker or dealer which is a member
of a registered securities exchange or
the National Association of Securities
Dealers, Inc.) with membership in an
approved signature guaranty medallion
program pursuant to SEC Rule 17 Ad-15.
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
This Certificate relates to $---------- principal
amount of Securities held in *-------- book-entry or *------- definitive form by
- -------------(the "Transferor").
The Transferor*:
|_| has requested the Trustee by written order to deliver in
exchange for its beneficial interest in the Book-Entry Security held by the
Depository a Security or Securities in definitive,
24
<PAGE>
registered form of authorized denominations in an aggregate
principal amount equal to its beneficial interest in such Book-Entry Security
(or the portion thereof indicated above); or
|_| has requested the Trustee by written order to exchange or
register the transfer of a Security or Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify and agree that Transferor is
familiar with the Indenture relating to the above captioned Securities and as
provided in Section 305 of such Indenture, the transfer of this Security does
not require registration under the Securities Act of 1933, as amended (the
"Securities Act") because:*
|_| Such Security is being acquired for the
Transferor's own account, without transfer (in satisfaction of
Section 305(b)(ii)(A) or Section 305(e)(i)(A) of the
Indenture).
|_| Such Security is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act in
reliance on Rule 144A (in satisfaction of Section 305(b)(ii)(B) or Section
305(e)(i)(B) of the Indenture) or pursuant to an exemption from registration in
accordance with Rule 904 under the Securities Act (in satisfaction of Section
305(b)(ii)(B) or Section 305(e)(i)(B) of the Indenture.)
|_| Such Security is being transferred in accordance with Rule
144 under the Securities Act, or pursuant to an effective registration statement
under the Securities Act (in satisfaction of Section 305(b)(ii)(B) or Section
305(e)(i)(B) of the Indenture).
|_| Such Security is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the
Securities Act, other than Rule 144A, 144 or Rule 904 under the Securities Act,
and any applicable state securities laws. An Opinion of Counsel to the effect
that such transfer does not require registration under the Securities Act
accompanies this Certificate (in satisfaction of Section 305(b)(ii)(C) or
Section 305(e)(i)(C) of the Indenture).
---------------------------
[INSERT NAME OF TRANSFEROR]
Dated: By:
--------------------- ----------------------------------
*Check applicable box.
25
<PAGE>
Section 204. Additional Provisions Required in Book-Entry Security.
------------------------------------------------------
Any Book-Entry Security issued hereunder shall, in addition to
the provisions contained in Sections 202 and 203 and in addition to any legend
required by the Depositary, bear a legend in substantially the following form:
"This Security is a Book-Entry Security within the meaning of
the Indenture hereinafter referred to and is registered in the name of a
Depositary or a nominee of a Depositary. This Security is exchangeable for
Securities registered in the name of a Person other than the Depositary or its
nominee only in the limited circumstances described in the Indenture and may not
be transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary."
Section 205. Form of Trustee's Certificate of Authentication.
------------------------------------------------
The Trustee's certificate of authentication shall be in
substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
Dated:
----------------------
STATE STREET BANK AND TRUST COMPANY,
As Trustee
By:
----------------------------------
[Authorized Signatory]
ARTICLE THREE
The Securities
Section 301. 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 from time to time in one or more
series. There shall be established in or pursuant to a Board Resolution and,
subject to Section 303, set forth, or determined
26
<PAGE>
in the manner provided, 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 Securities of any other series);
(2) any limit 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 Sections 304, 305, 306, 906 or 1107 and except for any
Securities which, pursuant to Section 303, are deemed never to have been
authenticated and delivered hereunder);
(3) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Securities of the series shall be
issuable;
(4) the Person to whom any interest on a Security of the
series shall be payable, if other than the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest;
(5) the date or dates on which the principal of and premium,
if any, on the Securities of the series is payable or the method of
determination thereof;
(6) the rate or rates at which the Securities of the series
shall bear interest, if any, or the method of calculating such rate or rates of
interest, the date or dates from which such interest shall accrue or the method
by which such date or dates shall be determined, the Interest Payment Dates on
which any such interest shall be payable and the Regular Record Date for any
interest payable on any Interest Payment Date;
(7) the rights, if any, to defer payments of interest on any
Securities of the series by extending the interest payment period, and the
duration of such extensions;
(8) if other than the Corporate Trust Office of the Trustee,
the place or places where the principal of and any premium and interest on
Securities of the series shall be payable;
(9) the currency, currencies or currency units in which
payment of the principal of and any premium and interest on any Securities of
the series shall be payable if other than the currency of the United States of
America and the manner of determining the equivalent thereof in the currency of
the United States of America for purposes of the definition of "Outstanding" in
Section 101;
(10) the period or periods within which, the price or prices
at which, the currency or currencies (including currency units) in which and the
other terms and conditions upon which Securities of the series may be redeemed,
in whole or in part, at the option of the Company;
27
<PAGE>
(11) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the Company or a
Holder thereof, in one or more currencies or currency units other than that or
those in which the Securities are stated to be payable, the currency, currencies
or currency units in which payment of the principal of and any premium and
interest on Securities of such series as to which such election is made shall be
payable, and the periods within which and the other terms and conditions upon
which such election is to be made;
(12) 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 pursuant to Section 502 or
the method by which such portion shall be determined;
(13) the obligation, if any, of the Company to redeem or
purchase Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods (or
the methods of determination of such a period or periods) within which, the
price or prices at which and the other terms and conditions upon which
Securities of the series shall be redeemed or purchased, in whole or in part,
pursuant to such obligation;
(14) if the amount of payments of principal of or any premium
or interest on any Securities of the series may be determined with reference to
an index, formula or other method, the index, formula or other method by which
such amounts shall be determined;
(15) if the amount Outstanding of an Indexed Security for
purposes of the definition of "Outstanding" is to be other than the principal
face amount at original issuance, the method of determination of such amount;
(16) if either or both of Section 1502 or 1503 does not apply
to the Securities of any series;
(17) whether the Securities of the series shall be issued in
whole or in part in the form of one or more Book-Entry Securities and, in such
case, the Depositary with respect to such Book-Entry Security or Securities and
the circumstances under which any Book-Entry Security may be registered for
transfer or exchange, or authenticated and delivered, in the name of a Person
other than such Depositary or its nominee, if other than as set forth in Section
305;
(18) any additional, modified or different covenants or
Events of Default applicable to one or more particular series of Securities;
(19) the application, if any, of Article Fourteen to the
Securities of any Series; and
(20) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 901(5)).
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 the Board Resolution
28
<PAGE>
referred to above and (subject to Section 303) set forth, or determined in the
manner provided, in the Officers' Certificate referred to above or in any such
indenture supplemental hereto. All Securities of any one series need not be
issued at the same time and, unless otherwise provided, a series may be
reopened, without the consent of the Holders, for issuances of additional
Securities of such series.
If any of the terms of the series are established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth, or providing the manner for determining,
the terms of the series.
Section 302. Denominations.
--------------
The Securities of each series shall be issuable in registered
form without coupons in such denominations as shall be specified as contemplated
by Section 301. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
-----------------------------------------------
The Securities shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its President, its Chief
Financial Officer or one of its Vice Presidents. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
executed by the Company to the Trustee for authentication, together with a
Company Order for the authentication and delivery of such Securities, and the
Trustee in accordance with the Company Order shall authenticate and deliver or
make available for delivery such Securities; provided, however, that in the case
of Securities of a series that are not to be originally issued at one time, the
Trustee shall authenticate and deliver or make available for delivery such
Securities from time to time in accordance with such other procedures
(including, without limitation, the receipt by the Trustee of oral or electronic
instructions from the Company or its duly authorized agents, promptly confirmed
in writing) acceptable to the Trustee as may be specified by or pursuant to a
Company Order delivered to the Trustee prior to the time of the first
authentication of Securities of such series. In authenticating such Securities,
and accepting the additional responsibilities under this Indenture in relation
to such Securities, the Trustee shall be entitled to receive, and (subject to
Section 601) shall be fully protected in relying upon:
(i) an Opinion of Counsel stating,
29
<PAGE>
(a) that the form or forms of such Securities have been
established in conformity with the provisions of this Indenture;
(b) that the terms of such Securities have been, or in the
case of Securities of a series that are not to be originally issued at one time,
will be, established in conformity with the provisions of this Indenture,
subject, in the case of Securities of a series that are not to be originally
issued at one time, to any conditions specified in such Opinion of Counsel; and
(c) that such Securities, when authenticated and delivered
by the Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; provided, that such Opinion
of Counsel need express no opinion as to whether a court in the United States
would render a money judgment in currency other than that of the United States;
and
(ii) an Officers' Certificate stating that all conditions precedent
provided for in this Indenture relating to the execution, authentication and
delivery of the Securities have been complied with.
If such form or forms or terms have been so established, the Trustee shall not
be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which the Trustee determines would expose it to personal liability.
Notwithstanding the provisions of Section 301 and of the
preceding paragraph, if all Securities of a series are not to be originally
issued at one time, it shall not be necessary to deliver the Officers'
Certificate otherwise required pursuant to Section 301 or the Company Order and
Opinion of Counsel otherwise required pursuant to such preceding paragraph at or
prior to the time of authentication of each Security of such series if such
documents, with appropriate modifications to cover such future issuances, are
delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued.
If the Company shall establish pursuant to Section 301 that
the Securities of a series are to be issued in whole or in part in the form of
one or more Book-Entry Securities, then the Company shall execute and the
Trustee shall, in accordance with this Section and the Company Order with
respect to such series, authenticate and deliver or make available for delivery
one or more Securities in such form that (i) shall represent and shall be
denominated in an amount equal to the aggregate principal amount of the
Outstanding Securities of such series to be represented by such Book-Entry
Security or Securities, (ii) shall be registered in the name of the Depositary
for such Book-Entry Security or Securities or the nominee of such Depositary,
(iii) shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary's instruction and (iv) shall bear the legend set forth in Section
204.
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Unless otherwise established pursuant to Section 301, each
Depositary designated pursuant to Section 301 for a Book-Entry Security must, at
the time of its designation and at all times while it serves as Depositary, be a
clearing agency registered under the Exchange Act and any other applicable
statute or regulation. The Trustee shall have no responsibility to determine if
the Depositary is so registered. Each Depositary shall enter into an agreement
with the Trustee governing the respective duties and rights of such Depositary
and the Trustee with regard to Book-Entry Securities.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein executed by the Trustee by manual signature of an authorized officer
thereof, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder. Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 309, for all purposes of this Indenture such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
Section 304. Temporary Securities.
---------------------
Pending the preparation of Definitive Securities of any
series, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver or make available for delivery, temporary Securities
which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
Definitive Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of such
Securities.
If temporary Securities of any series are issued, the Company
will cause Definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of Definitive Securities of such
series, the temporary Securities of such series shall be exchangeable for
Definitive Securities of such series upon surrender of the temporary Securities
of such series at the office or agency of the Company in a Place of Payment for
that series, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Securities of any series the Company shall execute and
the Trustee shall, as soon as practicable upon its receipt of an authentication
order, authenticate and deliver or make available for delivery in exchange
therefor one or more Definitive Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor. Until so
exchanged the temporary Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as Definitive Securities of
such series and tenor.
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Section 305. Registration, Registration of Transfer and Exchange;
Restrictions on Transfer.
(a) General Provisions Relating to Transfers and
Exchanges.
(1) The Company shall cause to be kept at the
Corporate Trust Office of the Trustee a register (the register
maintained in such office and in any other office or agency of
the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Securities
and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering
Securities and transfers and exchanges of Securities as herein
provided.
To permit registrations, transfers and exchanges of
Securities, the Company shall execute and the Trustee shall
authenticate Definitive Securities and Book-Entry Securities
at the Security Registrar's request. Notwithstanding anything
herein to the contrary, there shall be only one Security
Register with respect to each series of Securities.
(2) 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
connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Sections 304, 906
or 1107 not involving any transfer.
(3) Notwithstanding any other provision in this
Indenture, unless and until it is exchanged in whole or in
part for Securities that are not in the form of a Book-Entry
Security, a Book-Entry Security may not be transferred or
exchanged except as a whole by the Depositary with respect to
such Book-Entry Security to a nominee of such Depositary or by
a nominee of such Depositary to such Depositary or another
nominee of such Depositary.
(4) All Definitive Securities and Book-Entry
Securities issued upon any registration of transfer or
exchange of Definitive Securities or Book-Entry Securities
shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this
Indenture, as the Definitive Securities or Book-Entry
Securities surrendered upon such registration of transfer or
exchange.
(5) The Company 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 the mailing of a notice of redemption
of Securities of that series selected for redemption under
Section 1103 and ending at the close of business on the day of
such mailing, or (ii) to register the transfer of or exchange
any
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Security so selected for redemption in whole or in part,
except the unredeemed portion of any Security being redeemed
in part.
(6) Upon surrender for registration of transfer
of any Security of any series at the office or agency of the
Company in a Place of Payment for that series, the Company
shall execute, and the Trustee shall authenticate and deliver
or make available for delivery, in the name of the designated
transferee or transferees, one or more new Securities of the
same series, of any authorized denominations and of a like
aggregate principal amount and tenor.
(7) At the option of the Holder, Securities of
any series may be exchanged for other Securities of the same
series, of any authorized denominations and of a like
aggregate principal amount and tenor, upon surrender of the
Securities to be exchanged at such office or agency. Whenever
any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver
or make available for delivery, the Securities which the
Holder making the exchange is entitled to receive.
(8) Every Security presented or surrendered for
registration of transfer or for exchange shall (if so required
by the Company, the Security Registrar or the Indenture
Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company,
the Security Registrar and the Trustee duly executed by the
Holder thereof or his attorney duly authorized in writing.
(9) Notwithstanding the foregoing, any Book-Entry
Security shall be exchangeable pursuant to this Section 305
for Securities registered in the names of Persons other than
the Depositary for such Security or its nominee only if (i)
such Depositary notifies the Company that it is unwilling or
unable to continue as Depositary for such Book-Entry Security
or if at any time such Depositary ceases to be a clearing
agency registered under the Exchange Act and the Company does
to appoint a successor Depositary within 90 days after receipt
by it of such notice or after it becomes aware of such
cessation, (ii) the Company executes and delivers to the
Trustee a Company Order that such Book-Entry Security shall be
so exchangeable or (iii) there shall have occurred and be
continuing an Event of Default with respect to the Securities.
Any Book-Entry Security that is exchangeable pursuant to the
preceding sentence shall be exchangeable for Securities
registered in such names as such Depositary shall direct.
(10) None of the Company, the Trustee, any Paying
Agent or the Security Registrar will have any responsibility
or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in
a Book- Entry Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership
interests.
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(b) Transfer and Exchange of Securities.
When Definitive Securities are presented by a Holder to the
Security Registrar with a request: (x) to register the transfer of the
Definitive Securities; or (y) to exchange such Definitive Securities for an
equal principal amount of Definitive Securities of other authorized
denominations, the Security Registrar shall register the transfer or make the
exchange as requested if its requirements for such transactions are met;
provided, however, that the Definitive Securities presented or surrendered for
register of transfer or exchange: (i) shall be duly endorsed or accompanied by a
written instruction of transfer in form satisfactory to the Security Registrar
duly executed by such Holder or by his attorney, duly authorized in writing; and
(ii) in the case of a Definitive Security that is a Transfer Restricted
Security, such request shall be accompanied by the following additional
information and documents, as applicable: (A) if such Transfer Restricted
Security is being delivered to the Security Registrar by a Holder for
registration in the name of such Holder, without transfer, a certification to
that effect from such Holder (in substantially the form of the "Certificate to
be Delivered Upon Exchange or Registration of Transfer of Securities" set forth
in Section 203); or (B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) in accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance with Rule 144 or Rule
904 under the Securities Act or pursuant to an effective registration statement
under the Securities Act, a certification to that effect from such Holder (in
substantially the form of the "Certificate to be Delivered Upon Exchange or
Registration of Transfer of Securities" set forth in Section 203) or (C) if such
Transfer Restricted Security is being transferred in reliance on another
exemption from the registration requirements of the Securities Act or the
securities laws of any other applicable jurisdiction, a certification to that
effect from such Holder (in substantially the form of the "Certificate to be
Delivered Upon Exchange or Registration of Transfer of Securities" set forth in
Section 203) and an Opinion of Counsel from such Holder or the transferee
reasonably acceptable to the Company and to the Security Registrar to the effect
that such transfer is in compliance with the Securities Act.
(c) Transfer of a Definitive Security for a Beneficial
Interest in a Book-Entry Security.
A Definitive Security may not be exchanged for a beneficial
interest in a Book-Entry Security except upon satisfaction of the requirements
set forth below. Upon receipt by the Trustee of a Definitive Security, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with: (i) if such Definitive Security is a
Transfer Restricted Security, a certification from the Holder thereof (in
substantially the form of the "Certificate to be Delivered Upon Exchange or
Registration of Transfer of Securities" set forth in Section 203) to the effect
that such Definitive Security is being transferred by such Holder to a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) in accordance with Rule 144A under the Securities Act; and (ii) whether or
not such Definitive Security is a Transfer Restricted Security, written
instructions from the Holder thereof directing the Trustee to make, or to direct
the Security Custodian to make, an endorsement on the Book-Entry Security to
reflect an increase in the aggregate principal amount of the Securities
represented by the Book-Entry Security, in which case
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the Trustee shall cancel such Definitive Security in accordance with Section 309
and cause, or direct the Security Custodian to cause, in accordance with the
standing instructions and procedures existing between the Depository and the
Security Custodian, the aggregate principal amount of Securities represented by
the Book-Entry Security to be increased accordingly. If no Book-Entry Securities
are then outstanding, the Company shall issue and, upon receipt of a Company
Order in accordance with Section 303, the Trustee shall authenticate a new
Book-Entry Security in the appropriate principal amount.
(d) Transfer and Exchange of Book-Entry Securities.
The transfer and exchange of Book-Entry Securities or
beneficial interests therein shall be effected through the Depository, in
accordance with this Indenture and the procedures of the Depository therefor,
which shall include restrictions on transfer comparable to those set forth
herein to the extent required by the Securities Act.
(e) Transfer of a Beneficial Interest in a Book-Entry
Security for a Definitive Security.
(1) Any Person having a beneficial interest in a
Book-Entry Security may upon request exchange such beneficial
interest for a Definitive Security. Upon receipt by the
Trustee of written instructions or such other form of
instructions as is customary for the Depository, from the
Depository or its nominee on behalf of any Person having a
beneficial interest in a Book-Entry Security, and, in the case
of a Transfer Restricted Security, the following additional
information and documents (all of which may be submitted by
facsimile): (A) if such beneficial interest is being
transferred to the Person designated by the Depository as
being the beneficial owner, a certification to that effect
from such Person (in substantially the form of the
"Certificate to be Delivered Upon Exchange or Registration of
Transfer of Securities" set forth in Section 203) or (B) if
such beneficial interest is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration
in accordance with Rule 144 or Rule 904 under the Securities
Act or pursuant to an effective registration statement under
the Securities Act, a certification to that effect from the
transferor (in substantially the form of "Certificate to be
Delivered Upon Exchange or Registration of Transfer of
Securities" set forth in Section 203) or (C) if such
beneficial interest is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act or the securities laws of any other applicable
jurisdiction, a certification to that effect from the
transferor (in substantially the form of the "Certificate to
be Delivered Upon Exchange or Registration of Transfer of
Securities" set forth in Section 203) and an Opinion of
Counsel from the transferee or transferor reasonably
acceptable to the Company and to the Security Registrar to the
effect that such transfer is in compliance with the Securities
Act, in which case the Trustee or the Security Custodian, at
the direction of the Trustee, shall, in accordance with the
standing
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instructions and procedures existing between the Depository
and the Security Custodian, cause the aggregate principal
amount of Book-Entry Securities to be reduced accordingly and,
following such reduction, the Company shall execute and, upon
receipt of a Company Order in accordance with Section 303, the
Trustee shall authenticate and deliver to the transferee a
Definitive Security in the appropriate principal amount.
(2) Definitive Securities issued in exchange for
a beneficial interest in a Book-Entry Security pursuant to
this Section 305(e) shall be registered in such names and in
such authorized denominations as the Depository, pursuant to
instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall
deliver such Definitive Securities to the Persons in whose
names such Securities are so registered.
(f) Restrictions on Transfer and Exchange of Book-Entry
Securities.
Notwithstanding any other provision of this Indenture (other
than the provisions set forth in subsection (g) of this Section 305), a
Book-Entry Security may not be transferred as a whole except by the Depository
to a nominee of the Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository or by the Depository or any such
nominee to a successor Depository or a nominee of such successor Depository.
(g) Authentication of Securities in Absence of Depository.
If at any time: (i) the Depository for the Securities notifies
the Company that the Depository is unwilling or unable to continue as Depository
for the Book-Entry Securities and a successor Depository for the Book-Entry
Securities is not appointed by the Company within 90 days after delivery of such
notice; or (ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Securities under this
Indenture, then the Company shall execute, and the Trustee shall, upon receipt
of a Company Order in accordance with Section 303, authenticate and deliver,
Definitive Securities in an aggregate principal amount equal to the principal
amount of the Book-Entry Securities in exchange for such Book-Entry Securities.
(h) Legends and Authentication of Securities under Specified
Circumstances.
(1) Except as permitted by the following
paragraphs (iii) and (iv), each Security certificate
evidencing Book-Entry Securities and Definitive Securities
(and all Securities issued in exchange therefor or
substitution thereof) issued other than pursuant to Regulation
S shall bear a legend in substantially the following form:
"THIS [NOTE] [DEBENTURE] HAS NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A QUALIFIED
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INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE FOR THIS [NOTE] [DEBENTURE] A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (3) IN
AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903
OR 904 OF REGULATION S UNDER THE SECURITIES ACT OR (4)
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE)
AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF
THE STATES OF THE UNITED STATES."
(2) Except as permitted by the following
paragraphs (iii) and (iv), each Security certificate
evidencing Book-Entry Securities and Definitive Securities
(and all Securities issued in exchange therefor or
substitution thereof) issued pursuant to Regulation S shall
bear a legend in substantially the following form:
"THIS [NOTE] [DEBENTURE] HAS NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, PRIOR TO THE EXPIRATION OF A
DISTRIBUTION COMPLIANCE PERIOD (DEFINED AS 40 DAYS AFTER THE
ISSUE DATE WITH RESPECT TO THE [NOTES] [DEBENTURES]), MAY NOT
BE: OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
(A)(1) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF
RULE 903 OR 904 OF REGULATION S OR (2) TO A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, OR (3) TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO
THE TRUSTEE FOR THIS [NOTE] [DEBENTURE] A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE),
AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF
THE STATES OF THE UNITED STATES."
(3) Upon any sale or transfer of a Transfer
Restricted Security (including any Transfer Restricted
Security represented by a Book-Entry Security) pursuant to
Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act: (A) in the
case of any Transfer Restricted Security that is
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a Definitive Security, the Security Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security
for a Definitive Security that does not bear the legend set
forth in (i) OR (ii) above and rescind any restriction on the
transfer of such Transfer Restricted Security; and (B) in the
case of any Transfer Restricted Security represented by a
Book-Entry Security, such Transfer Restricted Security shall
not be required to bear the legend set forth in (i) or (ii)
above, but shall continue to be subject to the provisions of
Section 305(e); provided, however, that with respect to any
request for an exchange of a Transfer Restricted Security that
is represented by a Book-Entry Security for a Definitive
Security that does not bear the legend set forth in (i) or
(ii) above, which request is made in reliance upon Rule 144,
the Holder thereof shall certify in writing to the Security
Registrar that such request is being made pursuant to Rule 144
(such certification to be substantially in the form of the
"Certificate to be Delivered Upon Exchange or Registration of
Transfer of Securities" set forth in Section 203).
(4) Notwithstanding the foregoing, upon
consummation of the Exchange Offer, the Company shall issue
and, upon receipt of a Company Order in accordance with
Section 303, the Trustee shall authenticate Exchange
Securities in exchange for Offered Securities accepted for
exchange in the Exchange Offer, which Exchange Securities
shall not bear the legend set forth in (i) or (ii) above, and
the Security Registrar shall rescind any restriction on the
transfer of such Securities, in each case unless the Holder of
such Offered Securities is either (A) a broker-dealer, (B) a
Person participating in the distribution of the Offered
Securities or (C) a Person who is an affiliate (as defined in
Rule 144A) of the Company.
(5) The letter required to be provided pursuant
to paragraphs (i) and (ii) above shall be substantially in the
form of Exhibit 305(h)(5) hereto.
(i) Cancellation and/or Adjustment of Book-Entry
Securities.
At such time as all beneficial interests in Book-Entry
Securities have been exchanged for Definitive Securities, redeemed, repurchased
or canceled, all Book-Entry Securities shall be returned to or retained and
canceled by the Trustee in accordance with Section 309. At any time prior to
such cancellation, if any beneficial interest in a Book-Entry Security is
exchanged for Definitive Securities, redeemed, repurchased or canceled, the
Trustee or the Security Custodian, at the direction of the Trustee, shall, in
accordance with the standing instructions and procedures existing between the
Depository and the Security Custodian, cause the aggregate amount of Book-Entry
Securities to be reduced accordingly.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
-------------------------------------------------
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver or make
available for delivery in exchange therefor
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a new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen
Security, other than a security having the benefit of conversion privileges
pursuant to Article Fourteen, has become or is about to become due and payable,
the Company in its discretion may, instead of issuing a new Security, pay such
Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this
Section in lieu of any destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series duly issued
hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights Preserved.
-----------------------------------------------
Except as otherwise provided as contemplated by Section 301
with respect to any series of Securities, interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest at the office or agency maintained for such
purpose pursuant to Section 1002; provided, however, that at the option of the
Company, interest on Securities of any series that bear interest may be paid (i)
by check mailed to the address of the Person entitled thereto as it shall appear
on the Security Register or (ii) by wire transfer to an account maintained by
the Person entitled thereto as specified in the Security Register; provided,
that such Person shall have given the Trustee written wire instructions at least
five Business Days prior to the applicable Interest Payment Date.
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Any interest on any Security of any series which is payable,
but is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date by virtue of having been such Holder,
and such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clauses (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in writing
of the amount of Defaulted Interest proposed to be paid on each Security of such
series and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be in immediately available
funds and held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall be
not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment (it being understood that the date of the
proposed payment shall be delayed, as necessary, by that number of days that are
required to allow for the minimum number of days (i.e., 10 days) between the
Special Record Date and the date of payment, and that the Trustee will provide
the Company with prompt written notice of any such required delay after the
Trustee's receipt of the Company's notice of the proposed payment). The Trustee
shall promptly notify the Company of such Special Record Date and, in the name
and at the expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of Securities of such series at his
address as it appears in the Security Register, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose names the Securities of
such series (or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest
on the Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant to
this Clause, such manner of payment shall be deemed practicable by the Trustee.
In the case of any Security which is converted after any
Regular Record Date and on or prior to the next succeeding Interest Payment Date
(other than any Security whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is 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
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name that Security (or one or more Predecessor Securities) is registered at the
close of business on such Regular Record Date. Except as otherwise expressly
provided in the immediately preceding sentence, in the case of any Security
which is converted, interest whose Stated Maturity is after the date of
conversion of such Security shall not be payable.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
Section 308. Persons Deemed Owners.
