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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 11, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________
ASSISTED LIVING CONCEPTS, INC.
(Exact name of registrant as specified in its charter)
NEVADA 93-1148702
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
9955 S.E. WASHINGTON, SUITE 201
PORTLAND, OREGON 97216
(503) 252-6233
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
STEPHEN GORDON
CHIEF FINANCIAL OFFICER
9955 S.E. WASHINGTON, SUITE 201
PORTLAND, OREGON 97216
(503) 252-6233
(Name, address, including zip code, telephone number, including area code, of
agent for service)
COPIES TO:
Gary Olson, Esq.
Latham & Watkins
633 West Fifth Street - Suite 4000
Los Angeles, California 90071
(213) 485-1234
_________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective, depending on market
conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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Title of Each Proposed Maximum Proposed Maximum Amount of
Class of Securities Amount to be Offering Price Aggregate Offering Registration
to be Registered Registered Per Unit Price(1) Fee(2)
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<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per share
Debt Securities Issuable in Series and Preferred Stock (4) $(4) $150,000,000 $45,454
issuable in Series (3)................................
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(1) In no event will aggregate maximum offering price of all securities offered
pursuant to this Registration Statement exceed $150,000,000, or if any debt
securities are issued with original discount, such greater amount as shall
result in an aggregate offering price of $150,000,000. Any securities
registered hereunder may be sold separately or as units with other
securities registered hereunder.
(2) Determined pursuant to Rule 457(o) under the Securities Act of 1933, as
amended.
(3) There is also being registered hereunder an indeterminate number of shares
of Common Stock as may be issued upon conversion of the Debt Securities or
Preferred Stock registered hereby.
(4) Not applicable pursuant to General Instruction II.D of Form S-3 under the
Securities Act of 1933, as amended.
________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Prospectus Subject To Completion, Dated September 11, 1997
SECURITIES
ASSISTED LIVING CONCEPTS, INC.
Assisted Living Concepts, Inc., a Nevada Corporation (the "Company"), may
offer from time to time, in one or more series, its debt securities (the "Debt
Securities"), shares of its Preferred Stock, $.01 par value per share (the
"Preferred Stock"), and shares of its Common Stock, $.01 par value per share
(the "Common Stock"). The Debt Securities, Preferred Stock and Common Stock are
collectively referred to herein as the "Securities." The Securities will have
an aggregate offering price of up to $150,000,000 and will be offered on terms
to be determined at the time of the offering.
In the case of Debt Securities, the specific title, the aggregate principal
amount, the ranking, the purchase price, the maturity, the rate and time of
payment of any interest, any redemption or sinking fund provisions, any
conversion provisions and any other specific term of the Debt Securities will be
set forth in an accompanying supplement to this Prospectus (the "Prospectus
Supplement"). In the case of Preferred Stock, the specific number of shares,
designation, stated value per share, liquidation preference per share, issuance
price, dividend rate (or method of calculation), dividend payment dates, any
redemption or sinking fund provisions, any conversion rights and other specific
terms of the series of Preferred Stock will be set forth in an accompanying
Prospectus Supplement. In the case of Common Stock, the specific number of
shares and issuance price per share will be set forth in an accompanying
Prospectus Supplement. The Prospectus Supplement will also disclose whether the
Securities will be listed on a national securities exchange and, if they are not
to be listed, the possible effects thereof on their marketability.
The Securities may be sold: (i) directly by the Company; (ii) through
underwriting syndicates represented by one or more managing underwriters, or
through one or more underwriters without a syndicate; and (iii) through agents
designated from time to time. The names of any underwriters or agents of the
Company involved in the sale of the Securities in respect of which this
Prospectus is being delivered and any applicable commissions or discounts will
be set forth in an accompanying Prospectus Supplement. See "Plan of
Distribution." The net proceeds to the Company from such sale will be set forth
in the Prospectus Supplement.
The Company's Common Stock is traded on the American Stock Exchange (the
"AMEX") under the symbol "ALF." On September 10, 1997, the closing sale price
of the Common Stock on the AMEX was $18.00 per share.
SEE "RISK FACTORS" COMMENCING ON PAGE 4 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
__________________
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER , 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities of the Commission located at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at the New York Regional
Office of the Commission, Seven World Trade Center, Suite 1300, New York, New
York 10048, and at the Chicago Regional Office of the Commission, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can also be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Such reports and other information may also be inspected at the offices of the
American Stock Exchange, 86 Trinity Place, New York, New York 10006. The
Commission also maintains a World Wide Web Site that contains reports, proxy and
information statements and other information regarding registrants, including
the Company, that file electronically with the Commission, at
http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Securities offered hereby. The
Prospectus and any accompanying Prospectus Supplement do not contain all of the
information included in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information with respect to the Company and the Securities, reference is
hereby made to the Registration Statement including the exhibits and schedules
thereto. Statements contained in this Prospectus and any accompanying Prospectus
Supplement concerning the provisions or contents of any contract, agreement or
any other document referred to herein are not necessarily complete. With respect
to each such contract, agreement or document filed as an exhibit to the
Registration Statement, reference is made to such exhibit for a more complete
description of the matters involved, and each such statement shall be deemed
qualified in its entirety by such reference to the copy of the applicable
document filed with the Commission. The Registration Statement including the
exhibits and schedules thereto, may be inspected without charge at the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. and
copies of it or any part thereof may be obtained from such office, upon payment
of the fees prescribed by the Commission.
FORWARD LOOKING STATEMENTS
The forward looking statements and comments contained in this Prospectus
concerning, among other things, the prospects for the Company to grow and
operate profitably, are necessarily subject to risks and uncertainties, some of
which are significant in scope and nature. Actual results will be dependent upon
many factors the outcome of which cannot be predicted as of the date of this
Prospectus. The Company believes that it has summarized the most significant of
such factors of which it is aware under the caption "Risk Factors." Accordingly,
prospective investors should carefully consider such Risk Factors, which are
provided commencing on Page 4 of this Prospectus in addition to the other
information provided herein.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated herein by reference: (i) the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996, (ii) the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997,
(iii) the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1997, (iv) the Company's Current Report on Form 8-K dated July 24, 1997 and (v)
the description of the Company's Capital Stock contained in the Company's
Registration Statement on Form 8-A dated November 17, 1994. In addition, each
document filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to
termination of the offering of Securities offered hereby shall be deemed to be
incorporated
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by reference into this Prospectus and to be a part hereof from the date such
document is filed with the Commission.
Any statement contained herein, or any document, all or a portion of which
is incorporated or deemed to be incorporated by reference herein, shall be
deemed to be modified or superseded for purposes of the Registration Statement
and this Prospectus to the extent that a statement contained herein, or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein, or in any subsequently filed document that also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute part of the Registration
Statement or this Prospectus. All information appearing in this Prospectus is
qualified in its entirety by the information and financial statements (including
notes thereto) appearing in the documents incorporated herein by reference. This
Prospectus incorporates documents by reference which are not presented herein or
delivered herewith. These documents (other than exhibits to such documents which
are not specifically incorporated by reference into such documents) are
available without charge, upon written or oral request by any person to whom
this Prospectus has been delivered, from Stephen Gordon, Chief Financial
Officer, 9955 S.E. Washington, Suite 201, Portland, Oregon 97216.
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RISK FACTORS
In addition to the other information contained in this Prospectus and in an
accompanying Prospectus Supplement, prospective investors should consider
carefully the following factors before purchasing any of the Securities offered
hereby.
ANTICIPATED OPERATING LOSSES FOR NEW RESIDENCES
The Company anticipates that each residence will have an operating loss
(prior to depreciation, rent or interest, if any) of $10,000 during the first
three to four months of operation. To the extent the Company sells a residence
and leases it back or otherwise finances it, the aggregate loss may increase by
up to an additional $120,000. The Company currently plans to open 50 to 60
residences in 1997, of which twenty-nine had received certificates of occupancy
by July 31, 1997. The Company estimates that the aggregate losses to be incurred
during 1997 due to start-up residences could range from $1.7 million to $2.4
million. The success of the Company's future operations is directly tied to the
expansion of its operational base. There can be no assurance that the Company
will not experience unforeseen expenses, difficulties, complications and delays
in connection with the expansion of its operational base which could have a
material adverse effect on the Company's financial condition and results of
operations.
NO ASSURANCE AS TO ABILITY TO DEVELOP OR ACQUIRE ADDITIONAL ASSISTED LIVING
RESIDENCES
The Company's prospects for growth are directly affected by its ability to
develop and, to a lesser extent, acquire additional assisted living residences.
While the Company currently plans to open 50 to 60 residences per year in each
of 1997 and 1998, there can be no assurance that such residences will be
completed. The success of the Company's growth strategy will also depend upon,
among other factors, the Company's ability to obtain government licenses and
approvals, the Company's ability to obtain financing and the competitive
environment for development and acquisitions. The nature of such licenses and
approvals and the timing and likelihood of obtaining them vary widely from state
to state, depending upon the residence, or its operation, and the type of
services to be provided. The successful development of additional assisted
living residences will involve a number of risks, including the possibility that
the Company may be unable to locate suitable sites at acceptable prices or may
be unable to obtain, or may experience delays in obtaining, necessary zoning,
land use, building, occupancy, and other required governmental permits and
authorizations. The Company is dependent upon these permits and authorizations
to construct and operate its residences and any delay or inability to obtain
such permits could adversely affect the results of operations. The Company may
also incur construction costs that exceed original estimates, may not complete
construction projects on schedule and may experience competition in the search
for suitable development sites. The Company relies on third-party general
contractors to construct its new assisted living facilities. There can be no
assurance that the Company will not experience difficulties in working with
general contractors and subcontractors, which could result in increased
construction costs and delays. Further, facility development is subject to a
number of contingencies over which the Company will have little control and that
may adversely affect project cos and completion time, including shortages of, or
the inability to obtain, labor or materials, the inability of the general
contractor or subcontractors to perform under their contracts, strikes, adverse
weather conditions and change in applicable laws or regulations or in the method
of applying such laws and regulations. Accordingly, if the Company is unable to
achieve its development plans, its business, financial condition and results of
operations could be adversely affected. There can be no assurance that the
Company will be successful in developing or acquiring any particular residence,
that the Company's rapid expansion will not adversely affect its operations or
that any residences developed or acquired by the Company will be successful. The
various risks associated with the Company's development or acquisition of
assisted living residences and uncertainties regarding the profitability of such
operations could have a material adverse effect on the Company's financial
condition and results of operations.
NEED FOR ADDITIONAL FINANCING TO FUND FUTURE DEVELOPMENT AND ACQUISITIONS
To achieve its growth objectives, the Company will need to obtain
sufficient financial resources to fund its development, construction and
acquisition activities. The estimated cost to complete and fund start-up losses
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for the new facilities that will be developed by December 31, 1998 is between
$280 million and $336 million; accordingly, the Company's future growth will
depend on its ability to obtain additional financing on acceptable terms. The
Company will, from time to time, seek additional funding through public and/or
private financing sources, including equity and/or debt financing. If additional
funds are raised by issuing equity securities, the Company's stockholders may
experience dilution. There can be no assurance that adequate funding will be
available as needed or on terms acceptable to the Company. A lack of available
funds may require the Company to delay or eliminate all or some of its
development projects and acquisition plans.
The Company's aggregate annual fixed debt and lease payment obligations
currently total approximately $16.4 million. These fixed payment obligations
will significantly increase as the Company pursues its development plan. Failure
to meet these obligations may result in the Company being in default of its
financing agreements and, as a consequence, the Company may lose its ability to
operate any individual residence or other residences which may be cross-
defaulted. There can be no assurance that the Company will generate sufficient
cash flow to meet its current or future obligations. The Company has not
historically covered its fixed charges with earnings. In addition, the Company
anticipates there is a risk that, upon completion of construction, permanent
financing for newly developed residences may not be available or may be
available only on terms that are unfavorable or unacceptable to the Company.
GEOGRAPHIC CONCENTRATION; DEPENDENCE ON STATE MEDICAID WAIVER PROGRAMS
As of July 31, 1997, approximately 38.5% of the Company's properties are
located in the State of Texas, approximately 20.8% are located in the State of
Oregon; approximately 14.6% are located in the State of Ohio and approximately
11.5% are located in the State of Washington. Consequently, the Company is
dependent on the economies of Texas, Oregon, Ohio and Washington and, to a
certain extent, on the continued funding of state Medicaid waiver programs.
During the six months ended June 30, 1997 and the years ended 1996 and
1995, direct payments received from state Medicaid agencies accounted for
approximately 11.1%, 13.8% and 21.4% respectively of the Company's
revenue while the tenant-paid portion of Medicaid residents accounted for
approximately 5.9%, 6%, 8% and 10% of the Company's revenue during these
periods. The Company expects that state Medicaid reimbursement programs will
constitute a significant source of revenue for the Company. The Company intends
to continue developing and operating assisted living residences in other states.
Adverse changes in general economic factors affecting these states' respective
health care industries or in these states' laws and regulatory environment,
including Medicaid reimbursement rates, could have a material adverse effect on
the Company's financial condition and results of operations.
POSSIBLE VOLATILITY OF STOCK PRICE
The market price of the Securities could be subject to significant
fluctuations in response to various factors and events, including the liquidity
of the market for the Securities, variations in the Company's operating results,
new statutes or regulations or changes in the interpretation of existing
statutes or regulations affecting the health care industry generally or assisted
living residence businesses in particular. In addition, the stock market in
recent years has experienced broad price and volume fluctuations that often have
been unrelated to the operating performance of particular companies. These
market fluctuations also may adversely affect the market price of the
Securities.
DEPENDENCE ON SENIOR MANAGEMENT AND SKILLED PERSONNEL
The Company depends, and will continue to depend, upon the services of Dr.
Wilson, its Chief Executive Officer and President, Connie Baldwin, its Director
of Operations and Stephen Gordon, its Chief Administrative Officer and Chief
Financial Officer. The Company has entered into an employment agreement with Dr.
Wilson and has obtained a $500,000 key employee insurance policy covering her
life. The Company is also dependent upon its ability to attract and retain
management personnel who will be responsible for the day-to-day operations of
each residence. The loss of the services of any or all of such officers or the
Company's inability to attract additional management personnel in the future
could have a material adverse effect on the Company's financial condition or
results of operations.
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DEPENDENCE ON REIMBURSEMENT BY THIRD-PARTY PAYORS
A portion of the Company's revenues will be dependent upon reimbursement
from third-party payors, including state Medicaid programs and private insurers.
For the six months ended June 30, 1997 and years ended December 31,
1996 and 1995, the Company received, as a percentage of total revenue, under
Medicaid programs 11.1%, 13.8% and 21.4%, respectively. Furthermore,
there can be no assurance that the Company's proportionate percentage of revenue
received from Medicaid programs will not increase. The revenues and
profitability of the Company will be affected by the continuing efforts of
governmental and private third-party payors to contain or reduce the costs of
health care by attempting to lower reimbursement rates, increasing case
management review of services and negotiating reduced contract pricing. In an
attempt to reduce the federal and certain state budget deficits, there have
been, and management expects that there will continue to be, a number of
proposals to limit Medicaid reimbursement in general. Adoption of any such
proposals at either the federal or the state level could have a material adverse
effect on the Company's business, financial condition, results of operations and
prospects.
GOVERNMENT REGULATION
Health care is an area of extensive and frequent regulatory change. Changes
in the laws or new interpretations of existing laws can have a significant
effect on methods of doing business, costs of doing business and amounts of
reimbursement from governmental and other payors. The Company is and will
continue to be subject to varying degrees of regulation and licensing by health
or social service agencies and other regulatory authorities in the various
states and localities in which it operates or intends to operate. As a provider
of services under the Medicaid program in the United States, the Company is
subject to Medicaid fraud and abuse law, violations of which may result in civil
and criminal penalties and exclusions from participation in the Medicaid
program. The Company at all times attempts to comply with all applicable fraud
and abuse laws; however, there can be no assurance that administrative or
judicial interpretation of existing laws or regulations will not have a material
adverse effect on the Company's operations or financial condition.
The success of the Company will be dependent in part upon its ability to
satisfy the applicable regulations and requirements and to procure and maintain
required licenses. The Company's operations could also be adversely affected by,
among other things, regulatory developments such as mandatory increases in the
scope and quality of care to be afforded residents and revisions in licensing
and certification standards. Currently, no federal rules explicitly define or
regulate assisted living. In addition, federal and state laws currently exist
restricting health care providers from referring patients to affiliated
entities. The Company believes that its operations do not presently violate
these referral laws. However, there can be no assurance that federal, state or
local laws or regulatory procedures which might adversely affect the Company's
business, financial condition, results of operations or prospects will not be
expanded or imposed.
STAFFING AND LABOR COSTS
The Company will compete with other providers of long-term care with
respect to attracting and retaining qualified personnel. The Company will also
be dependent upon the available labor pool of low-wage employees. A shortage of
nurses and/or trained personnel may require the Company to enhance its wage and
benefits package in order to compete. No assurance can be given that the
Company's labor costs will not increase, or that, if they do increase, they can
be matched by corresponding increases in revenues.
COMPETITION
The long-term care industry is highly competitive and the Company expects
that the assisted living business, in particular, will become more competitive
in the future. The Company will be competing with numerous other companies
providing similar long-term care alternatives, such as home health agencies,
life care at home, community-based service programs, retirement communities and
convalescent centers. The Company expects that as assisted living receives
increased attention and the number of states which include assisted living in
their Medicaid waiver programs increases, competition will grow from new market
entrants, including publicly and privately held companies focusing primarily on
assisted living. Nursing facilities that provide long-term care services are
also a source of competition to the Company. Moreover, in the implementation of
the Company's
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expansion program, the Company expects to face competition for
development and acquisitions of assisted living residences. Some of the
Company's present and potential competitors are significantly larger and have,
or may obtain, greater financial resources than those of the Company.
Consequently, there can be no assurance that the Company will not encounter
increased competition in the future which could limit its ability to attract
residents or expand its business and could have a material adverse effect on the
Company's financial condition, results of operations and prospects.
DIFFICULTIES OF MANAGING RAPID GROWTH
The Company expects that the number of residences which it owns, leases or
otherwise operates will increase substantially as it pursues its growth
strategy. This rapid growth will place significant demands on the Company's
management resources. The Company's ability to manage its growth effectively
will require it to continue to expand its operational, financial and management
information systems and to continue to attract, train, motivate, manage and
retain key employees. If the Company is unable to manage its growth effectively,
its business, financial condition and results of operations could be adversely
affected.
LIABILITY AND INSURANCE
The provision of health care services entails an inherent risk of
liability. In recent years, participants in the long-term care industry have
become subject to an increasing number of lawsuits alleging malpractice or
related legal theories, many of which involve large claims and significant
defense costs. The Company currently maintains liability insurance intended to
cover such claims and the Company believes that its insurance is in keeping with
industry standards. There can be no assurance, however, that claims in excess of
the Company's insurance coverage or claims not covered by the Company's
insurance coverage (e.g., claims for punitive damages) will not arise. A
successful claim against the Company not covered by, or in excess of, the
Company's insurance coverage could have a material adverse effect upon the
Company's financial condition and results of operations. Claims against the
Company, regardless of their merit or eventual outcome, may also have a material
adverse effect upon the Company's ability to attract residents or expand its
business and would require management to devote time to matters unrelated to the
operation of the Company's business. In addition, the Company's insurance
policies must be renewed annually. There can be no assurance that the Company
will be able to obtain liability insurance coverage in the future or that, if
such coverage is available, it will be available on acceptable terms.
ENVIRONMENTAL RISKS
Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
held liable for the cost of removal or remediation of certain hazardous or toxic
substances, including, without limitation, asbestos-containing materials, that
could be located on, in or under such property. Such laws and regulations often
impose liability whether or not the owner or operator knew of, or was
responsible for, the presence of the hazardous or toxic substances. The costs of
any required remediation or removal of these substances could be substantial and
the liability of an owner or operator as to any property is generally not
limited under such laws and regulations and could exceed the property's value
and the aggregate assets of the owner or operator. The presence of these
substances or failure to remediate such substances properly may also adversely
affect the owner's ability to sell or rent the property, or to borrow using the
property as collateral. Under these laws and regulations, an owner, operator or
an entity that arranges for the disposal of hazardous or toxic substances, such
as asbestos-containing materials, at a disposal site may also be liable for the
costs of any required remediation or removal of the hazardous or toxic
substances at the disposal site. In connection with the ownership or operation
of its properties, the Company could be liable for these costs, as well as
certain other costs, including governmental fines and injuries to persons or
properties. As a result, the presence, with or without the Company's knowledge,
of hazardous or toxic substances at any property held or operated by the
Company, or acquired or operated by the Company in the future, could have an
adverse effect on the Company's business, financial condition and results of
operations. Environmental audits performed on the Company's properties have not
revealed any significant environmental liability that management believes would
have a material adverse effect on the Company's business, financial condition or
results of operations. No
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assurance can be given that existing environmental audits with respect to any of
the Company's properties reveal all environmental liabilities.
DIVIDEND POLICY
The Company has never declared or paid any dividends on its Common Stock.
The Company expects to retain any earnings to finance the operations and
expansion of the Company's business. Certain Trust Deed Notes, payable to the
State of Oregon Housing and Community Service Department restrict the payment of
cash dividends in certain circumstances and it is anticipated that the terms of
future debt financings may do so as well. Therefore, the payment of any cash
dividends on the Common Stock is unlikely in the foreseeable future.
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THE COMPANY
Assisted Living Concepts, Inc. (the "Company") develops, owns, leases and
operates assisted living residences, an increasingly popular form of housing for
senior citizens who, although generally ambulatory, need help with the
activities of daily living. In addition to housing, the Company provides
personal care and support services, and makes available routine nursing services
(as permitted by applicable government regulations) designed to meet the needs
of its residents. The Company believes that this combination of housing,
personal care and support services provides a cost-efficient alternative and
provides an independent lifestyle for individuals who do not require the broader
array of medical services that nursing facilities are required by law to
provide.
The Company was founded in July 1994 by Dr. Keren B. Wilson, the Company's
Chief Executive Officer and President, to develop, own, lease and operate
assisted living residences. The Company completed its initial public offering in
November 1994 and immediately began operating five assisted living residences
containing an aggregate of 137 units. As of December 31, 1996, the Company
licensed or had certificates of occupancy for 71 assisted living residences
containing an aggregate of 2,382 units. As of July 31, 1997, the Company had
certificates of occupancy for 96 assisted living residences containing an
aggregate of 3,481 units.
Currently, all the Company's residences are located in small communities in
Oregon, Washington, Texas, Idaho, Ohio and New Jersey. Of the 96 residences that
had certificates of occupancy as of July 31, 1997, 47 residences (1,720 units)
were owned and 49 residences (1,761 units) were leased. The Company is currently
developing and, to a lesser extent, seeking to acquire additional assisted
living residences in small communities in Oregon, Washington, Texas, Idaho, New
Jersey, Ohio and other states with regulatory and reimbursement climates that
the Company believes are favorable. As of July 31, 1997, the Company had
commenced construction on 35 residences (approximately 1,364 units). In
addition, at such date, the Company had entered into land purchase option
agreements for the development of 25 residences. The Company generally does not
acquire sites for development until it has completed its feasibility analysis
and appropriate zoning has been obtained. Capital expenditures for 1997, which
relate primarily to the development of new residences are expected to be between
$140 million and $168 million, of which $61 million had been expended through
June 30, 1997.