----------------------
Prior to due presentment of a Security 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 for the purpose of receiving payment of principal of and any
premium and (subject to Section 307) any interest on such Security and for all
other purposes whatsoever, whether or not such Security be overdue, and neither
the Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the
Security Registrar will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of any Book-Entry Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Section 309. Cancellation.
-------------
All Securities surrendered for payment, redemption,
conversion, repurchase, registration of transfer or exchange or for credit
against any sinking fund payment shall, if surrendered to any Person other than
the Trustee, be delivered to the Trustee. All Securities so delivered and any
Securities surrendered directly to the Trustee for any such purpose shall be
promptly canceled by the Trustee and such cancellation shall be noted
conspicuously on each such Security. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company
has not issued and sold, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of as directed by a Company Order or after 90 days, if
not in receipt of such Company Order, shall be disposed of in accordance with
the Trustee's customary procedures.
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Section 310. Computation of Interest.
------------------------
Except as otherwise specified as contemplated by Section 301
for Securities of any series, (i) interest on the Securities of each series
which bear interest at a fixed rate shall be computed on the basis of a 360-day
year of twelve 30-day months and (ii) interest on the Securities of each series
which bear interest at a variable rate shall be computed on a basis of the
actual number of days in an interest period divided by 360.
Section 311. CUSIP Numbers.
--------------
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided, that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such CUSIP numbers. The Company will promptly
notify the Trustee of any change in the CUSIP numbers.
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture.
----------------------------------------
This Indenture shall upon Company Request cease to be of
further effect with respect to Securities of any series (except as to any
surviving rights of registration of transfer, substitution, exchange,
replacement and conversion of such Securities herein expressly provided for),
and the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to such
Securities, including, but not limited to, Article Thirteen hereof, when
(1) either
(A) all such Securities theretofore authenticated and
delivered (other than (i) such Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 306 and (ii)
such Securities for whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable,
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(ii) will become due and payable at their Stated
Maturity within one year,
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company, or
(iv) are delivered to the Trustee for conversion in
accordance with Article Fourteen, and the Company, in the case of (B)(i), (ii)
or (iii) above, has deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose of payment and discharge an amount in the
currency or currencies or currency unit or units in which such Securities are
payable sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation, for
principal and any premium and interest to the date of such deposit (in the case
of Securities which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture with respect to such Securities have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, (i) the obligations of the Company to the Trustee under Section 607
and to any Authenticating Agent under Section 615 and, if money shall have been
deposited with the Trustee pursuant to subclause (B) of Clause (1) of this
Section, the obligations of the Trustee under Section 402, Article Six and the
last paragraph of Section 1003 shall survive, and (ii) to the extent conversion
privileges under Article Fourteen are applicable to the Securities of a series,
the rights and obligations under such Article Fourteen with respect to such
series of Securities shall survive until the earlier of the conversion of such
Securities in accordance with their terms or payment in full of the principal
amount of such Securities and any interest and other amounts due thereon, upon
such Securities becoming due and payable in accordance with their terms.
Section 402. Application of Trust Money.
---------------------------
Subject to provisions of the last paragraph of Section 1003,
all money deposited with the Trustee pursuant to Section 401 shall be held in
trust and applied by it, in accordance with the provisions of the Securities 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 and any premium and
interest for whose payment such money has been deposited with the Trustee.
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ARTICLE FIVE
Events of Default and Remedies
Section 501. Events of Default.
------------------
"Event of Default", wherever used herein with respect to
Securities of any series, means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body, unless it is inapplicable to a particular
series or is specifically deleted or modified in the Board Resolution (or action
taken pursuant thereto), Officers' Certificate or supplemental indenture under
which such series of Securities is issued or has been modified in an indenture
supplemental hereto):
(1) default in the payment of any interest upon any Security
of that series when it becomes due and payable, and continuance of such default
for a period of 30 days; or
(2) default in the payment of the principal of (or premium,
if any, on) any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when
and as due by the terms of a Security of that series and continuance of such
default for a period of 30 days; or
(4) default in the performance, or breach, of any covenant
or warranty of the Company in this Indenture with respect to Securities of that
series (other than a covenant or warranty a default in whose performance or
whose breach is elsewhere in this Section specifically dealt with), and
continuance of such default or breach for a period of 60 days after there has
been given, by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in principal amount
of the Outstanding Securities of that series (or, if any of the Securities of
that series are Original Issue Discount Securities or Indexed Securities, such
portion of the principal amount of such Securities as may be specified in the
terms thereof) a written notice specifying such default or breach and requiring
it to be remedied and stating that such notice is a "Notice of Default"
hereunder; or
(5) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 90 consecutive days; or
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(6) the commencement by the Company of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable federal
or state law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or of
any substantial part of its property, or the making by it of an assignment for
the benefit of creditors, or the admission by it in writing of its inability to
pay its debts generally as they become due, or the taking of corporate action by
the Company in furtherance of any such action; or
(7) any other Event of Default provided with respect to
Securities of that series.
Section 502. Acceleration of Maturity; Rescission and Annulment.
---------------------------------------------------
If an Event of Default (other than an Event of Default
described in clause 5 or 6 of Section 501) with respect to Securities of any
series at the time Outstanding occurs and is continuing, then in every such case
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount (or, if
any of the Securities of that series are Original Issue Discount Securities or
Indexed Securities, such portion of the principal amount of such Securities as
may be specified in the terms thereof) of all of the Securities of that series
to be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), and upon any such declaration such principal
amount (or, in the case of Original Issue Discount Securities or Indexed
Securities, such specified amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with
respect to Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article provided, the Holders of a majority in principal
amount of the Outstanding Securities of that series (or, if any of the
Securities of that series are Original Issue Discount Securities or Indexed
Securities, such portion of the principal amount of such Securities as may be
specified in the terms thereof), by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that
series,
(B) the principal of (and premium, if any, on) any
Securities of that series which have become due otherwise than by such
declaration of acceleration and any interest thereon at the rate or rates
prescribed therefor in such Securities,
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(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate or rates prescribed therefor
in such Securities, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Securities of that
series, other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or
impair any right consequent thereon.
If an Event of Default described in clause 5 or 6 of Section
501 occurs, the Outstanding Securities shall ipso facto become immediately due
and payable without need of any declaration or other act on the part of the
Trustee or any Holder.
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default continues
for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof, the Company will,
upon demand of the Trustee, pay to it, for the benefit of the Holders of such
Securities, the whole amount then due and payable on such Securities for
principal and any premium and interest and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal and
premium and on any overdue interest, at the rate or rates prescribed therefor in
such Securities, and, in addition thereto, 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.
If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities of
such series by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
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Section 504. Trustee May File Proofs of Claim.
---------------------------------
In case of any judicial proceeding relative to the Company (or
any other obligor upon the Securities), its property or its creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments directly to
the Trustee and, in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding;
provided, however, that the Trustee may, on behalf of the Holders, vote for the
election of a trustee in bankruptcy or similar official and may be a member of a
creditors' or other similar committee.
Section 505. Trustee May Enforce Claims Without Possession of Securities.
------------------------------------------------------------
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
Section 506. Application of Money Collected.
-------------------------------
Any money collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal
or any premium or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607;
SECOND: To holders of Senior Debt as provided for, and to the
extent required, in Article Thirteen;
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THIRD: To the payment of the amounts then due and unpaid for
principal of and any premium and interest on the Securities in respect of which
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
such Securities for principal and any premium and interest, respectively; and
FOURTH: The balance, if any, to the Company.
The Trustee may fix a record date and payment date for any
payment to holders of Securities pursuant to this Section 506. At least 15 days
before such record date, the Company shall mail to each holder of Securities and
the Trustee a notice that states the record date, the payment date and amount to
be paid.
Section 507. Limitation on Suits.
--------------------
No Holder of any Security of any series shall have any right
to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee before or during such 60-day period by the Holders of
a majority in principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders, or to obtain or to seek to obtain priority or preference over any other
Holders or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all Holders.
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Section 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest.
-------------
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and any premium and
(subject to Section 307) any interest on such Security on the Stated Maturity or
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.
Section 509. Restoration of Rights and Remedies.
-----------------------------------
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
-------------------------------
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306 and as otherwise provided in Section 507, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
-----------------------------
No delay or omission of the Trustee or of any Holder of any
Securities to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
Section 512. Control by Holders.
-------------------
The Holders of a majority in principal amount of the
Outstanding Securities of any series shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with respect
to the Securities of such series, provided that
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(1) such direction shall not be in conflict with any rule of
law or with this Indenture,
(2) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction, and
(3) the Trustee shall have the right to decline to follow
any such direction if the Trustee in good faith shall, by a Responsible Officer
or Officers of the Trustee, determine that the proceeding so directed would
result in the incurrence of liability by the Trustee.
Section 513. Waiver of Past Defaults.
------------------------
The Holders of not less than a majority in principal amount of
the Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of or any premium or
interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 514. 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,
suffered or omitted by it as Trustee, a court may require any party litigant in
such suit to file an undertaking to pay the costs of such suit, and may assess
costs, including counsel fees and expenses, against any such party litigant, in
the manner and to the extent provided in the Trust Indenture Act; provided, that
neither this Section nor the Trust Indenture Act shall be deemed to authorize
any court to require such an undertaking or to make such an assessment in any
suit instituted by the Company, the Trustee, a Holder of Securities pursuant to
Section 508, or the Holders of more than 10% in aggregate principal amount of
the Outstanding Securities of any series.
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ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities.
------------------------------------
The duties and responsibilities of the Trustee shall be
determined solely by the express provisions of this Indenture and the Trustee
need perform only those duties that are specifically set forth in this Indenture
and no others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee. Notwithstanding the foregoing, no provision of
this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any liability. Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this Section.
Section 602. Notice of Defaults.
-------------------
If a default occurs hereunder with respect to Securities of
any series, the Trustee shall, to the extent the Trustee has knowledge of such
default, within 90 days after such default becomes known to the Trustee, give
the Holders of Securities of such series notice of such default as and to the
extent provided by the Trust Indenture Act; provided, however, that in the case
of any default of the character specified in Section 501(4) with respect to
Securities of such series, no such notice to Holders shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section, the
term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to Securities of such
series.
Section 603. Certain Rights of Trustee.
--------------------------
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
(whether in its original or facsimile form) believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate or an Opinion of Counsel;
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(4) the Trustee may consult with counsel of its selection
and the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon;
(5) 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 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;
(6) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company, personally or by agent
or attorney;
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(8) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trust Indenture Act, and the
Trustee need perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations shall be read
into this Indenture against the Trustee;
(9) whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of, or affording protection to, the Trustee is subject to the provisions of this
Section 603;
(10) the Trustee shall not be liable for interest on any
money received by it hereunder except as the Trustee may agree in writing with
the Company. Money held in trust by the Trustee hereunder need not be segregated
from other funds except to the extent required by law;
(11) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture;
(12) the Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care;
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(13) the Trustee shall not be required to give any bond or
surety in respect of the performance of its powers and duties hereunder;
(14) delivery of reports, information and documents to the
Trustee under Section 704 is for informational purposes only and the Trustee's
receipt of the foregoing shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates); and
(15) the Trustee shall not be charged with knowledge of any
defaults or Events of Default unless either (1) a trust officer of the Trustee
shall have actual knowledge of such default or Event of Default or (2) written
notice of such default or Event of Default shall have been given to the Trustee
by any Holder or by the Company or any other obligor on the Securities or any
holder of Senior Debt or any representative thereof.
Section 604. Not Responsible for Recitals or Issuance of Securities.
-------------------------------------------------------
The recitals contained herein and in the Securities, except
the Trustee's certificates of authentication, shall be taken as the statements
of the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
Section 605. May Hold Securities and Serve as Trustee Under Other
Indentures.
-----------
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
Subject to the provisions of Section 608, the Trustee may
become and act as trustee under other indentures under which other securities,
or certificates of interest or participation in other securities, of the Company
are outstanding in the same manner as if it were not Trustee.
Section 606. Money Held in Trust.
--------------------
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
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Section 607. Compensation and Reimbursement.
-------------------------------
The Company agrees
(1) to pay to the Trustee from time to time such reasonable
compensation as shall be agreed in writing between the Company and the Trustee
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, willful
misconduct or bad faith; and
(3) to indemnify each of the Trustee and its agents,
employees, officers, directors and shareholders, or any predecessor Trustee,
for, and to hold same harmless against, any and all loss, liability, damage,
claim or expense (including, without limitation, reasonable attorney's fees and
expenses) incurred by it, arising out of or in connection with the acceptance or
administration of its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder except to the extent any
such loss, liability or expense may be attributable to its negligence or willful
misconduct. The Trustee may have separate counsel from the Company and the
Company shall pay the reasonable fees and expenses of such counsel.
The Trustee shall have a lien prior to the Securities upon all
property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 607, except with respect to funds
held in trust for the benefit of the Holders of particular Securities. Such lien
shall survive the satisfaction and discharge and termination of this Indenture
and the resignation or removal of the Trustee.
Without limiting any rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(5) or Section
501(6), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the satisfaction
and discharge and termination of this Indenture and the resignation or removal
of the Trustee.
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Section 608. Disqualification; Conflicting Interests.
----------------------------------------
If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Indenture. To
the extent permitted by the Trust Indenture Act, the Trustee shall not be deemed
to have a conflicting interest by virtue of being a trustee under this Indenture
with respect to the Securities of more than one series.
Section 609. Corporate Trustee Required; Eligibility.
----------------------------------------
There shall at all times be a Trustee hereunder which shall be
a Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of any federal or state supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.
Section 610. Resignation and Removal; Appointment of Successor.
--------------------------------------------------
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition, at
the expense of the Company, any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(c) The Trustee may be removed at any time with respect to
the Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the Trustee
and to the Company. If the instrument of acceptance by a successor Trustee
required by Section 611 shall not have been delivered to the Trustee within 30
days after the giving of such notice of removal, the Trustee being removed may
petition, at the expense of the Company, any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.
(d) If at any time:
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(1) the Trustee shall fail to comply with Section
608 after written request therefor by the Company or by any Holder who has been
a bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under
Section 609 and shall fail to resign after written request therefor by the
Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any such case, (i) the Company by or
pursuant to a Board Resolution may remove the Trustee and appoint a successor
Trustee with respect to all Securities, or (ii) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, with respect to the Securities of one or more series, the Company, by
or pursuant to a Board Resolution, shall promptly appoint a successor Trustee or
Trustees with respect to the Securities of that or those series (it being
understood that any such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any time there shall
be only one Trustee with respect to the Securities of any particular series) and
shall comply with the applicable requirements of Section 611. If, within one
year after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Securities of any series shall
be appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
611, become the successor Trustee with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee with respect to the Securities of any series shall have
been so appointed by the Company or the Holders and accepted appointment in the
manner required by Section 611, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and
each removal of the Trustee with respect to the Securities of any series and
each appointment of a successor Trustee with respect to the Securities of any
series to all Holders of Securities of such series in the manner provided in
Section 106. Each notice shall include the name of the successor Trustee with
respect to the Securities of such series and the address of its Corporate Trust
Office.
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Section 611. Acceptance of Appointment by Successor.
---------------------------------------
(a) In case of the appointment hereunder of a successor
Trustee with respect to all Securities, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of all sums owing to the Trustee under Section 607,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Securities of that or those series to which the appointment
of such successor Trustee relates; provided, however, that to the extent that
such property and money is not held by the Trustee in trust for the benefit of
the Holders of particular Securities, such retiring Trustee shall transfer and
deliver to such successor Trustee such property and money upon payment of all
sums owing to such retiring Trustee under Section 607.
(c) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee
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all such rights, powers and trusts referred to in paragraph (a) and (b) of this
Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
Section 612. Merger, Conversion, Consolidation or Succession to Business.
------------------------------------------------------------
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder;
provided, such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
Section 613. Preferential Collection of Claims Against Company.
--------------------------------------------------
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Securities), the Trustee shall be subject
to the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
Section 614. Investment of Certain Payments Held by the Trustee.
---------------------------------------------------
Any amounts held by the Trustee hereunder, other than pursuant
to Article Thirteen hereof, shall be invested by the Trustee from time to time
at the direction of the Company in such investments as may be specified by the
Company and reasonably agreed to by the Trustee from time to time; provided that
in investing trust funds pursuant to the terms of this Section and liquidating
any investments held in trust hereunder, the Trustee may, to the extent
permitted by law, purchase securities (including for the purposes of this
paragraph securities as to which the Trustee or a Trustee Affiliate (as defined
below) is the issuer or guarantor) from, and sell securities to, itself or any
Trustee Affiliate and purchase securities underwritten by, or in which a market
is made by, the Trustee or a Trustee Affiliate. For the purposes hereof, a
"Trustee Affiliate" shall mean an entity that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, the Trustee. Any income or gain realized as a result of any such
investment shall be promptly distributed (in no event later than the next
Business Day) to the Company after any intended amounts have been paid to the
Holders entitled thereto, except after the occurrence and during the continuance
of an Event of Default. The Trustee shall have no liability to the Company for
any loss resulting from any investment made in accordance with this Section, and
shall bear no expense in connection with any investment pursuant to this
Section. Any such investment may be sold (without regard to maturity date) by
the Trustee whenever necessary to make any distribution
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required by this Indenture. Nothing herein shall require the Trustee to invest
funds held by it pursuant to the last paragraph of Section 1003.
Section 615. Appointment of Authenticating Agent.
------------------------------------
The Trustee may appoint an Authenticating Agent or Agents with
respect to one or more series of Securities which shall be authorized to act on
behalf of the Trustee to authenticate Securities of such series issued upon
original issue and upon exchange, registration of transfer or partial redemption
thereof or pursuant to Section 306, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by federal or state authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to all or
substantially all the corporate agency or corporate trust business of an
Authenticating Agent, shall continue to be an Authenticating Agent; provided,
such corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and
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duties of its predecessor hereunder, with like effect as if originally named as
an Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this section.
The Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to or in lieu of the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
Dated:
--------------------------
STATE STREET BANK AND TRUST COMPANY
As Trustee
By:
---------------------------------
As Authenticating Agent
By:
----------------------------------
Authorized Signatory
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
----------------------------------------------------------
The Company will furnish or cause to be furnished to the
Trustee (a) semi-annually, not later than 15 days after the Regular Record Date
for interest for each series of Securities, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders as of such
Regular Record Date, as the case may be, and (b) at such other times as the
Trustee may request in writing, within 30 days after the receipt by the Company
of any such request, a list in similar form and content as of a date not more
than 15 days prior to the time such list is furnished.
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Notwithstanding the foregoing, so long as the Trustee is the Security Registrar,
no such list shall be required to be furnished.
Section 702. Preservation of Information; Communications to Holders.
-------------------------------------------------------
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other
Holders with respect to their rights under this Indenture or under the
Securities, and the corresponding rights and privileges of the Trustee, shall be
as provided by the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to names and addresses of Holders made pursuant
to the Trust Indenture Act.
Section 703. Reports by Trustee.
-------------------
(a) The Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the
Trustee shall, within sixty days after each May 15 following the date of the
first issuance of Securities hereunder deliver to Holders a brief report, dated
as of such May 15, which complies with the provisions of such Section 313(a).
The Trustee also shall comply with Sections 313(b) and 313(c) of the Trust
Indenture Act.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Securities are listed, with the Commission and with the Company. The
Company promptly will notify the Trustee when any Securities are listed on any
stock exchange or delisted therefrom.
Section 704. Reports by Company.
-------------------
The Company shall file with the Trustee and the Commission,
and transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided, that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be
filed with the Trustee within 15 days after the same is so required to be filed
with the Commission.
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ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
Section 801. Company May Consolidate, Etc., Only on Certain Terms.
-----------------------------------------------------
The Company shall not consolidate with or merge into any other
entity or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, unless:
(1) the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance, transfer or
lease the properties and assets of the Company substantially as an entirety
shall be a corporation, partnership or trust organized and validly existing
under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form reasonably satisfactory
to the Trustee, the due and punctual payment of the principal of (and premium,
if any) and interest on all the Securities and the performance of every covenant
and the satisfaction of every condition of this Indenture on the part of the
Company to be performed, observed or satisfied;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have occurred and be continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and such supplemental indenture comply
with this Article and that all conditions precedent herein provided for relating
to such transaction have been complied with.
This Section shall not apply to any merger or consolidation in
which the Company is the surviving entity.
Section 802. Successor Substituted.
----------------------
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety in accordance
with Section 801, the successor Person formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease 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 Person had been named as the Company herein, and thereafter, except in
the case of a lease, the predecessor Person shall be relieved of all obligations
and covenants under this Indenture and the Securities.
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Section 803. Officers' Certificate and Opinion of Counsel.
---------------------------------------------
The Trustee, subject to the provisions of Sections 601 and
603, shall receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any such consolidation, merger, conveyance, transfer or
lease, and any such assumption, complies with the provisions of this Article
before the Trustee shall execute any supplemental indenture required pursuant to
this Article.
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of Holders.
---------------------------------------------------
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) 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
(3) to add any additional Events of Default with respect to
all or any series of Securities; or
(4) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to permit or facilitate the
issuance of Securities in bearer form, registrable or not registrable as to
principal, and with or without interest coupons, or to permit or facilitate the
issuance of Securities in uncertificated form or in the form of Book-Entry
Securities; or
(5) to add to, change or eliminate any of the provisions of
this Indenture in respect of one or more series of Securities; provided, that
any such addition, change or elimination (i) shall neither (A) apply to any
Security of any series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor (B) modify the
rights of the Holder of any such Security with respect to such provision or (ii)
shall become effective only when there is no such Security Outstanding; or
(6) to secure the Securities; or
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(7) to establish the form or terms of Securities of any
series as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the Securities of
one or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 611(b); or
(9) if allowed, without penalty under applicable laws and
regulations, to permit payment in the United States (including any of the States
thereof and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction of principal, premium, if any, or
interest, if any, on Securities in bearer form or coupons, if any; or
(10) 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; provided, that such action pursuant to this clause
(10), other than with respect to a defective provision, shall not adversely
affect the interests of the Holders of Securities of any series in any material
respect.
Section 902. Supplemental Indentures with Consent of Holders.
------------------------------------------------
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series adversely affected
by such supplemental indenture (or, if any of the Securities of that series are
Original Issue Discount Securities or Indexed Securities, such portion of the
principal amount of such Securities as may be specified in the terms thereof),
by Act of said Holders delivered to the Company and the Trustee, the Company,
when authorized by a Board Resolution, and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities of such series under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502, or
change any Place of Payment where, or the coin or currency in which, any
Security or any premium or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date), or adversely affect any right of the Holder of any Security to require
the Company to repurchase such Security, or adversely affect the right to
convert any Security as contemplated by Article Fourteen or modify the
provisions of Article
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Thirteen or the definition of "Senior Debt" in a manner adverse to the Holder of
any Security in any material respect, or
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is required
for any such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section, Section
513 or Section 1007, except to increase any percentage set forth in such
Sections or to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Outstanding
Security affected thereby; provided, however, that this clause shall not be
deemed to require the consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this Section and Section
1007, or the deletion of this proviso, in accordance with the requirements of
Sections 611(b) and 901(8).
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
-------------------------------------
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 601) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel, each stating that the
execution of such supplemental indenture is authorized and permitted by this
Indenture and, in the case of such Opinion of Counsel, that such supplemental
indenture, when executed by the Trustee, will constitute a valid and legally
binding obligation of the Company enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moritorium and similar laws of general applicablility relating to or affecting
creditors' rights and to general equity principles. The Trustee may, but shall
not be obligated to, enter into any such supplemental indenture which affects
the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Section 904. 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
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Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
------------------------------------
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.
Section 906. 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 Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and Interest.
-------------------------------------------
The Company covenants and agrees for the benefit of each
series of Securities that it will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities of the series in accordance with
the terms of the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
--------------------------------
The Company will maintain in each Place of Payment for any
series of Securities an office or agency where Securities of that series may be
presented or surrendered for payment, where Securities of that series may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities of that series and
this Indenture may be served. The Trustee is hereby initially appointed Paying
Agent, and the Corporate Trust Office of the Trustee is initially designated as
the office or agency for the foregoing purposes. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
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The Company may also from time to time designate one or more
other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in each Place of Payment for Securities of any series for
such purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
Section 1003. Money for Securities Payments to Be Held in Trust.
--------------------------------------------------
If the Company shall at any time act as its own Paying Agent
with respect to any series of Securities, it will, on or before each due date of
the principal of (and premium, if any) or interest on any of the Securities of
that series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for
any series of Securities, it will, on or before each due date of the principal
of (and premium, if any) or interest on any Securities of that series, deposit
with a Paying Agent a sum sufficient to pay the principal (and premium, if any)
or interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure so to act.
The Company will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of
the principal of (and premium, if any) or interest on
Securities of that series in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the
Company (or any other obligor upon the Securities of that
series) in the making of any payment of principal (and
premium, if any) or interest on the Securities of that series;
and
(3) at any time during the continuance of any
such default, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust by such
Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums
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to be held by the Trustee upon the same trusts as those upon which such sums
were held by the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or
received by the Trustee in respect of obligations deposited with the Trustee
pursuant to Article Fifteen, or then held by the Company, in trust for the
payment of the principal of (and premium, if any) or interest on any Security of
any series and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall be paid to the
Company on Company Request (unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property law), or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof (unless the Company has remitted required moneys or
other property to the appropriate governmental authority under any applicable
escheat or abandoned or unclaimed property laws), or has otherwise been
discharged under such laws or laws of similar applicability, in which case such
Holder shall look solely to its remedies (if any) under such laws and not to the
Company), and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
Section 1004. Payment of Taxes and Other Claims.
----------------------------------
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all taxes, assessments
and governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or any property of the Company or any Subsidiary, and
(2) all lawful claims for labor materials and supplies which, if unpaid, might
by law become a lien upon any property of the Company or any Subsidiary;
provided, however, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim (a)
whose amount, applicability or validity is being contested in good faith by
appropriate proceedings or (b) which is not of material importance to the
business, operations, financial condition or results of operations of the
Company and its Subsidiaries taken as a whole.
Section 1005. Maintenance of Properties.
--------------------------
The Company will cause all of its material properties used or
useful in the conduct of its business or the business of any Subsidiary to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
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judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent the Company or any
Subsidiary from selling or otherwise disposing for value its properties in the
ordinary course of its business.
Section 1006. Corporate Existence.
--------------------
Subject to Article Eight, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence, rights (charter and statutory) and franchises; provided,
however, that the Company shall not be required to preserve any such right or
franchise if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company.
Section 1007. Waiver of Certain Covenants.
----------------------------
The Company may omit in any particular instance to comply with
any covenant or condition set forth in Sections 1004 to 1006, inclusive, with
respect to the Securities of any series if before or after the time for such
compliance the Holders of at least a majority in principal amount of the
Outstanding Securities of such series shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such covenant or condition shall remain in full
force and effect.
Section 1008. Compliance Certificate.
-----------------------
The Company will furnish to the Trustee on or before May 1 in
each year (beginning the first May 1 after the date of original issuance of
Securities hereunder) a brief certificate (which need not comply with Section
102) from the principal executive, financial or accounting officer of the
Company stating that in the course of the performance by the signer of his or
her duties as an officer of the Company he or she would normally have knowledge
of any default or non-compliance by the Company in the performance of any
covenants or conditions contained in this Indenture, stating whether or not he
or she has knowledge of any such default or non-compliance and, if so,
specifying each such default or non-compliance of which the signer has knowledge
and the nature thereof. For purposes of this Section 1008, non-compliance or
default shall be determined without regard to any grace period or requirement of
notice provided pursuant to the terms of this Indenture.
Section 1009. Insurance.
----------
The Company will, and will cause each of its Subsidiaries to,
keep all of its insurable properties insured against loss or damage with such
types of coverages and in such amounts as are customary, and in each case with
financially sound and reputable insurers.
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ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article.
-------------------------
Securities of any series which are redeemable in whole or in
part before their Stated Maturity shall be redeemable in accordance with their
terms and (except as otherwise specified as contemplated by Section 301 for
Securities of any series) in accordance with this Article.
Section 1102. Election to Redeem: Notice to Trustee.
--------------------------------------
The election of the Company to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution or Officers' Certificate. In case
of any redemption at the election of the Company of the Securities of any
series, the Company shall, at least 60 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, of the principal amount of
Securities of such series to be redeemed and, if applicable, of the tenor of the
Securities to be redeemed. In the case of any redemption of Securities (a) prior
to the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture or (b) pursuant to an election of
the Company which is subject to a condition specified in the terms of such
Securities or elsewhere in this Indenture, the Company shall furnish the Trustee
with an Officers' Certificate evidencing compliance with such restriction or
condition.
Section 1103. Selection by Trustee of Securities to Be Redeemed.
--------------------------------------------------
If less than all the Securities of any series are to be
redeemed (unless all of the Securities of such series and of a specified tenor
are to be redeemed or unless such redemption affects only a single Security),
the particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of a portion of the principal amount of any Security of such series;
provided, that the unredeemed portion of the principal amount of any Security
shall be in an authorized denomination (which shall not be less than the minimum
authorized denomination) for such Security. If less than all of the Securities
of such series and of a specified tenor are to be redeemed (unless such
redemption affects only a single Security), the particular Securities to be
redeemed shall be selected not more than 60 days prior to the Redemption Date by
the Trustee, from the Outstanding Securities of such series and specified tenor
not previously called for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of
the Securities selected for redemption and, in the case of any Securities
selected for partial redemption, the principal amount thereof to be redeemed.
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The provisions of the two preceding paragraphs shall not apply
with respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has been
or is to be redeemed.
Section 1104. Notice of Redemption.
---------------------
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at his address
appearing in the Security Register.
All notices of redemption shall identify the Securities to be
redeemed (including CUSIP numbers) and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) in the case of partial redemption of any Securities, the
principal amounts of the particular Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security, or portion thereof, to be
redeemed and, if applicable, that interest thereon will cease to accrue on and
after said date,
(5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price,
(6) that the redemption is for a sinking fund, if such is
the case, and
(7) that there exists a conversion privilege.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company (provided,
that the Trustee has received the notice of redemption at least 45 days prior to
the Redemption Date unless a shorter period is agreed to by the Trustee) and
shall be irrevocable.
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Section 1105. Deposit of Redemption Price.
----------------------------
On or prior to 11:00 a.m., New York City time, on the
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 1003) an amount of money in the currency or
currencies in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such series)
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities or
portions thereof which are to be redeemed on that date.
Section 1106. Securities Payable on Redemption Date.
--------------------------------------
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest. Upon surrender
of any such Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price, together with
accrued interest to the Redemption Date; provided, however, that, unless
otherwise specified as contemplated by Section 301, installments of interest
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal and any premium shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
Section 1107. Securities Redeemed in Part.
----------------------------
Any Security which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Company shall execute, and
the Trustee shall as soon as practicable upon receipt of the Company's written
request, authenticate and deliver or make available for delivery to the Holder
of such Security without service charge, a new Security or Securities of the
same series and of like tenor, of any authorized denomination as requested by
such Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered. If a
Book-Entry Security is so surrendered, such new Security so issued shall be a
new Book-Entry Security.
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ARTICLE TWELVE
Sinking Funds
Section 1201. Applicability of Article.
-------------------------
The provisions of this Article Twelve shall be applicable to
any sinking fund for the retirement of Securities of a series except as
otherwise specified as contemplated by Section 301 for Securities of such
series.
The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount provided
for by the terms of Securities of any series is herein referred to as an
"optional sinking fund payment". If provided for by the terms of Securities of
any series, the cash amount of any sinking fund payment may be subject to
reduction as provided in Section 1202. Each sinking fund payment shall be
applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series.
Section 1202. Satisfaction of Sinking Fund Payments with Securities.
------------------------------------------------------
The Company (1) may deliver Outstanding Securities of a series
(other than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; provided that such 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.
Section 1203. Redemption of Securities for Sinking Fund.
------------------------------------------
Not less than 45 days prior to each sinking fund payment date
for any series of Securities, the Company will deliver to the Trustee an
Officers' Certificate specifying the amount of the next ensuing sinking fund
payment for that series pursuant to the terms of that series, the portion
thereof, if any, which is to be satisfied by payment of cash and the portion
thereof, if any, which is to be satisfied by delivering and crediting Securities
of that series pursuant to Section 1202 and stating the basis for such credit
and that such Securities have not been previously so credited and will also
deliver to the Trustee any Securities to be so delivered. 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 1103 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner
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provided in Section 1104. Such notice having been duly given, the redemption of
such Securities shall be made upon the terms and in the manner stated in
Sections 1106 and 1107.
ARTICLE THIRTEEN
Subordination of Securities
Section 1301. Securities Subordinate to Senior Debt.
--------------------------------------
The Company covenants and agrees, and each Holder of a
Security, by his acceptance thereof, likewise covenants and agrees, that, to the
extent and in the manner hereinafter set forth in this Article (subject to the
provisions of Article Four and Article Fifteen (to the extent Article Fifteen is
applicable to such Security)), the payment of the principal of (and premium, if
any) and interest on each and all of the Securities (including any amounts
payable upon a purchase of the Securities) are hereby expressly made, to the
extent and in the manner set forth in this Article Thirteen, subordinate and
subject in right of payment to the prior payment in full of all Senior Debt.
Section 1302. Payment Over of Proceeds Upon Dissolution, Etc.
-----------------------------------------------
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, or (b) any liquidation, dissolution
or other winding up of the Company, whether voluntary or involuntary and whether
or not involving insolvency or bankruptcy, or (c) any assignment for the benefit
of creditors or any other marshaling of assets and liabilities of the Company,
then and in any such event specified in (a), (b) or (c) above (each such event,
if any, herein sometimes referred to as a "Proceeding") the holders of Senior
Debt shall be entitled to receive payment in full of all amounts due or to
become due on or in respect of all Senior Debt, or provision shall be made for
such payment in cash or cash equivalents or otherwise in a manner satisfactory
to the holders of Senior Debt, before the Holders of the Securities are entitled
to receive any payment or distribution of any kind or character, whether in
cash, property or securities, on account of principal of (or premium, if any) or
interest on or other obligations in respect of the Securities or on account of
any purchase or other acquisition of Securities by the Company or any Subsidiary
of the Company (all such payments, distributions, purchases and acquisitions
herein referred to, individually and collectively, as a "Securities Payment"),
and to that end the holders of Senior Debt shall be entitled to receive, for
application to the payment thereof, any Securities Payment which may be payable
or deliverable in respect of the Securities in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of
this Section 1302, the Trustee or the Holder of any Security shall have received
any Securities Payment prohibited by the foregoing provisions of this Section
1302 before all Senior Debt is paid in full or payment thereof provided for in
cash or cash equivalents or otherwise in a manner satisfactory to the holders of
Senior Debt, and if such fact shall, at or prior to the time of such Securities
Payment, have been made known to the Trustee or, as the case may be, such
Holder, then and in such event such
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Securities Payment shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
Person making payment or distribution of assets of the Company for application
to the payment of all Senior Debt remaining unpaid, to the extent necessary to
pay all Senior Debt in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
For purposes of this Article Thirteen only, the words "any
payment or distribution of any kind or character, whether in cash, property or
securities" shall not be deemed to include a payment or distribution of stock or
securities of the Company provided for by a plan of reorganization or
readjustment authorized by an order or decree of a court of competent
jurisdiction in a reorganization proceeding under any applicable bankruptcy law
or of any other entity provided for by such plan of reorganization or
readjustment which stock or securities are subordinated in right of payment to
all then outstanding Senior Debt to substantially the same extent as the
Securities are so subordinated as provided in this Article. 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 all or substantially all of its properties and assets as an entirety to
another Person upon the terms and conditions set forth in Article Eight shall
not be deemed a Proceeding for the purposes of this Section if the Person formed
by such consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer such properties and assets as an entirety, as
the case may be, shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions set forth in Article Eight.
Section 1303. Acceleration; Senior Debt in Default.
-------------------------------------
The Company may not make any payment (whether by redemption,
purchase, retirement, defeasance or otherwise) to the Trustee or any Holder on
account of the principal of, premium, if any, or interest on or any additional
amounts with respect to the Securities and may not acquire from the Trustee or
any Holder any Securities (other than payments and other distributions made from
any trust created pursuant to Section 401 for the purpose of payment and
discharge if the applicable deposit does not violate Article Four or this
Article Thirteen) until all principal and other amounts due or to become due on
or in respect of all Senior Debt of the Company have been paid in full if:
(a) a default in the payment of any principal of, premium,
if any, or interest on Designated Senior Debt occurs; or
(b) a default, other than a payment default, on Designated
Senior Debt occurs and is continuing that then permits holders of the Designated
Senior Debt as to which such default relates to accelerate its maturity and the
Trustee receives a notice of the default (a "Payment Blockage Notice") (i) under
the LaSalle Facility or (ii) from a holder (or a trustee on behalf of such
holder) purporting to hold at least $5,000,000 in principal amount of such other
Designated Senior Debt, it being understood that the Trustee shall be entitled
to conclusively rely upon any Payment Blockage Notice reasonably believed by it
to be genuine. If the Trustee receives any such Payment Blockage Notice, no
subsequent Payment Blockage Notice shall be effective for purposes of this
Section 1303
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unless and until 365 days shall have elapsed since the date of commencement of
the payment blockage period resulting from the immediately prior Payment
Blockage Notice. No nonpayment default in respect of any Designated Senior Debt
that existed or was continuing on the date of delivery of any Payment Blockage
Notice to the Trustee shall be, or be made, the basis for subsequent Payment
Blockage Notices.
The Company shall resume payments on and distributions in
respect of the Securities and may acquire Securities on:
(a) in the case of a default referred to in subparagraph (a)
of the preceding paragraph, the date on which the default is cured or waived, or
(b) in the case of a default referred to in subparagraph (b)
of the preceding paragraph, the earliest of (i) the date on which such
nonpayment default is cured or waived, (ii) the date the applicable Payment
Blockage Notice is retracted by written notice to the Trustee from the Person
who is a representative of the holders of the relevant Designated Senior Debt
and (iii) 179 days after the date on which the applicable Payment Blockage
Notice is received unless (A) any of the events described in subparagraph (a) of
the preceding paragraph has occurred and is continuing or (B) a default or Event
of Default under Section 501(5) or 501(6) has occurred, if this Article Thirteen
otherwise permits the payment, distribution or acquisition at the time of such
payment or acquisition.
In the event that, notwithstanding the foregoing, the Company
shall make any payment or distribution to the Trustee or the Holder of any
Security prohibited by the foregoing provisions of this Section 1303, such
payment or distribution shall be held by the Trustee (if the Trustee has
knowledge that such payment or distribution is so prohibited) or by such Holder
(in trust) for the holders of Senior Debt, and shall be paid forthwith over and
delivered (a) to the holders of Senior Debt or their respective representatives
as their respective interests may appear or (b) as a court of competent
jurisdiction shall direct, in each case for application to the payment of all
principal and other amounts due or to become due on or in respect of all Senior
Debt remaining unpaid to the extent necessary to pay such obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
The provisions of this Section shall not apply to any
Securities Payment with respect to which Section 1302 would be applicable.
Section 1304. Payment Permitted If No Default.
--------------------------------
Nothing contained in this Article or elsewhere in this
Indenture or in any of the Securities shall prevent (a) the Company, at any time
except during the pendency of any Proceeding referred to in Section 1302 or
under the conditions described in Section 1303, from making Securities Payments,
or (b) the application by the Trustee of any money deposited with it hereunder
to Securities Payments or the retention of such Securities Payment by the
Holders, if, at the time of
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such application by the Trustee, it did not have knowledge that such Securities
Payment would have been prohibited by the provisions of this Article.
Section 1305. Subrogation to Rights of Holders of Senior Debt.
------------------------------------------------
Subject to the payment in full of all amounts due or to become
due on or in respect of Senior Debt, or the provision for such payment in cash
or cash equivalents or otherwise in a manner satisfactory to the holders of
Senior Debt, the Holders of the Securities shall be subrogated to the rights of
the holders of such Senior Debt to receive payments and distributions of cash,
property and securities applicable to the Senior Debt until the principal of
(and premium, if any) and interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of the
Senior Debt of any cash, property or securities to which the Holders of the
Securities 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 Debt by Holders of the Securities or the Trustee, shall, as
among the Company, its creditors other than holders of Senior Debt and the
Holders of the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Debt.
Section 1306. Provisions Solely to Define Relative Rights.
--------------------------------------------
The provisions of this Article are and are intended solely for
the purpose of defining the relative rights of the Holders on the one hand and
the holders of Senior Debt on the other hand. Nothing contained in this Article
or elsewhere in this Indenture or in the Securities is intended to or shall (a)
impair, as among the Company, its creditors other than holders of Senior Debt
and the Holders of the Securities, the obligation of the Company, which is
absolute and unconditional (and which, subject to the rights under this Article
of the holders of Senior Debt, is intended to rank equally with all other
general obligations of the Company), to pay to the Holders of the Securities the
principal of (and premium, if any) and interest on the Securities as and when
the same shall become due and payable in accordance with their terms; or (b)
affect the relative rights against the Company of the Holders of the Securities
and creditors of the Company other than the holders of Senior Debt; or (c)
prevent the Trustee or the Holder of any Security from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article of the holders of Senior Debt to
receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder.
Section 1307. Trustee to Effectuate Subordination.
------------------------------------
Each Holder of a Security by his acceptance thereof authorizes
and directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
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Section 1308. No Waiver of Subordination Provisions.
--------------------------------------
No right of any present or future holder of any Senior Debt 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
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Debt, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Debt, or otherwise amend or supplement in any manner Senior Debt or any
instrument evidencing the same or any agreement under which Senior Debt is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Debt; (iii) release any Person
liable in any manner for the collection of Senior Debt; and (iv) exercise or
refrain from exercising any rights against the Company and any other Person.
Section 1309. Notice to Trustee.
------------------
The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Securities. 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 to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Debt or from any trustee therefor; and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Section 601, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the notice
provided for in this Section at least two Business Days prior to the date upon
which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (and premium, if
any) or interest on any Security), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purpose for which such money was
received and shall not be affected by any notice to the contrary which may be
received by it within two Business Days prior to such date.
Subject to the provisions of Section 601, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Debt (or a trustee therefor) to
establish that such notice has been given by a holder of Senior Debt (or a
trustee therefor). 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 Debt to participate in any payment or
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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 Debt 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 1310. Reliance on Judicial Order or Certificate of Liquidating
Agent.
------
Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee, subject to the provisions of Section
601, and the Holders of the Securities shall be entitled to rely upon any order
or decree entered by any court of competent jurisdiction in which such
Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or to
the Holders of Securities, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior Debt
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 1311. Trustee Not Fiduciary for Holders of Senior Debt.
-------------------------------------------------
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Debt and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders of Securities
or to the Company or to any other Person cash, property or securities to which
any holders of Senior Debt shall be entitled by virtue of this Article or
otherwise.
Section 1312. Rights of Trustee as Holder of Senior Debt; Preservation of
Trustee's Rights.
-----------------
The Trustee shall be entitled to all the rights set forth in
this Article with respect to any Senior Debt which may at any time be held by
it, to the same extent as any other holder of Senior Debt, and nothing in this
Indenture shall deprive the Trustee of any of its rights as such holder.
Nothing in this Article shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 607.
Section 1313. Article Applicable to Paying Agents.
------------------------------------
In 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 shall in such case (unless the context
otherwise requires) 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 in addition to or in place of the Trustee; provided,
however, that Section 1312 shall
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not apply to the Company or any Affiliate of the Company if it or such Affiliate
acts as Paying Agent.
Section 1314. Defeasance of this Article Thirteen.
------------------------------------
The subordination of the Securities provided by this Article
Thirteen is expressly made subject to the provisions for defeasance or covenant
defeasance in Article Fifteen hereof and, anything herein to the contrary
notwithstanding, upon the effectiveness of any such defeasance or covenant
defeasance, the Securities then outstanding shall thereupon cease to be
subordinated pursuant to this Article Thirteen.
ARTICLE FOURTEEN
Conversion of Securities
Section 1401. Applicability of Article.
-------------------------
If pursuant to Section 301 provision is made for the
conversion of Securities pursuant to this Article Fourteen, then the provisions
of this Article Fourteen, with such modifications thereto as may be specified
pursuant to Section 301 with respect to any Securities, shall be applicable to
the Securities of such series.
Section 1402. Conversion Privilege and Conversion Price.
------------------------------------------
Subject to and upon compliance with the provisions of this
Article, at the option of the Holder thereof, any Security or any portion of the
principal amount thereof which is $1,000 or an integral multiple of $1,000 may
be converted at the principal amount thereof, or of such portion thereof, into
fully paid and nonassessable shares (calculated as to each conversion to the
nearest 1/100 of a share) of Common Stock of the Company, at the conversion
price, determined as hereinafter provided, in effect at the time of conversion.
Such conversion right shall commence at the opening of business on the date
provided for with respect to such Securities and expire at the close of business
on the date provided for with respect to such Securities. In case a Security or
portion thereof is called for redemption, such conversion right in respect of
the Security or portion so called shall expire at the close of business on the
Redemption Date, unless the Company defaults in making the payment due upon
redemption.
The price at which shares of Common Stock shall be delivered
upon conversion is herein referred to as the "conversion price". The conversion
price shall be adjusted in certain instances as provided in Section 1405.
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Section 1403. Exercise of Conversion Privilege.
---------------------------------
In order to exercise the conversion privilege, the Holder of
any Security to be converted shall surrender such Security, duly endorsed or
assigned to the Company or in blank, at any office or agency of the Company
maintained for that purpose pursuant to Section 1002, accompanied by written
notice to the Company at such office or agency that the Holder elects to convert
such Security or, if less than the entire principal amount thereof is to be
converted, the portion thereof to be converted. Securities surrendered for
conversion during the period from the close of business on any Regular Record
Date next preceding any Interest Payment Date to the opening of business on such
Interest Payment Date shall (except in the case of Securities or portions
thereof which have been called for redemption on a Redemption Date within such
period) be accompanied by payment in immediately available funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of Securities being surrendered
for conversion. Except as provided in the preceding sentence and subject to the
penultimate paragraph of Section 307, no payment or adjustment shall be made
upon any conversion on account of any interest accrued on the Securities
surrendered for conversion or on account of any dividends on the Common Stock
issued upon conversion.
Securities shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such Securities for
conversion in accordance with the foregoing provisions, and at such time the
rights of the Holders of such Securities as Holders shall cease, and the Person
or Persons entitled to receive the Common Stock issuable upon conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
at such time. As promptly as practicable on or after the conversion date, the
Company shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 1404.
In the case of any Security which is converted in part only,
upon such conversion the Company shall execute and the Trustee shall
authenticate and deliver to the Holder thereof, at the expense of the Company, a
new Security or Securities of authorized denominations in aggregate principal
amount equal to the unconverted portion of the principal amount of such
Security.
Section 1404. Fractions of Shares.
--------------------
No fractional shares of Common Stock shall be issued upon
conversion of Securities. If more than one Security shall be surrendered for
conversion at one time by the same Holder, the number of full shares which shall
be issuable upon conversion thereof shall be computed on the basis of the
aggregate principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be issuable upon conversion of any Security or Securities (or
specified portions thereof), the Company shall pay a cash adjustment in respect
of such fraction in an amount equal to the same fraction of the market price per
share of Common Stock (as determined by the Board of Directors or in any manner
prescribed by the Board of Directors) at the close of business on the day of
conversion.
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Section 1405. Adjustment of Conversion Price.
-------------------------------
(1) In case at any time after the date of the issuance of
the applicable Securities, the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in Common Stock, the
conversion price in effect at the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares and
the total number of shares constituting such dividend or other distribution,
such reduction to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purposes of
this paragraph (1), 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 pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the Company.
(2) In case at any time after the date of the issuance of
the applicable Securities, the Company shall issue rights or warrants to all
holders of its Common Stock (not being available on an equivalent basis to
Holders of the Securities upon conversion) entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the current
market price per share (determined as provided in paragraph (8) of this Section)
of the Common Stock on the date fixed for the determination of stockholders
entitled to receive such rights, options or warrants (other than pursuant to a
dividend reinvestment plan, any employee benefit plan of the Company or any
obligation of the Company existing as of the original date of issuance of the
applicable Securities), the conversion price in effect at the opening of
business on the day following the date fixed for such determination shall be
reduced by multiplying such conversion price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination plus the number of shares
of Common Stock which the aggregate of the offering 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. For the purposes of this paragraph (2), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
will not issue any rights or warrants in respect of shares of Common Stock held
in the treasury of the Company.
(3) In case at any time after the date of the issuance of
the applicable Securities, outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the conversion price
in effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately reduced, and,
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conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the conversion price in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such reduction
or increase, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which such subdivision or
combination becomes effective.
(4) In case at any time after the date of the issuance of
the applicable Securities, the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its indebtedness or
assets (including securities, but excluding any rights or warrants referred to
in paragraph (2) of this Section, any dividend or distribution paid in cash out
of the retained earnings of the Company and any dividend or distribution
referred to in paragraph (1) of this Section), the conversion price shall be
adjusted so that the same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the close of business on the
date fixed for the determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the current market
price per share (determined as provided in paragraph (8) of this Section) of the
Common Stock on the date fixed for such determination less the then fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution filed with the Trustee) of the
portion of the assets or evidences of indebtedness so distributed applicable to
one share of Common Stock and the denominator shall be such current market price
per share of the Common Stock, such adjustment to become effective immediately
prior to the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such distribution.
(5) In case at any time after the date of the issuance of
the applicable Securities, the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding any cash that is
distributed upon a merger or consolidation to which Section 1412 applies or as
part of a distribution referred to in paragraph (4) of this Section) in an
aggregate amount that, combined together with (I) the aggregate amount of any
other distributions to all holders of its Common Stock made exclusively in cash
within the 12 months preceding the date of payment of such distribution and in
respect of which no adjustment pursuant to this paragraph (5) has been made and
(II) the aggregate of any cash plus the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive and described in a
Board Resolution) of any non-cash consideration payable in respect of any tender
offer by the Company or any of its subsidiaries for all or any portion of the
Common Stock concluded within the 12 months preceding the date of payment of
such distribution and in respect of which no adjustment pursuant to paragraph
(6) of this Section has been made, exceeds 15% of the product of the current
market price per share of the Common Stock on the date for the determination of
holders of shares of Common Stock entitled to receive such distribution times
the number of shares of Common Stock outstanding on such date, then, and in each
such case, immediately after the close of business on such date for
determination, the conversion price shall be decreased 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 date fixed for determination
of the stockholders entitled to receive such distribution by a fraction (i) the
numerator of which shall be equal to the current market price per share
(determined as provided in
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paragraph (8) of this Section) of the Common Stock on the date fixed for such
determination less an amount equal to the quotient of (x) the excess of such
combined amount over such 15% and (y) the number of shares of Common Stock
outstanding on such date for determination and (ii) the denominator of which
shall be equal to the current market price per share (determined as provided in
paragraph (8) of this Section) of the Common Stock on such date for
determination.
(6) In case at any time after the date of the issuance of
the applicable Securities, a tender offer made by the Company or any Subsidiary
for all or any portion of the Common Stock shall expire and such tender offer
(as amended upon the expiration thereof) shall require the payment to
stockholders of an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) that combined together with (I) the
aggregate of the cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the expiration of such tender offer, of any non-cash
consideration payable in respect of any other tender offer, by the Company or
any Subsidiary for all or any portion of the Common Stock expiring within the 12
months preceding the expiration of such tender offer and in respect of which no
adjustment pursuant to this paragraph (6) has been made and (II) the aggregate
amount of any distributions to all holders of the Company's Common Stock made
exclusively in cash within 12 months preceding the expiration of such tender
offer and in respect of which no adjustment pursuant to paragraph (5) of this
Section has been made, exceeds 15% of the product of the current market price
per share of the Common Stock (determined as provided in paragraph (8) of this
Section) as of the last time (the "Expiration Time") tenders could have been
made pursuant to such tender offer (as it may be amended) times the number of
shares of Common Stock outstanding (including any tendered shares) on the
Expiration Time, then, and in each such case, immediately prior to the opening
of business on the day after the date of the Expiration Time, the conversion
price shall be adjusted so that the same shall equal the price determined by
multiplying the conversion price immediately prior to close of business on the
date of the Expiration Time by a fraction (i) the numerator of which shall be
equal to (A) the product of (I) the current market price per share of the Common
Stock (determined as provided in paragraph (8) of this Section) on the date of
the Expiration Time and (II) the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time less (B) the amount of
cash plus the fair market value (determined as aforesaid) of the aggregate
non-cash consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender offer) of Purchased Shares, and
(ii) the denominator of which shall be equal to the product of (A) the current
market price per share of the Common Stock (determined as provided in paragraph
(8) of this Section) as of the Expiration Time and (B) the number of shares of
Common Stock outstanding (including any tendered shares) as of the Expiration
Time less the number of all shares accepted for payment pursuant to such tender
offer (the shares deemed so accepted up to any such maximum, being referred to
as the "Purchased Shares").
(7) The reclassification of Common Stock into securities
including securities other than Common Stock (other than any reclassification
upon a consolidation or merger to which Section 1412 applies) shall be deemed to
involve (a) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassification shall
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be deemed to be "the date fixed for the determination of stockholders entitled
to receive such distribution" and "the date fixed for such determination" within
the meaning of paragraph (4) of this Section), and (b) a subdivision or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of shares
of Common Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective",
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (3) of this Section).
(8) For the purpose of any computation under paragraphs (2),
(4), (5) and (6) of this Section, the current market price per share of Common
Stock on any date shall be deemed to be the average of the daily closing prices
for the five consecutive Trading Days selected by the Company commencing not
more than 20 Trading Days before, and ending not later than the earlier of the
day in question and the day before the "ex date" with respect to the issuance or
distribution requiring such computation. The closing price for each day shall be
the last reported sales price regular way or, in case no such reported sale
takes place on such day, the average of the reported closing bid and asked
prices regular way, in either case on the New York Stock Exchange or, if the
Common Stock is not listed or admitted to trading on such Exchange, on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the National Association of Securities Dealers Automated
Quotations National Market System or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or quoted on such
National Market System, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
selected from time to time by the Company for that purpose. For purposes of this
paragraph, the term "'ex date", when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular way
on such exchange or in such market without the right to receive such issuance or
distribution.