The Company is a Nevada corporation and its principal executive offices are
located at 9955 S.E. Washington, Suite 201, Portland, Oregon 97216, telephone
number (503) 252-6233.
RECENT DEVELOPMENTS
On September 8, 1997, the Company agreed in principle to acquire all of the
4,853,500 outstanding shares of Home and Community Care Inc. ("HCI") for $1 per
share to be paid in the Company's Common Stock and to assume approximately $4.9
million of HCI's debt. HCI shareholders will be entitled to receive additional
compensation depending upon how many of HCI's 39 residences under development
are completed. For each completed residence, HCI shareholders will receive an
additional $300,000 in the Company's Common Stock or in cash. HCI currently has
39 assisted living residences under development (1,567 units) in five states.
These residences are very similar in design to the Company's existing residences
and are located in local markets which are similar to those targeted by the
Company. In addition, HCI has an existing home health-care, hospice and durable
medical equipment businesses with annualized revenues approaching $6 million.
With this acquisition, the Company expects to make available home health,
hospice and durable medical equipment services to the majority of its
residences.
The Boards of Directors of the Company and HCI have approved the agreement
in principle. The Company and HCI are completing negotiations on the final
terms of a definitive acquisition agreement. The HCI acquisition will not be
consummated unless, among other things, the definitive acquisition agreement has
been approved by the Board of Directors of each of the Company and HCI and by
the stockholders of HCI. The parties contemplate closing the merger in October
1997.
In anticipation of the merger, Mr. William McBride III, Chairman of the
Board of Directors and one of the founders of the Company as well as the current
Chief Executive Officer of HCI, has been appointed the new Chief Executive
Officer of the Company. Dr. Keren Brown Wilson, who was the President and Chief
Executive Officer of the Company, has been named its new President and Chief
Operating Officer and also was elected by the Company's Board of Directors as
Vice Chairman. Dr. Wilson will also serve as Chief Executive Officer and
President of Assisted Living Concepts Services, a wholly owned subsidiary of the
Company, which will manage the development and operations of all of the
Company's assisted-living residences. The Company is forming another subsidiary
which will manage the home health, hospice and durable medical equipment
operations. The Company is considering reorganizing so that Assisted Living
Concepts, Inc. serves as a holding company with its assets held by its wholly
owned subsidiaries. The Company may be seeking shareholder approval in such
event.
Mr. Andre Dimitriadis has recently resigned from the Board of Directors of
the Company. The Board of Directors of the Company has elected Ms. Gloria
Cavanaugh, executive director of American Society on Aging, to the Board to
replace Mr. Dimitriadis.
Certain members of the Board of Directors of the Company serve as directors
of or are stockholders of HCI. Mr. McBride, the new Chief Executive Officer of
the Company, and Mr. Dimitradis, until recently a director of the Company, each
owns 675,723 shares, or 13.92%, of HCI's common stock and each serves as a
director and officer of HCI. Dr. Wilson, the new President and Chief Operating
Officer of the Company, together with her spouse, owns 229,287 shares, or 4.72%,
of HCI's common stock. The agreement in principle relating to the HCI
acquisition was approved by the independent members of the Board of Directors of
the Company.
To assist in financing the development of the Company's residences as well
as the HCI residences, the Company has entered into a $70 million commitment for
sale-leaseback financing with LTC Properties Inc. ("LTC"). This commitment is
in addition to the $50 million commitment that HCI had previously received from
LTC for construction and permanent financing, which will be transferred to the
Company as part of the merger.
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RATIO OF EARNINGS TO FIXED CHARGES
Set forth below is the ratio of earnings to fixed charges for the Company
and its predecessor for the periods indicated:
<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
- -------------------------------- -----------------------------------------------
YEARS ENDED ELEVEN YEARS ENDED SIX MONTHS
DECEMBER 31, MONTHS ENDED MONTH ENDED DECEMBER 31, ENDED
- --------------- NOVEMBER 30, DECEMBER 31, -------------- JUNE 30,
1992 1993 1994 1994(2) 1995(2) 1996 1997
- ---- ---- ------------ ----------- ------- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
1.08 1.74 1.71 -- -- .07 .75
</TABLE>
______________
(1) The historical earnings do not include Preferred Stock dividends as no
shares of Preferred Stock were outstanding for the periods presented.
(2) For the one month period ended December 31, 1994 and the year ended December
31, 1995, fixed charges exceeded earnings by $64,000 and $1,152,000,
respectively.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement which accompanies
this Prospectus, the net proceeds from the sale of the Securities offered from
time to time hereby will be used for repayment of outstanding amounts under the
Company's temporary construction financing arrangements and development of
additional health care facilities.
DESCRIPTION OF THE COMPANY'S CAPITAL STOCK
The summary of the terms of the capital stock of the Company set forth
below does not purport to be complete and is subject to and qualified in its
entirety by reference to the Articles of Incorporation (the "Charter") and By-
Laws of the Company, copies of which have been filed as exhibits to the
Registration Statement of which this Prospectus is a part. See "Available
Information."
GENERAL
The Company's Articles of Incorporation authorized 80,000,000 shares of
Common Stock, par value $.01 per share, and 1,000,000 shares of Preferred Stock,
par value $.01 per share. As of July 31, 1997, the Company had 11,043,512 shares
of Common Stock issued and outstanding and no outstanding shares of Preferred
Stock.
COMMON STOCK
Each holder of Common Stock is entitled to one vote for each share owned of
record on all matters voted upon by shareholders, and a majority vote is
required for all action to be taken by shareholders. Cumulative voting of shares
is prohibited. Accordingly, the holders of a majority of the voting power of the
shares voting for the election of directors can elect all of the directors if
they choose to do so. The Common Stock bears no preemptive rights, and is not
subject to redemption, sinking fund or conversion provisions. The shares of
Common Stock offered hereby will be, when issued and paid for, fully paid and
non-assessable.
Holders of Common Stock are entitled to receive dividends if, as and when
declared by the Company's Board of Directors out of funds legally available
therefor, subject to the dividend and liquidation rights of any preferred stock
that may be issued (and subject to any dividend restriction contained in any
credit facility which the Company may enter into in the future) and distributed
pro rata in accordance with the number of shares of Common Stock held by each
shareholder. See "Risk Factors--Dividend Policy."
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The Common Stock is listed on the American Stock Exchange. The transfer
agent and registrar for the Common Stock is American Stock Transfer & Trust
Company.
PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time by the Board of
Directors of the Company, without stockholder approval, in such series and with
such preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or other provisions, as may be fixed
by the Board of Directors when designating any such series.
The Preferred Stock and the variety of characteristics available for it
offers the Company flexibility in financing and acquisition transactions. An
issuance of Preferred Stock could dilute the book value or adversely affect the
relative voting power of the Common Stock. The issuance of such shares could be
used to enable the holder to block such a transaction. Although the Board of
Directors is required when issuing such stock to act based on its judgment as to
the best interests of the stockholders of the Company, the Board could act in a
manner which would discourage or prevent a transaction some stockholders might
believe is in the Company's best interests or in which stockholders could or
would receive a premium for their shares of Common Stock over the market price.
The Company's Board of Directors has authority to classify or reclassify
authorized but unissued shares of Preferred Stock by setting or changing the
preferences, conversion and other rights, voting powers, restrictions and
limitations as to dividends, qualifications and terms and conditions of
redemption of stock.
RIGHTS PLAN
On June 12, 1997, the Board of Directors of the Company declared a dividend
of one preferred share purchase right (each a "Right" and collectively the
"Rights") on each outstanding share of the Company's common stock, $0.01 par
value per share (the "Common Stock"), payable to shareholders of record on June
30, 1997. Each Right will entitle the holder thereof after the Rights become
exercisable and until June 30, 2007 (or the earlier redemption, exchange of
termination of the Rights), to buy one one-hundredth of a share of Series A
Junior Participating Preferred Stock (the "Series A Preferred Stock") at an
exercise price of $54.00, subject to certain anti-dilution adjustments (the
"Purchase Price"). The Rights will be represented by the Common Stock
certificates and will not be exercisable or transferable apart from the Common
Stock until the earlier of (i) the tenth day after the public announcement that
a Person (defined as any individual or entity) or group has become an Acquiring
Person (a Person who has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the Common Stock) or (ii) the tenth day after a
Person or group commences, or announces an intention to commence, a tender or
exchange offer, the consummation of which would result in the beneficial
ownership by a Person or group of 15% or more of the Common Stock (the earlier
of (i) and (ii) is referred to herein the "Distribution Date"). Prior to the
Distribution Date, the Company's Board of Directors has the power, under certain
circumstances, to postpone the Distribution Date. Separate certificates
representing the Rights will be mailed to holders of the Common Stock as of the
Distribution Date. The Rights will first become exercisable on the Distribution
Date, unless earlier redeemed or exchanged, and may then begin trading
separately from the Common Stock. The Rights will at no time have any voting
rights.
In the event that a Person becomes an Acquiring Person (except pursuant to
certain cash offers for all outstanding Common Stock approved by the Board of
Directors of the Company) or if the Company were the surviving corporation in a
merger and its Common Stock were not changed or exchanged, each holder of a
Right, other than Rights that are or were acquired or beneficially owned by the
Acquiring Person (which Rights will thereafter be void), will thereafter have
the right to receive upon exercise that number of shares of Common Stock having
a market value of two times the then-current exercise price of one Right. With
certain exceptions, in the event that (i) the Company were acquired in a merger
or other business combination transaction in which the Company is not the
surviving corporation or its Common Stock is changed or exchanged (other than a
merger which follows certain cash offers for all outstanding Common Stock
approved by the Board of Directors of the Company) or (ii) more than 50% of the
Company's assets or earning power were sold, proper provision shall be made so
that each holder of a Right (except Rights which previously have been voided as
set forth above) shall
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<PAGE>
thereafter have the right to receive, upon exercise thereof, that number of
shares of common stock of the acquiring company which at the time of such
transaction would have a market value of two times the then-current exercise
price of one Right.
At any time after a Person has become an Acquiring Person and prior to the
acquisition of 50% or more of the then-outstanding Common Stock by such
Acquiring Person, the Board of Directors of the Company may cause the Company to
acquire the Rights (other than Rights owned by an Acquiring Person which have
become void), in whole or in part, in exchange for that number of shares of
Common Stock having an aggregate value equal to the excess of the value of the
Common Stock issuable upon exercise of a Right after a Person becomes an
Acquiring Person over the Purchase Price.
The Rights are redeemable at $0.01 per Right prior to the first date of
public announcement that a Person or group has become an Acquiring Person. Prior
to the expiration of the period during which the Rights may be redeemed, the
Board of Directors of the Company has the power, under certain circumstances, to
extend the redemption period. The Rights will expire on June 12, 2007 (unless
earlier redeemed or exchanged). American Stock Transfer & Trust Company is the
Rights Agent. Under certain circumstances set forth in the Rights Agreement, the
decision to redeem or to lengthen or shorten the redemption period shall require
the concurrence of a majority of the Continuing Directors (as defined below).
The term "Continuing Directors" means any member of the Board of Directors
of the Company who was a member of the Board of Directors prior to the time that
any Person becomes an Acquiring Person, and any person who is subsequently
elected to the Board of Directors if such person is recommended or approved by a
majority of the Continuing Directors. Continuing Directors do not include an
Acquiring Person, or an affiliate or associate of an Acquiring Person, or any
representative of the foregoing.
The Purchase Price payable, and the number of shares of Series A Preferred
Stock or other securities or property issuable upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Series A Preferred Stock, (ii) upon the grant to holders of the Series A
Preferred Stock of certain rights or warrants to subscribe for or purchase the
Series A Preferred Stock or convertible securities at less than the current
market price of the Series A Preferred Stock or (iii) upon the distribution to
holders of the Series A Preferred Stock of evidences of indebtedness, cash,
securities or assets (excluding regular periodic cash dividends at a rate not in
excess of 125% of the last regular periodic cash dividend theretofore paid, or
in case regular periodic dividends have not theretofore been paid, at a rate not
in excess of 50% of the average net income per share of the Company for the four
quarters ended immediately prior to the payment of such dividend, or dividends
payable in the Series A Preferred Stock) or of subscription rights or warrants
(other than those referred to above). No adjustments in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price.
As of June 30, 1997, after giving effect to the stock split described
above, there were 11,043,512 shares of Common Stock outstanding. One Right was
distributed to shareholders of the Company for each share of Common Stock owned
of record by them on June 30, 1997 after giving effect to the stock split
described above. As long as the Rights are attached to the Common Stock, the
Company will issue one Right with each new share of Common Stock so that all
such shares will have attached Rights. The Company has reserved 800,000 shares
of Series A Preferred Stock for issuance upon exercise of the Rights.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors prior to the time that a Person or group has become an
Acquiring Person, as the Rights may be redeemed by the Company at $0.01 per
Right prior to such time.
The Rights Agreement dated as of June 12, 1997, between the Company and the
Rights Agent specifying the terms of the Rights, and the form of a letter to be
sent to the holders of the Common Stock explaining the
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<PAGE>
Rights, are attached hereto as exhibits and are incorporated herein by
reference. The foregoing description of the Rights is qualified by reference to
such exhibits.
RESTRICTIONS ON BUSINESS COMBINATIONS AND CORPORATE CONTROL
The Nevada General Corporation Law ("NGCL") contains provisions restricting
the ability of a corporation to engage in business combinations with an
"interested shareholder." Under the NGCL, except under certain circumstances,
business combinations are not permitted for a period of three years following
the date such shareholder became an interested shareholder. The NGCL defines an
"interested shareholder," generally, as a person who beneficially owns 10% or
more of the outstanding shares of a corporation's voting stock.
In addition the NGCL generally disallows the exercise of voting rights with
respect to "control shares" of an "issuing corporation" (as defined in the
NGCL). "Control shares" are the voting shares of an issuing corporation acquired
in connection with the acquisition of a "controlling interest." "Controlling
interest" is defined in terms of threshold levels of voting share ownership,
which, when crossed, trigger application of the voting bar with respect to the
newly acquired shares. The NGCL also permits directors to resist a change or
potential change in control of the corporation if the directors determine that
such a change is opposed to or not in the best interest of the corporation.
LIMITATIONS ON DIRECTORS LIABILITY
The Articles of Incorporation limit the liability of directors and officers
to the Company or its shareholders to the fullest extent permitted by the NGCL.
The inclusion of this provision in the Articles of Incorporation may have the
effect of reducing the likelihood of derivative litigation against directors and
may discourage or deter shareholders or management from bringing a lawsuit
against directors for breach of their duty of care, even though such an action,
if successful, might otherwise have benefited the Company and its shareholders.
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DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an indenture (the "Indenture")
to be executed by the Company and Harris Trust and Savings Bank, as trustee (the
"Trustee"), a form of which has been previously filed as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Indenture and the Debt Securities do not purport to be complete. These summaries
are qualified in their entirety by reference to all of the provisions of the
Indenture to which reference is hereby made for a full description of such
provisions, including the definitions therein of certain terms and other
information regarding the Debt Securities. Whenever particular sections or
defined terms of the Indenture are referred to, it is intended that such
sections or defined terms shall be incorporated herein by reference. Copies of
the form of the Indenture are available for inspection during normal business
hours at the principal executive offices of the Company, 9955 SE Washington,
Suite 201 Portland, Oregon 97216.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued thereunder and provides that Debt Securities may
be issued from time to time in one or more series. The Prospectus Supplement
will describe certain terms of any Debt Securities offered thereby, including
(i) the title of such Debt Securities; (ii) any limit on the aggregate principal
amount of such Debt Securities and their purchase price; (iii) the date or dates
on which such Debt Securities will mature; (iv) the rate or rates per annum (or
manner in which interest is to be determined) at which such Debt Securities will
bear interest, if any, and the date from which such interest, if any, will
accrue; (v) the dates on which such interest, if any, on such Debt Securities
will be payable and the regular record dates for such interest payment dates;
(vi) any mandatory or optional sinking fund or analogous provisions; (vii)
additional provisions, if any, for the defeasance of such Debt Securities;
(viii) the date, if any, after which and the price or prices at which such Debt
Securities may, pursuant to any optional or mandatory redemption or repayment
provisions, be redeemed and the other detailed terms and provisions of any such
optional or mandatory redemption or repayment provisions; (ix) whether such Debt
Securities are to be issued in whole or in part in registered form represented
by one or more registered global securities (a "Registered Global Security")
and, if so, the identity of the depository for such Registered Global Security
or Debt Securities; (x) certain applicable United States federal income tax
consequences; (xi) any provisions relating to security for payments due under
such Debt Securities; (xii) any provisions relating to the conversion or
exchange of such Debt Securities into or for shares of Common Stock or Debt
Securities of another series; (xiii) any provisions relating to the ranking of
such Debt Securities in right of payment as compared to other obligations of the
Company; (xiv) the denominations in which such Debt Securities are authorized to
be issued; (xv) the place or places where principal of, premium, if any, and
interest, if any, on such Debt Securities will be payable; and (xvi) any other
specific term of such Debt Securities, including any additional events of
default or covenants provided for with respect to such Debt Securities, and any
terms that may be required by or advisable under applicable laws or regulations.
CONVERSION RIGHTS
The terms, if any, on which Debt Securities of any series may be exchanged
for or converted into shares of Common Stock or Debt Securities of another
series will be set forth in the Prospectus Supplement relating thereto.
The conversion price will be subject to adjustment under certain
conditions, including (i) the payment of dividends (and other distributions) in
shares of Common Stock on any class of capital stock of the Company; (ii)
subdivisions, combinations and reclassifications of the Common Stock; (iii) the
issuance to all or substantially all holders of Common Stock of rights or
warrants entitling them to subscribe for or purchase shares of Common Stock at a
price per share (or having a conversion price per share) less than the then
current market price; and (iv) distributions to all or substantially all holders
of shares of Common Stock of evidences of indebtedness or assets (including
securities, but excluding those rights, warrants, dividends and distributions
referred to above and dividends and distributions not prohibited under the terms
of the Indenture) of the Company, subject to the
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limitation that all adjustments by reason of any of the foregoing would not be
made until they result in a cumulative change in the conversion price of at
least 1%. No adjustments in the conversion price of the Debt Securities will be
made for regular quarterly or other periodic or recurring cash dividends or
distributions. In the event the Company shall effect any capital reorganization
or reclassification of its shares of Common Stock or shall consolidate or merge
with or into any trust or corporation (other than a consolidation or merger in
which the Company is the surviving entity) or shall sell or transfer
substantially all of its assets to any other trust or corporation, the holders
of the Debt Securities of any series shall, if entitled to convert such Debt
Securities at any time after such transaction, receive upon conversion thereof,
in lieu of each share of Common Stock into which the Debt Securities of such
series would have been convertible prior to such transaction, the same kind and
amount of stock and other securities, cash or property as shall have been
issuable or distributable in connection with such transaction wit respect to
each share of Common Stock.
A conversion price adjustment made according to the provisions of the Debt
Securities of any series (or the absence of provisions for such an adjustment)
might result in a constructive distribution to the holders of Debt Securities of
such series or holders of shares of Common Stock that would be subject to
taxation as a dividend. The Company may, at its option, make such reductions in
the conversion price, in addition to those set forth above, as the Board of
Directors of the Company deems advisable to avoid or diminish any income tax to
holders of shares of Common Stock resulting from any dividend or distribution of
shares of Common Stock (or rights to acquire shares of Common Stock) or from any
event treated as such for income tax purposes or for any other reason. The Board
of Directors will also have the power to resolve any ambiguity or correct any
error in the adjustments made pursuant to these provisions and its actions in so
doing shall be final and conclusive.
Fractional shares of Common Stock will not be issued upon conversion but,
in lieu thereof, the Company will pay a cash adjustment based upon market price.
The Holders of Debt Securities of any series at the close of business on an
interest payment record date shall be entitled to receive the interest payable
on such Debt Securities on the corresponding interest payment date
notwithstanding the conversion thereof. However, Debt Securities surrendered for
conversion during the period from the close of business on any record date for
the payment of interest to the opening of business on the corresponding interest
payment date must be accompanied by payment of an amount equal to the interest
payable on such interest payment date. Holders of Debt Securities of any series
who convert Debt Securities of such series on an interest payment date will
receive the interest payable by the Company on such date and need not include
payment in the amount of such interest upon surrender of such Debt Securities
for conversion. Except as aforesaid, no payment or adjustment is to be made on
conversion for interest accrued on the Debt Securities of any series or for
dividends on shares of Common Stock.
OPTIONAL REDEMPTION
The Debt Securities of any series may be subject to redemption as permitted
or required by the terms of such Debt Securities on at least 30 days' prior
notice by mail. The Indenture does not contain any provision requiring the
Company to repurchase the Debt Securities of any series at the option of the
Holders thereof in the event of a leveraged buyout, recapitalization or similar
restructuring of the Company, even though the Company's creditworthiness and the
market value of the Debt Securities may decline significantly as a result of
such transaction. The Indenture does not protect Holders of the Debt Securities
of any series against any decline in credit quality, whether resulting from any
such transaction or from any other cause. The Company may at any time buy Debt
Securities of any series on the open market.
SUBORDINATION
The indebtedness evidenced by the Debt Securities of any series may be
subordinated and junior in right of payment to the extent set forth in the
Indenture to the prior payment in full of amounts then due or thereafter created
on all Senior Indebtedness (as defined). The terms, if any, on which the Debt
Securities of any series may be subordinated and junior in right of payment to
the prior payment in full of amounts then due or thereafter created on all
Senior Indebtedness will be set forth in the Prospectus Supplement relating
thereto. No payment shall be made by the Company on account of principal of (or
premium, if any) or interest on the Debt Securities
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<PAGE>
of any series or on account of the purchase or other acquisition of Debt
Securities of any series, if there shall have occurred and be continuing a
default with respect to any Senior Indebtedness permitting the holders to
accelerate the maturity thereof or with respect to the payment of any Senior
Indebtedness, and such default shall be the subject of a judicial proceeding or
the Company shall have received notice of such default from any holder of Senior
Indebtedness, unless and until such default or event of default shall have been
cured or waived or shall have ceased to exist. By reason of these provisions, in
the event of default on any Senior Indebtedness, whether now outstanding or
hereafter issued, payment of principal of (and premium, if any) and interest on
the Debt Securities of any series may not be permitted to be made until such
Senior Indebtedness is paid in full, or the event of default on such Senior
Indebtedness is cured or waived.
Upon any acceleration of the principal of the Debt Securities or any
distribution of assets of the Company upon any receivership, dissolution,
winding-up, liquidation, reorganization, or similar proceedings of the Company,
whether voluntary or involuntary, or in bankruptcy or insolvency, all amounts
due or to become due upon all Senior Indebtedness must be paid in full before
the holders of the Debt Securities of any series or the Trustee are entitled to
receive or retain any assets so distributed in respect of the Debt Securities.
By reason of this provision, in the event of insolvency, holders of the Debt
Securities of any series may recover less, ratably, than holders of Senior
Indebtedness.
"Senior Indebtedness" is defined to mean the principal, premium, if any,
unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post-filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement and indemnification obligations, and all other
amounts payable under or in respect of Indebtedness (as defined) of the Company
for money borrowed, whether any such Indebtedness exists as of the date of the
Indenture or is created, incurred, assumed or guaranteed after such date. There
is no limit on the amount of Senior Indebtedness that the Company may incur.
"Indebtedness" with respect to any Person is defined to mean:
(i) all indebtedness for money borrowed whether or not
evidenced by a promissory note, draft or similar instrument;
(ii) that portion of obligations with respect to leases that is
properly classified as a liability on a balance sheet in accordance with
generally accepted accounting principles;
(iii) notes payable and drafts accepted representing extensions
of credit;
(iv) any balance owed for all or any part of the deferred
purchase price or services which purchase price is due more than six months from
the date of incurrence of the obligation in respect thereof (except any such
balance that constitutes (a) a trade payable or an accrued liability arising in
the ordinary course of business or (b) a trade draft or note payable issued in
the ordinary course of business in connection with the purchase of goods or
services), if and to the extent such debt would appear as a liability upon a
balance sheet of such person prepared in accordance with generally accepted
accounting principles; and
(v) any deferral, amendment, renewal, extension, supplement or
refunding of any liability of the kind described in any of the preceding clauses
(i) through (iv);
provided, however, that, in computing the "Indebtedness" of any Person, there
shall be excluded any particular indebtedness if, upon or prior to the maturity
thereof, there shall have been deposited with a depositary in trust money (or
evidence of indebtedness if permitted by the instrument creating such
indebtedness) in the necessary amount to pay, redeem or satisfy such
indebtedness as it becomes due, and the amount so deposited shall not be
included in any computation of the assets of such Person.
DIVIDENDS, DISTRIBUTIONS AND ACQUISITIONS OF COMMON STOCK
The Company will not (i) declare or pay any dividend, or make any
distribution on its Common Stock to its stockholders (other than dividends or
distributions payable in Common Stock of the Company) or (ii) purchase, redeem,
or otherwise acquire or retire for value any of its Common Stock, or any
warrants, rights, or options to
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purchase or acquire any shares of its Common Stock (other than the Debt
Securities of any series or any other convertible indebtedness of the Company
that is neither secured nor subordinated to the Debt Securities of any series),
if at the time of such action an Event of Default has occurred and is continuing
or would exist immediately after such action. The foregoing, however, will not
prevent (i) the payment of any dividend within 60 days after the date of
declaration when the payment would have complied with the foregoing provision on
the date of declaration; or (ii) the Company's retirement of any of its Common
Stock by exchange for, or out of the proceeds of the substantially concurrent
sale of, other Common Stock.
ADDITIONAL COVENANTS
Any additional covenants of the Company with respect to a series of the
Debt Securities will be set forth in the Prospectus Supplement relating thereto.
MODIFICATION OF THE INDENTURE
Under the Indenture, with certain exceptions, the rights and obligations of
the Company with respect to any series of Debt Securities and the rights of
Holders of such series may only be modified by the Company and the Trustee with
the consent of the Holders of at least a majority in principal amount of the
outstanding Debt Securities of such series. However, without the consent of each
Holder of any Debt Securities affected, an amendment, waiver or supplement may
not (i) reduce the principal of, or rate of interest on, any Debt Securities;
(ii) change the stated maturity date of the principal of, or any installment of
interest on, any Debt Securities; (iii) waive a default in the payment of the
principal amount of, or the interest on, or any premium payable on redemption
of, any Debt Securities; (iv) change the currency for payment of the principal
of, or premium or interest on, any Debt Securities; (v) impair the right to
institute suit for the enforcement of any such payment when due; (vi) adversely
affect any right to convert any Debt Securities; (vii) reduce the amount of
outstanding Debt Securities necessary to consent to an amendment, supplement or
waiver provided for in the Indenture; or (viii) modify any provisions of the
Indenture relating to the modification and amendment of the Indenture or waivers
of past defaults, except as otherwise specified.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Except as otherwise set forth in the accompanying Prospectus Supplement,
the following is a summary of certain provisions of the Indenture relating to
events of default, notice and waiver.
The following are Events of Default under the Indenture with respect to any
series of Debt Securities: (i) default in the payment of interest on the Debt
Securities of such series when due and payable, which continues for 30 days;
(ii) default in the payment of principal of (and premium, if any) on the Debt
Securities when due and payable, at maturity, upon redemption or otherwise,
which continues for five Business Days; (iii) failure to perform any other
covenant of the Company contained in the Indenture or the Debt Securities of
such series which continues for 60 days after written notice as provided in the
Indenture; (iv) default under any bond, debenture or other Indebtedness (as
defined in the Indenture) of the Company or any subsidiary if (a) either (x)
such event of default results from the failure to pay any such Indebtedness at
maturity or (y) as a result of such event of default, the maturity of such
Indebtedness has been accelerated prior to its expressed maturity and such
acceleration shall not be rescinded or annulled or the accelerated amount paid
within 10 days after notice to the Company of such acceleration, or such
Indebtedness having been discharged, and (b) the principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
in default for failure to pay principal or interest thereon, or the maturity of
which has been so accelerated, aggregates $5,000,000 or more; and (v) certain
events of bankruptcy, insolvency or reorganization relating to the Company.
If an Event of Default occurs and is continuing with respect to the Debt
Securities of any series, either the Trustee or the Holders of a majority in
aggregate principal amount of the outstanding Debt Securities of such series may
declare the Debt Securities due and payable immediately.
The Company will not declare or pay any dividends or make any distribution
to holders of its capital stock (other than dividends or distributions payable
in capital stock of the Company) if at the time any of the
17
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aforementioned Events of Default has occurred and is continuing or would exist
immediately after giving effect to such action, except for (i) the payment of
any dividend within 60 days after the date of declaration when the payment would
have complied with the foregoing provisions on the date of declaration; (ii) the
retirement of any share of the Company's capital stock by exchange for, or out
of the proceeds of the substantially concurrent sale (other than to a
subsidiary) of, other shares of its capital stock.
The Indenture provides that the Trustee will, within 90 days after the
occurrence of any Default or Event of Default with respect to the Debt
Securities of any series, give to the Holders of Debt Securities notice of all
uncured Defaults and Events of Default known to it, but the Trustee will be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of such Holders, except in the
case of a default in the payment of the principal of (or premium, if any) or
interest on any of the Debt Securities of such series.
The Indenture provides that the Holders of a majority in aggregate
principal amount of the Debt Securities of any series then outstanding may
direct the time, method and place of conducting any proceedings for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee with respect to the Debt Securities of such series. The right of a
Holder to institute a proceeding with respect to the Indenture is subject to
certain conditions precedent including notice and indemnity to the Trustee, but
the Holder has an absolute right to receipt of principal of (and premium, if
any) and interest on such Holder's Debt Securities on or after the respective
due dates expressed in the Debt Securities, and to institute suit for the
enforcement of any such payments.
The Holders of a majority in principal amount of the outstanding Debt
Securities of any series then outstanding may on behalf of the Holders of all
Debt Securities of such series waive certain past defaults, except a default in
payment of the principal of (or premium, if any) or interest on any Debt
Securities of such series or in respect of certain provisions of the Indenture
which cannot be modified or amended without the consent of the Holder of each
outstanding Debt Security of such series affected thereby.
The Company will be required to furnish to the Trustee annually a statement
of certain officers of the Company stating whether or not they know of any
Default or Events of Default (as defined in the Indenture) and, if they have
knowledge of a Default or Event of Default, a description of the efforts to
remedy the same.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Indenture provides that the Company may merge or consolidate with, or
sell or convey all, or substantially all, of its assets to any other trust or
corporation, provided that (i) either the Company shall be the continuing
entity, or the successor entity (if other than the Company) shall be any entity
organized and existing under the laws of the United States or a state thereof or
the District of Columbia (although it may, in truth, be owned by a foreign
entity) and such entity shall expressly assume by supplemental indenture all of
the obligations of the Company under the Debt Securities of any series and the
Indenture; (ii) immediately after giving effect to such transactions, no Default
or Event of Default shall have occurred and be continuing; and (iii) the Company
shall have delivered to the Trustee an Officers' Certificate and opinion of
counsel, stating that the transaction and supplemental indenture comply with the
Indenture.
GLOBAL SECURITIES
The Debt Securities may be issued in whole or in part in global form (the
"Global Securities"). The Global Securities will be deposited with a depository
(the "Depository"), or with a nominee for a Depository, identified in the
Prospectus Supplement. In such case, one or more Global Securities will be
issued in a denomination or aggregate denominations equal to the portion of the
aggregate principal amount of outstanding Debt Securities to be represented by
such Global Security or Securities. Unless and until it is exchanged in whole or
in part for Debt Securities in definitive form, a Global Security may not be
transferred except as a whole by the Depository for such Global Security to a
nominee of such Depository or by a nominee of such Depository to such Depository
or another nominee of such Depository or by such Depository or any such nominee
to a successor for such Depository or a nominee of such successor.
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<PAGE>
The specific material terms of the depository arrangement with respect to
any portion of a series of Debt Securities to be represented by a Global
Security will be described in the Prospectus Supplement. The Company anticipates
that the following provisions will apply to all depository arrangements.
So long as the Depository for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depository or such nominee as the
case may be, will be considered the sole owner or Holder of the Debt Securities
represented by such Global Security for all purposes under the Indenture;
provided, however, that for purposes of obtaining any consents or directions
required to be given by the Holders of the Debt Securities, the Company, the
Trustee and its agents will treat a person as the holder of such principal
amount of Debt Securities as specified in a written statement of the Depository.
Principal, premium, if any, and interest payments, if any, on Debt
Securities represented by a Global Security registered in the name of a
Depository or its nominee will be made directly to the owners of beneficial
interests of such Global Security, except as may be limited by the terms of the
resolution of the Board of Directors of the Company that authorizes such series
of Debt Securities.
The Company expects that the depository for any Debt Securities represented
by a Global Security, upon receipt of any payment of principal, premium, if any,
or interest will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of such Depository. The
Company also expects that payments by participants will be governed by standing
instructions and customary practices, as is now the case with the securities
held for the accounts of customers registered in "street names," and will be the
responsibility of such participants.
If the Depository for any Debt Securities represented by a Global Security
is at any time unwilling or unable to continue as Depository and a successor
Depository is not appointed by the Company within 90 days, the Company will
issue each Debt Security in definitive form to the beneficial owners thereof in
exchange for such Global Security. In addition, the Company may at any time and
in its sole discretion determine not to have any of the Debt Securities of a
series represented by one or more Global Securities and, in such event, will
issue Debt Securities of such series in definitive form in exchange for all of
the Global Security or Securities representing such Debt Securities.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by and construed in
accordance with the laws of the State of New York.
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DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be described in such
Prospectus Supplement. The description of certain provisions of the Preferred
Stock set forth below and in any Prospectus Supplement does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Charter and the Board of Directors' resolution relating to each series of the
Preferred Stock which will be filed with the Commission and incorporated by
reference to the Registration Statement of which this Prospectus is a part at or
prior to the time of the issuance of such series of Preferred Stock.
GENERAL
The authorized capital stock of the Company consists of 80,000,000 shares
of Common Stock, $.01 par value per share, and 1,000,000 shares of Preferred
Stock, $.01 par value per share. See "Description of the Company's Capital
Stock."
Under the Charter, the Board of Directors of the Company is authorized to
establish and issue, from time to time, up to 1,000,000 shares of Preferred
Stock, in one or more series, with such dividend rights, dividend rate,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), the redemption price or prices, and the liquidation
preference as shall be stated in the resolution providing for the issue of a
series of such stock, adopted, at any time or from time to time, by the Board of
Directors of the Company.
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference is
made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i) the
designation and stated value per share of such Preferred Stock and the number of
shares offered; (ii) the amount of liquidation preference per share; (iii) the
initial public offering price at which such Preferred Stock will be issued; (iv)
the dividend rate (or method of calculation), the dates on which dividends shall
be payable and the dates from which dividends shall commence to cumulate, if
any; (v) any redemption or sinking fund provisions; (vi) any conversion rights;
and (vii) any additional voting, dividend, liquidation, redemption, sinking fund
and other rights, preferences, privileges, limitations and restrictions.
The Preferred Stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. Unless otherwise stated in a Prospectus
Supplement relating to a particular series of the Preferred Stock, each series
of the Preferred Stock will rank on a parity as to dividends and distributions
of assets with each other series of the Preferred Stock. The rights of the
holders of each series of the Preferred Stock will be subordinate to those of
the Company's general creditors.
CERTAIN PROVISIONS OF THE CHARTER
See "Description of the Company's Capital Stock" for a description of
certain provisions of the Charter, including provisions which may have certain
anti-takeover effects.
DIVIDEND RIGHTS
Holders of shares of the Preferred Stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors of the Company, out
of funds of the Company legally available therefor, cash dividends on such dates
and at such rates as will be set forth in, or as are determined by the method
described in the Prospectus Supplement relating to such series of the Preferred
Stock. Such rate may be fixed or variable or both. Each such dividend will be
payable to the holders of record as they appear on the stock books of the
Company on such record dates, fixed by the Board of Directors of the Company, as
specified in the Prospectus Supplement relating to such series of Preferred
Stock.
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Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating to such series of Preferred Stock. If the Board
of Directors of the Company fails to declare a dividend payable on a dividend
payment date on any series of Preferred Stock for which dividends are
noncumulative, then the holders of such series of Preferred Stock will have no
right to receive a dividend in respect of the dividend period ending on such
dividend payment date, and the Company shall have no obligation to pay the
dividend accrued for such period, whether or not dividends on such series are
declared payable on any future dividend payment dates. Dividends on the shares
of each series of Preferred Stock for which dividends are cumulative will accrue
from the date on which the Company initially issues shares of such series.
So long as the shares of any series of the Preferred Stock shall be
outstanding, unless (i) full dividends (including if such Preferred Stock is
cumulative, dividends for prior dividend periods) shall have been paid or
declared and set apart for payment on all outstanding shares of the Preferred
Stock of such series and all other classes and series of Preferred Stock (other
than Junior Stock, as defined below) and (ii) the Company is not in default or
in arrears with respect to the mandatory or optional redemption or mandatory
repurchase or other mandatory retirement of, or with respect to any sinking or
other analogous fund for, any shares of Preferred Stock of such series or any
shares of any other Preferred Stock of any class or series (other than Junior
Stock), the Company may not declare any dividends on any shares of Common Stock
or any other stock of the Company ranking as to dividends or distributions of
assets junior to such series of Preferred Stock (the Common Stock and any such
other stock being herein referred to as "Junior Stock"), or make any payment on
account of, or set apart money for, the purchase, redemption or other retirement
of, or for a sinking or other analogous fund for, any shares of Junior Stock or
make any distribution in respect thereof, whether in cash or property or in
obligations or stock of the Company, other than Junior Stock which is neither
convertible into, nor exchangeable or exercisable for, any securities of the
Company other than Junior Stock.
LIQUIDATION PREFERENCE
In the event of any liquidation, dissolution or winding up of the Company,
voluntary or involuntary, the holders of each series of the Preferred Stock will
be entitled to receive out of the assets of the Company available for
distribution to stockholders, before any distribution of assets or payment is
made to the holders of Common Stock or any other shares of stock of the Company
ranking junior as to such distribution or payment to such series of Preferred
Stock, the amount set forth in the Prospectus Supplement relating to such series
of the Preferred Stock. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the Preferred Stock of such series and
such other shares of Preferred Stock will share ratably in any such distribution
of assets of the Company in proportion to the full respective preferential
amounts to which they are entitled. After payment to the holders of the
Preferred Stock of each series of the full preferential amounts of the
liquidating distribution to which they are entitled, the holders of each such
series of the Preferred Stock will be entitled to no further participation in
any distribution of assets by the Company.
If such payment shall have been made in full to all holders of shares of
Preferred Stock, the remaining assets of the Company shall be distributed among
the holders of any other classes of stock ranking junior to the Preferred Stock
upon liquidation, dissolution or winding up, according to their respective
rights and preferences and in each case according to their respective number of
shares. For such purposes, the consolidation or merger of the Company with or
into any other corporation, or the sale, lease or conveyance of all or
substantially all of the property or business of the Company, shall not be
deemed to constitute a liquidation, dissolution or winding up of the Company.
REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or from time to
time in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms, at
the times and at the redemption prices set forth in the Prospectus Supplement
relating to such series. Shares of the Preferred Stock redeemed by the Company
will be restored to the status of authorized but unissued shares of preferred
stock of the Company.
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In the event that fewer than all of the outstanding shares of a series of
the Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or pro
rata (subject to rounding to avoid fractional shares) as may be determined by
the Company or by any other method as may be determined by the Company in its
sole discretion to be equitable. From and after the redemption date (unless the
Company defaults in the payment of the redemption price plus accumulated and
unpaid dividends, if any), dividends shall cease to accumulate on the shares of
the Preferred Stock called for redemption and all rights of the holders thereof
(except the right to receive the redemption price plus accumulated and unpaid
dividends, if any) shall cease.
So long as any dividends on shares of any series of the Preferred Stock or
any other series of preferred stock of the Company ranking on a parity as to
dividends and distributions of assets with such series of the Preferred Stock
are in arrears, no shares of any such series of the Preferred Stock or such
other series of preferred stock of the Company will be redeemed (whether by
mandatory or optional redemption) unless all such shares are simultaneously
redeemed, and the Company will not purchase or otherwise acquire any such
shares; provided, however, that the foregoing will not prevent the purchase or
acquisition of such shares of Preferred Stock of such series or of shares of
such other series of preferred stock pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of Preferred Stock
of such series and, unless the full cumulative dividends on all outstanding
shares of any cumulative Preferred Stock of such series and any other stock of
the Company ranking on a parity with such series as to dividends and upon
liquidation shall have been paid or contemporaneously are declared and paid for
all past dividend periods, the Company shall not purchase or otherwise acquire
directly or indirectly any shares of Preferred Stock of such series (except by
conversion into or exchange for stock of the Company ranking junior to the
Preferred Stock of such series as to dividends and upon liquidation).
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of shares of Preferred
Stock to be redeemed at the address shown on the stock transfer books of the
Company. After the redemption date, dividends will cease to accrue on the shares
of Preferred Stock called for redemption and all rights of the holders of such
shares will terminate, except the right to receive the redemption price without
interest.
CONVERSION RIGHTS
The terms, if any, on which shares of Preferred Stock of any series may be
exchanged for or converted (mandatorily or otherwise) into shares of Common
Stock or another series of Preferred Stock will be set forth in the Prospectus
Supplement relating thereto.
VOTING RIGHTS
Except as indicated below or in a Prospectus Supplement relating to a
particular series of the Preferred Stock, or except as required by applicable
law, the holders of the Preferred Stock will not be entitled to vote for any
purpose.
So long as any shares of Preferred Stock remain outstanding, the Company
shall not, without the consent or the affirmative vote of the holders of a
majority of the shares of each series of Preferred Stock outstanding at the time
given in person or by proxy, either in writing or at a meeting (such series
voting separately as a class) (i) authorize, create or issue, or increase the
authorized or issued amount of, any class or series of stock ranking prior to
such series of Preferred Stock with respect to payment of dividends, or the
distribution of assets on liquidation, dissolution or winding up or
reclassifying any authorized stock of the Company into any such shares, or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares and (ii) to repeal, amend or
otherwise change any of the provisions applicable to the Preferred Stock of such
series in any manner which materially and adversely affects the powers,
preferences, voting power or other rights or privileges of such series of the
Preferred Stock or the holders thereof; provided, however, that any increase in
the amount of the authorized Preferred Stock or the creation or issuance of
other series of Preferred Stock, or any increase in the amount of authorized
shares of such series or of any other series of Preferred Stock,
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in each case ranking on a parity with or junior to the Preferred Stock of such
series, shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of the Preferred Stock shall have been
redeemed or called for redemption and sufficient funds shall have been deposited
in trust to effect such redemption.
TRANSFER AGENT AND REGISTRAR
The transfer agent, dividend and redemption price disbursement agent and
registrar for shares of each series of the Preferred Stock will be set forth in
the Prospectus Supplement relating thereto.
PLAN OF DISTRIBUTION
The Company may sell Securities in any of three ways: (i) through
underwriting syndicates represented by one or more managing underwriters, or by
one or more underwriters without a syndicate; (ii) through agents designated
from time to time; and (iii) directly to investors. The names of any
underwriters or agents of the Company involved in the sale of the Securities in
respect of which this Prospectus is being delivered and any applicable
commissions or discounts will be set forth in the Prospectus Supplement. The net
proceeds to the Company from each such sale will also be set forth in the
Prospectus Supplement.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may engage in transactions with or perform
services for the Company in the ordinary course of business.
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for the
Company by Latham & Watkins, Los Angeles, California.
EXPERTS
The financial statements of Assisted Living Concepts Group (the predecessor
of the Company) for the eleven months ended November 30, 1994 and of the Company
for the one month ended December 31, 1994, incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31, 1996
of the Company have been so incorporated by reference in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
The consolidated financial statements of Assisted Living Concepts, Inc. as
of December 31, 1996 and 1995 and for the years then ended have been
incorporated by reference herein and in the Registration Statement in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
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================================================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, ANY OF
THE SECURITIES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
______________________
TABLE OF CONTENTS
PAGE
AVAILABLE INFORMATION................................................ 2
FORWARD LOOKING STATEMENTS........................................... 2
DOCUMENTS INCORPORATED BY REFERENCE.................................. 2
RISK FACTORS......................................................... 4
THE COMPANY.......................................................... 9
RATIO OF EARNINGS TO FIXED CHARGES................................... 10
USE OF PROCEEDS...................................................... 10
DESCRIPTION OF THE COMPANY'S CAPITAL
STOCK.............................................................. 10
DESCRIPTION OF DEBT SECURITIES....................................... 14
DESCRIPTION OF PREFERRED STOCK.......................................
PLAN OF DISTRIBUTION................................................. 23
LEGAL MATTERS........................................................ 23
EXPERTS.............................................................. 23
ASSISTED LIVING
CONCEPTS, INC.
SECURITIES
___________________
PROSPECTUS
___________________
SEPTEMBER , 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the fees and expenses to be incurred in
connection with the issuance and distribution of the Securities registered
hereby.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.. $ 45,450
American Stock Exchange Listing Fee.................. 15,000
Blue Sky Fees and Expenses........................... 5,000
Legal Fees and Expenses.............................. 100,000
Accounting Fees...................................... 35,000
Printing and Engraving Costs......................... 40,000
Trustee's Fees and Expenses.......................... 20,000
Miscellaneous Expenses............................... 14,550
Total........................................... $275,000
</TABLE>
All of the costs identified above will be paid by the Company
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation provide that a director or officer
of the Company shall not be personally liable to the Company or its stockholders
for damages for any breach of fiduciary duty as a director or officer, except
for liability for (i) acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law, or (ii) the payment of distributions in
violation of Nevada Revised Statutes 78.300. In addition, Nevada Revised
Statutes 78.751 and Article III, Section 13 of the Company's By-Laws, under
certain circumstances, provide for the indemnification of the Company's
officers, directors, employees, and agents against liabilities which they may
incur in such capacities. A summary of the circumstances in which such
indemnification is provided for is contained herein, but that description is
qualified in its entirety by reference to Article III, Section 13 of the
Company's By-Laws.