(9) No adjustment in the conversion price shall be required
unless such adjustment (plus any adjustments not previously made by reason of
this paragraph (9)) would require an increase or decrease of at least 1% in such
price; provided, however, that any adjustments which by reason of this paragraph
(9) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this paragraph (9) shall be
made by the Company and shall be made to the nearest cent or to the nearest
1/100 of a share, as the case may be.
(10) The Company may make such reductions in the conversion
price, in addition to those required by this Section, as it considers to be
advisable in order to avoid or diminish any income tax to any holders of shares
of Common Stock resulting from any dividend or distribution of stock or issuance
of rights or warrants to purchase or subscribe for stock or from any event
treated as such for income tax purposes or for any other reasons. The Company
shall have the power to resolve any ambiguity or correct any error in this
paragraph (10) and its actions in so doing shall be final and conclusive.
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Section 1406. Notice of Adjustments of Conversion Price.
------------------------------------------
Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price
in accordance with Section 1405 and shall prepare a certificate signed by the
Treasurer of the Company setting forth the adjusted conversion price and showing
in reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed at each office or agency maintained for the
purpose of conversion of Securities pursuant to Section 1002; and
(b) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall forthwith be
required, and as soon as practicable after it is required, such notice shall be
mailed by the Company to all Holders at their last addresses as they shall
appear in the Security Register. Failure to deliver such notice shall not affect
the legality or validity of any such conversion price adjustment.
Section 1407. Notice of Certain Corporate Action.
-----------------------------------
In case at any time after the date 20 days prior to the date
on which the Securities first become convertible:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of its
retained earnings; or
(b) the Company shall authorize the granting to the holders
of its Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any other rights; or
(c) of any reclassification of the Common Stock of the
Company (other than a subdivision or combination of its outstanding shares of
Common Stock), 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
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 1002, and shall
cause to be mailed to all Holders 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 or effective 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 Common Stock of
record to be entitled to such dividend, distribution, authorization of rights or
warrants are to be determined, or (y) the date on which such reclassification,
consolidation,
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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 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.
Neither the failure to give such notice nor any defect therein shall affect the
legality or validity of the proceedings described in clauses (a) through (d) of
this Section 1407. If at the time the Trustee shall not be the conversion agent,
a copy of such notice shall also forthwith be filed by the Company with the
Trustee.
Section 1408. Company to Reserve Common Stock.
--------------------------------
The Company shall at all times reserve and keep available,
free from pre-emptive rights, out of its authorized but unissued Common Stock,
for the purpose of effecting the conversion of Securities, the full number of
shares of Common Stock then issuable upon the conversion of all outstanding
Securities.
Section 1409. Taxes on Conversions.
---------------------
The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock 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 issue
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 issue or delivery
shall be made unless and until the Person requesting such issue has paid to the
Company the amount of any such tax, or has established to the satisfaction of
the Company that such tax has been paid.
Section 1410. Covenant as to Common Stock.
----------------------------
The Company covenants that all shares of Common Stock which
may be issued upon conversion of Securities will upon issue be fully paid and
nonassessable and, except as provided in Section 1409, the Company will pay all
taxes, liens and charges with respect to the issue thereof.
Section 1411. Cancellation of Converted Securities.
-------------------------------------
All Securities delivered for conversion shall be delivered to
the Trustee to be canceled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 309.
Section 1412. Provisions in Case of Consolidation, Merger or Sale of Assets.
--------------------------------------------------------------
In case of any consolidation of the Company with, or merger of
the Company into, any other Person, any merger of another Person into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company) or any sale or transfer of all or substantially all of the assets
of the
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Company, the Person formed by such consolidation or resulting from such merger
or which acquires such assets, as the case may be, shall execute and deliver to
the Trustee a supplemental indenture providing that the Holder of each Security
then outstanding shall have the right thereafter, during the period such
Security shall be convertible as specified in Section 1402, 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, assuming such holder of Common Stock of the Company (i) is not a
Person with which the Company consolidated or into which the Company merged or
which merged into the Company or to which such sale or transfer was made, as the
case may be ("constituent Person"), or an Affiliate of a constituent Person and
(ii) failed to exercise his rights of election, if any, as to the kind or amount
of securities, cash and other property receivable upon such consolidation,
merger, sale or transfer (provided, that if the kind or amount of securities,
cash and other property receivable upon such consolidation, merger, sale or
transfer is not the same for each share of Common Stock of the Company held
immediately prior to such consolidation, merger, sale or transfer by other than
a constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("non-electing share"), then for the
purpose of this Section 1412 the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer by each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares), and assuming, if such
consolidation, merger, sale or transfer is prior to the date upon which the
Securities first become convertible, that the Securities were convertible at the
time of such consolidation, merger, sale or transfer at the initial conversion
price specified in Section 1402 as adjusted from the date of the issuance of the
applicable Securities to such time pursuant to Section 1405. 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 Fourteen. The
above provisions of this Section shall similarly apply to successive
consolidations, mergers, sales or transfers.
ARTICLE FIFTEEN
Defeasance and Covenant Defeasance
Section 1501. Applicability of Article; Company's Option to Effect
Defeasance or Covenant Defeasance.
----------------------------------
Unless, pursuant to Section 301, provision is made that either
or both of (a) defeasance of the Securities of a series under Section 1502 or
(b) covenant defeasance of the Securities of a series under Section 1503 shall
not apply to the Securities of a series, then the provisions of such Section or
Sections, as the case may be, together with the other provisions of this Article
Fifteen, with such modifications thereto as may be specified pursuant to Section
301 with respect to any Securities, shall be applicable to the Securities of
such series, and the Company may at its option by Board Resolution, at any time,
with respect to the Securities of such series, elect to
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have either Section 1502 (if applicable) or Section 1503 (if applicable) applied
to the Outstanding Securities of such series upon compliance with the conditions
set forth below in this Article Fifteen.
Section 1502. Defeasance and Discharge.
-------------------------
Upon the Company's exercise of its option (if applicable) to
have this Section 1502 applied to any series of Securities, the Company shall be
deemed to have been discharged from its obligations with respect to the
Outstanding Securities of such series, and the provisions of Article Thirteen
shall cease to be effective, on and after the date the conditions precedent set
forth below are satisfied (hereinafter, "defeasance"). For this purpose, such
defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by the Outstanding Securities of such series
which shall thereafter be deemed to be "Outstanding" only for the purposes of
the Sections of this Indenture referred to in clauses (A) and (B) of this
Section 1502, and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are concerned (and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of
Outstanding Securities of such series to receive, solely from the trust fund
described in Section 1504 as more fully set forth in such Section, payments of
the principal of (and premium, if any) and interest on such Securities when such
payments are due, (B) the Company's obligations with respect to such Securities
under Sections 305, 306, 1002 and 1003 and such obligations as shall be
ancillary thereto, (C) the rights, powers, trusts, duties, immunities and other
provisions in respect of the Trustee hereunder and (D) this Article Fifteen.
Subject to compliance with this Article Fifteen, the Company may exercise its
option under this Section 1502 notwithstanding the prior exercise of its option
under Section 1503 with respect to the Securities of such series. Following a
defeasance, payment of such Securities may not be accelerated because of an
Event of Default.
Section 1503. Covenant Defeasance.
--------------------
Upon the Company's exercise of its option (if applicable) to
have this Section 1503 applied to any series of Securities, the Company shall be
released from its obligations under Section 801 (and any covenant made
applicable to such Securities pursuant to Section 301), the occurrence of an
event specified in Section 501(4) (with respect to Section 801 or any such
covenant) (and any other Event of Default applicable to such Securities that are
determined pursuant to Section 301 to be subject to this provision) shall not be
deemed to be an Event of Default with respect to the Outstanding Securities of
such series and the provisions of Article Thirteen shall cease to be effective
on and after the date the conditions set forth below are satisfied (hereinafter,
"covenant defeasance"), and such Securities shall thereafter be deemed not to be
"Outstanding" for the purposes of any direction, waiver, consent or declaration
or Act of Holders (and the consequences of any thereof) in connection with
Section 801 (and any other covenant made applicable to such Security pursuant to
Section 301 and any such Events of Default), but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to the Outstanding Securities of such
series, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such Section or
such other covenant whether directly or indirectly by reason of any reference
elsewhere herein to any such Section or such other covenant or by reason of any
reference in any such
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Section or such other covenant to any other provision herein or in any other
document, but the remainder of this Indenture and such Securities shall be
unaffected thereby. Notwithstanding the defeasance by the Company of its
obligations under Section 801, any successor shall be required to assume the
Company's obligations under Section 607 as a condition to such succession.
Section 1504. Conditions to Defeasance or Covenant Defeasance.
------------------------------------------------
The following shall be the conditions precedent to application
of either Section 1502 or Section 1503 to the Outstanding Securities of or
within such series:
(1) The Company shall irrevocably have deposited or caused
to be deposited with the Trustee (or another trustee satisfying the requirements
of Section 609 who shall agree to comply with the provisions of this Article
Fifteen applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Securities, (A) money in an amount (in
such currency, currencies or currency units in which such Securities are then
specified as payable at Maturity), or (B) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the due
date of any payment, money in an amount, or (C) a combination thereof in an
amount, sufficient, without reinvestment, 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, and which
shall be applied by the Trustee (or other qualifying trustee) to pay and
discharge, (i) the principal of (and premium, if any) and interest on the
Outstanding Securities of such series upon the Maturity of such principal,
premium, if any, or interest and (ii) any mandatory sinking fund payments
applicable to such Securities on the day on which such payments are due and
payable in accordance with the terms of this Indenture and such Securities.
Before such a deposit the Company may make arrangements satisfactory to the
Trustee for the redemption of Securities at a future date or dates in accordance
with Article Eleven, which shall be given effect in applying the foregoing. For
this purpose, "U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depositary receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depositary receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of principal
of or interest on the U.S. Government Obligation evidenced by such depositary
receipt.
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(2) No Event of Default or event which with notice or lapse
of time or both would become an Event of Default with respect to the Securities
of such series shall have occurred and be continuing (A) on the date of such
deposit or (B) insofar as Sections 501(5) and 501(6) are concerned, at any time
during the period ending on the 91st day after the date of such deposit or, if
longer, ending on the day following the expiration of the longest preference
period applicable to the Company in respect of such deposit (it being understood
that this condition shall not be deemed satisfied until the expiration of such
period).
(3) Such defeasance or covenant defeasance shall not (A)
cause the Trustee for the Securities of such series to have a conflicting
interest as defined in Section 608 or for purposes of the Trust Indenture Act
with respect to any Securities of the Company or (B) result in the trust arising
from such deposit to constitute, unless it is qualified as, a regulated
investment company under the Investment Company Act of 1940, as amended.
(4) Such defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a default under, this Indenture or
any other material agreement or material instrument to which the Company is a
party or by which it is bound.
(5) In the case of an election under Section 1502, the
Company shall have delivered to the Trustee an Opinion of Counsel stating that
(x) the Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (y) since the date of this Indenture there has been
a change in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the Holders of the
Outstanding Securities of such series will not recognize income, gain or loss
for federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such defeasance had not occurred.
(6) In the case of an election under Section 1503, the
Company shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the Outstanding Securities of such series will not recognize
income, gain or loss for federal income tax purposes as a result of such
covenant defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred.
(7) Such defeasance or covenant defeasance shall be effected
in compliance with any additional terms, conditions or limitations which may be
imposed on the Company in connection therewith pursuant to Section 301.
(8) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the defeasance under
Section 1502 or the covenant defeasance under Section 1503 (as the case may be)
have been complied with.
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Section 1505. Deposited Money and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions.
--------------------------------------
Subject to the provisions of the last paragraph of Section
1003, all money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee or other qualifying trustee (collectively, for
purposes of this Section 1505, the "Trustee") pursuant to Section 1504 in
respect of the Outstanding Securities of such series shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Securities and
this Indenture, to the payment, either directly or through any Paying Agent (but
not including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the extent required by
law. Money so held in trust shall not be subject to the provisions of Article
Thirteen.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the money or U.S.
Government Obligations deposited pursuant to Section 1504 or the principal and
interest received in respect thereof.
Anything herein to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 1504
which in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect a defeasance and discharge or covenant defeasance, as
applicable, in accordance with this Article Fifteen.
Section 1506. Reinstatement.
--------------
If the Trustee or the Paying Agent is unable to apply any
money in accordance with Section 1505 by reason of any order or judgment or any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under the Securities of such
series shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Fifteen until such time as the Trustee or Paying Agent
is permitted to apply all such money in accordance with Section 1505; provided,
however, that if the Company makes any payment of principal of (and premium, if
any) or interest on any such Security following 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 held by the Trustee or
the Paying Agent.
Section 1507. Qualifying Trustee.
-------------------
Any trustee appointed pursuant to Section 1504 for the purpose
of holding trust funds deposited pursuant to that Section shall be appointed
under any agreement in form acceptable to the Trustee and shall provide to the
Trustee a certificate of such trustee, upon which certificate the Trustee shall
be entitled to conclusively rely, that all conditions precedent provided for
herein to the
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related defeasance or covenant defeasance have been complied with. In no event
shall the Trustee be liable for any acts or omissions of said trustee.
ARTICLE SIXTEEN
Immunity of Incorporators, Stockholders, Officers, Directors and Employees
Section 1601. Exemption from Individual Liability.
-----------------------------------
No recourse under or upon any obligation, covenant or
agreement of the Company in this Indenture, or of any Security, or for any claim
based thereon or otherwise in respect thereof, shall be had against any
incorporator, stockholder, officer, director, or employee, as such, past,
present or future, of the Company or of any successor entity, either directly or
through the Company or any successor entity, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that this Indenture, any
supplemental indenture modifying this Indenture and the obligations issued
hereunder are solely corporate obligations of the Company, and that no such
personal liability whatever shall attach to, or is or shall be incurred by, the
incorporators, stockholders, officers, directors, or employees, as such, of the
Company or of any successor entity, or any of them, because of the creation of
the indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture, in any supplemental
indenture modifying this Indenture or in any of the Securities or implied
therefrom; and that any and all such personal liability, either at common law or
in equity or by constitution or statute, of, and any and all such rights and
claims against, every such incorporator, stockholder, officer, director, or
employee, as such, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or agreements
contained in this Indenture, in any supplemental indenture modifying this
Indenture or in any of the Securities or implied therefrom, are hereby expressly
waived and released as a condition of, and as a consideration for, the execution
of this Indenture, any supplemental indenture modifying this Indenture and the
issue of such Securities.
*****
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the day and year first above written.
BROOKDALE LIVING COMMUNITIES, INC.
By: /s/ Darryl W. Copeland, Jr.
---------------------------
Name: Darryl W. Copeland, Jr.
Title: Executive Vice President and
Chief Financial Officer
STATE STREET BANK AND TRUST COMPANY
By: /s/ Kathy A. Larimore
----------------------
Name: Kathy A. Larimore
Title: Assistant Vice President
94
FORM OF
SUPPLEMENTAL INDENTURE
Dated as of May 14, 1999
----------
BROOKDALE LIVING COMMUNITIES, INC.
TO
STATE STREET BANK AND TRUST COMPANY,
as Trustee under the Indenture
dated May 14, 1999
----------
Providing for Issuance of
5 1/2% Convertible Subordinated Notes Due 2009
<PAGE>
SUPPLEMENTAL INDENTURE, dated as of May 14, 1999, between
Brookdale Living Communities, Inc., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company"), having
its principal office at 77 West Wacker Drive, Suite 4400, Chicago, Illinois
60601, and State Street Bank and Trust Company (herein called the "Trustee"),
Trustee under the Indenture dated as of May 14, 1999, between the Company and
the Trustee (herein called the "Original Indenture").
RECITALS OF THE COMPANY
WHEREAS, the Original Indenture provides for the issuance
from time to time of its subordinated unsecured debentures, notes or other
evidences of indebtedness, to be issued in one or more series as provided
therein;
WHEREAS, the Company desires, by this Supplemental Indenture,
to create a series of 5 1/2% convertible subordinated notes to be issuable under
the Original Indenture and to be known as the Company's "5 1/2% Convertible
Subordinated Notes due 2009" (herein called the "5 1/2% Convertible Subordinated
Notes"), and the terms and provisions thereof to be as hereinafter set forth;
WHEREAS, the general forms of the 5 1/2% Convertible
Subordinated Notes and the Trustee's certificate of authentication to be borne
by the 5 1/2% Convertible Subordinated Notes are to be in the respective forms
established pursuant to or set forth in the Original Indenture, with such
insertions, omissions and variations as the Board of Directors of the Company
may determine to be appropriate in accordance with the provisions of this
Supplemental Indenture; and
WHEREAS, all things necessary to make the 5 1/2% Convertible
Subordinated Notes, when executed and duly issued by the Company and
authenticated and delivered by the Trustee, the valid obligations of the
Company, and to make this Supplemental Indenture a valid agreement of the
Company, in accordance with their respective terms, have been done.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the 5 1/2% Convertible Subordinated Notes by the Holders thereof, it is mutually
agreed, for the equal and proportionate benefit of such Holders, as follows:
Section 1. Additional Defined Terms Applicable to the 5
1/2% Convertible Subordinated Notes.
"Accretive" means, with respect to a Merger, that diluted
earnings per share or the After Tax Cash Flow of the Person surviving the
Merger, as presented in the pro forma consolidated or combined income statements
for such surviving Person, prepared on a reasonable basis (which may include
certain adjustments for revenues and expenses), must exceed the Company's
diluted earnings per share or After Tax Cash Flow for the period used for such
determination. Such pro forma presentation shall be opined on by a nationally
recognized investment banking firm separately or as part of its fairness opinion
with respect to the Merger in question.
-1-
<PAGE>
"Affiliate" means with respect to any Person, (i) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, 5% or more of the Stock having ordinary
voting power in the election of directors of such Person, (ii) each Person that
controls, is controlled by or is under common control with such Person or any
Affiliate of such Person, (iii) each of such Person's officers, directors, joint
venturers and partners, (iv) any trust or beneficiary of a trust of which such
Person is the sole trustee or (v) any lineal descendants, ancestors, spouse or
former spouses (as part of a marital dissolution) of such Person (or any trust
for the benefit of such Person). For the purpose of this definition, (i)
"control" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise and (ii)
limited partners of Purchaser or of one or more of Purchaser's Affiliates and
such limited partners' respective officers, directors and joint venture partners
are specifically excluded (unless such person is otherwise an "Affiliate" in
some other capacity) from the definition of "Affiliate" unless otherwise
specifically indicated.
"After Tax Cash Flow" of a Person means, on a per diluted
share basis, net income plus depreciation, amortization and deferred taxes of
such Person.
"Capital Lease" means with respect to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee that,
in accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as a capital lease in a note to such balance sheet, other than, in the
case of the Company or a Subsidiary of the Company, any such lease under which
Company or such Subsidiary is the lessor.
"Capital Lease Obligation" means with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that, in accordance
with GAAP, would appear on a balance sheet of such lessee in respect of such
Capital Lease or otherwise be disclosed in a note to such balance sheet.
"Common Stock Equivalents" means, without duplication with
any other Common Stock or Common Stock Equivalents, any security of the Company
which is convertible into, exercisable for or exchangeable for, directly or
indirectly, Common Stock of the Company, whether at the time of issuance or upon
the passage of time or the occurrence of some future event.
"Designated Merger" has the meaning specified in Section
5(a).
"Fiscal Year" means the twelve-month period ending December
31. Subsequent changes of the fiscal year of the Company shall not change the
meaning of the term "Fiscal Year" unless the Holders of at least a majority in
principal amount of the 5 1/2% Convertible Subordinated Notes shall consent in
writing to such changes.
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<PAGE>
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time.
"Guaranteed Indebtedness" means as to any Person, any
obligation of such Person guaranteeing any Indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person (the "primary
obligor") in any manner including, without limitation, any obligation or
arrangement of such Person (a) to purchase or repurchase any such primary
obligation, (b) to advance or supply funds (i) for the purchase or payment of
any such primary obligation or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) to indemnify the owner of such
primary obligation against loss in respect thereof.
"Indebtedness" of any Person means (i) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (including, without limitation, reimbursement and all other obligations
with respect to surety bonds, letters of credit and bankers' acceptances,
whether or not matured, but not including obligations to trade creditors
incurred in the ordinary course of business), (ii) all obligations evidenced by
notes, bonds, debentures or similar instruments, (iii) all indebtedness created
or arising under any conditional sale or other title retention agreements with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (iv) all Capital Lease Obligations,
(v) all Guaranteed Indebtedness, (vi) all Indebtedness referred to in clause
(i), (ii), (iii), (iv) or (v) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for payment of such Indebtedness and (vii) all liabilities
under title IV of ERISA.
"HSR Act" has the meaning specified in Section 7(n).
"Material Adverse Effect" means any event or circumstance,
condition, fact, effect, or other matter which has had or could reasonably be
expected to have a material adverse effect (i) on the business, assets, results
of operations, prospects or financial or other condition of the Company and its
Subsidiaries, taken as a whole; (ii) the Company's ability to pay the
Obligations in accordance with the terms hereof; or (iii) the ability of the
Company and its Subsidiaries to perform on a timely basis any material
obligation under the Transaction Documents or to consummate the transactions
contemplated thereby.
"Merger" has the meaning specified in Section 7(m).
"Note Purchase Agreement" means the Note Purchase Agreement,
dated as of April 27, 1999, by and between the Company and Healthcare Partners
and shall refer to such agreement as the same may be in effect at the time such
reference becomes operative.
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<PAGE>
"Obligations" mean all amounts owing by the Company under the
Transaction Documents, including without limitation, all principal, interest,
fees, expenses, attorneys' fees and any other sum chargeable to the Company
under any of the Transaction Documents.
"Purchaser" has the meaning given to such term in the Note
Purchase Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of May 14, 1999, by and between the Company and the
Purchaser and shall refer to such agreement as the same may be in effect at the
time such reference becomes operative.
"Restricted Payment" means (i) the declaration of any
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of the Company's
capital stock (other than stock splits or stock dividends) or (ii) any payment
on account of the purchase, redemption or other retirement of the Company's
capital stock or any other payment or distribution made in respect of any
capital stock of the Company, either directly or indirectly.
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests, limited liability company membership interests,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the SEC under the Exchange
Act).
"Stockholders Agreement" means the Stockholders Agreement,
dated as of May 14, 1999, by and among the Company and the other signatories
thereto and shall refer to such agreement as the same may be in effect at the
time such reference becomes operative.
"Transaction Documents" mean the 5 1/2% Convertible
Subordinated Notes, this Supplemental Indenture, the Original Indenture, the
Note Purchase Agreement, the Stockholders Agreement and the Registration Rights
Agreement.
All terms used in this Supplemental Indenture that are
defined in the Original Indenture have the meanings assigned to them in the
Original Indenture unless such terms have been otherwise defined in this
Supplemental Indenture.
Section 2. Designation and Terms of the 5 1/2% Convertible
Subordinated Notes. The series of Securities created by this Supplemental
Indenture shall be known and designated as the "5 1/2% Convertible Subordinated
Notes due 2009" of the Company and, subject to the provisions of Section 306 of
the Original Indenture, shall be limited in aggregate principal amount to One
Hundred Million Dollars ($100,000,000).
The Stated Maturity of the 5 1/2% Convertible Subordinated
Notes shall be May 14, 2009. The 5 1/2% Convertible Subordinated Notes shall
bear interest from May 14, 1999, or from the
-4-
<PAGE>
most recent Interest Payment Date to which interest on the 5 1/2% Convertible
Subordinated Notes then outstanding has been paid or duly provided for, at the
rate of five and one-half percent (5 1/2%) per annum. Interest shall be payable
semi-annually on June 30 and December 31 of each year, commencing June 30, 1999,
until the principal amount thereof is paid (including payment through conversion
pursuant to the terms of the 5 1/2% Convertible Subordinated Notes) or made
available for payment and (to the extent that the payment of such interest shall
be legally enforceable) at the rate of ten percent (10%) per annum on any
overdue principal and premium and on any overdue installment of interest.
Payment of principal of (and premium, if any, on) the 5 1/2%
Convertible Subordinated Notes and, unless otherwise paid as hereinafter
provided, the interest thereon will be made at the office or agency of the
Company maintained for such purpose pursuant to Section 1002 of the Original
Indenture; provided, however, that at the option of the Company, interest on the
5 1/2% Convertible Subordinated Notes may be paid (i) by check mailed to the
address of the Person entitled thereto as it shall appear on the Security
Register or (ii) by wire transfer to an account maintained by the Person
entitled thereto as specified in the Security Register; provided, that such
Person shall have given the Trustee written wire instructions at least five
Business Days prior to the applicable Interest Payment Date; provided, further,
and notwithstanding any other provision of this Supplemental Indenture or the
Original Indenture to the contrary, that with respect to a Holder of Securities
of this series that, together with such Holder's Affiliates, holds an aggregate
principal amount of 5 1/2% Convertible Subordinated Notes equal to or in excess
of $5,000,000, at the request of such Holder in writing to the Company, interest
on, and any Redemption Price or Repurchase Payment with respect to, such
Holder's Securities shall be paid, on the applicable Interest Payment Date,
Redemption Date or Repurchase Date, by wire transfer in immediately available
funds in accordance with wire transfer instructions supplied by such Holder to
the Trustee and the Paying Agent (if different from the Trustee), which
instructions such Holder shall have given to the Trustee and the Paying Agent at
least five Business Days prior to the applicable Interest Payment Date,
Redemption Date or Repurchase Payment Date.
The Company will make all payments pursuant to the 5 1/2%
Convertible Subordinated Notes ("Payments") without reduction for any U.S.
withholding taxes, or at a reduced rate of withholding, as applicable, provided
the Person entitled to such Payment supplies to the Company or the Company's
agent, prior to such Payment, (a) properly executed IRS Forms 1001 or W-8
(including IRS Forms W-81MY and associated IRS Forms W-8BEN, W-8EXP, W-8ECI
and/or W- 9) or any successor IRS Form, claiming exemption from or reduction in
U.S. withholding taxes (i) pursuant to the terms of an applicable income tax
treaty to which the United States is a party or (ii) because the beneficial
owner of all or part of the Payment is a U.S. person; or (b) other documentary
evidence establishing an entitlement to exemption or reduction in U.S.
withholding taxes with respect to any Payment.
The Regular Record Date referred to in Section 301 of the
Original Indenture for the payment of the interest on the 5 1/2% Convertible
Subordinated Notes payable, and punctually paid or duly provided for, on any
Interest Payment Date shall be the fifteenth day (whether or not a Business Day)
of the month in which such Interest Payment Date occurs.
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The 5 1/2% Convertible Subordinated Notes may be issued in
denominations of $1,000 and any integral multiple thereof authorized by the
Company, such authorization to be conclusively evidenced by the execution
thereof.