In general, any officer, director, employee or agent shall be indemnified
against expenses including attorneys' fees, fines, settlements, or judgments
which were actually and reasonably incurred in connection with a legal
proceeding, other than one brought by or on behalf of the Company, to which he
was a party as a result of such relationship, if he acted in good faith, and in
the manner he believed to be in or not opposed to the Company's best interest
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. If the action or suit is brought by or on
behalf of the Company, the person to be indemnified must have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
Company's best interest. No indemnification will be made in respect of any
claim, issue or matter as to which such person shall have been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the Company or for amounts paid in settlement to the Company,
unless and only to the extent that the court in which the action or suit was
brought or other court of competent jurisdiction, determines upon application
that in view of all the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such expenses which such court shall deem
proper.
Any indemnification under the previous paragraphs, unless ordered by a
court or advanced as provided in the succeeding paragraph, must be made by the
Company only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made (i) by the stockholders, (u) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to the act, suit or proceeding, (iii) if a majority vote of
a quorum of directors who were not parties to the act, suit or proceeding so
orders, by independent legal counsel in a written
II-1
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opinion or (iv) if a quorum consisting of directors who were not parties to the
act, suit or proceeding cannot be obtained, by independent legal counsel in a
written opinion. To the extent that a director, officer, employee or agent of
the Company has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in the previous paragraph, or in defense
of any claim, issue or matter therein, he must be indemnified by the Company
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the defense.
Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding must be paid by the Company as they are
incurred and in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the Company
as authorized by the By-Laws. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the Board of
Directors deems appropriate.
The indemnification and advancement of expenses authorized in or ordered by
a court as provided in the foregoing paragraphs does not exclude any other
rights to which a person seeking indemnification or advancement of expenses may
be entitled under the Articles of Incorporation or any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, for either an action in
his official capacity or an action in another capacity while holding his office,
except that indemnification, unless ordered by a court as described in the third
preceding paragraph or for advancement of expenses made as described in the next
preceding paragraph, may not be made to or on behalf of any director or officer
if a final adjudication establishes that his acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law and was material
to the cause of action. If a claim for indemnification or payment of expenses
under Article III, Section 13 of the By-Laws is not paid in full within ninety
(90) days after a written claim therefor has been received by the Company, the
claimant may file suit to recover the unpaid amount of such claim, if successful
in whole or in part, shall be entitled to be paid the expense of prosecuting
such claim. In any such action, the Company shall have the burden of proving
that the claimant was not entitled to the requested indemnification or payment
of expenses under applicable law.
The Board of Directors may authorize, by a vote of a majority of a quorum
of the Board of Directors, the Company to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Company would have the power to indemnify him against such
liability under the provisions of Article III, Section 13 of the By-Laws. The
Board of Directors may authorize the Company to enter into a contract with any
person who is or was a director, officer, employee or agent of the Company or is
or was serving at the request of the Company as a director, officer, employee or
agent of another partnership, joint venture, trust or other enterprise providing
for indemnification rights equivalent to or, if the Board of Directors so
determines, greater than those provided for in Article III, Section 13 of the
By-Laws.
The Company has also purchased insurance for its directors and officers for
certain losses arising from claims or charges made against them in their
capacities as directors and officers of the Company.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<S> <C>
1.1 Form of Underwriting Agreement (filed herewith).
2.1 Merger Agreement between the Company and CCL Sub, Inc.
(incorporated by reference to the same titled exhibit to the
Company's Registration Statement on Form S-1, File No.
33-83938).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<S> <C>
2.2 Agreement and Plan of Corporate Separation and
Reorganization between Concepts In Community Living, Inc.
and Keren Wilson (Incorporated by reference to the same
titled exhibit to the Company's Registration Statement on
Form S-1, File No. 33-83938).
2.3 Assignment, Bill of Sale, License, and Assumption Agreement
between Concepts In Community Living, Inc., and CCL Sub,
Inc. (Incorporated by reference to the same titled exhibit
to the Company's Registration Statement on Form S-1, File
No. 33-83938.
2.4 Purchase Agreement between the Company and Lincoln City
Limited Partnership (Incorporated by reference to the same
titled exhibit to the Company's Registration Statement on
Form S-1, File No. 33-83938).
2.5 Letter Purchase Agreement between the Company and Madras
Senior Residence, LRW partners, Keren Brown Wilson and
Joseph Hughes (Incorporated by reference to the same titled
exhibit to the Company's Registration Statement on Form S-1,
File No. 33-83938).
3.1 Articles of Incorporation of the Company (Incorporated by
reference to the same titled exhibit to the Company's
Registration Statement on Form S-1, File No. 33-83938).
3.2 By laws of the Company (Incorporated by reference to the
same titled exhibit to the Company's Registration Statement
on Form S-1, File No. 33-83938).
4.1 Indenture, dated as of August 15, 1995, between the Company
and Harris Trust and Savings Bank, as Trustee, in respect of
the Company's 7.0% Convertible Subordinated Debentures due
2005. (Incorporated by reference to the same titled exhibit
to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1995, File No. 1-83938).
4.2 Form of 7.0% Convertible Subordinated Debentures due 2005
(Incorporated by reference to the same titled exhibit to the
Company Quarterly Report on Form 10-Q for the period ended
September 30, 1995, File No. 1-83938).
4.3 Registration Rights Agreement dated August 2, 1995 between
the Company and the Purchasers of its 7% Convertible
Subordinated Debentures due 2005 (Incorporated by reference
to the same titled exhibit to the Company's Quarterly Report
on Form 10-Q for the period ended September 30, 1995, File
No. 1-83938).
4.4 Form of Indenture between the Company and Harris Trust and
Savings Bank with respect to the Debt Securities that are,
among other things, the subject of this Registration
Statement (filed herewith).
4.5 Rights Agreement dated as of June 12, 1997, between Assisted
Living Concepts, Inc. and American Stock Transfer & Trust
Company, as Rights Agent, which includes the form of
Certificate of Resolution Establishing Designations,
Preferences and Rights of Series A Junior Participating
Preferred Stock of Assisted Living Concepts, Inc. as
Exhibit A, the form of Right Certificate as Exhibit B and
the Summary of Rights to Purchase Preferred Shares as
Exhibit C (Incorporated by reference to the same titled
exhibit to the Company's Current Report on Form 8-K, dated
July 24, 1997, File No. 1-83938).
5.1 Opinion of Latham & Watkins regarding legality (filed
herewith).
12.1 Computation of Ratio of Earnings to Fixed Charges (filed
herewith).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<S> <C>
23.1 Consent of Latham & Watkins with respect to opinion on
legality (included in Exhibit 5.1).
23.2 Consent of Price Waterhouse LLP (filed herewith).
23.3 Consent of KPMG Peat Marwick LLP (filed herewith).
24.1 Power of Attorney (included on Page II-6).
25.1 Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939 of the Trustee (filed
herewith).
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities and Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall
be deemed to be part of this Registration Statement as of the time
it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of
prospectus shall be deemed to a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(d) The undersigned registrant hereby undertakes to deliver or caused
to be delivered with the Prospectus, to each person to whom the Prospectus is
sent or given, the latest annual report, to security holders that is
incorporated by reference in the Prospectus and furnished pursuant to and
meeting the requirement of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X is not set forth in the Prospectus, to
deliver, or cause to be delivered to each person to whom the Prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the Prospectus to provide such interim financial information.
(e) The undersigned registrant hereby undertakes:
II-4
<PAGE>
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1993;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post- effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (e)(1)(i) and (e)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and
the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized in the City of Portland, State of Oregon on the 11th day of September
1997.
ASSISTED LIVING CONCEPTS, INC.
By: /s/ WILLIAM MCBRIDE III
----------------------------------
William McBride III
Chairman of the Board of Directors
and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
William McBride III, Keren B. Wilson and Stephen J. Gordon and all or any of
them, as his or her true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign this Registration Statement, and
any and all amendments thereto (including post-effective amendments and any
Registration Statement pursuant to Rule 462(b)), and to file the same, with
exhibits and schedules thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing necessary or desirable to be done in and about the premises, as fully to
all intents and purposes as he or she might or could do in person, thereby
ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
Chairman of the September 11, 1997
/s/ WILLIAM MCBRIDE III Board of Directors and Chief
----------------------- Executive Officer
William McBride III (Principal Executive Officer)
/s/ KEREN B. WILSON Director, President and September 11, 1997
----------------------- Chief Operating Officer
Keren B. Wilson
/s/ STEPHEN GORDON Chief Administrative Officer September 11, 1997
------------------------ and Chief Financial Officer
Stephen Gordon
/s/ RHONDA S. MARSH Chief Accounting Officer and September 11, 1997
------------------------ Controller
Rhonda S. Marsh
/s/ GLORIA CAVANAUGH Director September 11, 1997
------------------------
Gloria Cavanaugh
/s/ RICHARD C. LADD
------------------------ Director September 11, 1997
Richard C. Ladd
/s/ BRADLEY C. RAZOOK Director September 11, 1997
------------------------
Bradley C. Razook
</TABLE>
II-6
<PAGE>
EXHIBITS INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE
----------- ---------------------- ----
<S> <C> <C>
1.1 Form of Underwriting Agreement (filed herewith).
2.1 Merger Agreement between the Company and CCL Sub,
Inc. (incorporated by reference to the same titled
exhibit to the Company's Registration Statement on
Form S-1, File No. 33-83938).
2.2 Agreement and Plan of Corporate Separation and
Reorganization between Concepts In Community
Living, Inc. and Keren Wilson (Incorporated by
reference to the same titled exhibit to the
Company's Registration Statement on Form S-1, File
No. 33-83938).
2.3 Assignment, Bill of Sale, License, and Assumption
Agreement between Concepts In Community Living,
Inc., and CCL Sub, Inc. (Incorporated by reference
to the same titled exhibit to the Company's
Registration Statement on Form S-1, File No.
33-83938.
2.4 Purchase Agreement between the Company and Lincoln
City Limited Partnership (Incorporated by
reference to the same titled exhibit to the
Company's Registration Statement on Form S-1, File
No. 33-83938).
2.5 Letter Purchase Agreement between the Company and
Madras Senior Residence, LRW partners, Keren Brown
Wilson and Joseph Hughes (Incorporated by
reference to the same titled exhibit to the
Company's Registration Statement on Form S-1, File
No. 33-83938).
3.1 Articles of Incorporation of the Company
(Incorporated by reference to the same titled
exhibit to the Company's Registration Statement on
Form S-1, File No. 33-83938).
3.2 By laws of the Company (Incorporated by reference
to the same titled exhibit to the Company's
Registration Statement on Form S-1, File No.
33-83938).
4.1 Indenture, dated as of August 15, 1995, between
the Company and Harris Trust and Savings Bank, as
Trustee, in respect of the Company's 7.0%
Convertible Subordinated Debentures due 2005.
(Incorporated by reference to the same titled
exhibit to the Company's Quarterly Report on Form
10-Q for the period ended September 30, 1995, File
No. 1-83938).
4.2 Form of 7.0% Convertible Subordinated Debentures
due 2005 (Incorporated by reference to the same
titled exhibit to the Company Quarterly Report on
Form 10-Q for the period ended September 30, 1995,
File No. 1-83938).
4.3 Registration Rights Agreement dated August 2, 1995
between the Company and the Purchasers of its 7%
Convertible Subordinated Debentures due 2005
(Incorporated by reference to the same titled
exhibit to the Company's Quarterly Report on Form
10-Q for the period ended September 30, 1995, File
No. 1-83938).
4.4 Form of Indenture between the Company and Harris
Trust and Savings Bank with respect to the Debt
Securities that are, among other things, the
subject of this Registration Statement (filed
herewith).
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE
----------- ---------------------- ----
<S> <C> <C>
4.5 Rights Agreement dated as of June 12, 1997,
between Assisted Living Concepts, Inc. and
American Stock Transfer & Trust Company, as Rights
Agent, which includes the form of Certificate of
Resolution Establishing Designations, Preferences
and Rights of Series A Junior Participating
Preferred Stock of Assisted Living Concepts, Inc.
as Exhibit A, the form of Right Certificate as
Exhibit B and the Summary of Rights to Purchase
Preferred Shares as Exhibit C (Incorporated by
reference to the same titled exhibit to the
Company's Current Report on Form 8-K, dated July
24, 1997, File No. 1-83938).
5.1 Opinion of Latham & Watkins regarding legality (filed
herewith).
12.1 Computation of Ratio of Earnings to Fixed Charges (filed
herewith).
23.1 Consent of Latham & Watkins with respect to
opinion on legality (included in Exhibit 5.1).
23.2 Consent of Price Waterhouse LLP (filed herewith).
23.3 Consent of KPMG Peat Marwick LLP (filed herewith).
24.1 Power of Attorney (included on Page II-6).
25.1 Form T-1 Statement of Eligibility and
Qualification under the Trust Indenture Act of
1939 of the Trustee (filed herewith).
</TABLE>
II-8
<PAGE>
EXHIBIT 1.1
ASSISTED LIVING CONCEPTS, INC.
[__________ SHARES OF __________ STOCK*]
[$_____ AGGREGATE PRINCIPAL AMOUNT OF
___% __________ DUE _______ *]
UNDERWRITING AGREEMENT
----------------------
_______________, ____
________________________
________________________
________________________
________________________
________________________
Dear Sirs:
Assisted Living Concepts, Inc., a Nevada corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule 1
hereto (the "Underwriters"), for whom you have been duly authorized to act as
representative[s] (in such capacit[y] [ies], the "Representative[s]"), [an
aggregate of _______ shares of the Company's _________ Stock, par value $_____
per share (the "_____ Stock")] [$_______ aggregate principal amount of ___%
__________ Due _______ (the "Debentures/Notes")] (the "Firm Securities"). The
Company has also agreed to issue and sell pursuant to an option, subject to the
terms and conditions hereof, up to [_____ additional shares of _____ Stock]
[$_____ aggregate principal amount of Debenture/Notes]. Any and all [shares of
_____ Stock] [Debentures/Notes] to be issued and sold pursuant to such option
are referred to herein as the "Option Securities," and the Firm Securities and
any Option Securities are collectively referred to herein as the "Securities."
[The Securities are to be issued pursuant to an indenture dated __________, ____
(the "Indenture") between the Company and Harris Trust and Savings Bank, as
Trustee (the "Trustee").] [The Securities will be convertible at the option of
the holder thereof at any time prior to the close of business on any date fixed
for redemption, unless earlier redeemed, into shares of the Company's Common
Stock, par value $0.01 per share (the "Common Stock").] The Company hereby
confirms its agreement with the several Underwriters, as set forth below. If you
are the only Underwriter[s], all references herein to the Representative[s]
shall be deemed to be the Underwriters.
1. Agreements to Sell and Purchase.
(a) The Company agrees to issue and sell to each of the Underwriters,
and each of the Underwriters, severally and not jointly, agrees to purchase from
the Company, upon the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein set
forth, and at a
_____________________________
/*/ Plus an option to purchase from the Company up to [____ shares] [$_____
aggregate principal amount of __% Due ____] to cover over-allotments.
<PAGE>
purchase price [of $___ per share,] [equal to ___% of the principal amount
thereof, together with accrued interest, if any, from __________, ____ to the
Firm Closing Date (as hereinafter defined),] the [number] [aggregate principal
amount] of Firm Securities set forth opposite the name of such Underwriter in
Schedule1 hereto. The Company shall deliver, or cause to be delivered, to the
Representative[s] for the respective accounts of the Underwriters, one or more
certificates in definitive form for the Firm Securities that the several
Underwriters have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Representative[s]
request upon notice to the Company at least 48 hours prior to the Firm Closing
Date (as hereinafter defined), against payment by or on behalf of the
Underwriters of the purchase price therefor by certified or official bank check
or checks drawn upon or by a New York Clearing House bank and payable in next-
day funds to the order of the Company. Such delivery of and payment for the Firm
Securities shall be made at the offices of Latham & Watkins, 633 West Fifth
Street, Suite 4000, Los Angeles, California 90071 at 6:30 A.M., Los Angeles
time, on ___________, ____, or at such other place, time or date as the
Representative[s] and the Company may agree upon or as the Representative[s] may
determine pursuant to Section9 hereof, such time and date of delivery against
payment being herein referred to as the "Firm Closing Date." The Company will
make such certificate or certificates for the Firm Securities available for
checking and packaging by the Representative[s] at the offices in New York, New
York of the Company's transfer agent or registrar at least 24 hours prior to the
Firm Closing Date.
(b) Solely for the purpose of covering any over-allotments in
connection with the distribution and sale of the Firm Securities as contemplated
by the Prospectus (as hereinafter defined), the Company hereby grants to the
several Underwriters an option to purchase, severally and not jointly, the
Option Securities. The purchase price to be paid for any Option Securities shall
be the same [price per share as the price per share for the Firm Securities sold
by the Company] [percentage of the principal amount thereof as] set forth above
in paragraph (a) of this Section1. The option granted hereby may be exercised
as to all or any part of the Option Securities from time to time within thirty
days after the date of the Prospectus. The Underwriters shall not be under any
obligation to purchase any of the Option Securities prior to any exercise of
such option. The Representative[s] may from time to time exercise the option
granted hereby by giving notice in writing or by telephone (confirmed in
writing) to the Company setting forth the aggregate amount of Option Securities
as to which the several Underwriters are then exercising the option and the date
and time for delivery of and payment for such Option Securities. Any such date
of delivery shall be determined by the Representative[s] but shall not be
earlier than two business days or later than seven business days after such
exercise of the option and, in any event, shall not be earlier than the Firm
Closing Date. The time and date set forth in such notice, or such other time on
such other date as the Representative[s] and the Company may agree upon or as
the Representative[s] may determine pursuant to Section 8 hereof, is herein
called the "Option Closing Date" with respect to such Option Securities. Upon
exercise of the option as provided herein, the Company shall become obligated to
sell to each of the several Underwriters, and, subject to the terms and
conditions herein set forth, each of the
2
<PAGE>
Underwriters (severally and not jointly) shall become obligated to purchase from
the Company the same percentage of the total [number] [principal amount] of the
Option Securities as to which the several Underwriters are then exercising the
option, as such Underwriter is obligated to purchase of the aggregate [number]
[principal amount] of Firm Securities[.] [, as adjusted by the Representative[s]
in such manner as they deem advisable to avoid fractional Shares]. If the option
is exercised as to all or any portion of the Option Securities, one or more
certificates in definitive form for such Option Securities, and payment
therefor, shall be delivered on the related Option Closing Date in the manner,
and upon the terms and conditions, set forth in paragraph (a) of this Section 1,
except that reference therein to the Firm Securities an the Firm Closing Date
shall be deemed, for purposes of this paragraph (b), to refer to such Option
Securities and Option Closing Date, respectively.
(c) It is understood that [any] [either] [of] you, individually and
not as one of the Representative[s], may (but shall not be obligated to) make
payment on behalf of any Underwriter or Underwriters for any of the Securities
to be purchased by such Underwriter or Underwriters. No such payment shall
relieve such Underwriter or Underwriters from any of its or their obligations
hereunder.
2. Representations and Warranties. The Company represents and warrants
------------------------------
to, and agrees with, each of the several Underwriters that:
(i) The Company has filed with the Securities and Exchange
Commission (the "Commission") a "shelf" registration statement on Form S-3
(File No. 333-_______), which has become effective, relating to shares of
Common Stock, certain debt securities and shares of the Company's Preferred
Stock, $0.01 par value per share. The Company will promptly file with the
Commission a supplement to the form of prospectus included in such
registration statement specifically relating to the Securities pursuant to
Rule 424 under the Securities Act of 1933, as amended (the "Act"). Such
registration statement, as amended at the date hereof, meets the
requirements of Rule 415 under the Act. As used in this Agreement, the term
"Registration Statement" means such registration statement as amended at
the date hereof, including exhibits, financial statements, schedules and
documents incorporated by reference therein. The term "Basic Prospectus"
means the prospectus included in the Registration Statement. The term
"Prospectus" means the Basic Prospectus together with the prospectus
supplement specifically relating to the Securities as filed with the
Commission pursuant to such Rule 424. Any reference herein to the
Registration Statement or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein as of the date
hereof or the date of the Prospectus, as the case may be, and any reference
herein to any amendment or supplement to the Registration Statement or the
Prospectus shall be deemed to refer to and include any documents filed
after such date and through the date of such amendment or supplement under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
so incorporated by reference. For purposes of the
3
<PAGE>
preceding sentence, any reference to the "effective date" of an amendment
to a registration statement shall, if such amendment is effected by means
of the filing with the Commission under the Exchange Act of a document
incorporated by reference in such registration statement, be deemed to
refer to the date on which such document was so filed with the Commission.
(ii) When the Registration Statement or any amendment thereto was
declared effective, as of the date hereof, and at the time any amendment to
the Registration Statement filed after the date hereof becomes effective
(including the filing of any document incorporated by reference in the
Registration Statement), the Registration Statement (i) met, meets and will
meet, as the case may be, the requirements set forth in Rule 415(a)(1)
under the Act and complied, complies and will comply as the case may be, in
all material respects with said Rule, (ii) contained, contains and will
contain, as the case may be, all statements required to be stated therein
in accordance with, and complied, complies and will comply in all material
respects with the requirements of, the Act, the Exchange Act and the
respective rules and regulations of the Commission thereunder and (iii) did
not, does not and will not, as the case may be, include any untrue
statement o f a material fact or omit to state any material fact necessary
to make the statements therein not misleading. As of the date hereof, and
when the Prospectus is filed with the Commission pursuant to Rule 424(b),
on the date when the Prospectus is otherwise supplemented and on the Firm
Closing Date and any Option Closing Date, the Prospectus (as supplemented
as of any such time), (i) contains and will contain, as the case may be,
all statements required to be stated therein in accordance with, and
complies and will comply in all material respects with the requirements of,
the Act, the Exchange Act and the respective rules and regulations of the
Commission thereunder and (ii) does not and will not, as the case may be,
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph(b) do not apply to statements or
omissions made in the Prospectus or the Registration Statement or any
amendment or supplement thereto in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representative[s] specifically for use therein.
(iii) The Company is a Nevada corporation in good standing under the
laws of the State of Nevada. Each of the subsidiaries of the Company (the
"Subsidiaries") has been duly organized and is validly existing in good
standing under the laws of its jurisdiction of organization; and each of
the Company and its Subsidiaries is duly qualified to transact business as
a foreign organization and is in good standing under the laws of all other
jurisdictions where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not result in a material liability or
disability to the Company and its Subsidiaries, taken as a whole.
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(iv) The Company and each of its Subsidiaries have full power
(corporate and other) to own or lease their respective properties and
conduct their respective businesses as described in the Registration
Statement and the Prospectus; and the Company has full power (corporate and
other) to enter into this Agreement and to carry out all the terms and
provisions hereof to be carried out by it.
(v) The shares of capital stock owned by the Company which have
been issued by the Company's corporate Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable and are
owned beneficially by the Company free and clear of any security interests,
liens, encumbrances, equities or claims, except for pledges of such shares
in connection with indebtedness included on the balance sheets of the
Company and its consolidated subsidiaries incorporated by reference into
the Registration Statement and the Prospectus.
(vi) The Company has an authorized capitalization as set forth in
the Prospectus. All of the issued shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable. [The Firm Securities have been duly authorized and at the
Firm Closing Date, after payment therefor in accordance herewith, will be
validly issued, fully paid and nonassessable.] [The Firm Securities have
been duly authorized and the Common Stock initially issuable upon
conversion of the Firm Securities has been duly authorized and reserved for
issuance, and when the Indenture has been duly executed and delivered by
the Company and the Trustee (assuming the due authorization, execution and
delivery of the Indenture by the Trustee) and the Firm Securities have been
duly executed by the Company, authenticated by the Trustee, and issued and
delivered in accordance with their terms, the Firm Securities will
constitute valid and legally binding obligations of the Company enforceable
against the Company in accordance with their terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general principles of equity, the Firm Securities will be convertible into
Common Stock in accordance with the terms of the Indenture, and the Common
Stock initially issuable upon such conversion of the Firm Securities, when
issued and delivered in accordance with the provisions of the Indenture,
will be validly issued, fully paid and nonassessable; and the Firm
Securities will conform to the description of the Firm Securities contained
in the Prospectus.) No holders of outstanding shares of capital stock of
the Company are entitled as such to any preemptive or other rights to
subscribe for any of the Securities , and no holders of securities of the
Company are entitled to have such securities registered under the
Registration Statement, except where such rights have been waived.
[(vii) The Indenture has been duly authorized and has been duly
qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and when the Indenture has been duly executed and
delivered by the
5
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Company and the Trustee (assuming the due authorization, execution and
delivery of the Indenture by the Trustee), the Indenture will constitute a
valid and legally binding instrument of the Company, enforceable against
the Company in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, freorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity.]
(viii) The shares of capital stock of the Company conform to the
description thereof incorporated by reference in the Prospectus.
(ix) The consolidated financial statements and schedules of the
Company and its consolidated subsidiaries incorporated by reference into
the Registration Statement and the Prospectus fairly present the financial
condition, results of operations, stockholders' equity and cash flows of
the Company and its consolidated subsidiaries as of the dates and periods
therein specified. Such financial statements and schedules have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise
noted therein). The selected financial data set forth in the Company's
(i) Annual Report on Form 10-K for the fiscal year ended December 31, 1996
and (ii) Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1997 and June 30, 1997, fairly present, on the basis stated in
such Annual Report, the information included therein.
(x) KPMG Peat Marwick LLP, who have audited certain financial
statements of the Company and its consolidated subsidiaries and delivered
their report with respect to the audited consolidated financial statements
and schedules incorporated in the Registration Statement and the
Prospectus, are independent public accountants as required by the Act, the
Exchange Act and the related published rules and regulations thereunder.
(xi) The execution and delivery of this Agreement has been duly
authorized by the Company and this Agreement has been duly executed and
delivered by the Company and is the valid and binding agreement of the
Company enforceable against the Company in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors'
rights, to general principles of equity and, with respect to
indemnification, public policy.
(xii) No legal or governmental proceedings are pending to which the
Company or any of its Subsidiaries is a party or to which the property of
the Company or any of its Subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are not
described therein and no such proceedings have been threatened against the
Company or any of its Subsidiaries or with respect to any of their
respective properties; and no contract or other document is required to be
described in the Registration Statement or the
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Prospectus or to be filed as an exhibit to the Registration Statement that
is not described therein or filed as required.
(xiii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its Subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, (B) there have
been no transactions entered into by the Company or any of its
Subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its Subsidiaries considered as
one enterprise, and (C) there has been no dividend or distribution of any
kind declared, paid or made by the Company on any of its shares of Common
Stock.
(xiv) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, [the issuance of
the Common Stock issuable upon conversion of the Securities,] the
compliance by the Company with the other provisions of this Agreement and
the Indenture and the consummation of the other transactions herein
contemplated do not (i) require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except
such as have been obtained and such as may be required under state
securities or blue sky laws or (ii) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, lease or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective
properties are bound, or the charter documents or by-laws of the Company or
any of its Subsidiaries, or any statute or any judgment, decree, order,
rule or regulation of any court or other governmental authority or any
arbitrator applicable to the Company or any of its Subsidiaries.
(xv) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(xvi) The Company and each of its Subsidiaries have good and
marketable title to all real properties, and interests in real property,
described in the Prospectus (including the documents incorporated by
reference therein) as owned by each of them, in each case free and clear of
all liens, charges, encumbrances and restrictions except such as are
described in the Registration Statement or such as do not materially
adversely affect the value of such property or interests or interfere with
the use made or proposed to be made of such property or interests by the
Company and each of its Subsidiaries; the Company has obtained satisfactory
confirmations, except as is otherwise described in the Registration
Statement, that the Company and each of its Subsidiaries has the
7
<PAGE>
foregoing title to such real property and interests in real property; and
any real property and buildings held under lease by the Company or any of
its Subsidiaries, as the case may be, under valid, binding and enforceable
leases conforming to any applicable description thereof set forth in or the
documents incorporated by reference into the Registration Statement and the
Prospectus, with such exceptions as do not interfere with the use made and
proposed to be made of such property and buildings by the Company, its
Subsidiaries or any third party.
(xvii) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required
by this Agreement to be delivered to the Representative[s] was or will be,
when made, inaccurate, untrue or incorrect in any material respect.
(xviii) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action intended,
or which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale
of the Securities.
[(xix) The Company has been advised by the American Stock Exchange
that the Securities [and the shares of Common Stock issuable upon
conversion of the Securities] will be listed for trading on the American
Stock Exchange upon official notice of issuance.]
(xx) Neither the Company nor any of its Subsidiaries is involved in
any material labor dispute nor, to the best knowledge of the Company, is
any such dispute threatened.
(xxi) Neither the Company nor any of its Subsidiaries nor, to the
Company's best knowledge, any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any Subsidiary
of the Company or received or retained any funds in violation of any law,
rule or regulation or of a character required to be disclosed in the
Prospectus.
(xxii) Any certificate signed by any officer of the Company and
delivered to the Representative[s] or to counsel for the Underwriters in
connection with the transactions contemplated by this Agreement shall be
deemed a representation and warranty by the Company to each Underwriter as
to the matters covered thereby.
(xxiii) No default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a default in the due
performance and observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, lease or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of their respective properties is
bound or may be affected in any material adverse respect with regard to
property, business or operations of the Company
8
<PAGE>
and its subsidiaries which would require disclosure in the Registration
Statement and the Prospectus.
3. Representations and Warranties of the Underwriters. Upon your
--------------------------------------------------
authorization of the release of the Firm Securities, the several Underwriters
propose to offer the Firm Securities for sale to the public upon the terms set
forth in the Prospectus. [Each of] [t]he Representative[s] represent[s] and
agree[s] that (i) it has not offered or sold and will not offer or sell in the
United Kingdom, by means of any document, any Securities other than to persons
whose ordinary business it is to buy or sell shares or debentures (whether as
principal or agent) or in circumstances which do not constitute an offer to the
public within the meaning of the Companies Act 1985; (ii) it has complied and
will comply with all applicable provisions of the Financial Services Act 1986
with respect to anything done by it in relation to the Securities in, from or
otherwise involving the United Kingdom; and (iii) it has issued or passed on and
will issue or pass on to any person in the United Kingdom any document received
by it in connection with the issue of the Securities only if that person is of a
kind described in Article 9(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemption 3) Order 1988, as amended.
4. Agreements. (a) The Company covenants and agrees with each of the
----------
Underwriters that:
(i) Subject to the next sentence, the Company will file the
Prospectus with the Commission pursuant to Rule 424 under the Act. During
any time when a prospectus relating to the Securities is required to be
delivered under the Act, the Company (i) will comply with all requirements
imposed upon it by the Act[,] [and] the Exchange Act [and the Trust
Indenture Act] and the respective rules and regulations of the Commission
thereunder to the extent necessary to permit the continuance of sales of or
dealings in the Securities in accordance with the provisions hereof and of
the Prospectus, as then amended or supplemented, and (ii) will not file
with the Commission the Prospectus, any amendment or supplement to the
Prospectus, or any amendment to the Registration Statement, of which the
Representative[s] shall not previously have been advised and furnished with
a copy a reasonable period of time prior to the proposed filing and as to
which filing the Representative[s] shall not have given their consent. The
Company will advise the Representative[s], promptly after receiving notice
thereof, of the time when (i) the Prospectus has been filed with the
Commission and (ii) any amendment to the Registration Statement has been
filed or declared effective or any amendment or supplement to the
Prospectus has been filed and will provide evidence satisfactory to the
Representative[s] of each such filing or effectiveness.
(ii) The Company will advise the Representative[s], promptly after
receiving notice or obtaining knowledge thereof, of (i) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or any order
directed at any
9
<PAGE>
document incorporated by reference in the Registration Statement or the
Prospectus or any amendment or supplement thereto or any order preventing
or suspending the use of the Prospectus, (ii) the suspension of the
qualification of the Securities for offering or sale in any jurisdiction,
(iii) the institution, threatening or contemplation of any proceeding for
any such purpose or (iv) any request made by the Commission for amending or
supplementing the Registration Statement, for amending the Prospectus or
for additional information. The Company will use its best efforts to
prevent the issuance of any such stop order and, if any such stop order is
issued, to obtain the withdrawal thereof as promptly as possible.
(iii) The Company will arrange for the qualification of the
Securities for offering and sale under the securities or blue sky laws of
such jurisdictions as the Representative[s] may designate and will continue
such qualifications in effect for as long as may be necessary to complete
the distribution of the Securities; provided, however, that in connection
-------- -------
therewith the Company shall not be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction.
(iv) If, at any time when a prospectus relating to the Securities
is required to be delivered under the Act, any event occurs as a result of
which the Prospectus, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if for any
other reason it is necessary at any time to amend or supplement the
Prospectus to comply with the Act, the Exchange Act or the respective rules
or regulations of the Commission thereunder, the Company will promptly
notify the Representative[s] thereof and, subject to Section 4(a) hereof,
will prepare and file with the Commission, at the Company's expense, an
amendment to the Registration Statement or an amendment to the Basic
Prospectus or the Prospectus that corrects such statement or omission or
effects such compliance.
(v) The Company will, without charge, provide (i) to the
Representative[s] and to counsel for the Underwriters, upon request, a
signed copy of the registration statement originally filed with respect to
the Securities and each amendment thereto (in each case including exhibits
thereto), (ii) to each Underwriter, a conformed copy of such registration
statement and each amendment thereto (in each case without exhibits
thereto) and (iii) so long as a prospectus relating to the Securities is
required to be delivered under the Act, as many copies of the Prospectus or
any amendment or supplement thereto as the Representative[s] may reasonably
request.
(vi) The Company, as soon as practicable, will make generally
available to its security holders and to the Representative[s] a
consolidated earnings statement of the Company and its Subsidiaries (which
need not be
10
<PAGE>
audited) that satisfies the provisions of Section 11(a) of the Act and
Rule 158 thereunder.
(vii) The Securities [and the shares of Common Stock issuable upon
conversion of the Securities] will be listed on the American Stock
Exchange, subject to notice of issuance].
(viii) The Company and its executive officers will not, directly or
indirectly, offer, sell or otherwise dispose of any shares of Common Stock
or any securities convertible into or exercisable or exchangeable for, or
any rights to purchase or acquire, Common Stock for a period of 90 days
after the date hereof without the prior written consent of the
Representative[s].
(ix) The Company intends to use, the net proceeds from the sale of
the Securities sold by it hereunder as set forth under the "Use of
Proceeds" in the Prospectus.
5. Expenses. The Company will pay all costs and expenses incident to the
--------
performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 10 hereof, including all costs and expenses incident to
(i) the printing or other production of all documents with respect to the
transactions, including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment thereto and
the Prospectus and any amendment or supplement thereto, this Agreement and any
blue sky memoranda, (ii) all arrangements relating to the delivery to the
Underwriters of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, accountants and any other experts or advisors
retained by the Company, (iv) preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Securities [and the Common Stock
issuable upon conversion of the Securities], including transfer agent's and
registrar's fees [and the fees of the Trustee], (v) the qualification of the
Securities [and the Common Stock issuable upon conversion of the Securities]
under state securities and blue sky laws, including filing fees and fees and
disbursements of counsel for the Underwriters relating thereto, (vi) the filing
fees of the Commission relating to the Securities [and the Common Stock issuable
upon conversion of the Securities], [(vii) the listing of the Securities [and
the Common Stock issuable upon conversion of the Securities] on the American
Stock Exchange] and (viii) expenses of Company personnel in connection with
their attendance at meetings with prospective investors in the Securities. If
the sale of the Securities provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth in Section6 hereof
is not satisfied, because this Agreement is terminated pursuant to Section10
hereof or because of any failure, refusal or inability on the part of the
Company to perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by
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<PAGE>
them in connection with the proposed purchase and sale of the Securities. The
Company shall not in any event be liable to any of the Underwriters for the loss
of anticipated profits from the transactions covered by this Agreement.
6. Conditions to the Underwriters' Obligations. The obligations of the
-------------------------------------------
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representative[s]' sole discretion, to the accuracy in all
material respects of the representations and warranties of the Company contained
herein as of the date hereof and as of the Firm Closing Date as if made on and
as of the Firm Closing Date, to the accuracy in all material respects of the
statements of the Company's officers made pursuant to the provisions hereof, to
the performance by the Company of its covenants and agreements hereunder and to
the following additional conditions:
(a) The Prospectus shall have been filed with the Commission in
the manner and within the time period required by Rule 424(b) under the Act; no
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto and no order directed at any document
incorporated by reference in the Registration Statement or the Prospectus or any
amendment or supplement thereto shall have been issued and no proceedings for
that purpose shall have been instituted or threatened or, to the knowledge of
the Company or the Representative[s], shall be contemplated by the Commission;
and the Company shall have complied with any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise).
(b) The Representative[s] shall have received opinions, dated the
Firm Closing Date, of Latham & Watkins and/or Schreck Morris, to the effect
that:
(i) the Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Nevada. All of its
subsidiaries listed on Exhibit A to such counsel's opinion (the
"Subsidiaries") have been duly organized; and the Company and each of its
Subsidiaries are validly existing as organizations in good standing under
the laws of their respective jurisdictions of organization and are duly
qualified to transact business as foreign corporations and are in good
standing under the laws of the jurisdictions listed on Exhibit B to such
counsel's opinion;
(ii) the Company and each of the Subsidiaries have corporate power
to own or lease their respective properties and conduct their respective
businesses as described in the Registration Statement and the Prospectus,
and the Company has corporate power to enter into this Agreement and to
carry out all the terms and provisions hereof to be carried out by it;
(iii) the issued shares of capital stock owned by the Company which
have been issued by each of the corporate Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable and are
owned beneficially by the Company free and clear, to the best knowledge of
such counsel, of any
12
<PAGE>
security interests, liens, encumbrances, equities or claims, except for
pledges of such shares in connection with indebtedness included on the
balance sheets of the Company and its consolidated Subsidiaries
incorporated by reference into the Registration Statement and the
Prospectus;
(iv) the Company has an authorized capitalization as set forth in
the Prospectus; all of the issued shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable; [the
Firm Securities sold by the Company hereunder have been duly authorized by
all necessary corporate action of the Company and, when issued and
delivered to and paid for by the Underwriters pursuant to this Agreement,
will be validly issued, fully paid and nonassessable;] [the Firm Securities
sold by the Company hereunder have been duly authorized and the Common
Stock initially issuable upon conversion of the Firm Securities has been
duly and validly authorized and reserved for issuance, and when the
indenture has been duly executed and delivered by the Company and the
Trustee and the Firm Securities have been duly executed by the Company,
authenticated by the Trustee, and issued and delivered in accordance with
their terms, the Firm Securities will then constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general principles of equity, the
Firm Securities will be convertible into Common Stock in accordance with
the terms of the Indenture, and the Common Stock initially issuable upon
such conversion, when issued and delivered in accordance with the
provisions of the Indenture, will be validly issued, fully paid and
nonassessable;] [the Securities [and the Common Stock issuable upon
conversion of the Securities] have been duly authorized for listing,
subject to official notice of issuance, on the American Stock Exchange;] to
such counsel's best knowledge, no holders of outstanding shares of capital
stock of the Company are entitled as such to any preemptive or other rights
to subscribe for any of the Securities [or the Common Stock issuable upon
conversion of the Securities]; and to such counsel's best knowledge, no
holders of securities of the Company are entitled to have such securities
registered under the Registration Statement;
[(v) the Indenture has been duly authorized and has been duly
qualified under the Trust Indenture Act, and when the Indenture has been
executed and delivered by the Company and the Trustee (and assuming the due
authorization, execution and delivery of the Indenture by the Trustee) the
Indenture will constitute a valid and legally binding instrument,
enforceable against the Company in accordance with its terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general principles of equity;]
(vi) the description of the Common Stock incorporated by reference
into the Prospectus, insofar as such statements purport to summarize
certain
13
<PAGE>
provisions of the Common Stock, provides a fair summary of such
provisions[, and the description of the Securities in the Prospectus,
insofar as such statements purport to summarize certain provisions of the
Securities, provides a fair summary of such provisions];
(vii) the execution and delivery of this Agreement have been duly
authorized by all necessary corporate action of the Company and this
Agreement has been duly executed and delivered by the Company, and is the
valid and binding agreement of the Company enforceable against the Company
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general principles of equity and
except as right to indemnity and contribution may be limited by federal or
state securities laws or the public policy underlying such laws;
(viii) to such counsel's knowledge, no legal or governmental
proceedings are pending to which the Company or any of the Subsidiaries is
a party or to which the property of the Company or any of the Subsidiaries
is subject that are required to be described in the Registration Statement
or the Prospectus and are not described therein, and, to the best knowledge
of such counsel, no such proceedings have been threatened against the
Company or any of the Subsidiaries or with respect to any of their
respective properties; and to such counsel's best knowledge, no contract or
other document is required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement
that is not described therein or filed as required;
(ix) the issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, [the issuance of
the Common Stock issuable upon conversion of the Securities,] the
compliance by the Company with the other provisions of this Agreement and
the Indenture and the consummation of the other transactions herein
contemplated do not (A) require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except
such as have been obtained and such as may be required under state
securities or blue sky laws, or (B) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, any material contract filed as an exhibit to the Registration
Statement or the charter documents or by-laws of the Company or any of the
Subsidiaries, or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any arbitrator
known to such counsel and applicable to the Company or any of the
Subsidiaries.
(x) the Registration Statement is effective under the Act; any
required filing of the Prospectus pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b); and no stop
order suspending the
14
<PAGE>
effectiveness of the Registration Statement or any post-effective amendment
thereto and no order directed at any document incorporated by reference in
the Registration Statement or the Prospectus or any amendment or supplement
thereto has been issued, and no proceedings for that purpose have been
instituted or threatened or, to the best knowledge of such counsel, are
contemplated by the Commission.
(xi) the Company is not required to be registered under the
Investment Company Act of 1940, as amended; and
(xii) the registration statement originally filed with respect to
the Securities and each amendment thereto and the Basic Prospectus and the
Prospectus (in each case, including the documents incorporated by reference
therein but not including the financial statements and other financial and
statistical information contained therein, as to which such counsel need
express no opinion) comply as to form in all material respects with the
applicable requirements of the Act, the Exchange Act and the respective
rules and regulations of the Commission thereunder.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
laws of jurisdictions in which such counsel are not admitted to practice, to the
extent satisfactory to counsel for the Underwriters, upon the opinion of local
counsel in such jurisdictions and in the case of the opinion described in
paragraph (i) above upon certificates of public officials. The foregoing
opinion shall also state that the Underwriters are justified in relying upon any
such opinion of such local counsel, and copies of the opinion of such local
counsel shall be delivered to the Representative[s] and counsel for the
Underwriters.
In addition to the matters set forth above, such counsel shall also
state that in the course of the preparation of the Registration Statement and
the Prospectus, such counsel has participated in conferences with officers and
representatives of the Company and with the Company's independent auditors, your
representatives and your counsel, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed and
although they are not passing upon, and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus (except as set forth therein) and have
not made any independent check or verification thereof, during the course of
such participation (relying as to the factual matters underlying the
determination of materiality to a large extent upon the statements of officers
or other representatives of the Company), no facts came to their attention that
caused them to believe that the Registration Statement, as of the Effective Date
and as of the date of such opinion, contained or contains any untrue statement
of a material fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus, as of its date and the date of such opinion, included or
includes any untrue statement of a material fact required to be stated therein
or necessary in order to make the
15
<PAGE>
statements therein, in the light of the circumstances under which they were
made, not misleading. It is understood that such counsel will express no belief
with respect to the financial statements, the notes thereto and related
schedules and other financial, numerical, statistical and accounting data
included or omitted from the Registration Statement or the Prospectus and will
express no belief with respect to the Statement of Eligibility and Qualification
of the Trustee on Form T-1.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment thereto at the date of such opinion.
(c) The Representative[s] shall have received an opinion, dated
the Firm Closing Date, of ________________, counsel for the Underwriters, with
respect to the issuance and sale of the Firm Securities, the Registration
Statement, the Prospectus, and such other related matters as the
Representative[s] may reasonably require, and the Company shall have furnished
to such counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters. In rendering such opinion, such counsel
may rely as to all matters of Maryland law upon the opinion of Schreck Morris
referred to in paragraph (b) above.
(d) The Representative[s] shall have received from KPMG Peat
Marwick LLP a letter or letters dated, respectively, the date hereof and the
Firm Closing Date, in form and substance satisfactory to the Representative[s],
to the effect that:
(i) they are independent accountants with respect to the Company
and its consolidated subsidiaries within the meaning of the Act, the
Exchange Act and the applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules examined by them and included in the Registration
Statement and the Prospectus comply in form and in all material respects
with the applicable accounting requirements of the Act, the Exchange Act
and the related published rules and regulations thereunder;
(iii) on the basis of a reading of the latest available interim
unaudited consolidated financial statements of the Company and its
consolidated subsidiaries, carrying out certain specified procedures (which
do not constitute an audit made in accordance with generally accepted
auditing standards) that would not necessarily reveal matters of
significance with respect to the comments set forth in this paragraph
(iii), a reading of the minute books of the shareholders, the board of
directors and any committees thereof of the Company and each of its
consolidated subsidiaries, and inquiries of certain officials of the
Company and its consolidated subsidiaries who have responsibility for
financial and accounting matters, nothing came to their attention that
caused them to believe that at a specific date not more than five business
days prior to the date of such letter, there were any changes in the shares
of capital stock or indebtedness of the Company and its consolidated
subsidiaries or any decreases in total assets, current assets or
shareholders' equity of the Company and its consolidated subsidiaries, in
each
16
<PAGE>
case compared with amounts shown on the ___________________ consolidated
balance sheet included by incorporation by reference to the Company's
Report on Form 10-Q for the fiscal quarter ended __________________ in the
Registration Statement and the Prospectus, or for the period from
___________________ to such specified date there were any decreases, as
compared with the corresponding period of the preceding fiscal year, in net
revenues, net income before income taxes or total or per share amounts of
net income of the Company and its consolidated subsidiaries, except in all
instances for changes, decreases or increases set forth in such letter or
as set forth in or contemplated in the Prospectus; and
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information that are derived from the general accounting records
of the Company and its consolidated subsidiaries and are included in its
Quarterly Report on Form 10-Q for the fiscal quarter ended __________,
incorporated by reference in the Registration Statement and the Prospectus,
and have compared such amounts, percentages and financial information with
such records of the Company and its consolidated subsidiaries and with
information derived from such records and have found them to be in
agreement, excluding any questions of legal interpretation.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representative[s] deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representative[s],
make it impractical or inadvisable to proceed with the purchase and delivery of
the Securities as contemplated by the Registration Statement, as amended as of
the date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (d) with respect to either letter referred to above shall include any
amendment thereto at the date of such letter.