Section 305(a)(5) of the Original Indenture shall not apply
to the 5 1/2% Convertible Subordinated Notes.
Notwithstanding the provisions of Section 401 of the Original
Indenture, the satisfaction and discharge of the Indenture with respect to the 5
1/2% Convertible Subordinated Notes pursuant to Section 401(1)(B)(ii) or (iii)
of the Original Indenture shall not impair the effect of Section 5 or of Section
7(m) concerning Mergers unless and until all of the outstanding 5 1/2%
Convertible Subordinated Notes have been (x) repaid in full, whether by payment
of cash or through conversion, (y) redeemed by the Company in accordance with
their terms or (z) repurchased by the Company in accordance with Section 5
(provided that the foregoing provisions of this paragraph shall no longer apply
with respect to any 5 1/2% Convertible Subordinated Notes not tendered for
payment pursuant to a Repurchase Offer).
In accordance with Sections 201, 202 and 203 of the Original
Indenture, the 5 1/2% Convertible Subordinated Notes shall be substantially in
the form attached hereto as Exhibit A.
The Purchaser acknowledges that each 5 1/2% Convertible
Subordinated Note and any stock certificate representing shares of Common Stock
issued upon conversion of any of the 5 1/2% Convertible Subordinated Notes will
be endorsed with a legend substantially similar to the following:
THE SECURITIES REPRESENTED BY THIS [NOTE] [CERTIFICATE] HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT
TO THE SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY
NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
ASSIGNED, EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT, (ii) RULE 144
UNDER SUCH ACT, OR (iii) ANY OTHER EXEMPTION FROM REGISTRATION UNDER
SUCH ACT.
Notwithstanding the provisions of Section 305 of the Original Indenture to the
contrary, (x) no Opinion of Counsel shall be required in order for a Holder to
transfer its 5 1/2% Convertible Subordinated Notes, and (y) the legend set forth
above shall be the only legend applicable to the 5 1/2% Convertible Subordinated
Notes.
Upon the execution of this Supplemental Indenture, the 5 1/2%
Convertible Subordinated Notes may be executed by the Company and delivered to
the Trustee for authentication, and the Trustee shall, upon receipt of the
documents specified in Section 303 of the
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Original Indenture, thereupon authenticate and deliver said 5 1/2% Convertible
Subordinated Notes to or upon a Company Order.
Subject to Section 5 hereof, the Company may not, without the
prior written consent of the holders of a majority of the then outstanding
principal amount of the 5 1/2% Convertible Subordinated Notes, effect any Change
of Control.
Section 3. Redemption of 5 1/2% Convertible Subordinated
Notes. Subject to the provisions of Section 6(n), the 5 1/2% Convertible
Subordinated Notes are subject to redemption upon not less than 20 Business Days
nor more than 60 calendar days' notice by mail, such 20 Business Days or 60
calendar days, as the case may be, to be counted from the date notice is mailed,
at any time on or after May 14, 2002, as a whole, but not in part, at the
election of the Company, at the following Redemption Prices (expressed as
percentages of the principal amount): If redeemed during the 12-month period
beginning May 14 of the years indicated,
Redemption
Year Price
---- ----------
2002....................... 103.0%
2003....................... 101.5%
2004 and
thereafter............... 100.0%
, together, in the case of any such redemption, with accrued interest to but not
including the Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the Holders of such 5
1/2% Convertible Subordinated Notes of record at the close of business on the
relevant Regular Record Dates or Special Record Dates, all as provided in the
Original Indenture.
The 5 1/2% Convertible Subordinated Notes do not have the
benefit of any sinking fund obligations.
The 5 1/2% Convertible Subordinated Notes are not subject to
the provisions of Article Fifteen of the Original Indenture concerning
defeasance and covenant defeasance of Securities.
Section 4. Conversion of 5 1/2% Convertible Subordinated
Notes. (a) Subject to and upon compliance with the provisions of the Original
Indenture, the Holders of the 5 1/2% Convertible Subordinated Notes are
entitled, at their option, at any time, or in case the 5 1/2% Convertible
Subordinated Notes are called for redemption, then in respect of the 5 1/2%
Convertible Subordinated Notes until and including, but (unless the Company
defaults in making the payment due upon redemption) not after, the close of
business on the Redemption Date, to convert the 5 1/2% Convertible Subordinated
Notes (or any portion of the principal amount thereof which is $1,000 or an
integral multiple thereof), at 100% of the principal amount thereof, or of such
portion, into fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100 of a share) of Common
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Stock of the Company at a conversion price equal to $18.25 aggregate principal
amount of the 5 1/2% Convertible Subordinated Notes for each share of Common
Stock (or at the current adjusted conversion price if an adjustment has been
made as provided in the Original Indenture, as such conversion price adjustment
provisions are supplemented by this Section 4) by surrender of the 5 1/2%
Convertible Subordinated Notes duly endorsed or assigned to the Company or in
blank, to the Company at its office or agency in Chicago, Illinois (which
initially shall be at the Company's offices at 77 West Wacker Drive, Suite 4400,
Chicago, Illinois 60601, Attention: General Counsel), accompanied by written
notice to the Company that the Holder thereof elects to convert its 5 1/2%
Convertible Subordinated Notes, or if less than the entire principal amount
thereof is to be converted, the portion thereof to be converted. Subject to the
right of the Holder of this Security (or any Predecessor Security) to receive an
installment of interest on the principal amount of such Security or portion
thereof so converted for the period from the first day of the then current
semi-annual interest period to but not including the effective date of such
conversion, no payment or adjustment is to be made on conversion for interest
accrued thereon or for dividends on the Common Stock issued on conversion. No
fractions of shares or scrip representing fractions of shares will be issued on
conversion, but instead of any fractional interest the Company shall pay a cash
adjustment as provided in the Original Indenture.
(b) In addition to the conversion price adjustments set
forth in Section 1405 of the Original Indenture, in case at any time after the
date of the issuance of the 5 1/2% Convertible Subordinated Notes, the Company
shall issue (or is deemed to have issued, as described in this Section 4) shares
of its Common Stock (other than pursuant to a dividend reinvestment plan, any
employee benefit plan of the Company or any obligation of the Company existing
as of the original date of issuance of the 5 1/2% Convertible Subordinated
Notes) at a price per share less than the current market price per share
(determined as provided in paragraph (8) of Section 1405 of the Original
Indenture) of the Common Stock on the date such shares of Common Stock are
issued, the conversion price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced to an amount
obtained by multiplying such conversion price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding (or deemed
to be 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 sale price of the total number of shares of Common Stock so issued (or
deemed to be issued) would purchase at such current market price and the
denominator shall be the number of shares of Common Stock outstanding (or deemed
to be outstanding) at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so issued (or deemed to
be issued), such reduction to become effective immediately after the opening of
business on the day following the date fixed for such determination. For the
purposes of this paragraph, (i) 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 and (ii) all shares of Common Stock issuable
upon exercise or conversion of outstanding Common Stock Equivalents shall be
deemed to be outstanding, and immediately after any additional shares of Common
Stock are deemed issued pursuant to Section 4(c), such additional shares of
Common Stock shall be deemed to be outstanding.
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(c) In the event the Company at any time after the date of
the issuance of the 5 1/2% Convertible Subordinated Notes shall issue any Common
Stock Equivalents or shall fix a record date for the determination of holders of
any class of securities entitled to receive any such Common Stock Equivalents,
then the maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for a subsequent
adjustment of such number) of Common Stock issuable upon the exercise or
conversion of such Common Stock Equivalents, shall be deemed to be shares of
Common Stock issued as of the time of such issuance or, in case such a record
date shall have been fixed, as of the close of business on such record date, at
a price equal to the total of all consideration received by the Company for the
issuance of such Common Stock Equivalents plus all consideration to be received
by the Company (as provided therein) upon the exercise or conversion thereof;
provided, however, that in any such case in which such shares of Common Stock
are deemed to be issued:
(i) no further adjustment (other than pursuant to
clause (ii) below) in the conversion price shall be made upon
the subsequent issue of shares of Common Stock upon the
exercise or conversion of such Common Stock Equivalents; and
(ii) if such Common Stock Equivalents by their terms
provide, with the passage of time or otherwise, for any
increase or decrease in the consideration payable to the
Company, or increase or decrease in the number of shares of
Common Stock issuable upon the exercise or conversion
thereof, the conversion price computed upon the original
issuance of such Common Stock Equivalents (or upon the
occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to
reflect such increase or decrease, insofar as it affects such
conversion price, but no further change in the conversion
price shall be made upon the exercise or conversion of such
Common Stock Equivalents, and no such adjustment of the
conversion price shall affect Common Stock previously issued
upon conversion of any 5 1/2% Convertible Subordinated Notes.
Section 5. Repurchase Upon a Designated Merger.
(a) In the event that a proposed Merger not otherwise
permitted by the terms of the 5 1/2% Convertible Subordinated Notes has been
approved by the requisite vote of the Company's stockholders entitled to vote
thereon (a "Designated Merger"), and the Holders of less than a majority of the
outstanding principal amount of the 5 1/2% Convertible Subordinated Notes have
consented to such Designated Merger, the Company may nevertheless consummate
such Merger to the extent and only to the extent that it repurchases, on the
effective date of such Designated Merger (the "Repurchase Payment Date"), all of
the 5 1/2% Convertible Subordinated Notes tendered for such repurchase by the
Holders thereof, at a purchase price equal to 110% of the principal amount
thereof plus accrued and unpaid interest thereon to but not including the
Repurchase Payment Date. To effect such repurchase, the Company shall give or
cause to be given written notice in the form of an Officer's Certificate (the
"Repurchase Notice") to all Holders of the 5 1/2% Convertible Subordinated
Notes, the Trustee and the Paying Agent of such Designated Merger and shall make
an offer to
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purchase (as the same may be extended in accordance with applicable law, the
"Repurchase Offer") all then outstanding 5 1/2% Convertible Subordinated Notes
at a purchase price equal to 110% of the principal amount thereof plus accrued
and unpaid interest thereon to but not including the Repurchase Payment Date.
The Repurchase Notice shall be given in accordance with Section 106 of the
Original Indenture and the Repurchase Offer shall, subject to Section 6(n), be
made not less than 21 Business Days prior to the Repurchase Payment Date. The
Repurchase Notice shall set forth:
(i) a description of the Designated Merger and that the
Company is offering to repurchase all of the outstanding 5 1/2%
Convertible Subordinated Notes upon consummation of the Designated
Merger;
(ii) the repurchase price (the "Repurchase Payment");
(iii) the expiration date of the Repurchase Offer,
which shall be not less than 20 Business Days following the date the
Repurchase Notice is mailed;
(iv) the Repurchase Payment Date;
(v) that, unless the Company defaults in the payment of
the Repurchase Payment, all 5 1/2% Convertible Subordinated Notes or
portions thereof accepted for payment pursuant to the Repurchase Offer
shall cease to accrue interest on and after the Repurchase Payment
Date;
(vi) the Conversion Price;
(vii) the name and address of the Paying Agent;
(viii) that the 5 1/2% Convertible Subordinated Notes
(duly endorsed for transfer to the Company), together with the form of
"Option of Holder to Elect Repurchase" thereon completed and signed,
must be surrendered to the Paying Agent prior to the expiration of the
Repurchase Offer to collect the Repurchase Payment; and
(ix) any other information required by applicable law
to be included therein and any other procedures that a Holder must
follow in order to have 5 1/2% Convertible Subordinated Notes
repurchased.
(b) The Repurchase Offer shall remain open until the close
of business on the expiration date of the Repurchase Offer. Each Holder shall
have the right to withdraw its tender in accordance with applicable rules
promulgated by the SEC under the Exchange Act.
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<PAGE>
(c) In the event that the Company makes a Repurchase Offer,
the Company will comply with any applicable securities laws and regulations,
including, to the extent applicable, Section 14(e) of, and Rule 14e-1 under, the
Exchange Act.
(d) On the Repurchase Payment Date, the Company shall, to
the extent lawful and only if the Designated Merger is consummated on such date:
(i) accept for payment all 5 1/2% Convertible
Subordinated Notes or portions thereof tendered pursuant to the
Repurchase Offer;
(ii) irrevocably deposit with the Paying Agent in
immediately available funds an amount equal to the Repurchase Payment
with respect to all 5 1/2% Convertible Subordinated Notes or portions
thereof so accepted; and
(iii) deliver or cause to be delivered to the Trustee
the 5 1/2% Convertible Subordinated Notes so accepted together with an
Officers' Certificate stating the 5 1/2% Convertible Subordinated
Notes or portions thereof tendered to the Company.
(e) The Paying Agent shall promptly (but in any case not
later than five Business Days after the Repurchase Payment Date) mail (unless
paid by wire transfer, if applicable, pursuant to the provisions of Section 2)
to each Holder of 5 1/2% Convertible Subordinated Notes so accepted payment in
an amount equal to the Repurchase Payment for such 5 1/2% Convertible
Subordinated Notes, and the Trustee shall as soon as practicable authenticate
and mail to each Holder new 5 1/2% Convertible Subordinated Notes equal in
principal amount to any unpurchased portion of the 5 1/2% Convertible
Subordinated Notes surrendered by such Holder, if any; provided, that such new 5
1/2% Convertible Subordinated Notes shall be in the principal amount of $1,000
or an integral multiple thereof. The Company shall publicly announce the results
of all repurchases pursuant to this Section 5 on or as soon as practicable after
the Repurchase Payment Date.
Section 6. Additional Events of Default Applicable to the 5
1/2% Convertible Subordinated Notes. In addition to the Events of Default set
forth in Section 501 of the Original Indenture, the following events shall also
be Events of Default with respect to the 5 1/2% Convertible Subordinated Notes:
(a) The Company shall default in the payment of any amount
owing in respect of the 5 1/2% Convertible Subordinated Notes other than
principal or interest, or owing in respect of any of the other Obligations
(other than principal or interest), when due and payable or declared due and
payable, and continuance of such default for a period of 30 days after there has
been given, by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least a majority in principal
amount of the 5 1/2% Convertible Subordinated Notes, a written notice specifying
such default and requiring it to be remedied and stating that such notice is a
"Notice of Default" under the Indenture; or
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(b) The Company shall fail or neglect to perform, keep or
observe any provision of any of the Transaction Documents, and continuance of
such failure or neglect for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least a majority in principal amount of the
5 1/2% Convertible Subordinated Notes, a written notice specifying such default
and requiring it to be remedied and stating that such notice is a "Notice of
Default" under the Indenture; provided, that if such default is susceptible to
being cured and at the expiration of such 60 day period the Company is
attempting in good faith to cure such default, such 60 day period may be
extended for an additional 30 days; or
(c) The Company shall default under any other agreement,
document or instrument to which the Company or any Subsidiary is a party or by
which the Company or any of its Subsidiaries or any of their property is bound,
and such default (i) involves the failure to make any payment (whether of
principal, interest or otherwise) due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise, after applicable notices have
been given and cure periods have elapsed) in respect of any Indebtedness of the
Company or any of its Subsidiaries in an aggregate amount exceeding $1,750,000,
or (ii) causes (or permits any holder of such Indebtedness or a trustee to
cause) such Indebtedness or a portion thereof in an aggregate amount exceeding
$1,750,000, to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, without such Indebtedness having been discharged, or
such acceleration having been rescinded or annulled, within a period of 30 days
after there has been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least a
majority in principal amount of the 5 1/2% Convertible Subordinated Notes, a
written notice specifying such default and requiring it to be remedied and
stating that such notice is a "Notice of Default" under the Indenture; provided,
however, that if, prior to the entry of judgment in favor of the Trustee, such
acceleration, if any, shall be rescinded or annulled, or such default under such
agreement, document or instrument shall be remedied or cured by the Company or
waived by the holders of such Indebtedness, or if any amounts due and payable as
a result of maturity or such acceleration are paid in full, then the Event of
Default hereunder by reason thereof shall be deemed likewise to have been
thereupon remedied, cured or waived without further action upon the part of
either the Trustee or any of the Holders of the 5 1/2% Convertible Subordinated
Notes; or
(d) Any representation or warranty of the Company in the
Note Purchase Agreement or in any other Transaction Document or in any written
statement pursuant thereto, report, financial statement or certificate made or
delivered to the Purchaser by the Company pursuant thereto shall be untrue, or
incorrect in any material respect, as of the date when made; or
(e) Any asset of the Company or any of its Subsidiaries
which is material to the Company and its Subsidiaries, taken as a whole, shall
be attached, seized, levied upon or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian or assignee for
the benefit of creditors of the Company or any of its Subsidiaries and shall
remain unstayed or undismissed for ninety (90) consecutive days; or the Company
or any of its Subsidiaries shall have concealed, removed or permitted to be
concealed or removed, any part of its property, with intent to hinder, delay or
defraud its creditors or any of them or made or suffered a transfer of
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any of its property or the incurring of an obligation which may be fraudulent
and or any bankruptcy, fraudulent conveyance or other similar law; or
(f) Final judgment or judgments (after the expiration of
all times to appeal therefrom) for the payment of money in excess of $2,000,000
in the aggregate shall be rendered against the Company or any of its
Subsidiaries and the same shall not be (i) fully covered by insurance, or (ii)
vacated, stayed, bonded, paid or discharged for a period of thirty (30) days;
provided, however, that if, prior to the entry of judgment in favor of the
Trustee, such judgment or judgments are vacated, stayed, bonded, paid or
discharged, then the Event of Default hereunder by reason thereof shall be
deemed likewise to have been thereupon remedied, cured or waived without further
action upon the part of either the Trustee or any of the Holders of the 5 1/2%
Convertible Subordinated Notes.
Notwithstanding the reference to "Holders of at least 25% in
principal amount of the Outstanding Securities" set forth in Section 501(4) of
the Original Indenture, Holders of at least a majority in principal amount of
the 5 1/2% Convertible Subordinated Notes shall be required for Holders of the 5
1/2% Convertible Subordinated Notes to declare an Event of Default pursuant to
such Section 501(4) of the Original Indenture.
Notwithstanding the reference to "Holders of not less than
25% in principal amount of the Outstanding Securities" set forth in Section 502
of the Original Indenture, Holders of not less than a majority in principal
amount of the 5 1/2% Convertible Subordinated Notes shall be required for
Holders of the 5 1/2% Convertible Subordinated Notes to declare the principal
amount of the 5 1/2% Convertible Subordinated Notes due and payable immediately
pursuant to such Section 502 of the Original Indenture.
Notwithstanding the reference to "Holder of not less than 25%
in principal amount of the Outstanding Securities" set forth in Section 507(2)
of the Original Indenture, Holders of not less than a majority in principal
amount of the 5 1/2% Convertible Subordinated Notes shall be required for
Holders of the 5 1/2% Convertible Subordinated Notes to institute proceedings
with respect to an Event of Default pursuant to such Section 507(2) of the
Original Indenture.
Section 7. Additional Covenants Applicable to the 5 1/2%
Convertible Subordinated Notes. In addition to the covenants set forth in
Article Ten of the Original Indenture, the 5 1/2% Convertible Subordinate Notes
shall also be subject to the following covenants:
(a) Books and Records. The Company shall, and shall cause
its Subsidiaries to, keep adequate records and books of account with respect to
their business activities, in which proper entries, reflecting all of their
financial transactions, are made in accordance with GAAP.
(b) Financial and Business Information.
(i) Quarterly Information. Subject to the last
sentence of this Section 7(b)(i), the Company will deliver to the
Purchaser as soon as practicable after the end of each of the first
three quarterly fiscal periods in each Fiscal Year of the
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Company, but in any event within 45 days thereafter, (A) an unaudited
consolidated balance sheet of the Company and its Subsidiaries, if
any, as at the end of such quarter, and (B) unaudited consolidated
statements of operations, retained earnings and cash flows of the
Company and its Subsidiaries, if any, for such quarter and (in the
case of the second and third quarters) for the portion of the Fiscal
Year ending with such quarter, setting forth in comparative form in
each case the projected consolidated figures for such period and the
actual consolidated figures for the comparable period of the prior
Fiscal Year. Such statements shall be (1) prepared in accordance with
GAAP consistently applied, (2) in reasonable detail and (3) certified
by the principal financial or accounting officer of the Company. So
long as the Company complies with Section 7(c), the requirements of
this Section 7(b)(i) shall be deemed to be satisfied in every respect
with no further action, report, delivery or presentation on the part
of the Company being necessary.
(ii) Annual Information. Subject to the last
sentence of this Section 7(b)(ii), the Company will deliver to the
Purchaser as soon as practicable after the end of each Fiscal Year of
the Company, but in any event within 90 days thereafter, (A) an
audited consolidated balance sheet of the Company and its
Subsidiaries, if any, as at the end of such year, and (B) audited
consolidated statements of operations, retained earnings and cash
flows of the Company and its Subsidiaries, if any, for such year;
setting forth in each case in comparative form the figures for the
previous year. Such statements shall be (1) prepared in accordance
with GAAP consistently applied, (2) in reasonable detail and (3)
certified by Ernst & Young LLP or such other firm of independent
certified public accountants of recognized national standing selected
by the Company and reasonably acceptable to the Purchaser. So long as
the Company complies with Section 7(c), the requirements of this
Section 7(b)(ii) shall be deemed to be satisfied in every respect with
no further action, report, delivery or presentation on the part of the
Company being necessary.
(c) Filings. The Company will deliver to the Purchaser,
promptly upon their becoming available, one copy of each report, notice or proxy
statement sent by the Company to its stockholders generally, and of each regular
or periodic report (pursuant to the Exchange Act) and any registration
statement, prospectus or other writing (other than transmittal letters)
(including, without limitation, by electronic means) pursuant to the Securities
Act filed by the Company with (i) the Securities and Exchange Commission or (ii)
any securities exchange on which shares of Common Stock of the Company are
listed.
(d) Budgets. Company will deliver to Purchaser within 15
days prior to the beginning of each Fiscal Year:
(A) budgeted consolidated balance sheets of the
Company and its Subsidiaries, if any, for such Fiscal Year,
on a monthly basis;
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(B) budgeted consolidated cash flow statements of
the Company and its Subsidiaries, if any, including summary
details of cash disbursements, for such Fiscal Year, on a
monthly basis; and
(C) budgeted consolidated statements of operation of
the Company and its Subsidiaries, if any, for such Fiscal
Year, on a monthly basis;
in each case together with appropriate supporting details.
(e) Compliance with Law. The Company shall, and shall cause
each of its Subsidiaries to, comply with all laws applicable to it, except,
where the failure to comply would not be reasonably likely to result in a
Material Adverse Effect.
(f) Conduct of Business. The Company shall, and shall cause
each of its Subsidiaries to, continue to conduct business solely in its existing
lines of business and businesses related thereto.
(g) Amendments to Basic Documents. The Company shall not,
and shall not permit any of its Subsidiaries to, amend, alter or repeal,
including by merger consolidation or otherwise, any provision of the Company's
Restated Certificate of Incorporation (including the filing of any certificate
of designation(s)) or bylaws of the Company or any Subsidiary, in any manner
that could reasonably be anticipated to have a material negative impact on the
Purchaser (or any Holder) or the Purchaser's rights hereunder or a Material
Adverse Effect.
(h) Sales of Assets; Liquidation. The Company shall not,
and shall not permit any Subsidiary of the Company to, (A) sell, transfer,
convey or otherwise dispose of any assets or properties or (B) liquidate,
dissolve or wind up the Company, except for transfers to the Company, whether
voluntary or involuntary; provided, however, that the foregoing, shall not
prohibit (i) the sale of inventory in the ordinary course of business, (ii) the
sale of surplus or obsolete equipment and fixtures, (iii) transfers resulting
from any casualty or condemnation of assets or properties, (iv) sales as to
which the net proceeds are either (1) reinvested in the Company's or, if sold by
a Subsidiary, such Subsidiary's or the Company's existing or related lines of
business or (2) applied to repay Indebtedness, within 180 days after such sale
and (v) sales as to which the aggregate net proceeds do not exceed $1,000,000 in
any calendar year.
(i) Employee Loans. The Company shall not and shall not
permit any Subsidiary of the Company to make or accrue any loans or other
advances of money to any employee of the Company or such Subsidiary, other than
in the ordinary course of business in an aggregate amount outstanding not to
exceed $1,000,000 at any one time.
(j) Transactions with Affiliates. The Company shall not and
shall not permit any Subsidiary of the Company to enter into or be a party to
any transaction with any Affiliate of the Company or such Subsidiary, except (i)
transactions expressly permitted hereby, (ii) transactions which are approved by
a disinterested majority of the members of the Company's Board of Directors,
-15-
<PAGE>
(iii) transactions between the Company and its wholly-owned Subsidiaries or
between such Subsidiaries and (iv) payment of compensation to employees and
directors' fees.
(k) Indebtedness. The Company shalt not incur or suffer to
exist any Indebtedness directly or indirectly convertible into or exchangeable
for any class of equity security of the Company which ranks senior to the
Indebtedness evidenced by the 5 1/2% Convertible Subordinated Notes.
(l) Restricted Payments. The Company shall not and shall
not permit any Subsidiary of the Company to make any Restricted Payments nor
shall the Company permit any Subsidiary to make such payments with respect to
the Company's stock.
(m) Mergers and Subsidiaries. Without the consent of
Holders of at least a majority of the outstanding principal amount of the 5 1/2%
Convertible Subordinated Notes, neither the Company nor any Subsidiaries of the
Company shall directly or indirectly, by operation of law or otherwise, merge
with, consolidate with, or otherwise combine with any Person ("Merger") nor
shall the Company create any Subsidiary, other than (i) the creation of
wholly-owned Subsidiaries; (ii) mergers of wholly-owned Subsidiaries of the
Company into the Company or any other of its wholly-owned Subsidiaries; (iii)
the formation of joint ventures with third parties for the ownership, operation,
leasing or development of specific faculties or for conduct of business related
to the Company's primary business; and (iv) any Merger, (A) in which the
stockholders of the Company immediately prior to the Merger (x) own immediately
following the Merger over 50% of the equity value of the surviving entity (on a
fully diluted basis) or (y) are entitled to elect at least a majority of the
directors of the surviving entity and (B) which is Accretive.
(n) HSR Act. To the extent the Company proposes to engage
in any transaction (other than the annual election of directors, approval of
employee benefit or incentive plans, ratification of the appointment of
independent auditors and similar matters described in any proxy statement of the
Company for annual meetings of its stockholders) that requires the prior
approval of the Company's stockholders, the Company will, to the extent
permitted by applicable law, delay the date set for the stockholder vote on such
proposed transaction (and, as necessary, the record date for determination of
stockholders entitled to vote on such proposed transaction), by that number of
days such that the number of days between the date such stockholders' meeting
was first publicly announced by the Company and such delayed date for the
stockholders' meeting shall not be less than 40 calendar days; provided, that
the Purchaser desires to convert all or a portion of its 5 1/2% Convertible
Subordinated Notes in order to vote in such stockholders' meeting and that the
Purchaser is required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), to file a Notification and Report Form under
the HSR Act in order to convert such 5 1/2% Convertible Subordinated Notes (and
enable the Purchaser to vote in such stockholders' meeting); provided, further,
that the Purchaser provide the Company with written notice stating the
circumstances set forth in the immediately preceding proviso not less than 10
Business Days following the Company's first public announcement of the
stockholders' meeting; and provided, further, that the Company shall be required
to comply with this Section 7(n) only once. The
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<PAGE>
Company hereby agrees to reasonably cooperate with the Purchaser in order to
facilitate a prompt and proper filing of the Purchaser's Notification and Report
Form described above.