(e) The Representative[s] shall have received a certificate,
dated the Firm Closing Date, of the Chief Executive Officer and the Chief
Financial Officer of the Company to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm Closing
Date; the Registration Statement, as amended as of the Firm Closing Date,
does not include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading,
and the Prospectus, as amended or supplemented as of the Firm Closing Date,
does not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made,
17
<PAGE>
not misleading; and the Company has performed all covenants and agreements
and satisfied all conditions on its part to be performed or satisfied at or
prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto and no order
directed at any document incorporated by reference in the Registration
Statement or any amendment thereto or the Prospectus has been issued, and
no proceedings for that purpose have been instituted or threatened or, to
the best of the Company's knowledge, are contemplated by the Commission;
and
(iii) subsequent to the respective dates as of which information
is given in the Registration Statement an the Prospectus, there has not
been any material adverse change, or any development involving a
prospective material adverse change (including without limitation a change
in management or control of the Company), in the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company and the Subsidiaries, except in each case as described in or
contemplated by the Prospectus (exclusive of any amendment or supplement
thereto after the date hereof).
(f) On or before the Firm Closing Date, the Representative[s]
and counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
(g) Prior to the commencement of the offering of the Securities,
the Securities shall have been accepted for listing on the American Stock
Exchange [and the Common Stock issuable upon conversion of the Securities shall
have been accepted for listing on the American Stock Exchange, subject to notice
of issuance].
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representative[s] and
counsel for the Underwriters. The Company shall furnish to the
Representative[s] such conformed copies of such opinions, certificates, letters
and documents in such quantities as the Representative[s] and counsel for the
Underwriters shall reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Option Securities shall be subject, in their discretion, to each of
the foregoing conditions to purchase the Firm Securities, except that all
references to the Firm Securities and the Firm Closing Date shall be deemed to
refer to such Option Securities and the related Option Closing Date,
respectively.
7 Indemnification and Contribution. (a) The Company agrees to indemnify
--------------------------------
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities to which such
Underwriter or such
18
<PAGE>
controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made by the
Company in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the registration statement originally filed
with respect to the Securities or any amendment thereto, the Prospectus or
any amendment thereto or (B) any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Securities [or the Common Stock
issuable upon conversion of the Securities] under the securities or blue
sky laws thereof or filed with the Commission or any securities association
or securities exchange (each an "Application") or
(iii) the omission or alleged omission to state in such
registration statement or any amendment thereto, the Prospectus or any
amendment or supplement thereto, or any Application as material fact
required to be stated therein or necessary to make the statements therein
not misleading,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
-------- -------
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement or
any amendment thereto, the Prospectus or any amendment or supplement thereto, or
any Application in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representative[s]
specifically for use therein and provided, further, that the Company will not be
liable to any underwriter or any person controlling such underwriter with
respect to any such untrue statement or omission made in any preliminary
supplemental Prospectus that is corrected in the supplemental Prospectus (or any
amendment or supplement thereto) if the person asserting any such loss, claim,
damage or liability purchased Securities from such Underwriter but was not sent
or given a copy of the supplemental Prospectus (as amended or supplemented),
other than the document incorporated by reference therein, at or prior to the
written confirmation of the sale of such Securities to such person in any case
where such delivery of the supplemental Prospectus (as amended or supplemented)
as required by the Act, unless such failure to deliver the supplemental
Prospectus (as amended or supplemented) was the result of noncompliance by the
Company with Section 4(a)(v). This indemnity agreement will be in addition to
any liability which the Company may otherwise have. The Company will not,
without the prior written consent of each Underwriter, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may
19
<PAGE>
be sought hereunder (whether or not such Underwriter or any person who controls
such Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act is a party to such claim, action, suit or proceeding), unless
such settlement, compromise or consent includes an unconditional release of such
Underwriter and each such controlling person from all liability arising out of
such claim, action, suit or proceeding.
(a) Each Underwriter will indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act against any losses,
claims, damages or liabilities to which the Company and any such director,
officer or controlling person may become subject under the Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment thereto, the Prospectus or any amendment or
supplement thereto, or any Application or (ii) the omission or the alleged
omission to state therein a material fact required to be stated in the
Registration Statement or any amendment thereto, the Prospectus or any amendment
or supplement thereto, or any Application or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representative[s]
specifically for use therein; and, subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses reasonably incurred by the Company and any such director, officer
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability or any action in respect thereof. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have.
(b) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 7, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 7. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnifying party shall not have the right to direct the defense of such action
on behalf of such indemnified party or parties and such
20
<PAGE>
indemnified party or parties shall have the right to select separate counsel to
defend such action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not be liable to
such indemnified party under this Section 7 for any legal or other expenses,
other than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to local counsel) in any
one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the Representative[s] in the case of paragraph (a) of this
Section 7, representing the indemnified parties under such paragraph (a) who are
parties to such action or actions) or (ii) the indemnifying party has authorized
the employment of counsel for the indemnified party at the expense of the
indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified party
without the consent of the indemnifying party, unless such indemnified party
waived its rights under this Section 7 in which case the indemnified party may
effect such a settlement without such consent.
In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 7 is unavailable or insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total proceeds from
the offering (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the Underwriters. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters, the parties' relative intents,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in the
circumstances. The Company and the Underwriters agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation (even if the Underwriters were
21
<PAGE>
treated as one entity for such purpose) or by any other method of allocation
that does not take into account the equitable considerations referred to in the
first sentence of this paragraph (d). Notwithstanding any other provision of
this paragraph (d), no Underwriter shall be obligated to make contributions
hereunder that in the aggregate exceed the total underwriting discounts received
by it with respect to the Securities purchased by such Underwriter under this
Agreement, less the aggregate amount of any damages that such Underwriter has
otherwise been required to pay in respect of the same or any substantially
similar claim, and no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute hereunder are several in proportion to
their respective underwriting obligations and not joint, and contributions among
Underwriters shall be governed by the provisions of the Agreement Among
Underwriters. For purposes of this paragraph (d), each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
shall have the same rights to contribution as the Company.
8. Default of Underwriters. If one or more Underwriters default in their
-----------------------
obligations to purchase Firm Securities or Option Securities hereunder and the
aggregate [number] [principal amount] of such Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase is ten percent or less
of the aggregate [number] [principal amount] of Firm Securities or Option
Securities to be purchased by all of the Underwriters at such time hereunder,
the other Underwriters may make arrangements satisfactory to the
Representatives[s] for the purchase of such Securities by other persons (who may
include one or more of the non-defaulting Underwriters, including the
Representative[s]), but if no such arrangements are made by the Firm Closing
Date or the related Option Closing Date, as the case may be, the other
Underwriters shall be obligated severally in proportion to their respective
commitments hereunder to purchase the Firm Securities or Option Securities that
such defaulting Underwriter or Underwriters agreed but failed to purchase. If
one or more Underwriters so default with respect to an aggregate [number]
[principal amount] of Securities that is more than ten percent of the aggregate
[number] [principal amount] of Firm Securities or Option Securities, as the case
may be, to be purchased by all of the Underwriters at such time hereunder, and
if arrangements satisfactory to the Representative[s] are not made within 36
hours after such default for the purchase by other persons who may include one
or more of the non-defaulting Underwriters, including the Representative[s]) of
the Securities with respect to which such default occurs, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company other than as provided in Section 10 hereof. In the event of any
default by one or more Underwriters as described in this Section 8, the
Representative[s] shall have the right to postpone the Firm Closing Date or the
Option Closing Date, as the case may be, established as provided in Section 1
hereof for not more than seven business days in order that any necessary changes
may be made in the arrangements or documents for the
22
<PAGE>
purchase and delivery of the Firm Securities or Option Securities, as the case
may be. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 8. Nothing herein shall
relieve any defaulting Underwriter from liability for its default.
9. Survival. The respective representations, warranties, agreements,
--------
covenants, indemnities and other statements of the Company, its officers and the
several Underwriters set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the Company,
any of its officers or directors, any Underwriter or any controlling person
referred to in Section 7 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 5 and 7 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
10. Termination. This Agreement may be terminated with respect to the Firm
-----------
Securities or any Option Securities in the sole discretion of the
Representative[s] by notice to the Company given prior to the Firm Closing Date
or the related Option Closing Date, respectively, in the event that the Company
obligations and satisfy all conditions on its part to be performed or satisfied
hereunder at or prior thereto or, if at or prior to the Firm closing Date or
such Option Closing Date, respectively, the Representative[s] determine in their
sole discretion that:
(i) trading in the Securities or trading in the Common Stock
shall have been suspended by the Commission or trading in securities
generally on the American Stock Exchange or the International Stock
Exchange of the United Kingdom shall have been suspended or minimum or
maximum prices shall have been established for the Common Stock on either
such exchange;
(ii) a banking moratorium shall have been declared by New York,
United Kingdom or United States authorities; or
(iii) there shall have been (A) an outbreak or escalation of
hostilities between the United States or the United Kingdom and any foreign
power, (B) an outbreak or escalation of any other insurrection or armed
conflict involving the United States or the United Kingdom or (C) any other
calamity or crisis having an effect on the financial markets that makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the securities as contemplated by the Registration Statement.
11. Information Supplied by Underwriters. The statements set forth in the
------------------------------------
last paragraph on the front cover page and under the heading "Underwriting" in
the Prospectus (to the extent such statements relate to the Underwriters)
constitute the only information furnished by any Underwriter through the
Representative[s] to the Company for the purposes of Sections 2 and 7(b) hereof.
The Underwriters confirm that such statements (to such extent) are correct.
23
<PAGE>
12. Notices. All communications hereunder shall be in writing and, if sent
-------
to any of the Underwriters, shall be mailed or delivered or telegraphed and
confirmed in writing to
______________________________________________________________, if sent to the
Company, shall be mailed, delivered or telegraphed and confirmed in writing to
the Company at 9955 S.E. Washington, Suite 201, Portland, Oregon 97216,
Attention: President.
13. Successors. This Agreement shall inure to the benefit of and shall be
----------
binding upon the several Underwriters, the Company and its respective successors
and legal representatives, and nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the indemnities
of the Company contained in Section 7 of this Agreement shall also be for the
benefit of any person or persons who control any Underwriter within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act and (ii) the
indemnities of the Underwriters contained in Section 7 of this Agreement shall
also be for the benefit of the directors of the Company, the officers of the
Company who have signed the Registration Statement and any person or persons who
control the Company within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act. No purchaser of Securities from any Underwriter shall be
deemed a successor because of such purchase.
14. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND
--------------
THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
PROVISIONS RELATING TO CONFLICTS OF LAWS.
15. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
24
<PAGE>
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company and each
of the several Underwriters.
Very truly yours,
ASSISTED LIVING CONCEPTS, INC.
By:______________________________
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
_____________________________
as Representative[s] of the several Underwriters
By: _____________________________
By:_______________________________
Name:
Title:
25
<PAGE>
SCHEDULE 1
UNDERWRITER[S'] COMMITMENTS
[Number] [Aggregate Principle Amount] of
Firm Securities to be Purchased from the
Underwriter Company
- ----------- ------------------------------------------
_________________________
TOTAL......... ______________
26
<PAGE>
EXHIBIT 4.4
________________________________________________________________________________
ASSISTED LIVING CONCEPTS, INC.
INDENTURE
Dated as of __________ ___, ____
HARRIS TRUST AND SAVINGS BANK,
AS TRUSTEE
Providing for Issuance of Securities in Series
_________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C>
SECTION 1.01 Definitions................................................. 1
SECTION 1.02 Other Definitions........................................... 5
SECTION 1.03 Incorporation by Reference to Trust
Indenture Act.............................................. 6
SECTION 1.04 Rules of Construction....................................... 6
ARTICLE 2
THE SECURITIES
SECTION 2.01 Forms Generally............................................. 6
SECTION 2.02 Amount Unlimited; Issuable in Series........................ 6
SECTION 2.03 Execution and Authentication................................ 9
SECTION 2.04 Registrar and Agents........................................ 10
SECTION 2.05 Paying Agent to Hold Money in Trust......................... 10
SECTION 2.06 Transfer and Exchange....................................... 11
SECTION 2.07 Replacement Securities...................................... 14
SECTION 2.08 Outstanding Securities...................................... 14
SECTION 2.09 Temporary Securities........................................ 15
SECTION 2.10 Cancellation................................................ 15
SECTION 2.11 Defaulted Interest.......................................... 15
SECTION 2.12 Securityholder Lists........................................ 16
SECTION 2.13 Persons Deemed Owners....................................... 16
SECTION 2.14 CUSIP Number................................................ 16
SECTION 2.15 Provisions in Global Security............................... 17
ARTICLE 3
REDEMPTION
SECTION 3.01 Right of Redemption......................................... 18
SECTION 3.02 Selection of Securities to be Redeemed...................... 19
SECTION 3.03 Notice of Redemption by the Company......................... 20
SECTION 3.04 Effect of Notice of Redemption.............................. 20
SECTION 3.05 Deposit of Redemption Price................................. 21
SECTION 3.06 Securities Redeemed in Part................................. 21
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of the Securities................................... 21
SECTION 4.02 Commission Reports.......................................... 21
SECTION 4.03 Waiver of Stay, Extension or Usury Laws..................... 22
SECTION 4.04 Notice of Default........................................... 22
SECTION 4.05 Compliance Certificates..................................... 22
SECTION 4.06 Limitation on Dividends and Other
Distributions.............................................. 23
</TABLE>
<PAGE>
<TABLE>
ARTICLE 5
SUCCESSOR CORPORATION
<S> <C>
SECTION 5.01 When Company May Merge, etc................................. 23
SECTION 5.02 Successor Corporation or Trust Substituted.................. 24
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default........................................... 24
SECTION 6.02 Acceleration................................................ 26
SECTION 6.03 Other Remedies.............................................. 27
SECTION 6.04 Waiver of Defaults and Events of Default.................... 27
SECTION 6.05 Control by Majority......................................... 27
SECTION 6.06 Rights of Holders to Receive Payment........................ 27
SECTION 6.07 Collection Suit by Trustee.................................. 28
SECTION 6.08 Trustee May File Proofs of Claim............................ 28
SECTION 6.09 Priorities.................................................. 29
SECTION 6.10 Undertaking for Costs....................................... 29
SECTION 6.11 Limitations on Suits........................................ 30
ARTICLE 7
TRUSTEE
SECTION 7.01 Duties of Trustee........................................... 30
SECTION 7.02 Rights of Trustee........................................... 32
SECTION 7.03 Individual Rights of Trustee................................ 32
SECTION 7.04 Trustee's Disclaimer........................................ 33
SECTION 7.05 Notice of Defaults.......................................... 33
SECTION 7.06 Reports by Trustee to Holders............................... 33
SECTION 7.07 Compensation and Indemnity.................................. 34
SECTION 7.08 Replacement of Trustee...................................... 34
SECTION 7.09 Successor Trustee by Merger, etc............................ 36
SECTION 7.10 Eligibility; Disqualification............................... 36
SECTION 7.11 Preferential Collection of Claims Against
Company.................................................... 36
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01 Satisfaction, Discharge and Defeasance of the
Securities.................................................. 36
SECTION 8.02 Satisfaction and Discharge of Indenture..................... 37
SECTION 8.03 Survival of Certain Obligations............................. 38
SECTION 8.04 Application of Trust Money.................................. 38
SECTION 8.05 Paying Agent to Repay Monies Held........................... 39
SECTION 8.06 Return of Unclaimed Monies.................................. 39
SECTION 8.07 Reinstatement............................................... 39
</TABLE>
-2-
<PAGE>
<TABLE>
ARTICLE 9
SUPPLEMENTAL INDENTURES
<S> <C>
SECTION 9.01 Supplemental Indentures Without Consent of
Holders..................................................... 40
SECTION 9.02 Supplemental Indentures with Consent of Holders............. 41
SECTION 9.03 Compliance with Trust Indenture Act......................... 42
SECTION 9.04 Revocation and Effect of Consents........................... 42
SECTION 9.05 Notation on or Exchange of Securities....................... 43
SECTION 9.06 Effect of Supplemental Indentures........................... 43
SECTION 9.07 Reference in Securities to Supplemental
Indentures................................................. 43
ARTICLE 10
CONVERSION OF SECURITIES
SECTION 10.01 Right of Conversion; Conversion Price....................... 44
SECTION 10.02 Issuance of Shares on Conversion............................ 45
SECTION 10.03 No Adjustment for Interest or Dividends..................... 46
SECTION 10.04 Adjustment of Conversion Price.............................. 46
SECTION 10.05 Notice of Adjustment of Conversion Price.................... 49
SECTION 10.06 Notice of Certain Corporate Action.......................... 50
SECTION 10.07 Taxes on Conversions........................................ 51
SECTION 10.08 Fractional Shares........................................... 51
SECTION 10.09 Cancellation of Converted Securities........................ 51
SECTION 10.10 Provisions in Case of Consolidation, Merger
or Sale of Assets.......................................... 52
SECTION 10.11 Disclaimer by Trustee of Responsibility for
Certain Matters............................................ 52
SECTION 10.12 Covenant to Reserve Shares.................................. 53
ARTICLE 11
SUBORDINATION; SENIORITY
SECTION 11.01 Securities Subordinated to Senior Indebtedness.............. 54
SECTION 11.02 Company Not to Make Payments with Respect to
Junior Securities in Certain Circumstances................. 55
SECTION 11.03 Subrogation of Junior Securities............................ 57
SECTION 11.04 Authorization by Holders of Junior Securities............... 58
SECTION 11.05 Notices to Trustee.......................................... 59
SECTION 11.06 Trustee's Relation to Senior Indebtedness................... 60
SECTION 11.07 No Impairment of Subordination.............................. 60
SECTION 11.08 Article 11 Not To Prevent Events of Default................. 60
SECTION 11.09 Paying Agents other than the Trustee........................ 60
SECTION 11.10 Securities Senior to Subordinated
Indebtedness............................................... 61
</TABLE>
-3-
<PAGE>
<TABLE>
ARTICLE 12
SINKING FUND
<S> <C>
SECTION 12.01 Mandatory and Optional Sinking Fund Payments............... 61
SECTION 12.02 Satisfaction of Sinking Fund Payments with
Securities................................................ 61
SECTION 12.03 Redemption of Securities for Sinking Funds................. 62
ARTICLE 13
MISCELLANEOUS
SECTION 13.01 Trust Indenture Act Controls............................... 63
SECTION 13.02 Notices.................................................... 63
SECTION 13.03 Communications by Holders with Other Holders............... 64
SECTION 13.04 Certificate and Opinion as to Conditions
Precedent................................................. 64
SECTION 13.05 Statements Required in Certificate and Opinion............. 64
SECTION 13.06 Rules by Trustee and Agents................................ 65
SECTION 13.07 Record Date................................................ 65
SECTION 13.08 Legal Holidays............................................. 65
SECTION 13.09 Governing Law.............................................. 65
SECTION 13.10 No Adverse Interpretation of Other Agreements.............. 66
SECTION 13.11 No Recourse Against Others................................. 66
SECTION 13.12 Successors................................................. 66
SECTION 13.13 Multiple Counterparts...................................... 66
SECTION 13.14 Table of Contents, Headings, etc........................... 66
SECTION 13.15 Severability............................................... 66
</TABLE>
-4-
<PAGE>
CROSS-REFERENCE TABLE
ASSISTED LIVING CONCEPTS, INC.
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture
- --------------- ---------
<S> <C>
{310(a)(1) 7.10
(a)(2) 7.10
(a)(3) Not
Applicable
(a)(4) Not
Applicable
(b) 7.08; 7.10;
13.02
(c) Not
Applicable
{311(a) 7.11
(b) 7.11
(c) Not
Applicable
{312(a) 2.12
(b) 12.03
(c) 12.03
{313(a) 7.06
(b)(1) Not
Applicable
(b)(2) 7.06
(c) 7.06; 13.02
(d) 7.06
{314(a) 4.02; 13.02
(b) Not
Applicable
(c)(1) 12.04
(c)(2) 12.04
(c)(3) Not
Applicable
(d) Not
Applicable
(e) 12.05
(f) Not
Applicable
{315(a) 7.01(b)
(b) 7.05; 13.02
(c) 7.01(a)
(d) 7.01(c)
(e) 6.10
{316(a)(last sentence) 13.06
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) Not
Applicable
(b) 6.06
{317(a)(1) 6.07
(a)(2) 6.08
(b) 2.05
</TABLE>
<PAGE>
<TABLE>
<S> <C>
{318(a) 11.01
</TABLE>
__________
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
INDENTURE dated as of ____________ ___, ____ between Assisted Living
Concepts, Inc., a Nevada corporation ("Company"), and Harris Trust and Savings
Bank, an Illinois banking corporation ("Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its securities (hereinafter called the
"Securities") evidencing its unsecured indebtedness, to be issued in one or more
fully registered series.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
To set forth or to provide for the establishment of the terms and
conditions upon which the Securities are and are to be authenticated, issued and
delivered, and in consideration of the premises and the purchase of Securities
by the Holders thereof, it is mutually covenanted and agreed as follows, for the
equal and proportionate benefit of all Holders of the Securities or of a series
thereof, as the case may be:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
-----------
"Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities or by agreement
or otherwise.
"Agent" means any Registrar, Paying Agent, Conversion Agent, co-
registrar or agent for service of notices and demands.
"Bankruptcy Law" means Title 11 of the U.S. Code or any similar
Federal or State law for the relief of debtors.
"Board of Directors of the Company" means the Board of Directors of
the Company or any committee of the Board.
"Board Resolution" means a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of
Directors of the Company and to be in
-1-
<PAGE>
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means any and all shares or other equivalents (however
designated) of capital stock, including all common stock and all preferred
stock.
"Closing Price" means with respect to the shares of common stock of
the Company on any day, (i) the last reported sales price regular way or, in
case no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case on the New York Stock
Exchange, or (ii) if the shares of common stock are not listed or admitted to
trading on the New York Stock Exchange, the last reported sales price regular
way, or in case no such reported sale takes place on such day, the average of
the reported closing bid and asked prices regular way, on the principal national
securities exchange on which the shares of common stock are listed or admitted
to trading, or (iii) if the shares of common stock are not listed or admitted to
trading on any national securities exchange, the average of the closing bid and
asked prices as furnished by any New York Stock Exchange member firm selected
from time to time by the Company for that purpose.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 311 West Monroe Street, 12th Floor, Chicago, Illinois.
"Custodian" means any receiver, trustee, liquidator or similar
official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Depositary" means, with respect to the Securities of any series
issued in whole or in part in the form of a Global Security, the Person
designated as Depositary by the Company pursuant to Section 2.02 until a
successor Depositary shall have become such pursuant to the applicable
procedures of this Indenture, and thereafter "Depositary" shall mean or include
each Person who is then a Depositary hereunder, and if at any time there is more
than one Depositary with respect to the Securities of any such series,
"Depositary" shall mean the Depositary with respect to the Securities of that
series.