In the event that the Company elects to redeem the 5 1/2%
Convertible Subordinated Notes pursuant to Section 3 hereof or repurchase the 5
1/2% Convertible Subordinated Notes upon a Designated Merger pursuant to Section
5 hereof and has mailed notice of such redemption or repurchase in accordance
with the applicable provisions of the Original Indenture and this Supplemental
Indenture, to the extent the Holder of 5 1/2% Convertible Subordinated Notes is
then required to file a Notification and Report Form pursuant to the HSR Act in
order to convert its 5 1/2% Convertible Subordinated Notes into Common Stock in
accordance with their terms, then to the extent that such Holder (x) notifies
the Company in writing within ten (10) Business Days from the Company's mailing
of the redemption or repurchase notice that it wishes to convert its 5 1/2%
Convertible Subordinated Notes prior to the Redemption Date and that it is
required to file a Notice and Report Form pursuant to the HSR Act in order to
convert its 5 1/2% Convertible Subordinated Notes and (y) files its Notification
and Report Form with the applicable governmental authorities within ten (10)
Business Days from the Company's mailing of the redemption or repurchase notice,
the Company will extend the Redemption Date or the Repurchase Payment Date, as
applicable, for such redemption or repurchase, as applicable, for such
reasonable number days requested by such Holder to enable such Holder to obtain
any necessary approvals or for the applicable waiting period under the HSR Act
to expire in order to convert its 5 1/2% Convertible Subordinated Notes;
provided, that the Company shall not be required to extend the Redemption Date
or the Repurchase Payment Date, as applicable, for such redemption or repurchase
beyond 90 calendar days from the date that the Company's original redemption or
repurchase notice was mailed to Holders; provided, further, that if the Holder
exercises its rights under this paragraph, it thereby covenants and agrees to
use its best efforts to obtain necessary approvals or achieve early termination
of applicable waiting periods under the HSR Act as soon as practicable. The
Company hereby agrees to reasonably cooperate with the Holder in order to
facilitate a prompt and proper filing of the Holder's Notification and Report
Form described above.
(o) Actions to Permit Conversions. In connection with any
conversion of the 5 1/2% Convertible Subordinated Notes, the Company shall make
or cause its Subsidiaries, as applicable, to make, in a timely manner, all
necessary material filings with and notices to all governmental authorities
having jurisdiction over the Company or its applicable Subsidiaries (including
but not limited to all filings and notices necessary to satisfy any "change of
ownership" requirements with respect to any facility or any license or permit
relating thereto, to the extent that the failure to do so would reasonably be
likely to have a Material Adverse Effect).
The Company may omit in any particular instance to comply
with any covenant or condition set forth in this Section 7, with respect to the
5 1/2% Convertible Subordinated Notes if before or after the time for such
compliance the Holders of at least a majority in principal amount of the
outstanding 5 1/2% Convertible Subordinated Notes shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance with
such covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and
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<PAGE>
the duties of the Trustee in respect of any such covenant or condition shall
remain in full force and effect.
The terms and conditions of this Supplemental Indenture shall
modify, and shall be deemed to be a part of, the terms and conditions of the
Indenture for any and all purposes. To the extent any provisions of this
Supplemental Indenture are inconsistent with any provision of the Original
Indenture, such provision contained in this Supplemental Indenture shall govern.
The Original Indenture, as modified by this Supplemental Indenture, is in all
respects hereby ratified and confirmed.
Although this Supplemental Indenture is dated May 14, 1999,
it shall be effective only from and after the actual time of its execution and
delivery by the Company and the Trustee on the date indicated by their
respective acknowledgments attached hereto.
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
*****
-18-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the day and year first above
written.
BROOKDALE LIVING COMMUNITIES, INC.
By: /s/ Darryl W. Copeland, Jr.
---------------------------
Name: Darryl W. Copeland, Jr.
Title: Executive Vice Presiden and
Chief Financial Officer
STATE STREET BANK AND TRUST COMPANY
By: /s/ Kathy A. Larimore
---------------------
Name: Kathy A. Larimore
Title: Assistant Vice President
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<PAGE>
EXHIBIT A
[FORM OF FACE OF 5 1/2% OF CONVERTIBLE SUBORDINATED NOTES]
BROOKDALE LIVING COMMUNITIES, INC.
5 1/2% Convertible Subordinated Notes due 2009
No. --------- $100,000,000
Brookdale Living Communities, Inc., a corporation duly
organized and existing under the laws of Delaware (herein called the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Health Partners, or
registered assigns, the principal sum of One Hundred Million Dollars
($100,000,000) on May 14, 2009, and to pay interest thereon from May 14, 1999 or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semi-annually on June 30 and December 31 in each year,
commencing June 30, 1999, at the rate of five and one-half percent (5 1/2%) per
annum, until the principal hereof is paid (including payment through conversion
pursuant to the terms hereof) or made available for payment and (to the extent
that the payment of such interest shall be legally enforceable) at the rate of
ten percent (10%) per annum on any overdue principal and premium and on any
overdue installment of interest. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the June 15 or December 15
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided
for will forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any, on) and any
such interest on this Security will be made at the office or agency of the
Company maintained for that purpose in Hartford, Connecticut or such other
office or agency of the Company or other office as the Paying Agent may be
located, in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that at the option of the
A-1
<PAGE>
Company payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register or
by wire transfer to an account maintained by the Person entitled thereto as
specified in the Security Register, provided that such Person shall have given
the Trustee written wire instructions at least five Business Days prior to the
applicable Interest Payment Date; provided, further, and notwithstanding any
other provision of the Supplemental Indenture or the Indenture to the
contrary,that with respect to a Holder of Securities of this series that,
together with such Holder's Affiliates, holds an aggregate principal amount of
Securities of this series equal to or in excess of $5,000,000, at the request of
such Holder in writing to the Company, interest on, and any Redemption Price or
Repurchase Payment with respect to, such Holder's Securities shall be paid, on
the applicable Interest Payment Date, Redemption Date or Repurchase Payment
Date, by wire transfer in immediately available funds in accordance with wire
transfer instructions supplied by such Holder to the Trustee and the Paying
Agent (if different from the Trustee), which instructions such Holder shall have
given to the Trustee and the Paying Agent at least five Business Days prior to
the applicable Interest Payment Date, Redemption Date or Repurchase Payment
Date.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
TRUSTEE'S CERTIFICATE: BROOKDALE LIVING COMMUNITIES, INC.
This is one of the Securities of
the series designated therein
referred to in the within-mentioned
Supplemental Indenture.
Dated: May --, 1999 By: /s/ Darryl W. Copeland, Jr.
---------------------------
Darryl W. Copeland, Jr.
Executive Vice President
STATE STREET BANK AND TRUST COMPANY,
as Trustee Attest:
By: /s/ Kathy A. Larimore By: /s/ Robert J. Rudnik
---------------------- ---------------------
Authorized Signatory Secretary
A-2
<PAGE>
This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities"), issued and to be issued in one
or more series under an Indenture, dated as of May 14, 1999 (herein, together
with all indentures supplemental thereto including the Supplemental Indenture
(as defined below), called the "Indenture"), between the Company and State
Street Bank and Trust Company, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture). This Security is one
of a series, limited in aggregate principal amount to One Hundred Million
Dollars ($100,000,000) and designated as 5 1/2% Convertible Subordinated Notes
due 2009 (herein called "5 1/2% Convertible Subordinated Notes"), created by a
Supplemental Indenture dated as of May 14, 1999 (the "Supplemental Indenture"),
duly executed and delivered by the Company to such Trustee. Reference is hereby
made to the Indenture for a statement of the respective rights, limitations of
rights, duties and immunities thereunder of the Company, the Trustee, the
holders of Senior Debt and the Holders of the Securities (including the Holders
of the 5 1/2% Convertible Subordinated Notes) and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
The Securities of this series are subject to redemption,
subject to the provisions of the immediately succeeding paragraph, upon not less
than 20 Business Days nor more than 60 calendar days' notice by mail, such 20
Business Days or 60 calendar days, as the case may be, to be counted from the
date notice is mailed, at any time on or after May 14, 2002, as a whole, but not
in part, at the election of the Company, at the following Redemption Prices
(expressed as percentages of the principal amount): If redeemed during the
12-month period beginning May 14 of the years indicated,
Redemption
Year Price
2002....................... 103.0%
2003....................... 101.5%
2004 and
thereafter............... 100.0%
, together in the case of any such redemption with accrued interest to but not
including the Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Regular Record Dates referred to on the face hereof, or
Special Record Dates, as applicable, all as provided in the Indenture.
The Securities do not have the benefit of any sinking fund
obligations.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Debt, and this Security is issued subject to
the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions,
A-3
<PAGE>
[FORM OF REVERSE OF 5 1/2% CONVERTIBLE SUBORDINATED NOTES]
(b) authorizes and directs the Trustee on its or his behalf to take such action
as may be necessary or appropriate to effect the subordination so provided and
(c) appoints the Trustee its or his attorney-in-fact for any and all such
purposes.
The Securities of this series are not subject to the
provisions of Article Fifteen of the Indenture concerning defeasance and
covenant defeasance of Securities.
If an Event of Default with respect to Securities of this
series shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.
Subject to and upon compliance with the provisions of the
Indenture, the Holder of this Security is entitled, at its or his option, at any
time, or in case this Security is called for redemption, then in respect of this
Security until and including, but (unless the Company defaults in making the
payment due upon redemption) not after, the close of business on the Redemption
Date, to convert this Security (or any portion of the principal amount hereof
which is $1,000 or an integral multiple thereof), at the principal amount
hereof, or of such portion, into fully paid and nonassessable shares (calculated
as to each conversion to the nearest 1/100 of a share) of Common Stock of the
Company at a conversion price equal to $18.25 aggregate principal amount of
Securities for each share of Common Stock (or at the current adjusted conversion
price if an adjustment has been made as provided in the Indenture) by surrender
of this Security, duly endorsed or assigned to the Company or in blank, to the
Company at its office or agency in Chicago, Illinois (which initially shall be
at the Company's offices at 77 West Wacker Drive, Suite 4400, Chicago, Illinois
60601, Attention: General Counsel), accompanied by a completed and signed "Form
of Election to Convert" below, which will constitute written notice to the
Company that the Holder hereof elects to convert this Security, or if less than
the entire principal amount hereof is to be converted, the portion hereof to be
converted. Subject to the right of the Holder of this Security (or any
Predecessor Security) to receive an installment of interest on the principal
amount of such Security so converted for the period from the first day of the
then current semi-annual interest period to but not including the effective date
of such conversion, such interest being payable on the next Interest Payment
Date following the effective date of such conversion, no payment or adjustment
is to be made on conversion for interest accrued hereon or for dividends on the
Common Stock issued on conversion. No fractions of shares or scrip representing
fractions of shares will be issued on conversion, but instead of any fractional
interest the Company shall pay a cash adjustment as provided in the Indenture.
The conversion price is subject to adjustment as provided in the Indenture.
Upon a Designated Merger, the Company shall repurchase all
then outstanding 5 1/2% Convertible Subordinated Notes tendered for repurchase
at a repurchase price equal to 110% of the principal amount thereof, plus
accrued and unpaid interest to but not including the Repurchase Payment Date, if
any. Not less than 21 Business Days prior to a Designated Merger, the Company
shall mail a notice to each Holder setting forth the procedures governing the
Repurchase Offer as required by the Indenture. A Holder may tender or refrain
from tendering all or any portion of such Holder's 5 1/2% Convertible
Subordinated Notes, at such Holder's discretion, by completing and
A-4
<PAGE>
signing the form entitled "Option of Holder to Elect Repurchase" below and
delivering such form, together with the 5 1/2% Convertible Subordinated Notes
with respect to which the repurchase right is being exercised, duly endorsed for
transfer to the Company, to the Paying Agent. Any partial tender of 5 1/2%
Convertible Subordinated Notes must be made in an integral multiple of $1,000.
In the event that the Company elects to redeem the 5 1/2%
Convertible Subordinated Notes pursuant to their terms or repurchase the 5 1/2%
Convertible Subordinated Notes upon a Designated Merger and has mailed notice of
such redemption or repurchase in accordance with the applicable provisions of
the Indenture, and the Holder of 5 1/2% Convertible Subordinated Notes is then
required to file a Notification and Report Form pursuant to the HSR Act in order
to convert its 5 1/2% Convertible Subordinated Notes into Common Stock in
accordance with their terms, then to the extent that such Holder (x) notifies
the Company in writing within ten (10) Business Days from the Company's mailing
of the redemption or repurchase notice that it wishes to convert its 5 1/2%
Convertible Subordinated Notes prior to the Redemption Date and that it is
required to file a Notice and Report Form pursuant to the HSR Act in order to
convert its 5 1/2% Convertible Subordinated Notes and (y) files its Notification
and Report Form with the applicable governmental authorities within ten (10)
Business Days from the Company's mailing of the redemption or repurchase notice,
the Company will extend the Redemption Date or the Repurchase Payment Date, as
applicable, for such redemption or repurchase, as applicable, for such
reasonable number days requested by such Holder to enable such Holder to obtain
any necessary approvals or for the applicable waiting period under the HSR Act
to expire in order to convert its 5 1/2% Convertible Subordinated Notes;
provided, that the Company shall not be required to extend the Redemption Date
or the Repurchase Payment Date, as applicable, for such redemption or repurchase
beyond 90 calendar days from the date that the Company's original redemption or
repurchase notice was mailed to Holders; provided, further, that if the Holder
exercises its rights under this paragraph, it thereby covenants and agrees to
use its best efforts to obtain necessary approvals or achieve early termination
of applicable waiting periods under the HSR Act as soon as practicable. The
Company hereby agrees to reasonably cooperate with the Purchaser in order to
facilitate a prompt and proper filing of the Purchaser's Notification and Report
Form described above.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be adversely affected under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a majority in
principal amount of the Securities at the time Outstanding of each series to be
adversely affected. The Indenture also contains provisions permitting the
Holders of specified percentages in principal amount of the Securities of each
series at the time Outstanding, on behalf of the Holders of all Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
A-5
<PAGE>
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any
premium and interest on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the principal
of and any premium and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered
form without coupons in denominations of $1,000 (and any integral multiple
thereof). As provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
No recourse shall be had for the payment of the principal of
(or premium, if any, on) or the interest on this Security, or for any claim
based hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture or any indenture supplemental thereto, against any incorporator,
stockholder, officer, director or employee, as such, past, present or future, of
the Company or any successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes (subject to Section 307 of the Indenture), whether or
not this Security be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture. The
Indenture and this Security shall be governed by and construed in accordance
with the laws of the State of New York without regard to the conflicts of laws
principles thereof.
A-6
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of
the face of this Note, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the entireties ------------------------ Custodian
(Cust)
JT TEN - as joint tenants with right of ------------------------ under
survivorship and not as (Minor)
tenants in common
Uniform Gifts to
Minors Act---------------------
(State)
Additional abbreviations may also be used
though not in the above list.
A-7
<PAGE>
FORM OF ELECTION TO CONVERT
I(we) hereby irrevocably exercise the option to convert this
Security, or the principal portion below designated, into shares of Common Stock
in accordance with the terms of the Indenture referred to in this Security, and
direct that the shares issuable and deliverable upon conversion, together with
any check in payment for fractional shares, be issued in the name of and
delivered to the undersigned registered Holder hereof and any Security
representing any unconverted principal amount hereof, unless a different name
has been indicated below. If shares and/or any Security representing any
unconverted principal amount hereof are to be issued in the name of a Person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto.
Portion of this Security
to be converted (if partial
conversion, $1,000 or an
integral multiple thereof):
Signature:
----------------------------------
$------------ (exactly as your name appears on the
face of this Security)
Name:
---------------------------------------
Title:
--------------------------------------
Address:
------------------------------------
Phone No.:
----------------------------------
Date:
---------------------------------------
If shares and/or any Security representing any unconverted principal amount
hereof, are to be issued and registered in the name of a Person other than the
undersigned, please print the name and address, including zip code, and social
security or other taxpayer identification number of such Person below.
Name:
---------------------------------------
Address:
------------------------------------
TIN/Social Security No.:
--------------------
Signature Guaranteed (if Common Stock to be issued
to other than the registered holder(s)):
By:
----------------------------------------
This signature shall be guaranteed by an
eligible guarantor institution (a bank or
trust company having an office or
correspondent in the United States or a
broker or dealer which is a member of a
registered securities exchange or a
National Association of Securities Dealers,
Inc.) with membership in an approved
signature guaranty medallion program
pursuant to SEC Rule 17Ad-15.
A-8
<PAGE>
ASSIGNMENT FORM
(I) or (we) assign and transfer this Security to:
- ------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
- ---------------------- agent to transfer this Security on the Register. The
agent may substitute another to act for him.
Date:
---------------------------
Signature:
----------------------------------
(exactly as your name appears on
the face of this Security)
Name:
---------------------------------------
Title:
--------------------------------------
Address:
------------------------------------
Phone No.:
----------------------------------
Date:
---------------------------------------
Signature Guaranteed:
By:
------------------------------
This signature shall be guaranteed by an eligible guarantor institution (a bank
or trust company having an office or correspondent in the United States or a
broker or dealer which is a member of a registered securities exchange or a
National Association of Securities Dealers, Inc.) with membership in an approved
signature guaranty medallion program pursuant to SEC Rule 17Ad-15.
A-9
<PAGE>
OPTION OF HOLDER TO ELECT REPURCHASE
To elect to have all or a portion (which is $1,000 in principal
amount or an integral multiple thereof) of this Security repurchased by the
Company pursuant to Section 5 of the Supplemental Indenture in connection with a
Repurchase Offer, state the Principal amount of this Security you elect to have
repurchased (if all, write "ALL"): $----------------.
Your Name:
----------------------------------
(exactly as your name appears on
the face of this Security)
By:
-----------------------------------------
Title:
--------------------------------------
Date:
---------------------------------------
Signature Guaranteed:
By:
----------------------------------------
This signature shall be guaranteed by an
eligible guarantor institution (a bank or
trust company having an office or
correspondent in the United States or a
broker or dealer which is a member of a
registered securities exchange or a
National Association of Securities Dealers,
Inc.) with membership in an approved
signature guaranty medallion program
pursuant to SEC Rule 17Ad-15.
A-10
EXECUTION COPY
Registration Rights Agreement
BY AND BETWEEN
BROOKDALE LIVING COMMUNITIES, INC.,
AND
HEALTH PARTNERS
---------------------------------------
Dated as of May 14, 1999
---------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
Article 1 DEFINITIONS ............................................1
Section 1.1 Definitions ............................................1
Article 2 PIGGYBACK REGISTRATION; SHELF REGISTRATION .............4
Section 2.1 Piggyback Registration Rights ..........................4
2.1.1 Right to Piggyback ................................4
2.1.2 Priority on Registrations .........................5
2.1.3 Suspension of Piggyback Dispositions ..............6
Section 2.2 Shelf Registration .....................................6
2.2.1 Obligation to File ................................6
2.2.2 Maintenance of Effectiveness ......................6
2.2.3 Certain Limitations on Sales ......................7
2.2.4 Certain Limitations on Sale of Notes Pursuant
to Shelf Registration ..........................7
Section 2.3 Registration Procedures ................................7
Section 2.4 Registration Expenses .................................11
Section 2.5 Indemnification .......................................12
Article 3 TRANSFEREES ...........................................15
Section 3.1 Transferrees ..........................................15
Article 4 TERMINATION ...........................................15
Section 4.1 Termination ...........................................15
Article 5 MISCELLANEOUS .........................................15
Section 5.1 Notices ...............................................15
Section 5.2 Governing Law .........................................16
Section 5.3 Successors and Assigns ................................16
Section 5.4 Duplicate Originals ...................................16
Section 5.5 Severability ..........................................16
Section 5.6 No Waivers; Amendments ................................17
Section 5.7 Entire Agreement ......................................17
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REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (this "Registration Rights
Agreement") dated as of May 14, 1999, is entered into by and between Brookdale
Living Communities, Inc., a Delaware corporation (including its successors, the
"Company"), Health Partners ("Health Partners") and any direct or indirect
transferee of Health Partners that becomes a party to this Registration Rights
Agreement in accordance with Section 3.1 hereto.
In consideration of the premises, mutual covenants and agreements
hereinafter contained and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
Article 1
DEFINITIONS
-----------
Section 1.1 Definitions.
"Advice" shall have the meaning provided in Section
2.1.3 hereof.
"Affiliate" means, with respect to any Person, any
Person who, directly or indirectly, controls, is controlled by or
is under common control with that Person. For purposes of this
definition, "control" when used with respect to any Person means
the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
"Common Stock" means shares of the Common Stock, $.01
par value per share, of the Company, and any capital stock into
which such Common Stock thereafter may be changed.
"Common Stock Equivalents" means, without duplication
with any other Common Stock or Common Stock Equivalents, any
security of the Company which is convertible into, exercisable for
or exchangeable for, directly or indirectly, Common Stock of the
Company, whether at the time of issuance or upon the passage of
time or the occurrence of some future event.
"Company" shall have the meaning provided in the
introductory paragraph hereof.
"Conversion Common Stock" means (i) all shares of Common
Stock issued or issuable upon conversion of the Notes, provided
that such Shares are owned by a Holder (or are issuable upon
conversion of Notes that are owned by a Holder) and (ii) any
shares of Common Stock issued as a dividend or other distribution
with respect to or in exchange or in replacement of any shares of
the Common Stock referred to in clause (i) above.
<PAGE>
"Effectiveness Period" shall have the meaning provided
in Section 2.2.1 hereof.
"Effectiveness Target Date" means the 180th day
following the date of this Registration Rights Agreement.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated by the
SEC thereunder.
"Excluded Registration" shall have the meaning provided
in Section 2.1.1 hereof.
"Filing Date" means the 90th day following the date of
this Registration Rights Agreement.
"Fully-Diluted Common Stock" means, at any time, the
then outstanding Common Stock of the Company plus (without
duplication) all shares of Common Stock issuable, whether at such
time or upon the passage of time or the occurrence of future
events, upon the conversion or exchange of all then outstanding
Common Stock Equivalents.
"Health Partners" shall have the meaning provided in the
introductory paragraph hereof.
"Health Partners Holders" means, collectively, Health
Partners and any Affiliates or direct or indirect partners of
Health Partners who own any Common Stock or Common Stock
Equivalents or any interest therein.
"Holder" means (i) Health Partners and (ii) any direct
or indirect transferee of Health Partners who shall become a party
to this Registration Rights Agreement in accordance with Section
3.1 hereof.
"Inspectors" shall have the meaning provided in Section
2.3(x) hereof.
"Losses" shall have the meaning provided in Section
2.5.1 hereof.
"Majority Health Partners Holders" means Health Partners
Holders owning Common Stock and/or Common Stock Equivalents
representing a majority of the Fully-Diluted Common Stock then
owned by all Health Partners Holders.
"Material Adverse Effect shall have the meaning provided
in Section 2.1.2 hereof.
"NASD" shall have the meaning provided in Section 2.4
hereof.
"Notes" means the 5 1/2% Convertible Subordinated Notes
due 2009 of the Company in the aggregate principal amount of
$100,000.00.
2
<PAGE>
"Person" or "person" means any individual, corporation,
partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated
organization or government or other agency or political
subdivision thereof.
"Prime Registration Rights Agreement" means the
Registration Rights Agreement, dated as of May 7, 1997, by and
among Company, The Prime Group, Inc., Prime Group Limited
Partnership and Prime Group, VI, L.P.
"Prospectus" means the prospectus included in any
Registration Statement (including, without limitation, a
prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the
shares of Common Stock covered by such Registration Statement, and
all other amendments and supplements to any such prospectus,
including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference, if any, in
such prospectus.
"Records" shall have the meaning provided in Section
2.3(x) hereof.
"Registration Expenses" shall have the meaning provided
in Section 2.4 hereof.
"Registration Rights Agreement" means this Registration
Rights Agreement, as such from time to time may be amended.
"Registration Statement" means any registration
statement of the Company under the Securities Act that covers any
shares of Common Stock pursuant to the provisions of Article 2
hereof (or with respect to which any shares of Common Stock are
eligible for inclusion in accordance with Section 2.1 hereof),
including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by
reference, if any, in such registration statement.
"SEC" means the U. S. Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated by the SEC
thereunder.
"Seller Affiliates" shall have the meaning provided in
Section 2.5.1 hereof.
"Shelf Registration" shall have the meaning provided in
Section 2.2.1 hereof.
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<PAGE>
"Shelf Securities" means (i) all of the Notes, provided
that such Notes are held by Holders and (ii) the Conversion Common
Stock.
"Suspension Notice" shall have the meaning provided in
Section 2.1.3 hereof.
Section 1.2 Rules of Construction. Unless the context otherwise
requires
(1) a term has the meaning assigned to it;
(2) words in the singular include the plural, and words
in the plural include the singular;
(3) provisions apply to successive events and
transactions; and
(4) "herein," "hereof" and other words of similar import
refer to this Registration Rights Agreement as a whole and not
to any particular Article, Section or other subdivision.
Article 2
PIGGYBACK REGISTRATION; SHELF REGISTRATION
------------------------------------------
Section 2.1 Piggyback Registration Rights.
------------------------------
2.1.1 Right to Piggyback. Each time the Company proposes to
register any of its Common Stock (other than pursuant to an Excluded
Registration) under the Securities Act for sale to the public (whether for the
account of the Company or the account of any securityholder of the Company), the
Company shall give prompt written notice to each Holder (which notice shall be
given not less than thirty (30) days prior to the effective date of the
Company's Registration Statement), which notice shall offer each such Holder the
opportunity to include any or all of its or his Conversion Common Stock in such
Registration Statement, subject to the limitations contained in Section 2.1.2
hereof. Each Holder who desires to have its or his Conversion Common Stock
included in such Registration Statement shall so advise the Company in writing
(stating the number of shares desired to be registered) within twenty (20) days
after the date of such notice from the Company. Any Holder shall have the right
to withdraw (provided that, after such Holder has entered into an underwriting
agreement, such right to withdraw will exist only to the extent provided in such
underwriting agreement) such Holder's request for inclusion of such Holder's
Conversion Common Stock in any Registration Statement pursuant to this Section
2.1.1 by giving written notice to the Company of such withdrawal. Subject to
Section 2.1.2 hereof, the Company shall include in such Registration Statement
all such Conversion Common Stock so requested to be included therein; provided,
however, that the Company may at any time withdraw or cease proceeding with any
such registration if it shall at the same time withdraw or cease proceeding with
the registration of all other equity securities originally proposed to be
registered. As used herein, "Excluded Registration" means a registration under
the Securities Act of (i) securities registered pursuant to the Shelf
Registration, (ii) securities
4
<PAGE>
registered on Form S-4 or S-8 or any similar successor form, (iii) securities
registered to effect the acquisition by the Company of, or combination by the
Company with, another Person or registered to effect an offering solely to the
Company's existing stockholders and (iv) securities registered pursuant to any
primary shelf registration statement on the part of the Company or any resale
shelf registration statement on behalf of any other Person.
2.1.2 Priority on Registrations. If the managing underwriter
or underwriters advise the Company that the inclusion of the Conversion Common
Stock proposed to be included in a proposed registration in accordance with
Section 2.1.1 hereof would materially and adversely affect the price or success
of the offering (a "Material Adverse Effect"), then (i) the number of such
Holder's shares of Conversion Common Stock to be included in the Registration
Statement shall be reduced to an amount which, in the judgment of the managing
underwriter or underwriters, would eliminate such Material Adverse Effect, or
(ii) if no such reduction would, in the judgment of the managing underwriter or
underwriters eliminate such Material Adverse Effect, then the Company shall have
the right to exclude all such Conversion Common Stock from such Registration
Statement. Any partial reduction in the number of shares of Conversion Common
Stock to be included in the Registration Statement pursuant to clause (i) of the
immediately preceding sentence shall be effected pro rata based on the ratio
which such Holder's requested shares bears to the total number of shares of
Conversion Common Stock requested to be included in such Registration Statement
by all Holders, and any reduction in the number of shares of Common Stock to be
included in the Registration Statement pursuant to the immediately preceding
sentence shall be effected pro rata among all Persons (including Holders) who
have requested (pursuant to contractual registration rights) the inclusion of
shares of Common Stock in such Registration Statement (based on the respective
number of such shares such Person has requested to be included); provided,
however, that such inclusion shall be subject to the priorities set forth in the
Prime Registration Rights Agreement. If as a result of the provisions of this
Section 2.1.2 any Holder shall not be entitled to include all shares of
Conversion Common Stock in a registration that such Holder has requested to be
so included, such Holder may withdraw (provided that, after such Holder has
entered into an underwriting agreement, such right to withdraw will exist only
to the extent provided in such underwriting agreement) such Holder's request to
include shares of Conversion Common Stock in such Registration Statement. No
Person may participate in any Registration Statement pursuant to this Section
2.1 unless such Person (x) agrees to sell such Person's shares of Common Stock
on the basis provided in any underwriting arrangements approved by the Company
or by the holder of demand registration rights who has initiated such
registration and (y) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements, and other documents, each in
customary form, reasonably required under the terms of such underwriting
arrangements; provided, however, that no such Person shall be required to make
any representations or warranties in connection with any such registration other
than representations and warranties as to (i) such Person's ownership of his or
its shares of Common Stock to be sold or transferred free and clear of all
liens, claims, and encumbrances, (ii) such Person's power and authority to
effect such transfer, and (iii) such matters pertaining to compliance with
securities laws, including representations and warranties concerning the
5
<PAGE>
accuracy of any information provided in writing by such Person for inclusion in
the Registration Statement, as may be reasonably requested; provided further,
however, that the obligation of such Person to indemnify pursuant to any such
underwriting arrangements shall be several, not joint and several, among such
Persons selling shares of Common Stock, and the liability of each such Person
will be in proportion to, and provided further that such liability will be
limited to, the net amount received (after excluding underwriting discounts and
commissions, but not other expenses) by such Person from the sale of his or its
shares of Common Stock pursuant to such registration.
2.1.3 Suspension of Piggyback Dispositions. Each Holder agrees
by acquisition of any shares of Common Stock that, upon receipt of any notice (a
"Suspension Notice") from the Company of the happening of any event of the kind
described in Section 2.3(v)(C), such Holder will forthwith discontinue
disposition of shares of Common Stock registered pursuant to this Section 2.1
until such Holder's receipt of the copies of the supplemented or amended
Prospectus, or until it is advised in writing (the "Advice") by the Company that
the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
Prospectus.
Section 2.2 Shelf Registration.
-------------------
2.2.1 Obligation to File. The Company agrees to file with the
SEC, as soon as practicable, but in no event later than the Filing Date, a
Registration Statement for a resale offering to be made on a continuous basis
pursuant to Rule 415 promulgated under the Securities Act covering all of the
Shelf Securities (the "Shelf Registration"). The Shelf Registration shall be on
Form S-3 under the Securities Act or another appropriate form permitting
registration of such Shelf Securities for resale by the Holders of Conversion
Common Stock in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Company shall use its best
efforts to cause the Shelf Registration to be declared effective pursuant to the
Securities Act as promptly as practicable following the filing thereof, but in
no event later than the Effectiveness Target Date, and to keep the Shelf
Registration continuously effective under the Securities Act during the term of
this Registration Rights Agreement, or such shorter period ending when either
(1) all Shelf Securities covered by the Shelf Registration have been sold in the
manner set forth and as contemplated in the Shelf Registration or pursuant to
Rule 144 promulgated under the Securities Act or (2) there cease to be
outstanding any Shelf Securities (the "Effectiveness Period").
2.2.2 Maintenance of Effectiveness. The Company shall use its
best efforts to keep the Shelf Registration continuously effective for the
Effectiveness Period, by supplementing and amending the Shelf Registration if
required by the rules, regulations or instructions applicable to the
registration form used for such Shelf Registration, if required by the
Securities Act or if reasonably requested by Holders of Shelf Securities covered
by such Registration Statement or by any underwriter of such Shelf Securities.
6
<PAGE>
2.2.3 Certain Limitations on Sales. Notwithstanding anything
to the contrary in Section 2.2.1 or Section 2.2.2 hereof, the Company may, by
delivering written notice to the Holders of Conversion Common Stock, prohibit
offers and sales of Conversion Common Stock pursuant to the Shelf Registration
until a date not later than 90 days after the date of such notice if (i) the
Company is engaged in confidential negotiations or other confidential business
activities, disclosure of which would be required in such Registration Statement
(but which public disclosure would not be required if offers and sales were not
made pursuant to such Registration Statement), and the Company determines in
good faith that such disclosure would be materially adverse to the Company and
its stockholders (provided, however, that upon the public disclosure by the
Company of the negotiations or business activities described above, the
suspension of the use of the Shelf Registration pursuant to this Section 2.2.3
shall cease and the Company shall promptly notify Holders of Conversion Common
Stock that dispositions of Conversion Common Stock may be resumed) or (ii) the
Company is required to file a post effective amendment to such Shelf
Registration. In no event may the Company prohibit offers and sales of
Conversion Common Stock pursuant to the Shelf Registration (i) for a period of
more than 90 days following the delivery by the Company of the notice provided
for in the first sentence of this Section 2.2.3 or (ii) more than twice in any
12-month period.
2.2.4 Certain Limitations on Sale of Notes Pursuant to Shelf
Registration. Notwithstanding anything in this Article 2 to the contrary, (i) no
Holder will sell any Notes pursuant to the Shelf Registration except pursuant to
an underwritten offering, (ii) the Holders will effect no more than three such
underwritten offerings of Notes in the aggregate pursuant to the Shelf
Registration and (iii) the Holders will not effect more than one such
underwritten offering of Notes pursuant to the Shelf Registration in any nine
month period.
Section 2.3 Registration Procedures. In connection with the
Company's registration obligations hereunder, the Company shall effect such
registrations on the appropriate form available for the sale of the Common Stock
(in the case of any registration pursuant to Section 2.1 hereof) or Shelf
Securities (in the case of any registration pursuant to Section 2.2 hereof) to
permit the sale of such Common Stock or Shelf Securities, as applicable, in
accordance with the intended method or methods of disposition thereof and
subject to the provisions hereof, and pursuant thereto the Company shall as
expeditiously as possible:
(i) prepare and file with the SEC a Registration
Statement on any appropriate form under the Securities Act with
respect to such shares of Common Stock or Shelf Securities, as
applicable, and use its best efforts to cause such Registration
Statement to become effective as quickly as practicable
(ii) prepare and file with the SEC such amendments,
post-effective amendments, and supplements to such Registration
Statement and the Prospectus used in connection therewith as may
be necessary to keep such Registration Statement continuously
effective for the applicable time period (which, (i) in the case
of a Registration Statement in which shares of Common
7
<PAGE>
Stock are included pursuant to Section 2.1 hereof, shall be not
less than 180 days or such lesser period in the case of an
underwritten offering as is necessary for the underwriters to sell
unsold allotments, and (ii) in the case of a Registration
Statement pursuant to Section 2.2 hereof, shall be the
Effectiveness Period) and comply on the Company's part with the
provisions of the Securities Act applicable to the Company with
respect to the disposition of all securities covered by such
Registration Statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth
in such Registration Statement;
(iii) furnish to each seller of Common Stock or Shelf
Securities, as applicable, pursuant to such Registration Statement
and the underwriters of the securities being registered such
number of copies of such Registration Statement, each amendment
and supplement thereto, the Prospectus included in such
Registration Statement (including each preliminary Prospectus),
any documents incorporated by reference therein and such other
documents as such seller or underwriters may reasonably request in
order to facilitate the disposition of such Common Stock or Shelf
Securities, as applicable, or the sale of such securities by such
underwriters (it being understood that, subject to the
requirements of the Securities Act and applicable state securities
laws and to the provisions of Section 2.2.3 hereof, the Company
consents to the use of the Prospectus and any amendment or
supplement thereto by each seller and the underwriters in
connection with the offering and sale of the Common Stock or Shelf
Securities, as applicable, covered by the Registration Statement
of which such Prospectus, amendment or supplement is a part);
(iv) use its commercially reasonable efforts to
register or qualify such Common Stock or Shelf Securities, as
applicable, under such other securities or blue sky laws of such
U.S. states as the managing underwriter or underwriters reasonably
request (or, in the event the Registration Statement does not
relate to an underwritten offering, as the holders of a majority
of such shares of Common Stock or Shelf Securities, as applicable,
may reasonably request); use its commercially reasonable efforts
to keep each such registration or qualification (or exemption
therefrom) effective during the period in which such Registration
Statement is required to be kept effective; and do any and all
other acts and things which may be reasonably necessary or
advisable to enable each seller to consummate the disposition of
the shares of Common Stock or Shelf Securities, as applicable,
owned by such seller in such jurisdictions (provided, however,
that the Company will not be required to (A) qualify generally to
do business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph, (B) consent to
general service of process in any such jurisdiction or (C) subject
itself to taxation in any such jurisdiction);
(v) promptly notify each seller and each underwriter
and (if requested by any such Person) confirm such notice in
writing (A) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed and, with respect to a
Registration Statement or any post-effective
8
<PAGE>
amendment, when the same has become effective, (B) of the issuance
by any state securities or other regulatory authority of any order
suspending the qualification or exemption from qualification of
any of the shares of Common Stock or Shelf Securities, as
applicable, under state securities or "blue sky" laws or the
initiation of any proceedings for that purpose, and (C) of the
happening of any event which makes any statement made in a
Registration Statement or related Prospectus untrue or which
requires the making of any changes in such Registration Statement,
Prospectus or documents so that they will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and, as promptly as practicable
thereafter, prepare and file with the SEC and furnish a supplement
or amendment to such Prospectus so that, as thereafter deliverable
to the purchasers of such shares of Common Stock or Shelf
Securities, as applicable, such Prospectus will not contain any
untrue statement of a material fact or omit a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(vi) make generally available to the Company's
securityholders an earnings statement satisfying the provisions of
Section 11(a) of the Securities Act no later than thirty (30) days
after the end of the twelve (12) month period beginning with the
first day of the Company's first fiscal quarter commencing after
the effective date of a Registration Statement, which earnings
statement shall cover said twelve (12) month period, and which
requirement will be deemed to be satisfied if the Company timely
files complete and accurate information on Forms 10-Q, 10-K and
8-K under the Exchange Act and otherwise complies with Rule 158
promulgated under the Securities Act;
(vii) if reasonably requested by the managing
underwriter or underwriters or any seller, promptly incorporate in
a Prospectus supplement or post-effective amendment such
information as the managing underwriter or underwriters or any
seller reasonably requests to be included therein, including,
without limitation, with respect to the shares of Common Stock or
Shelf Securities, as applicable, being sold by such seller, the
purchase price being paid therefor by the underwriters and with
respect to any other terms of the underwritten offering of the
shares of Common Stock or Shelf Securities, as applicable, to be
sold in such offering, and promptly make all required filings of
such Prospectus supplement or post-effective amendment;
(viii)as promptly as practicable after filing with the
SEC of any document which is incorporated by reference into a
Registration Statement (in the form in which it was incorporated),
deliver a copy of each such document to each seller;
(ix) cooperate with the sellers and the managing
underwriter or underwriters to facilitate the timely preparation
and delivery of certificates (which shall not bear any restrictive
legends unless required under applicable law) representing
securities sold under any Registration Statement, and enable such
9
<PAGE>
securities to be in such denominations and registered in such
names as the managing underwriter or underwriters or such sellers
may request and keep available and make available to the Company's
transfer agent prior to the effectiveness of such Registration
Statement a supply of such certificates;
(x) promptly make available for inspection by any
seller, any underwriter participating in any disposition pursuant
to any Registration Statement, and any attorney, accountant or
other agent or representative retained by any such seller or
underwriter (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably
necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any
such Inspector in connection with such Registration Statement;
(xi) furnish to each seller in an underwritten offering
and underwriter a signed counterpart of (A) an opinion or opinions
of counsel to the Company, and (B) a comfort letter or comfort
letters from the Company's independent public accountants, each in
customary form and covering such matters of the type customarily
covered by opinions or comfort letters, as the case may be, as
such sellers or managing underwriter reasonably requests;
(xii) cause the shares of Common Stock or Shelf
Securities, as applicable, included in any Registration Statement
to be (A) listed on each securities exchange, if any, on which
similar securities issued by the Company are then listed, or (B)
authorized to be quoted and/or listed (to the extent applicable)
on the National Association of Securities Dealers, Inc. Automated
Quotation System or the Nasdaq National Market if the shares of
Common Stock or Shelf Securities, as applicable, so qualify;
(xiii)reasonably cooperate with each seller and each
underwriter participating in the disposition of such shares of
Common Stock or Shelf Securities, as applicable, and their
respective counsel in connection with any filings required to be
made with the National Association of Securities Dealers, Inc.;
(xiv) during the period when the Prospectus is required
to be delivered under the Securities Act, promptly file all
documents required to be filed with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act;
(xv) notify each seller of shares of Common Stock or
Shelf Securities, as applicable, promptly of any request by the
SEC for the amending or supplementing of such Registration
Statement or Prospectus or for additional information;
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<PAGE>
(xvi) prepare and file with the SEC promptly any
amendments or supplements to such Registration Statement or
Prospectus which, in the opinion of counsel for the Company or in
the reasonable opinion of counsel for the managing underwriter, is
required in connection with the distribution of the shares of
Common Stock or Shelf Securities, as applicable;
(xvii)enter into such agreements (including underwriting
agreements in the managing underwriter's customary form) as are
customary in connection with an underwritten registration; and
(xviii)advise each seller of such shares of Common Stock
or Shelf Securities, as applicable, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any
stop order by the SEC suspending the effectiveness of such
Registration Statement or the initiation or threatening of any
proceeding for such purpose and promptly use its best efforts to
prevent the issuance of any stop order or to obtain its withdrawal
at the earliest possible moment if such stop order should be
issued.
Section 2.4 Registration Expenses. All expenses incident to the
Company's performance of or compliance with this Article 2 including, without
limitation, all registration and filing fees, all fees and expenses associated
with filings required to be made with the National Association of Securities
Dealers, Inc. ("NASD") (including, if applicable, the fees and expenses of any
"qualified independent underwriter" as such term is defined in Schedule E of the
By-Laws of the NASD, and of its counsel), as may be required by the rules and
regulations of the NASD, fees and expenses of compliance with securities or
"blue sky" laws (including reasonable fees and disbursements of counsel in
connection with "blue sky" qualifications of the shares of Common Stock or Shelf
Securities, as applicable), rating agency fees, printing expenses (including
reasonable expenses of printing certificates for the shares of Common Stock or
Shelf Securities, as applicable, in a form eligible for deposit with Depository
Trust Company and of printing Prospectuses if the printing of Prospectuses is
reasonably requested by a holder of shares of Common Stock or Shelf Securities,
as applicable), messenger and delivery expenses, the Company's internal expenses
(including without limitation all salaries and expenses of its officers and
employees performing legal or accounting duties), the fees and expenses incurred
in connection with any listing of the shares of Common Stock or Shelf
Securities, as applicable, fees and expenses of counsel for the Company and its
independent certified public accountants (including the expenses of any special
audit or "cold comfort" letters required by or incident to such performance),
securities acts liability insurance (if the Company elects to obtain such
insurance), the fees and expenses of any special experts retained by the Company
in connection with such registration, and the fees and expenses of other Persons
retained by the Company and reasonable fees and expenses of one firm of counsel
for the sellers (which shall be selected by the holders of a majority of the
shares of Common Stock or Shelf Securities, as applicable, being included in any
particular Registration Statement) (all such expenses being herein called
"Registration Expenses") will be borne by the Company whether or not any
Registration Statement becomes effective; provided that in no event shall
Registration Expenses include any underwriting discounts, commissions, or fees
11
<PAGE>
attributable to the sale of the shares of Common Stock or Shelf Securities, as
applicable, or any counsel (except as provided above), accountants, or other
Persons retained or employed by the sellers.
Section 2.5 Indemnification.
----------------
2.5.1 The Company agrees to indemnify and reimburse, to the
fullest extent permitted by law, each Holder who offers or sells shares of
Common Stock pursuant to a Registration Statement, and each of its employees,
agents, representatives, partners, officers, and directors and each Person who
controls such Holder (within the meaning of the Securities Act or the Exchange
Act) and any investment advisor thereof (collectively, the "Seller Affiliates")
(i) against any and all losses, expenses, claims, damages or liabilities
(including, without limitation, reasonable attorneys' fees and disbursements,
subject to the limitations set forth in Section 2.5.3 hereof) (collectively,
"Losses" and each individually, a "Loss") based upon, arising out of, related to
or resulting from any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus, or preliminary Prospectus
or any amendment thereof or supplement thereto, or any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which made, not
misleading, (ii) against any and all Loss, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation or investigation or
proceeding by any governmental agency or body, commenced or threatened, or of
any claim whatsoever based upon, arising out of, related to or resulting from
any such untrue statement or omission or alleged untrue statement or omission,
and (iii) against any and all costs and expenses (including, subject to the
provisions of Section 2.5.3 hereof, reasonable fees and disbursements of
counsel) as may be reasonably incurred in investigating, preparing, or defending
against any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon,
arising out of, related to or resulting from any such untrue statement or
omission or alleged untrue statement or omission, to the extent that any such
expense or cost is not paid under clause (i) or (ii) above; except insofar as
the same are made in reliance upon and in strict conformity with information
furnished in writing to the Company by such seller or any Seller Affiliate for
use therein or arise from such seller's or any Seller Affiliate's failure to
deliver a copy of the Registration Statement or Prospectus or any amendments or
supplements thereto after the Company has furnished such seller or Seller
Affiliate with a sufficient number of copies of the same. The reimbursements
required by this Section 2.5.1 will be made by periodic payments during the
course of the investigation or defense, as and when bills are received or
expenses incurred.
2.5.2 In connection with any Registration Statement in which a
seller of shares of Common Stock or Shelf Securities, as applicable, is
participating, each such seller will furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any such Registration Statement or Prospectus and, to the
fullest extent permitted by law, each such seller will indemnify the Company and
its directors and officers, employees, agents, representatives and each Person
who controls the Company (within the meaning of the Securities Act or the
12
<PAGE>
Exchange Act) (i) against any and all Losses resulting from any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, Prospectus, or any preliminary Prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) against any and all Loss, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation or investigation or
proceeding by any governmental agency or body, commenced or threatened, or of
any claim whatsoever based upon, arising out of, related to or resulting from
any such untrue statement or omission or alleged untrue statement or omission,
and (iii) against any and all costs and expenses (including, subject to the
provisions of Section 2.5.3 hereof, reasonable fees and disbursements of
counsel) as may be reasonably incurred in investigating, preparing, or defending
against any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon,
arising out of, related to or resulting from any such untrue statement or
omission or alleged untrue statement or omission, but, in the case of each of
the foregoing clauses (i), (ii) and (iii), only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission is made in
reliance upon and in strict conformity with information furnished in writing to
the Company by such seller or any Seller Affiliate for use therein or arise from
such seller's or any Seller Affiliate's failure to deliver a copy of the
Registration Statement or Prospectus or any amendments or supplements thereto
after the Company has furnished such seller or Seller Affiliate with a
sufficient number of copies of the same; provided that the obligation to
indemnify will be several, not joint and several, among such sellers of shares
of Common Stock or Shelf Securities, as applicable, and the liability of each
such seller of shares of Common Stock or Shelf Securities, as applicable, will
be in proportion to, and provided further that such liability will be limited
to, the net amount received by such seller from the sale of shares of Common
Stock or Shelf Securities, as applicable, pursuant to such Registration
Statement; provided, further, that such seller of shares of Common Stock or
Shelf Securities, as applicable, shall not be liable in any such case to the
extent that prior to the filing of any such Registration Statement or Prospectus
(or amendment thereof or supplement thereto from which such Loss has arisen),
such seller has furnished in writing to the Company information expressly for
use in such Registration Statement or Prospectus or any amendment thereof or
supplement thereto which corrected or made not misleading information previously
furnished to the Company.
2.5.3 Any Person entitled to indemnification hereunder will
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to give
such notice shall not limit the rights of such Person unless the indemnifying
party is materially prejudiced thereby) and (ii) permit such indemnifying party
to assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, however, that any Person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such Person unless (A) the indemnifying party
has agreed to pay such fees or expenses, (B) the indemnifying party shall have
failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such Person or (C) in such party's reasonable judgment, a
conflict of interest between such indemnified party and
13
<PAGE>
indemnifying party exists with respect to such claim. If such defense is not
assumed by the indemnifying party as permitted hereunder, the indemnifying party
will not be subject to any liability for any settlement made by the indemnified
party without its consent (but such consent will not be unreasonably withheld).
If such defense is assumed by the indemnifying party pursuant to the provisions
hereof, such indemnifying party shall not settle or otherwise compromise the
applicable claim unless (1) such settlement or compromise contains a full and
unconditional release of the indemnified party or (2) the indemnified party
otherwise consents in writing. In the event an indemnifying party elects not to
assume the defense of a claim or an indemnified party, in its reasonable
judgment, concludes that a conflict of interest exists as described in clause
(C) above, the indemnifying party will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim.
2.5.4 Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 2.5.1 or Section 2.5.2 are
unavailable to hold harmless an indemnified party in respect of any Losses
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such Losses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party in connection with the actions which resulted in
the Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact
relates to information supplied by such indemnifying party or indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 2.5.4 were determined by pro rata allocation (even if the Holders or any
underwriters or all of them were treated as one entity for such purpose) or by
any other method of allocation which does not take account of the equitable
considerations referred to in this Section 2.5.4. The amount paid or payable by
an indemnified party as a result of the Losses referred to above shall be deemed
to include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or, except as provided in
Section 2.5.3, defending any such action or claim. Notwithstanding the
provisions of this Section 2.5.4, no Holder shall be required to contribute an
amount greater than the dollar amount by which the net proceeds received by such
Holder with respect to the sale of any shares of Common Stock or Shelf
Securities, as applicable, pursuant to this Article 2 exceeds the amount of
damages which such Holder has otherwise been required to pay by reason of any
and all untrue or alleged untrue statements of material fact or omissions or
alleged omissions of material fact made in any Registration Statement,
Prospectus or preliminary Prospectus or any amendment thereof or supplement
thereto related to such sale of shares of Common Stock or Shelf Securities, as
applicable. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. The Holders'
obligations in this Section 2.5.4 to contribute shall be several in proportion
to the amount of shares of Common Stock or Shelf Securities, as applicable, sold
by them, and not joint.
14
<PAGE>
If indemnification is available under this Section 2.5, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in
Section 2.5.1 and Section 2.5.2 without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this Section 2.5.4 subject, in the case of the Holders, to the
limited dollar amounts set forth in Section 2.5.2.
Article 3
TRANSFEREES
-----------
Section 3.1 Transferees. Other than in the case of transfers to the
public pursuant to an effective Registration Statement or sales to the public
pursuant to Rule 144 promulgated under the Securities Act, each Holder may (but
shall not be required to) cause any proposed transferee of any Common Stock or
Common Stock Equivalent or any interest therein held by him or it to agree, by
execution of a counterpart signature page hereto, to take and hold such Common
Stock or Common Stock Equivalent subject to the provisions and upon the
conditions specified in this Registration Rights Agreement and to become a party
to this Registration Rights Agreement.
Article 4
TERMINATION
-----------
Section 4.1 Termination. Subject to earlier termination of certain
provisions hereof as provided herein, the provisions of this Registration Rights
Agreement shall terminate on the date that is 10 years following the date of
this Registration Rights Agreement.
Article 5
MISCELLANEOUS
-------------
Section 5.1 Notices. Any notices or other communications required or
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery, by telex, by telecopier, by registered or certified mail,
postage prepaid, return receipt requested, or by overnight courier, addressed as
follows (or at such other address as may be substituted by notice given as
herein provided):
If to the Company:
Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4400
Chicago, Illinois 60601
Attention: Mark J. Schulte
Fax: (312) 977-3699
with copies to (which shall not constitute notice):
15
<PAGE>
Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4400
Chicago, Illinois 60602
Attention: Robert J. Rudnik, Esq.
Fax: (312) 977-3769
and
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Wayne D. Boberg, Esq.
Fax: (312) 558-5700
If to any Holder, at its address listed on the signature pages hereof.
Any notice or communication hereunder shall be deemed to have been
given or made as of the date so delivered if personally delivered; when answered
back, if telexed; when receipt is acknowledged, if telecopied; and five (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); and one (1) business day after delivery to
a reputable overnight courier service guaranteeing next business day delivery.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
Section 5.2 Governing Law. THIS REGISTRATION RIGHTS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Section 5.3 Successors and Assigns. This Registration Rights
Agreement shall be binding upon the Company, each Holder, and their respective
successors and permitted assigns.
Section 5.4 Duplicate Originals. All parties may sign any number of
copies of this Registration Rights Agreement. Each signed copy shall be an
original, but all of them together shall represent the same agreement.
Section 5.5 Severability. In case any provision in this Registration
Rights Agreement shall be held invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such provision
in every other respect and the remaining provisions shall not in any way be
affected or impaired thereby.
16
<PAGE>
Section 5.6 No Waivers; Amendments.
-----------------------
5.6.1 No failure or delay on the part of the Company or any
Holder in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or any Holder at law or in equity or otherwise.
5.6.2 Any provision of this Registration Rights Agreement may
be amended or waived if, but only if, such amendment or waiver is in writing and
is signed by the Company, the Holders holding at least a majority of the
Fully-Diluted Common Stock held by all Holders, and the Majority Health Partners
Holders.
Section 5.7 Entire Agreement. This Registration Rights Agreement
contains the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings with
respect to such subject matter.
[Signature Pages Follow]
17
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC.
By: /s/ Darryl W. Copeland, Jr.
---------------------------
Name: Darryl W. Copeland, Jr.