-2-
<PAGE>
"Dollar" or "$" means the lawful money of the United States of
America.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Global Security" means a Security in the form prescribed in Section
2.15 evidencing all or part of a Securities, issued to the Depositary for such
series or its nominee, and registered in the name of such Depositary or nominee.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Indebtedness," as applied to any Person, means, without duplication
(i) all indebtedness for borrowed money whether or not evidenced by a promissory
note, draft or similar instrument, (ii) that portion of obligations with respect
to leases that is properly classified as a liability on a balance sheet in
accordance with generally accepted accounting principles, (iii) notes payable
and drafts accepted representing extensions of credit, (iv) any balance owed for
all or any part of the deferred purchase price of property or services, which
purchase price is due more than six months from the date of incurrence of the
obligation in respect thereof (except any such balance that constitutes (a) a
trade payable or an accrued liability arising in the ordinary course of business
or (b) a trade draft or note payable issued in the ordinary course of business
in connection with the purchase of goods or services), if and to the extent such
debt would appear as a liability upon a balance sheet of such Person prepared in
accordance with generally accepted accounting principles, and (v) any deferral,
amendment, renewal, extension, supplement or refunding of any of the foregoing
indebtedness; provided, however, that, in computing the "Indebtedness" of any
-------- -------
Person, there shall be excluded any particular indebtedness if, upon or prior to
the maturity thereof and at the time of determination of such indebtedness,
there shall have been deposited with a depository in trust money (or evidences
of indebtedness if permitted by the instrument creating such indebtedness) in
the necessary amount to pay, redeem or satisfy such indebtedness as it becomes
due, and the amount so deposited shall not be included in any computation of the
assets of such Person.
"Indenture" means this Indenture as originally executed or, if amended
or supplemented as provided in Article 9, as amended or supplemented from time
to time.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary or the Controller of the Company.
"Officers' Certificate" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer, Assistant Secretary or Assistant
Controller of the Company. See
-3-
<PAGE>
Sections 13.04 and 13.05.
"Opinion of Counsel" means a written opinion from LathamE& Watkins or
any other legal counsel who is reasonably acceptable to the Trustee. The
counsel may be an employee of or counsel to the Company or the Trustee. See
Sections 13.04 and 13.05.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Principal" of a Security means the principal of the Security plus,
when appropriate, the premium, if any, on the Security.
"Redemption Date" when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
as specified in such Security.
"Senior Indebtedness" means the principal, premium, if any, and unpaid
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for post-filing interest is allowed in such proceeding), fees, charges,
expenses, reimbursement and indemnification obligations, and all other amounts
payable under or in respect of Indebtedness of the Company for money borrowed,
whether any such Indebtedness exists as of the date of this Indenture or shall
hereafter be created, incurred, assumed or guaranteed.
"Subordinated Indebtedness" means the principal, premium, if any, and
interest on any Indebtedness of the Company which by its terms is expressly
subordinated in right of payment to the Securities.
"Subsidiary" means a corporation the majority of whose voting stock is
owned by the Company or a subsidiary of the Company. Voting stock is Capital
Stock having voting power under ordinary circumstances to elect directors.
"Trust Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice-president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any Trust Officer or assistant Trust Officer, the controller
or any assistant controller or any other officer of the Trustee customarily
performing functions similar to
-4-
<PAGE>
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer of the Trustee
to whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"United States" means the United States of America.
SECTION 1.02 Other Definitions.
-----------------
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Company Order" 2.03
"Conversion Agent" 2.04
"conversion price" 10.01
"current market price" 10.04
"Event of Default" 6.01
"Junior Securities" 11.01
"Legal Holiday" 13.08
"mandatory sinking fund payments" 12.01
"Market Price" 3.01
"optional sinking fund payments" 12.01
"Paying Agent" 2.04
"Payment or Distribution" 11.01
"Redemption Price" 3.01
"Registrar" 2.04
"Rule 13e-3 Transaction" 10.06
"Securities" Recitals
"TIA" 1.03
"U.S. Government Obligations" 8.01
</TABLE>
SECTION 1.03 Incorporation by Reference to Trust Indenture Act.
-------------------------------------------------
Whenever this Indenture refers to a provision of the Trust Indenture
Act of 1939 (the "TIA"), the provision is incorporated by reference in and made
a part of this Indenture. The following TIA terms used in this Indenture have
the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the indenture securities.
-5-
<PAGE>
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rules have
the meanings assigned to them therein.
SECTION 1.04 Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with United States generally accepted accounting principles
in effect as of the time as to which such accounting principles are to be
applied;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and in the plural
include the singular.
ARTICLE 2
THE SECURITIES
SECTION 2.01 Forms Generally.
---------------
The Securities of each series shall be in substantially the form
(including any global form that is not inconsistent with this Indenture) as
shall be established from time to time by or pursuant to a Board Resolution or
in one or more indentures supplemental hereto, in each case with such variations
as are required or permitted by this Indenture (including such other provisions
as are necessary to reflect the global form of any Security, and the designation
of a Depositary for such Global Security) and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
of any securities exchange or to conform to general usage, all as may be
determined by the officers executing such Securities as evidenced by their
execution of the Securities.
SECTION 2.02 Amount Unlimited; Issuable in Series.
------------------------------------
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series:
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);
-6-
<PAGE>
(2) the limit, if any, upon the aggregate principal amount of
the Securities of the series which may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Securities of the series pursuant to this Indenture);
(3) the date or dates on which the principal of (and premium, if
any, on) the Securities of the series is payable;
(4) the rate or rates, if any, at which the Securities of the
series shall bear interest (or the method of determining such rate or
rates), the date or dates from which such interest shall accrue, date
or dates on which such interest shall be payable and the record date
or dates for the interest payable;
(5) the place or places where the principal of (and premium, if
any) and interest on Securities of the series shall be payable;
(6) the period or periods within which or the date or dates on
which, if any, the price or prices at which and the terms and
conditions upon which Securities of the series may be redeemed, in
whole or in part, at the option of the Company;
(7) the obligation, if any, of the Company to redeem, repay or
purchase Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Securityholder thereof and
the period or periods within which, the price or prices at which and
the terms and conditions upon which Securities of the series shall be
redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation;
(8) the price at which Securities of any one series are or may
be converted into shares of Capital Stock of the Company;
(9) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be
payable upon declaration of acceleration of the maturity thereof;
(10) whether any Securities of the series are to be issued in
whole or in part in the form of one or more Global Securities and, if
so, the Depositary for such Global Security or Securities (which
Depositary shall be, if then required by applicable law or regulation,
a clearing agency registered under the Exchange Act and any other
applicable statute or
-7-
<PAGE>
regulation) and whether beneficial owners of interests in such Global
Security or Securities may exchange such interests for Securities of
such series and any authorized form and denomination of such
Securities and the circumstances under which any such exchanges may
occur (if other than in the manner provided in Section 2.06);
(11) the identity of each Paying Agent, Conversion Agent and
Registrar (each as defined in Section 2.04) for the Securities of such
series; and
(12) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to such Board Resolution and set forth in such Officers' Certificate or in any
such indenture supplemental hereto.
If any of the terms of a series of Securities are established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery to the Trustee
of the Officers' Certificate or supplemental indenture setting forth the terms
of the series.
SECTION 2.03 Execution and Authentication.
----------------------------
Two Officers shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be impressed, affixed, imprinted
or reproduced on the Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall
nevertheless be valid.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security. Such signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate Securities for original issue upon
written order or orders of the Company signed by two Officers or by an Officer
and an Assistant Treasurer of the Company (a "Company Order").
The Trustee may appoint an authenticating agent to authenticate
Securities. An authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication
-8-
<PAGE>
by such agent. An authenticating agent has the same rights as an Agent to deal
with the Company or an Affiliate.
The Securities may be issued in registered form without coupons. The
Securities shall be issuable only in denominations of $1,000 principal amount
and any integral multiple thereof.
The Trustee shall inform the Depositary with respect to the Securities
of any series that the Trustee has endorsed pursuant to the provisions of
Section 2.15.
SECTION 2.04 Registrar and Agents.
--------------------
The Company shall maintain an office or agency where Securities of any
series may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities of any series may be
presented for payment ("Paying Agent"), an office or agency where Securities of
any series may be presented for conversion ("Conversion Agent") and an office or
agency where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Registrar shall keep a
register of the Securities of each series and of their transfer and exchange.
The Company may have one or more co-registrars, one or more additional Paying
Agents and one or more additional Conversion Agents. The Company or any
Subsidiary may act as Paying Agent and/or Conversion Agent. The term "Paying
Agent" includes any additional paying agent and the term "Conversion Agent"
includes any additional conversion agent.
The Company may change any Paying Agent, Registrar, Conversion Agent
or Co-Registrar on sixty (60) days' prior written notice to the Trustee. The
Company shall notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar, Paying Agent, Conversion
Agent or agent for service of notices and demands, or fails to give the
foregoing notice, the Trustee shall act as such.
-9-
<PAGE>
The Company and the Trustee initially appoint the Trustee as
Registrar, Paying Agent, Conversion Agent and agent for service of notices and
demands.
SECTION 2.05 Paying Agent to Hold Money in Trust.
-----------------------------------
Prior to each due date of the principal of, premium if any, and
interest on any Securities of any series, the Company shall deposit with each
Paying Agent a sum sufficient to pay such principal, premium, if any, and
interest so becoming due. The Company shall require each Paying Agent other
than the Trustee to agree in writing that it will hold in trust for the benefit
of Holders of Securities of any series or the Trustee all money held by the
Paying Agent for the payment of principal of, premium if any, or interest on the
Securities of such series and to notify the Trustee in writing of any default by
the Company (or any other obligor on the Securities of such series) in making
any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall
on or before each due date of the principal of, premium, if any, or interest on
any Securities of any series segregate the money and hold it as a separate trust
fund. The Company at any time may require a Paying Agent to pay all money held
by it to the Trustee and the Trustee may at any time during the continuance of
any payment default, upon written request to a Paying Agent, require such Paying
Agent to forthwith pay to the Trustee all sums so held in trust by such Paying
Agent. Upon doing so, the Paying Agent (other than the Company or a Subsidiary
thereof) shall have no further liability for the money.
SECTION 2.06 Transfer and Exchange.
---------------------
(a) When a Security of any series is presented to the Registrar or a
co-registrar with a request to register the transfer, the Registrar or co-
registrar shall register the transfer as requested and when Securities of any
series are presented to the Registrar or a co-registrar with a request to
exchange them for a like aggregate principal amount of Securities of such series
in other authorized denominations, the Registrar shall make the exchange as
requested, provided that every Security presented or surrendered for
registration or transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Registrar duly executed by the Holder thereof or his attorney-in-fact duly
authorized in writing. To permit registrations of transfers and exchanges, the
Company shall issue and the Trustee or any authenticating agent shall
authenticate Securities of such series at the Registrar's or co-registrar's
written request. No service charge shall be made for any registration of
transfer or exchange of Securities but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto, but this provision shall not apply to any exchange pursuant to
Section 2.09, 3.06, 9.05 or 10.02 not involving any transfer.
Unless and until a Global Security is exchanged in
-10-
<PAGE>
whole or in part for Securities in definitive form in accordance with the
provisions of this Indenture, a Global Security may not be transferred, except
as a whole, by the Depositary to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor of such Depositary or
nominee. Unless otherwise provided as contemplated by Section 2.02 of this
Indenture, the Depositary may not sell, assign, transfer or otherwise convey any
beneficial interest in a Global Security evidencing all or part of the
Securities of such series unless such beneficial interest is in an amount equal
to an authorized denomination for Securities of such series.
At the option of the Holder, Securities of any series may be exchanged
for other Securities of such series of any authorized denominations and of a
like aggregate principal amount, upon surrender to the Registrar or a co-
registrar of the Securities to be exchanged. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, the Securities which the Holder
making the exchange is entitled to receive.
(b) The Registrar shall not be required (i) to issue, register the
transfer of, or exchange Securities of any series during a period beginning at
the opening of business 15 days before the day of any selection of Securities of
such series for redemption under Section 3.02 and ending at the close of
business on the day of selection, (ii) to register the transfer or exchange of
any Security of any series so selected for redemption in whole or in part,
except the unredeemed portion of any Security being redeemed in part, or (iii)
to register the transfer or exchange of any Securities of any series during a
period beginning at the opening of business 15 days before the day of any
selection of Securities of such series for redemption under Section 3.02 and
ending at the close of business on the day interest is to be paid on Securities
of such series.
(c) If at any time the Depositary for any Securities of a series
issued in the form of one or more Global Securities notifies the Company that it
is unwilling or unable to continue as Depositary for such Securities or if at
any time the Depositary for the Securities of such series shall no longer be
eligible under Section 2.02 of this Indenture, the Company shall appoint a
successor Depositary with respect to such Securities. If a successor Depositary
for such Securities is not appointed by the Company within ninety (90) days
after the Company receives such notice or becomes aware of such ineligibility,
the Company's election to issue Global Securities pursuant to Section 2.02 shall
no longer be effective with respect to such Securities and the Company will
execute, and the Trustee, upon receipt of a Company Order for the authentication
and delivery of definitive Securities of such series, will authenticate
Securities of such series in definitive form, in authorized denominations, in an
aggregate principal amount equal to the principal amount of the Global
-11-
<PAGE>
Security or Securities in exchange for such Global Security or Securities and
deliver such definitive Securities to the Securityholders of such series.
The Company may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more Global Securities
shall no longer be represented by such Global Security or Securities. The
Company shall notify the Depositary and the Trustee of the date and time of such
exchange in a Company Order. The Depositary shall surrender the Global
Securities to the Trustee as the Company's agent for such purpose as shall be
specified in the Company Order. The Company will execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of definitive
Securities of such series, will authenticate and deliver, Securities of such
series in definitive form, in authorized denominations, and in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities in exchange for such Global Security or Securities.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 2.02 of this Indenture, any Global Security shall be
exchangeable only as provided in this paragraph. If the owners of beneficial
interests in a Global Security of any series are entitled to exchange such
interests for Securities of such series, as may be specified in accordance with
Section 2.02 of this Indenture, then without unnecessary delay upon receipt of
notice therefrom so specified as contemplated by Section 2.02 of this Indenture
but in any event not later than one business day prior to the earliest date on
which such interests may be so exchanged, the Company shall deliver to the
Trustee definitive Securities of such series, in authorized denominations, and
in aggregate principal amount equal to the principal amount of such Global
Security, executed by the Company. On or after the earliest date on which such
interests may be so exchanged, such Global Security shall be surrendered by the
Depositary as shall be specified in the Company Order with respect thereto to
the Trustee, as the Company's agent for such purpose, to be exchanged, in whole
or from time to time in part, for definitive Securities of such series, without
charge, and the Trustee shall authenticate and deliver, in exchange for each
portion of such Global Securities, a like aggregate principal amount of
definitive Securities of the same series in authorized denominations as the
portion of such Global Securities to be so exchanged; provided, however, that no
such exchanges may occur for a period of 15 days immediately preceding the date
notice is received by the Company requesting such changes.
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<PAGE>
SECTION 2.07 Replacement Securities.
----------------------
If a mutilated Security of any series is surrendered to the Trustee or
if the Holder of a Security of any series presents evidence to the satisfaction
of the Company and the Trustee that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security of such series if the requirements of the Trustee and the
Company are met. An indemnity bond may be required by the Company or the
Trustee that is sufficient in the judgment of the Company to protect the Company
and is sufficient in the judgment of the Trustee to protect the Trustee or any
Agent from any loss which it may suffer if a Security of such series is
replaced. The Company may charge for its expense in replacing a Security.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its sole discretion
may, instead of issuing a new Security, pay or authorize the payment or convert
or authorize the conversion of such Security.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
SECTION 2.08 Outstanding Securities.
----------------------
Securities of any series outstanding at any time are all Securities of
such series authenticated by the Trustee except for those canceled by it, those
delivered to it for cancellation and those described in this Section 2.08 as not
outstanding.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding until the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company or a Subsidiary) holds on
a Redemption Date or maturity date money deposited with it by or on behalf of
the Company sufficient to pay the principal of and accrued interest on
Securities of any series payable on that date, then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue.
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<PAGE>
A Security does not cease to be outstanding because the Company or an
Affiliate holds the Security.
SECTION 2.09 Temporary Securities.
--------------------
Until definitive Securities of any series are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities of
such series. Temporary Securities of any series shall be substantially in the
form of definitive Securities of such series but may have non-material
variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities of any series in exchange for temporary
Securities of such series upon written order of the Company signed by two
Officers. Until so exchanged, temporary Securities of any series represent the
same rights as definitive Securities of such series. Upon request of the
Trustee, the Company shall provide a certificate to the effect that the
temporary Securities of any series meet the requirements of the second sentence
of this Section 2.09.
SECTION 2.10 Cancellation.
------------
The Company at any time may deliver Securities of any series to the
Trustee for cancellation. The Registrar, the Paying Agent and the Conversion
Agent shall forward to the Trustee any Securities surrendered to them for
transfer, exchange, payment or conversion. The Trustee shall cancel all
Securities surrendered for transfer, exchange, payment or conversion and destroy
canceled Securities in accordance with its customary destruction procedures and
deliver a certificate of such destruction to the Company unless the Company
directs the Trustee in writing prior to such destruction to deliver canceled
Securities to the Company. Subject to Sections 2.07, 3.06 and the second
paragraph of Section 10.02, the Company may not issue Securities to replace
Securities that it has previously paid or delivered to the Trustee for
cancellation or that a Securityholder has converted pursuant to Article 10
hereof.
SECTION 2.11 Defaulted Interest.
------------------
If the Company defaults in a payment of interest on Securities of any
series, it shall pay the defaulted interest to the Persons who are Holders of
the Securities of such series on a subsequent special record date. After the
deposit by the Company with the Trustee of money sufficient to pay such
defaulted interest, the Trustee shall fix the record date and payment date.
Each such special record date shall be not less than 10 days prior to such
payment date. Each such payment date shall be not more than 60 days after the
deposit by the Company of money to pay the defaulted interest. At least 15 days
before the special record date, the Company shall mail to each Holder of a
Security of such series a notice that states the special record date, the
payment date, and the amount of defaulted interest to be paid. The Company may
pay defaulted interest in any other lawful manner if,
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<PAGE>
after prior notice to the Trustee, such payment shall be deemed operationally
practicable by the Trustee.
SECTION 2.12 Securityholder Lists.
--------------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders of Securities of each series. If the Trustee is not the Registrar, the
Company or other obligor, if any, shall furnish to the Trustee at least seven
Business Days prior to each semiannual interest payment date and at such other
times as the Trustee may request in writing a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of Holders
of Securities of each series upon which the Trustee may conclusively rely. The
Trustee may destroy any such list upon receipt of a replacement list. The
Paying Agent will solicit from each Securityholder a certification of social
security number or taxpayer identification number in accordance with its
customary practice and as required by law, unless the Paying Agent is in
possession of such certification. Each Paying Agent is authorized to impose
back-up withholding with respect to payments to be made to Securityholders to
the extent required by law.
SECTION 2.13 Persons Deemed Owners.
---------------------
Prior to presentment of a Security of any series for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security and neither the Company, the Trustee nor any agent of the Company
or the Trustee shall be affected by notice to the contrary.
SECTION 2.14 CUSIP Number.
------------
The Company may use a "CUSIP" number when issuing Securities of any
series, and if so, the Trustee may use the CUSIP number in notices of redemption
or exchange as a convenience to Holders of Securities of such series; provided,
that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in the notice or on the
Securities, and that reliance may be placed only on the other identification
numbers printed on the Securities.
SECTION 2.15 Provisions in Global Security.
-----------------------------
(a) If Securities of a series are issuable in whole or in part as
Global Securities, as may be specified in accordance with Section 2.02 of this
Indenture, then in accordance with any such Global Security, such Global
Security may represent such of the outstanding Securities of such series as
shall be specified therein and may also provide that it represents the aggregate
principal amount of outstanding Securities from time to time endorsed thereon
and that the aggregate principal amount of outstanding Securities represented
thereby may from time to time
-15-
<PAGE>
be reduced to reflect exchanges. Global Securities may be permanent or
temporary. Any endorsement of a Global Security to reflect the amount, or any
increase or decrease in the principal amount, of outstanding Securities
represented thereby shall be made by the Trustee in such manner and upon
instructions given by such Person or Persons as shall be specified therein or in
the Company Order to be delivered to the Trustee and the Depositary pursuant to
Section 2.03 or Section 2.09. Subject to the provisions of Section 2.03 and, if
applicable, Section 2.09, the Depositary shall deliver and redeliver any
permanent Global Security in the manner and upon written instructions given by
the Person or Persons specified therein or in the applicable Company Order.
(b) Notwithstanding the other provisions of this Indenture, unless
otherwise specified in accordance with Section 2.02, payment of principal of
(and premium, if any) and interest, if any, on any permanent Global Securities
shall be made directly to owners of beneficial interest of such Global Security.
(c) Notwithstanding the provisions of Section 2.13 of this Indenture,
the Company, the Trustee and any agent of the Company or the Trustee shall treat
the owners of beneficial interest of such Global Security as the Holders of such
principal amounts of outstanding Securities represented by a Global Security as
shall be specified in writing by the Depositary and delivered to the Company and
the Trustee with respect to such Global Security only for purposes of obtaining
any consents or directions required to be given by the Holders pursuant to this
Indenture.
(d) Unless otherwise provided as contemplated by Section 2.02, a
Global Security of any series shall provide, in addition to the provisions
established pursuant to Sections 2.01, 2.02 and 2.15(a) through (c), that the
Depositary will not sell, assign, transfer or otherwise convey any beneficial
interest in such Global Security unless such beneficial interest is in an amount
equal to an authorized denomination for Securities of such series, and the
Depository, by accepting such Global Security, agrees to be bound by such
provision. Any Global Security shall also contain such other provisions as are
necessary to reflect the global form of such Security and the designation of a
Depositary for such Global Security.
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<PAGE>
ARTICLE 3
REDEMPTION
SECTION 3.01 Right of Redemption.
-------------------
(a) The Company may, at its option, redeem Securities of any series
as permitted or required by the terms of such Securities, which redemption shall
be made in accordance with the terms of such Securities and this Article. The
election of the Company to redeem any Securities pursuant to this Section shall
be evidenced by a Board Resolution. The Company shall, at least 45 days prior
to the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and, in
the case of any redemption at the election of the Company of less than all the
Securities of any series, of the principal amount of Securities of that series
to be redeemed.
(b) If the Company wants to redeem the Securities of any series
pursuant to the redemption provisions of the Securities of such series, it shall
notify the Trustee of the Redemption Date and the principal amount of Securities
of such series to be redeemed. The notice shall be in writing and accompanied
by an Officers' Certificate stating that the redemption complies with the
provisions of this Indenture and the provisions of the applicable Board
Resolution, if any, and in the Securities of such series.
The Company shall give each notice provided for in this Section 3.01
in writing and at least 45 but not more than 90 days before the Redemption Date
or such other period as the Company and the Trustee may agree.
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<PAGE>
SECTION 3.02 Selection of Securities to be Redeemed.
--------------------------------------
If any part of a series of Securities is to be redeemed, the Trustee
shall select the Securities of such series to be redeemed pro rata or by lot or
by any other method that the Trustee considers fair and appropriate under the
circumstances. The Trustee shall promptly notify the Company of the Securities
of such series to be so called for redemption. The Trustee shall make the
selection from Securities of such series outstanding and not previously called
for redemption. The Trustee may select for redemption portions of the principal
of Securities that have denominations larger than $1,000 principal amount.
Securities and portions of them it selects shall be in principal amounts of
$1,000 or multiples thereof. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption. The Trustee's selection of Securities for redemption by any method
authorized by this Section 3.02 shall be conclusively deemed reasonable.
SECTION 3.03 Notice of Redemption by the Company.