Title: Executive Vice President
HEALTH PARTNERS
By: Capital Z Financial Services Fund II, L.P.,
its general partner
By: Capital Z Partners, L.P.,
its general partner
By: Capital Z Partners, Ltd.,
its general partner
By: /s/ Paul H. Warren
-------------------
Paul H. Warren
Senior Vice President
Address:
One Chase Manhattan Plaza, 44th Floor
New York, New York 10005
Attention: David A. Spuria, Esq.
Fax: (212) 898-8720
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Thomas A. Roberts
Fax: (212) 310-6717
EXECUTION COPY
Stockholders Agreement
BY AND AMONG
BROOKDALE LIVING COMMUNITIES, INC.
AND
SIGNATORIES LISTED HEREIN
--------------------------------------
Dated as of May 14, 1999
--------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
Article 1 DEFINITIONS.............................................1
Section 1.1 Definitions.............................................1
Article 2 MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES........3
Section 2.1 Board of Directors......................................3
2.1.1 Board Representation....................................3
2.1.2 Vacancies...............................................4
2.1.3 Termination of Rights...................................4
2.1.4 Committee Representation................................5
2.1.5 Costs and Expenses......................................5
2.1.6 Other Activities of the Holders; Fiduciary Duties.......5
Article 3 HEALTH PARTNERS STANDSTILL..............................5
Section 3.1 Health Partners Standstill..............................5
Article 4 TRANSFEREES BOUND.......................................7
Section 4.1 Transferees Bound.......................................7
Article 5 TERMINATION.............................................7
Section 5.1 Termination.............................................7
Article 6 MISCELLANEOUS...........................................7
Section 6.1 Notices.................................................7
Section 6.2 Ownership by Prime......................................8
Section 6.3 Governing Law...........................................8
Section 6.4 Successors and Assigns..................................9
Section 6.5 Duplicate Originals.....................................9
Section 6.6 Severability............................................9
Section 6.7 No Waivers; Amendments..................................9
Section 6.8 Entire Agreement........................................9
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STOCKHOLDERS AGREEMENT
----------------------
THIS STOCKHOLDERS AGREEMENT (this "Stockholders Agreement") dated as of
May 14, 1999, is entered into by and among Brookdale Living Communities, Inc., a
Delaware corporation (including its successors, the "Company"), and the
securityholders listed on the signature pages hereof, or who may execute
counterpart signature pages hereto following the date hereof in accordance with
Section 4.1 hereto.
In consideration of the premises, mutual covenants and agreements
hereinafter contained and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
Article 1
DEFINITIONS
-----------
Section 1.1 Definitions.
------------
"Affiliate" means, with respect to any Person, any Person
who, directly or indirectly, controls, is controlled by or is
under common control with that Person. For purposes of this
definition, "control" when used with respect to any Person means
the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
"Beneficially Own" or "Beneficial Ownership" means
beneficial ownership determined in accordance with Rule 13d-3
promulgated under the Exchange Act.
"Common Stock" means shares of the Common Stock, $.01 par
value per share, of the Company, and any capital stock into which
such Common Stock thereafter may be changed.
"Common Stock Equivalents" means, without duplication with
any other Common Stock or Common Stock Equivalents, any security
of the Company which is convertible into, exercisable for or
exchangeable for, directly or indirectly, Common Stock of the
Company, whether at the time of issuance or upon the passage of
time or the occurrence of some future event.
"Company" shall have the meaning provided in the
introductory paragraph hereof.
"Controlled Affiliate" means, with respect to any Person,
any Affiliate of such Person who, directly or indirectly, is
controlled by such Person; provided, however, that the term
"Controlled Affiliate" with respect to the Ultimate General
Partner shall not include any entity with respect to which, as of
the time of such determination, the Ultimate General Partner does
not have
<PAGE>
the direct or indirect power (whether through ownership of a
majority of the voting securities of such entity or by contract or
otherwise) to elect a majority of the members of the board of
directors (or equivalent governing body) of such entity.
"Fully-Diluted Common Stock" means, at any time, the then
outstanding Common Stock of the Company plus (without duplication)
all shares of Common Stock issuable, whether at such time or upon
the passage of time or the occurrence of future events, upon the
conversion or exchange of all then outstanding Common Stock
Equivalents.
"Health Partners" means Health Partners, a Bermuda limited
partnership.
"Health Partners Designee" shall have the meaning provided
in Section 2.1.1(a) hereof.
"Health Partners Holders" means, collectively, Health
Partners and any Affiliates or direct or indirect partners of
Health Partners who own any Common Stock or Common Stock
Equivalents or any interest therein.
"Holder" means (i) any securityholder listed on the
signature pages hereof as of the date of this Stockholders
Agreement and (ii) any direct or indirect transferee of any such
Person who shall become a party to this Stockholders Agreement in
accordance with Section 4.1 hereof.
"Majority Health Partners Holders" means Health Partners
Holders owning Common Stock and/or Common Stock Equivalents
representing a majority of the Fully-Diluted Common Stock then
owned by all Health Partners Holders.
"Majority Prime Holders" means Prime Holders owning Common
Stock and/or Common Stock Equivalents representing a majority of
the Fully-Diluted Common Stock then owned by all Prime Holders.
"Notes" means the 5 1/2% Convertible Subordinated Notes
due 2009 of the Company.
"Person" or "person" means any individual, corporation,
partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated
organization or government or other agency or political
subdivision thereof.
"Prime" means The Prime Group, Inc.
"Prime Holders" means, collectively, Prime and any
Affiliates of Prime who own any Common Stock or Common Stock
Equivalents or any interest therein.
2
<PAGE>
"SEC" means the U. S. Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated by the SEC
thereunder.
"Standstill Limit" shall have the meaning provided in
Section 3.1(a) hereof.
"Stockholders Agreement" means this Stockholders
Agreement, as such from time to time may be amended.
"Ultimate General Partner" shall have the meaning provided
in Section 3.1(a) hereof.
Section 1.2 Rules of Construction. Unless the context otherwise
requires
(1) a term has the meaning assigned to it;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and
words in the plural include the singular;
(4) provisions apply to successive events and
transactions; and
(5) "herein," "hereof" and other words of similar
import refer to this Stockholders Agreement as a whole and
not to any particular Article, Section or other subdivision.
Article 2
MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES
------------------------------------------------
Section 2.1 Board of Directors.
-------------------
2.1.1 Board Representation.
---------------------
(a) During the term of this Stockholders Agreement, the
Board of Directors of the Company shall consist of no more than nine (9)
individuals. Subject to Section 2.1.3 hereof, the Majority Health Partners
Holders will be entitled to designate two (2) directors (each a "Health Partners
Designee"). One Health Partners Designee shall be a member of Class I of the
Board of Directors of the Company (with the term of such director expiring at
the annual meeting of the Company's stockholders to be held in 2001), and the
second Health Partners Designee shall be a member of Class II of the Board of
Directors of the Company (with the term of such director commencing at the first
meeting of the Board of Directors of the Company following the annual meeting of
the Company's stockholders to be held in May 1999 and expiring at the annual
meeting of the Company's stockholders to be held in 2002). The Board of
Directors of the
3
<PAGE>
Company has taken (or will take) all necessary action to ensure that,
concurrently with the execution and delivery of this Stockholders Agreement, a
Health Partners Designee is being elected to the Board of Directors of the
Company, as a member of Class I of the Board of Directors of the Company as
provided in the immediately preceding sentence, and that at the first meeting of
the Board of Directors of the Company following the 1999 annual meeting of the
Company's stockholders, a Health Partners Designee shall be elected to the Board
of Directors of the Company, as a member of Class II of the Board Directors of
the Company as provided in the immediately preceding sentence. The existence of
the right, pursuant to this Section 2.1.1(a), on the part of the Majority Health
Partners Holders to designate certain directors will in no way limit or impair
the right of the Majority Health Partners Holders to vote their shares of
capital stock of the Company as they see fit with respect to the election of
persons to fill seats on the Board of Directors other than the seats filled as a
result of the designation rights under this Section 2.1.1(a).
(b) The Company, from time to time at each appropriate time,
will cause each of the persons theretofore serving as Health Partners Designees
(or other persons designated by the Majority Health Partners Holders as new
Health Partners Designees in replacement of such persons) to be nominated and
recommended by the Board of Directors of the Company for reelection to the Board
of Directors of the Company by the stockholders of the Company upon any
expiration of their respective terms of office. Each Holder shall vote his or
its shares of Common Stock at any regular or special meeting of stockholders of
the Company or in any written consent executed in lieu of such a meeting of
stockholders and shall take all other lawful actions necessary to give effect to
the agreements contained in this Stockholders Agreement (including without
limitation the election of the Health Partners Designees as described in this
Section 2.1.1) and to attempt to ensure that the certificate of incorporation
and bylaws of the Company do not, at any time hereafter during the term of this
Stockholders Agreement, conflict in any respect with the provisions of this
Stockholders Agreement.
2.1.2 Vacancies. If, prior to his election to the Board of
Directors of the Company pursuant to Section 2.1.1 hereof, any Health Partners
Designee shall be unable or unwilling to serve as a director of the Company,
then the Majority Health Partners Holders shall be entitled to designate a
replacement Health Partners Designee. If, following an election to the Board of
Directors of the Company pursuant to Section 2.1.1 hereof, any Health Partners
Designee shall resign or be removed or be unable to serve for any reason prior
to the expiration of his term as a director of the Company, then the Majority
Health Partners Holders shall, within thirty (30) days of such event, notify the
Board of Directors of the Company in writing of a replacement Health Partners
Designee, and the Board of Directors shall elect such replacement Health
Partners Designee to fill the unexpired term of the designee who such new Health
Partners Designee is replacing. If the Majority Health Partners Holders request
that any Health Partners Designee be removed as a director (with or without
cause) by written notice thereof to the Company, then each of the Holders shall
vote all of its or his capital stock in favor of such removal upon such request.
2.1.3 Termination of Rights. The right of the Health Partners
Holders to designate directors under Section 2.1.1, and the obligation of the
Holders to vote their
4
<PAGE>
shares as provided herein with respect to such designees, shall terminate upon
the first to occur of (i) the termination or expiration of this Stockholders
Agreement, (ii) such time as the Majority Health Partners Holders elect in
writing to terminate their rights under this Section 2.1, or (iii) such time as
the Health Partners Holders collectively cease to Beneficially Own at least five
percent (5%) of the Fully-Diluted Common Stock. In addition, prior to the time
that the right of the Majority Health Partners Holders to designate directors is
terminated in accordance with the provisions of the immediately preceding
sentence, the number of directors that the Majority Health Partners Holders are
entitled to designate will be decreased from two (2) directors to one (1)
director from and following the time that the Health Partners Holders
collectively cease to Beneficially Own at least ten percent (10%) of the
Fully-Diluted Common Stock.
2.1.4 Committee Representation. So long as the Health Partners
Holders are entitled to designate any director under Section 2.1.1, at least one
(1) of the Health Partners Designees shall be permitted to serve on each
committee of the Board of Directors of the Company (provided that, if such
committee has eligibility requirements that are imposed by a Person other than
the Company, such as independence requirements for the Independent Committee,
such designee meets those requirements).
2.1.5 Costs and Expenses. The Company will, consistent with
the Company's policies and practices, pay all reasonable out-of-pocket expenses
incurred by in connection with the participation by directors in meetings of the
Board of Directors (and committees thereof) of the Company. The Health Partners
Designees will not be entitled to receive any fees or other remuneration (except
for the expense reimbursements described in the immediately preceding sentence)
for their service on the Board of Directors of the Company or any committees
thereof.
2.1.6 Other Activities of the Holders; Fiduciary Duties. It is
understood and accepted that the Holders and their Affiliates have interests in
other business ventures which may be in conflict with the activities of the
Company and its Subsidiaries and that, subject to applicable law, nothing in
this Stockholders Agreement shall limit the current or future business
activities of the Holders whether or not such activities are competitive with
those of the Company and its Subsidiaries. Nothing in this Stockholders
Agreement, express or implied, shall relieve any officer or director of the
Company or any of its Subsidiaries, or any Holder, of any fiduciary or other
duties or obligations they may have to the Company's stockholders.
Article 3
HEALTH PARTNERS STANDSTILL
--------------------------
Section 3.1 Health Partners Standstill.
(a) For a period commencing upon the date of this
Stockholders Agreement and ending on the date that is three (3) years following
the date of this Stockholders Agreement, neither Health Partners nor Capital Z
Partners, Ltd., the ultimate general partner of Health Partners (the "Ultimate
General Partner"), shall (nor
5
<PAGE>
shall the Ultimate General Partner permit any of its Controlled Affiliates to),
without the prior affirmative vote or written consent of a majority of the
directors of the Company (without counting as a director for such purpose any
director designated by the Health Partners Holders or any of their Affiliates),
directly or indirectly, (i) purchase or otherwise acquire Beneficial Ownership
of additional Common Stock or Common Stock Equivalents, if the effect of such
acquisition would be to increase the aggregate number of shares of Common Stock
and/or Common Stock Equivalents then Beneficially Owned by Health Partners and
the Ultimate General Partner and its Controlled Affiliates (including, without
limitation, Common Stock into which the Notes are convertible) to an amount in
excess of 49.9% of the total Fully-Diluted Common Stock (the "Standstill
Limit"), (ii) alone, or acting in concert with any other Person, make any tender
offer for the acquisition of additional Common Stock or Common Stock Equivalents
or (iii) seek to challenge the legality of this Section 3.1(a). Notwithstanding
the foregoing, (A) the provisions of clause (i) of the immediately preceding
sentence shall not apply to any acquisition from any Prime Holder or any
acquisition of Common Stock pursuant to conversion of any Notes, and (B) for the
purposes of calculating the number of shares of Common Stock and/or Common Stock
Equivalents Beneficially Owned by Health Partners and the Ultimate General
Partner and its Controlled Affiliates, there shall be excluded from such
calculation any shares owned by any insurance company or other institution which
is a Controlled Affiliate of the Ultimate General Partner as part of such
Controlled Affiliate's investment portfolio (and not owned for the purpose of
affecting control of the Company).
(b) The provisions of this Section 3.1 shall terminate prior
to expiration, and Health Partners or the Ultimate General Partner and its
Controlled Affiliates shall be free to acquire Common Stock and/or Common Stock
Equivalents without regard to the Standstill Limit and to take other actions
described in clause (ii) of the initial sentence of Section 3.1(a) hereof, at
and following the earliest time that (A) any Person other than Health Partners,
the Ultimate General Partner or any of its Controlled Affiliates or any Prime
Holder (and other than any Person acting in concert with Health Partners or the
Ultimate General Partner or any of its Controlled Affiliates) acquires
Beneficial Ownership of Common Stock and/or Common Stock Equivalents
representing, together with any Common Stock and/or Common Stock Equivalents
already Beneficially Owned by such Person and its Affiliates, at least 20% of
the total Fully-Diluted Common Stock, (B) any Person other than Health Partners,
the Ultimate General Partner or any of its Controlled Affiliates or any Prime
Holder (and other than any Person acting in concert with Health Partners or the
Ultimate General Partner or any of its Controlled Affiliates) notifies in
writing the Company or its Board of Directors or publicly announces that it has
acquired or has offered to acquire (including but not limited to any offer to
acquire by means of a tender offer) beneficial ownership (as determined in
accordance with Rule 13d-3 promulgated under the Exchange Act) of Common Stock
and/or Common Stock Equivalents representing, together with any Common Stock
and/or Common Stock Equivalents already beneficially owned (as determined in
accordance with Rule 13d-3 promulgated under the Exchange Act) by such Person
and its Affiliates, at least 20% of the total Fully-Diluted Common Stock or (C)
any Person commences (or publicly announces its intention to commence) a proxy
6
<PAGE>
contest pursuant to which such Person seeks to defeat or otherwise challenge the
election of any Health Partners Designee to the Board of Directors of the
Company.
Article 4
TRANSFEREES BOUND
-----------------
Section 4.1 Transferees Bound. Other than (i) transfers by any Prime
Holder (or any Holder that is a direct or indirect transferee of any Prime
Holder) to a Person other than a Prime Holder occurring on or after the third
anniversary of the date of this Stockholders Agreement, (ii) transfers to the
public pursuant to an effective Registration Statement, (iii) sales to the
public pursuant to Rule 144 promulgated under the Securities Act or (iv)
transfers to Blackacre Bridge Capital LLC (with respect to 12,500 shares of
Common Stock that it has certain rights to acquire) and Daryl W. Copeland, Jr.
(with respect to 125,000 shares of Common Stock that he has certain rights to
acquire), each Holder will cause any proposed transferee of any Common Stock or
Common Stock Equivalent or any interest therein held by him or it to agree to
take and hold such Common Stock or Common Stock Equivalent subject to the
provisions and upon the conditions specified in this Stockholders Agreement and
to become a party to this Stockholders Agreement by executing a counterpart
signature page hereto. Notwithstanding the foregoing, no Holder that is a direct
or indirect transferee of a Prime Holder (and that is not, itself, a Prime
Holder) will be bound by any provision of this Stockholders Agreement following
the third anniversary of the date of this Stockholders Agreement (and such
Person thereafter shall not be deemed to be a Holder).
Article 5
TERMINATION
-----------
Section 5.1 Termination. The provisions of this Stockholders
Agreement shall terminate on the date that is 10 years following the date of
this Stockholders Agreement; provided, however, that certain provisions of this
Stockholders Agreement may terminate earlier in accordance with their express
terms.
Article 6
MISCELLANEOUS
-------------
Section 6.1 Notices. Any notices or other communications required or
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery, by telex, by telecopier, by registered or certified mail,
postage prepaid, return receipt requested, or by overnight courier, addressed as
follows (or at such other address as may be substituted by notice given as
herein provided):
7
<PAGE>
If to the Company:
Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4400
Chicago, Illinois 60601
Attention: Mark J. Schulte
Fax: (312) 977-3699
with copies to (which shall not constitute notice):
Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4400
Chicago, Illinois 60601
Attention: Robert J. Rudnik, Esq.
Fax: (312) 977-3769
and
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Wayne D. Boberg, Esq.
Fax: (312) 558-5700
If to any Holder, at its address listed on the signature pages hereof.
Any notice or communication hereunder shall be deemed to have been
given or made as of the date so delivered if personally delivered; when answered
back, if telexed; when receipt is acknowledged, if telecopied; 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); and one (1) business day after delivery to a
reputable overnight courier service guaranteeing next business day delivery.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
Section 6.2 Ownership by Prime. Prime and the Affiliates of Prime
that are executing and delivering signature pages to this Stockholders Agreement
hereby represent and warrant that such Affiliates of Prime are the only
Affiliates of Prime who own any Common Stock as of the date hereof.
Section 6.3 Governing Law. THIS STOCKHOLDERS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
8
<PAGE>
Section 6.4 Successors and Assigns. This Stockholders Agreement
shall be binding upon the Company, each Holder, and their respective successors
and permitted assigns.
Section 6.5 Duplicate Originals. All parties may sign any number of
copies of this Stockholders Agreement. Each signed copy shall be an original,
but all of them together shall represent the same agreement.
Section 6.6 Severability. In case any provision in this Stockholders
Agreement shall be held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and the remaining provisions shall not in any way be affected or
impaired thereby
Section 6.7 No Waivers; Amendments.
-----------------------
6.7.1 No failure or delay on the part of the Company or any
Holder in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or any Holder at law or in equity or otherwise.
6.7.2 Any provision of this Stockholders Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the Company, the Holders holding at least a majority of the
Fully-Diluted Common Stock held by all Holders, the Majority Health Partners
Holders and the Majority Prime Holders.
Section 6.8 Entire Agreement. This Stockholders Agreement contains
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings with respect to such
subject matter.
[Signature pages follow]
9
<PAGE>
BROOKDALE LIVING COMMUNITIES, INC.
By: /s/ Darryl W. Copeland, Jr.
---------------------------
Name: Darryl W. Copeland, Jr.
Title: Executive Vice President
<PAGE>
THE PRIME GROUP, INC.
By: /s/ Robert J. Rudnik
--------------------
Name: Robert J. Rudnik
Title: Executive Vice President
Address:
77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601
Attention: Michael W. Reschke
Fax: (312) 917-1511
With copies to:
Robert J. Rudnik, Esq.
77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601
Fax: (312) 917-8442
and
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Wayne D. Boberg, Esq.
Fax: (312) 558-5700
<PAGE>
PRIME GROUP II, L.P.
By: PGLP, Inc., Managing General Partner
By: /s/ Robert J. Rudnik
--------------------
Name: Robert J. Rudnik
Title: Vice President
Address:
c/o The Prime Group, Inc.
77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601
Attention: Michael W. Reschke
Fax: (312) 917-1511
With copies to:
Robert J. Rudnik, Esq.
77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601
Fax: (312) 917-8442
and
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Wayne D. Boberg, Esq.
Fax: (312) 558-5700
<PAGE>
PRIME GROUP III, L.P.
By: PGLP, Inc.,
Managing General Partner
By: /s/ Robert J. Rudnik
---------------------
Name: Robert J. Rudnik
Title: Vice President
Address:
c/o The Prime Group, Inc.
77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601
Attention: Michael W. Reschke
Fax: (312) 917-1511
With copies to:
Robert J. Rudnik, Esq.
77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601
Fax: (312) 917-8442
and
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Wayne D. Boberg, Esq.
Fax: (312) 558-5700
<PAGE>
PRIME GROUP VI, L.P.
By: PGLP, Inc.,
Managing General Partner
By: /s/ Robert J. Rudnik
---------------------
Name: Robert J. Rudnik
Title: Vice President
Address:
c/o The Prime Group, Inc.
77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601
Attention: Michael W. Reschke
Fax: (312) 917-1511
With copies to:
Robert J. Rudnik, Esq.
77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601
Fax: (312) 917-8442
and
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Wayne D. Boberg, Esq.
Fax: (312) 558-5700
<PAGE>
PRIME GROUP LIMITED PARTNERSHIP
By: /s/ Michael W. Reschke
----------------------
Michael W. Reschke
Managing General Partner
Address:
c/o The Prime Group, Inc.
77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601
Attention: Michael W. Reschke
Fax: (312) 917-1511
With copies to:
Robert J. Rudnik, Esq.
77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601
Fax: (312) 917-8442
and
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Wayne D. Boberg, Esq.
Fax: (312) 558-5700
<PAGE>
HEALTH PARTNERS
By: Capital Z Financial Services Fund II, L.P.,
its general partner
By: Capital Z Partners, L.P., its general partner
By: Capital Z Partners, Ltd.,
its general partner
By: /s/ Paul H. Warren
-------------------
Paul H. Warren
Senior Vice President
Address:
One Chase Manhattan Plaza, 44th Floor
New York, New York 10005
Attention: David A. Spuria, Esq.
Fax: (212) 898-8720
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Thomas A. Roberts
Fax: (212) 310-6717
FOR FURTHER INFORMATION:
CONTACT FOR BROOKDALE: CONTACT FOR CAPITAL Z:
Mark J. Schulte Tracey T. Stearns
President and Chief Executive Officer Kekst and Company
Brookdale Living Communities, Inc. (212) 521-4800
(312) 977-3700
Sharon J. Erikson
Vice President
Fleishman Hillard
(312) 751-8878
FOR IMMEDIATE RELEASE
FRIDAY, MAY 14, 1999
BROOKDALE LIVING COMMUNITIES, INC. ANNOUNCES CLOSING OF $100
MILLION INVESTMENT BY CAPITAL Z
-------------------------------
BROOKDALE TO ELECT TWO CAPITAL Z BOARD MEMBERS
----------------------------------------------
Chicago, May 14, 1999 - Brookdale Living Communities, Inc. (NASDAQ: BLCI), a
national provider of senior and assisted living services to the elderly, today
announced the closing of the previously announced $100 million investment in the
Company by Health Partners, an investment vehicle sponsored by Capital Z
Financial Services Fund II, L.P.
In connection with this investment by Capital Z, Brookdale is very pleased to
announce the appointment of Paul H. Warren, a partner of Capital Z, to the
Company's Board of Directors as a Class I director. Brookdale also expects,
following its May 20, 1999 annual meeting of shareholders, to appoint Mark H.
Tabak, a partner of Health Partners, to the Company's Board of Directors as a
Class II director. As a result of the Capital Z appointments, Brookdale's Board
will increase in size from seven to nine members. Mr. Warren's and Mr. Tabak's
summary biographies are as follows:
Paul H. Warren, 43, is a partner of Capital Z Partners. Mr. Warren was
previously a Partner in Insurance Partners Advisors, L.P., a fund dedicated to
the Health and Insurance industries that invested $540 million from 1994 to
1998. Mr. Warren was a Managing Director of International Insurance Advisors,
Inc. from 1992 until the formation of Insurance Partners Advisors, L.P.
<PAGE>
Previously, Mr. Warren was a Vice President at J.P. Morgan & Co. in the
Insurance Group. From 1979 until 1985, Mr. Warren held various positions at the
Assistant Secretary level in the Hong Kong Government. He is also currently a
Director of Provincia Salud, an Argentine-based healthcare company, Provincia
A.R.T., the leading workers' compensation company in Argentina, Corporate Health
Dimensions, the leading U.S. provider of worksite clinic management services,
and United Payors & United Providers, Inc., a national preferred provider
organization.
Mark H. Tabak, 49, is the President and Chief Executive Officer of International
Managed Care Advisors LLC, the healthcare operating partner for Capital Z
Partners. Formerly, Mr. Tabak served as President of AIG Managed Care, Inc., a
subsidiary of American International Group from 1993 to 1996. Prior to joining
AIG, he served as President and CEO of Group Health Plan, a St. Louis-based HMO
company, and from 1982 to 1986 he was President of Health America Development
Corporation. Mr. Tabak is a Director of Provincia Salud, Provincia A.R.T., Ceres
Group, an indemnity health insurer, and Corporate Health Dimensions.
Brookdale Living Communities, Inc. is a provider of senior and assisted living
services to the elderly, with 19 facilities in 11 states containing an aggregate
of approximately 4,168 units located in urban and suburban areas of major
metropolitan markets. In addition, the Company has five facilities containing
approximately 1,100 units under construction and another five facilities with a
total of 1,100 units under development, the construction of which is expected to
commence in the next twelve months.
Based in New York, Capital Z Financial Services Fund II, L.P. is a $1.85 billion
global private equity fund that focuses exclusively on investments in the
insurance, financial services and healthcare services industries. The fund,
which was formed in August 1998, is managed by Capital Z Partners, a global
alternative asset management firm headquartered in New York City with offices or
affiliates in London and Hong Kong. Capital Z Partners also manages Capital Z
Investments, L.P., a $1.5 billion fund which focuses exclusively on investments
in private equity funds, hedge funds and other alternative investment vehicles.
Since 1990, Capital Z Partners and its predecessor funds have invested in excess
of $1.5 billion in over 50 transactions with an aggregate market value in excess
of $12 billion.
This news release contains certain forward-looking statements. When used in this
news release, the words "believes," "expects," "anticipates," "estimates" and
similar words or expressions are generally intended to identify forward-looking
statements. These forward-looking statements involve risks and uncertainties,
such as the risks detailed in Brookdale's filings with the Securities and
Exchange Commission.
# # #