-----------------------------------
At least 30 days but not more than 60 days before a Redemption Date
with respect to Securities of any series, the Company shall mail a notice of
redemption by first-class mail to each Holder of Securities of such series to be
redeemed. The notice shall identify the Securities to be redeemed and shall
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent and the Conversion
Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(5) that interest on Securities called for redemption ceases to
accrue on and after the Redemption Date;
(6) if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and
that, after the Redemption Date, upon surrender of such
Security, a new Security or Securities of the same series in
principal amount equal to the unredeemed portion thereof
will be issued; and
(7) any conversion rights with respect to the Securities and the
applicable procedures required to be followed in connection
with a conversion of Securities.
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<PAGE>
At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. If a CUSIP
number is listed in such notice or printed on the Security, the notice shall
state that no representation is made as to the correctness or accuracy of such
CUSIP number.
SECTION 3.04 Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the applicable Redemption Date and at the applicable
Redemption Price. Upon surrender to the Paying Agent, such Securities shall be
paid at the Redemption Price, plus accrued interest to the Redemption Date.
SECTION 3.05 Deposit of Redemption Price.
---------------------------
On or before the Redemption Date with respect to any series of
Securities, the Company shall deposit with the Paying Agent (or if the Company
or a Subsidiary is the Paying Agent, shall segregate and hold in trust or cause
such Subsidiary to segregate and hold in trust) in immediately available funds
money sufficient to pay the Redemption Price of and accrued interest on all
Securities of such series to be redeemed on that date. The Trustee or the
Paying Agent shall return to the Company any money so received not required for
that purpose.
SECTION 3.06 Securities Redeemed in Part.
---------------------------
Upon surrender of a Security of any series that is redeemed in part,
the Trustee shall authenticate for the Holder, at the expense of the Company, a
new Security of such series equal in principal amount to the unredeemed portion
of the Security surrendered. If a Global Security is so surrendered, such new
Security so issued shall be a new Global Security.
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of the Securities.
-------------------------
The Company shall pay the principal of, premium, if any, and interest
on the Securities of any series on the dates and in the manner provided in the
Securities of such series and this Indenture. An installment of principal,
premium, if any, or interest shall be considered paid on the date it is due if
the Trustee or Paying Agent (other than the Company or a Subsidiary) holds on
that date money designated for and sufficient to pay the installment. The
Company shall pay interest on overdue principal and premium, if any, at the rate
borne by the Security; it shall pay interest, including post-petition interest
in the event of a proceeding under the Bankruptcy Laws, on overdue installments
of interest at the same rate to the extent lawful.
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<PAGE>
SECTION 4.02 Commission Reports.
------------------
The Company shall file with the Trustee, promptly after it files them
with the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the Commission may by rules and regulations prescribe) which the Company is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act. The Company shall also comply with the other provisions of TIA
(S) 314(a).
So long as the Securities remain outstanding, the Company shall cause
its annual reports to shareholders (containing audited financial statements) and
any other financial reports furnished by it to shareholders to be mailed to the
Holders at their addresses appearing in the register of Securities maintained by
the Registrar.
SECTION 4.03 Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company expressly waives (to the extent that it may lawfully do
so) any stay or extension law or any usury law or other law that would prohibit
or forgive the Company from paying all or any portion of the principal of
(premium, if any) or interest on Securities of any series as contemplated
herein, wherever enacted, now or at any time hereafter in force, or that may
affect the covenants or the performance of this Indenture.
SECTION 4.04 Notice of Default.
-----------------
The Company will, so long as any Securities of any series are
outstanding, deliver to the Trustee, within 10 days of becoming aware of any
Default or Event of Default in the performance of any covenant, agreement or
condition in this Indenture, an Officers' Certificate specifying such Default or
Event of Default, the period of existence thereof and what action the Company is
taking or proposes to take with respect thereto.
SECTION 4.05 Compliance Certificates.
-----------------------
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company (which as of the date hereof is December 31),
a written statement signed by the principal executive officer, principal
financial officer or principal accounting officer of the Company, stating, as to
each signer thereof, that
(1) a review of the activities of the Company during such year and of
performance under this Indenture has been made under his supervision and
(2) to the best of his knowledge, based on such review, the Company
has kept, observed, performed and fulfilled in all material respects each and
every condition and covenant contained in this Indenture throughout such year,
or, if there has
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<PAGE>
been a default in the fulfillment of any such condition or covenant, specifying
each such default known to him and the nature and status thereof.
The Company will give the Trustee written notice of a change in the
fiscal year of the Company, within a reasonable time after such change is
effected.
SECTION 4.06 Limitation on Dividends and Other Distributions.
-----------------------------------------------
The Company will not declare or pay any dividends or make any
distribution to holders of its Capital Stock (other than dividends or
distributions payable in Capital Stock of the Company), or purchase, redeem or
otherwise acquire or retire for value any of its Capital Stock or permit any
Subsidiary to purchase, redeem or otherwise acquire or retire for value any of
the Company's Capital Stock if at the time of any of the aforementioned actions
an Event of Default has occurred and is continuing or would exist immediately
after giving effect to such action.
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<PAGE>
Notwithstanding the foregoing, the provisions of this Section 4.06
will not prevent (i) the payment of any dividend within 60 days after the date
of declaration when the payment would have complied with the foregoing
provisions on the date of declaration and (ii) the retirement of any share of
the Company's Capital Stock by exchange for, or out of the proceeds of the
substantially concurrent sale (other than to a Subsidiary) of, other shares of
its Capital Stock.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When Company May Merge, etc.
----------------------------
The Company shall not consolidate with or merge into, or transfer all
or substantially all of its assets to, another Person in any transaction in
which the Company is not the continuing or surviving entity unless (i) the
resulting, surviving or transferee Person is a corporation or trust which
assumes by supplemental indenture all the obligations of the Company under the
Securities of each series and this Indenture; (ii) such corporation or trust is
organized and existing under the laws of the United States, a State thereof or
the District of Columbia although it in turn may be owned by a foreign entity;
(iii)immediately after giving effect to such transaction no Default or Event of
Default shall have happened and be continuing, and the Officers' Certificate
referred to in the following clause reflects that such Officers are not aware of
any such Default or Event of Default that shall have happened and be continuing,
and (iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture comply with this Indenture,
and thereafter all obligations of the Company shall terminate.
SECTION 5.02 Successor Corporation or Trust Substituted.
------------------------------------------
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.01,
the successor corporation or trust formed by such consolidation or into which
the Company is merged or to which such transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation or trust
has been named as the Company herein.
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<PAGE>
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
-----------------
An "Event of Default" occurs if, with respect to any series of
Securities:
(1) the Company defaults in the payment of interest on any
Security of such series when the same becomes due and payable and the
default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of (and
premium, if any, on) any Security of such series when the same becomes
due and payable at maturity, upon redemption or otherwise, and the
default continues for five Business Days;
(3) the Company fails to comply with any of its other agreements
in the Securities of such series or this Indenture and the default
continues for the period and after the notice specified in the last
paragraph of this Section 6.01;
(4) there shall be a default under any bond, debenture, note or
other evidence of Indebtedness or under any mortgage, indenture or
other instrument under which there may be issued or by which there may
be secured or evidenced any Indebtedness of the Company or any
Subsidiary, whether any such Indebtedness now exists or shall
hereafter be created, if (a) either (i) such event of default results
from the failure to pay any such Indebtedness at maturity or (ii) as a
result of such event of default, the maturity of such Indebtedness has
been accelerated prior to its stated maturity and such acceleration
shall not be rescinded or annulled or the accelerated amount paid
within ten days after notice to the Company of such or acceleration,
or such Indebtedness having been discharged and (b) the principal
amount of such Indebtedness, together with the principal amount of any
other such Indebtedness in default for failure to pay principal or
interest thereon, or the maturity of which has been so accelerated,
aggregates $5,000,000 or more;
(5) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order for relief against it
in an involuntary case or proceeding,
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or
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(D) makes a general assignment for the benefit of its
creditors; or
(6) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary
case or proceeding,
(B) appoints a Custodian of the Company or for all or
substantially all of its property, or
(C) orders the liquidation of the Company,
and the order or decree remains unstayed and in effect for 90 days;
provided, however, that a default under this Section 6.01 is not an Event of
- -------- -------
Default with respect to any series of Securities if a specified event is either
applicable to a particular series other than such series or it is specifically
deleted or modified in the supplemental indenture creating such series of
Securities or in the form of Security for such series.
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<PAGE>
A default under clause (3) is not an Event of Default with respect to
any series of Securities until the Trustee notifies the Company, or the Holders
of a majority in principal amount of the Securities of such series then
outstanding notify the Company and the Trustee in writing, of the default and
the Company does not cure the default within 60 days after receipt of such
notice. The notice must specify the default, demand that it be remedied and
state that the notice is a "Notice of Default." The Trustee shall give such
notice to the Company only if directed to do so in writing by the Holders of a
majority in principal amount of the Securities then outstanding. Such notice by
the Trustee shall not be deemed to be a certification by the Trustee as to
whether an Event of Default has occurred.
SECTION 6.02 Acceleration.
------------
If an Event of Default occurs and is continuing with respect to any
series of Securities, the Trustee by notice to the Company, or the Holders of a
majority in principal amount of the Securities of such series then outstanding
by notice to the Company and the Trustee, may declare to be due and payable
immediately the principal amount of the Securities of such series plus accrued
interest to the date of acceleration. Upon any such declaration, such amount
shall be due and payable immediately, and upon payment of such amount all of the
Company's obligations with respect to the Securities of such series, other than
obligations under Section 7.07, shall terminate. The Holders of a majority in
principal amount of the outstanding Securities of such series by written notice
to the Trustee may rescind an acceleration and its consequences if (x) all
existing Events of Default with respect to the Securities of such series, other
than the non-payment of the principal of the Securities of such series, which
have become due solely by such declaration of acceleration, have been cured or
waived, (y) to the extent the payment of such interest is lawful, interest on
overdue installments of interest and overdue principal which has become due
otherwise than by such declaration of acceleration, has been paid, and (z) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction. The Trustee may rely upon such notice of rescission
without any independent investigation as to the satisfaction of conditions (x),
(y) and (z).
SECTION 6.03 Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal (and premium, if any) or interest on the Securities of such
series or to enforce the performance of any provision of the Securities of such
series or this Indenture.
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<PAGE>
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04 Waiver of Defaults and Events of Default.
----------------------------------------
Subject to Section 9.02, the Holders of a majority in principal amount
of the Securities of any series then outstanding, on behalf of the Holders of
the Securities of such series, by written notice to the Trustee may waive a
Default or Event of Default with respect to the Securities of such series and
its consequences. When a Default or Event of Default is waived with respect to
the Securities of any series, it is cured and ceases.
SECTION 6.05 Control by Majority.
-------------------
The Holders of a majority in principal amount of the Securities of any
series then outstanding may direct in writing the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on it with respect to the Securities of such
series. The Trustee, however, may refuse to follow any direction that conflicts
with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Securityholders, it being understood that
(subject to Section 7.01) the Trustee shall have no duty to ascertain whether or
not such actions or forebearances are unduly prejudicial to such Securityholders
or that may involve the Trustee in personal liability or for which the Trustee
does not have adequate indemnification pursuant to Section 7.01(e); provided,
--------
that, the Trustee may take any other action deemed proper by the Trustee which
is not inconsistent with such direction.
SECTION 6.06 Rights of Holders to Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Security of any series to receive payment of principal of,
premium, if any, and interest on such Security, on or after the respective due
dates expressed in such Security, or to bring suit for the enforcement of any
such payment on or after such respective dates, is absolute and unconditional
and shall not be impaired or affected without the consent of the Holder.
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Notwithstanding any other provision of this Indenture (other than
Section 3.01), the right of any Holder of any Security to convert such Security
or to bring suit for the enforcement of such right shall not be impaired or
affected without the written consent of the Holder.
SECTION 6.07 Collection Suit by Trustee.
--------------------------
If an Event of Default with respect to any series of Securities in
payment of interest or principal (and premium, if any) specified in Section
6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company or any other
obligor on the Securities of such series for the whole amount of unpaid
principal (and premium, if any) and accrued interest remaining unpaid on the
Securities of such series, together with interest on overdue principal (and
premium, if any) and to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate borne by
the Securities of such series and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 6.08 Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of Securities of any series allowed in any judicial proceedings relative
to the Company (or any other obligor upon the Securities of any series), its
creditors or its property and shall be entitled and empowered to collect and
receive any monies or other property payable or deliverable on any such claims
and to distribute the same. Any Custodian in any such judicial proceeding is
hereby authorized by each Securityholder to make such payments to the Trustee,
and in the event that the Trustee shall consent to the making of such payments
directly to the Holders of Securities of any series, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07.
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Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan or reorganization, arrangement, adjustment or composition affecting the
Securities of any series or the rights of any Holder thereof, or to authorize
the Trustee to vote in respect of the claim of any Securityholder in any such
proceedings.
SECTION 6.09 Priorities.
----------
If the Trustee collects any money pursuant to this Article 6 with
respect to the Securities of any series, it shall pay out the money in the
following order:
FIRST: to the Trustee for payment of costs and expenses of
collection, including all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses and
disbursements of the Trustee, its agents and counsel and all
other amounts due under Section 7.07;
SECOND: to holders of any Senior Indebtedness as required by
Article 11; and
THIRD: to Holders of Securities of such series for amounts due
and unpaid on the Securities of such series for principal of (and
premium, if any) and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on
the Securities of such series for principal (and premium, if any)
and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders of Securities of any series pursuant to this Section 6.09.
SECTION 6.10 Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorney's fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.10 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.06 or a suit by Holders of more than 10% in principal
amount of the Securities of any series then outstanding or a suit by any holder
of Senior Indebtedness.
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SECTION 6.11 Limitations on Suits.
--------------------
Subject to Section 6.06, a Holder of any series of Securities may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder has given the Trustee written notice of a continuing
Event of Default;
(2) the Holders of at least 25% in principal amount of such series of
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expenses;
(4) The Trustee does not comply with the request within 60 days after
receipt of the notice, request and offer of indemnity; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60 day period by the Holders of a
majority in principal amount of such series of Securities then
outstanding.
A Holder of any Security may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
ARTICLE 7
TRUSTEE
SECTION 7.01 Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise its rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent Person
would exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default and
after the curing or waiving of all such Events of Default which may have
occurred:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture, and the Trustee
shall not be liable except for the performance of such
duties as are specifically set forth in this Indenture, and
no others, and no implied covenants or obligation shall be
read into this Indenture against the Trustee.
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(2) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
statements certificates or opinions furnished to the Trustee
and conforming to the requirements of this Indenture. The
Trustee, however, shall examine the certificates and
opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
(2) The Trustee shall not be liable for any error in judgment
made in good faith by a Trust Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
(4) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in
the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not
reasonably assured to it.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01 and
subject to Sections 315 and 316 of the TIA.
(e) Subject to subsection (c), the Trustee may refuse to perform
any duty or exercise any right or power unless, subject to the provisions of the
TIA, it receives indemnity satisfactory to it against any loss, liability,
expense or fee.
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(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02 Rights of Trustee.
-----------------
(1) The Trustee may rely on and shall be protected in acting or
refraining from acting upon any document believed by it to be
genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter
stated in the document.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, or
both, which shall conform to Section 13.05. The Trustee shall not
be liable for any action it takes or omits to take in good faith
in reliance on such Officers' Certificate or Opinion of Counsel.
(3) The Trustee may act through agents or attorneys and shall
not be responsible for the misconduct or negligence of such
agents or attorneys appointed with due care and shall not be
responsible for their supervision.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or
within its rights or powers.
(5) The Trustee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action
taken, suffered or omitted by the Trustee hereunder in good faith
and reliance thereon.
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<PAGE>
(6) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders of Securities of any
series pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against
the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction.
SECTION 7.03 Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities of any series and may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. The Trustee, however, is
subject to Sections 7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities of any series, it shall not be accountable for
the Company's use of the proceeds from the Securities of any series, and it
shall not be responsible for any statement of the Company in the Indenture or
any statement in the Securities of any series other than its certificate of
authentication or in any document used in the sale of the Securities of any
series other than any statement in writing provided by the Trustee expressly for
use in such document.
SECTION 7.05 Notice of Defaults.
------------------
If a Default or Event of Default occurs and is continuing and if it is
actually known to the Trustee with respect to the Securities of any series, the
Trustee shall mail to each Holder of Securities of such series notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a default in payment of principal of, premium, if any, or interest on any
Security, the Trustee may withhold the notice if and so long as a committee of
its Trust Officers in good faith determines that withholding the notice is in
the interests of Holders of Securities of such series. Notwithstanding anything
to the contrary expressed in this Indenture, the Trustee shall not be deemed to
have knowledge of any Event of Default hereunder unless and until a Trust
Officer shall have actual knowledge thereof, or shall have received written
notice thereof from the Company at its principal Corporate Trust Office in
Chicago, Illinois. The Trustee shall not be deemed to have actual knowledge of
an Event of Default hereunder, except in the case of an Event of Default under
Sections 6.01(1) or 6.01(2) (provided that the Trustee is the Paying Agent),
until a Trust Officer receives written notice thereof from the Company or any
Securityholder that such an Event of Default has occurred.
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SECTION 7.06 Reports by Trustee to Holders.
-----------------------------
Within 60 days after each May 15 beginning with May 15 of the first
year in which Securities are outstanding hereunder, the Trustee, if required by
the provisions of TIA (S) 313(a), shall mail to each Securityholder a brief
report dated as of May 15 of such year that complies with TIA (S) 313(a). The
Trustee also shall comply with TIA (S) (S) 313(b) and (S) 313(c).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the Commission and each stock exchange on which the
Securities of any series are listed. The Company agrees to notify the Trustee
in writing whenever the Securities of any series become listed or delisted on or
from any stock exchange.
SECTION 7.07 Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time, and the
Trustee shall be entitled to, reasonable compensation for its services (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust). The Company shall reimburse the
Trustee upon request for all reasonable disbursements, expenses and advances
incurred or made by it. Such expenses may include, but shall not be limited to,
the reasonable compensation, disbursements and expenses of the Trustee's agents
and counsel.
The Company shall indemnify the Trustee for, and hold it harmless
against, any loss or liability incurred by it in connection with the acceptance
or administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the Securities or the
exercise or performance of any of its powers or duties hereunder. The Trustee
shall notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity and the Company may elect by written notice to the
Trustee to assume the defense of any such claim at the Company's expense with
counsel reasonably satisfactory to the Trustee; provided, however, that if the
Trustee is advised by counsel that the interests of the Company and the Trustee
conflict, the Trustee shall have the right to retain separate counsel.
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<PAGE>
The Company need not reimburse the Trustee for any expense or
indemnify it against any loss or liability incurred by it through the Trustee's
negligence or willful misconduct. The Company shall not be liable for any
settlement of any claim or action effected without the Company's consent, which
consent shall not be unreasonably withheld. To secure the Company's payment
obligations in this Section, the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01 occurs, the expenses and the compensation for
the services are intended to constitute expenses of administration under any
applicable bankruptcy or comparable law.
SECTION 7.08 Replacement of Trustee.
----------------------
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign with respect to any series of Securities by so
notifying the Company. The Holders of a majority in principal amount of the
Securities of any series then outstanding may remove the Trustee with respect to
such series of Securities by so notifying the Trustee and may appoint a
successor Trustee with respect to such series of Securities with the Company's
written consent. The Company may remove the Trustee with respect to any series
of Securities (or, if clause (4) applies, with respect to all series) if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting with
respect to any series of Securities.
If the Trustee resigns or is removed with respect to any series of
Securities or if a vacancy exists in the office of Trustee with respect to any
series of Securities for any reason, the Company shall promptly appoint a
successor Trustee with respect to such series.
If a successor Trustee with respect to any series of Securities does
not take office within 45 days after the retiring Trustee with respect to such
series resigns or is removed, the retiring Trustee, the Company or the Holders
of a
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<PAGE>
majority in principal amount of the Securities of such series then
outstanding may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
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<PAGE>
A successor Trustee shall deliver a written acceptance of its
appointment with respect to any series of Securities to the retiring Trustee and
to the Company. Immediately after that, the retiring Trustee shall, upon
payment of its fees and expenses, transfer all property held by it as Trustee
with respect to such series to the successor Trustee, subject to the lien
provided for in Section 7.07, the resignation or removal of the retiring Trustee
shall become effective with respect to such series, and the successor Trustee
shall have all the rights, powers and duties of the Trustee under this Indenture
with respect to such series. Notwithstanding the replacement of the Trustee
with respect to any series of Securities pursuant to this Section 7.08, the
Company's obligations under Section 7.07 shall continue for the benefit of the
retiring Trustee with respect to expenses and liabilities incurred by it and
compensation earned by it prior to such replacement or otherwise with respect to
the Securities of such series or the Indenture. A successor Trustee with
respect to any series of Securities shall mail notice of its succession to each
Holder of Securities of such series.
SECTION 7.09 Successor Trustee by Merger, etc.
---------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10 Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1). The Trustee shall have a combined capital
and surplus of at least $50,000,000 as set forth in its most recent published
annual report of condition. The Trustee shall comply with TIA (S) 310(b),
including the optional provision permitted by the second sentence of TIA
(S) 310(b)(9).
SECTION 7.11 Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01 Satisfaction, Discharge and Defeasance of the
---------------------------------------------
Securities.
----------
The Company shall be deemed to have paid and discharged the entire
indebtedness on the Securities of any series
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<PAGE>
after the date of the deposit referred to in paragraph (a) below, the provisions
of this Indenture shall no longer be in effect in respect of the Securities of
such series, and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of such
indebtedness; provided that the following conditions shall have been satisfied:
--------
(a) the Company has deposited or caused to be deposited
with the Trustee irrevocably as trust funds in trust,
specifically pledged as security for, and dedicated solely to,
the benefit of the Holders of all Securities of such series, with
reference to this Section 8.01, (i) money or (ii) U.S. Government
Obligations or (iii) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge the entire
indebtedness on all the Securities of such series for principal,
premium, if any, and interest, if any, to the maturity date of
such series of Securities as such principal, premium, if any, or
interest becomes due and payable in accordance with the terms of
this Indenture and the Securities;
(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company in connection with all of
the Securities of any series, including all fees and expenses of
the Trustee; and
(c) the Company has delivered to the Trustee an Officers'
Certificate stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of the
entire indebtedness on the Securities and the discharge of this
Indenture and the termination of the Company's obligations
hereunder have been complied with.
-37-
<PAGE>
"U.S. Government Obligations" means direct, non-callable
obligations of, or non-callable obligations guaranteed by, the United States of
America for the timely payment of which obligation or guarantee the full faith
and credit of the United States of America is pledged.
SECTION 8.02 Satisfaction and Discharge of Indenture.
---------------------------------------
In addition to its rights under Section 8.01, the Company may
terminate all of its obligations under this Indenture when:
(a) All of the Securities of each series theretofore
authenticated and delivered (other than (A) Securities which have been
destroyed, lost or stolen and which have been replaced or paid as
provided in Section 2.07 hereof and (B) Securities for whose payment
money has theretofore been deposited with the Trustee or the Paying
Agent in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 2.05 and Section 8.06 hereof) have been delivered
to the Trustee for cancellation; and
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<PAGE>
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company in connection with the outstanding
Securities, including all fees and expenses of the Trustee.
SECTION 8.03 Survival of Certain Obligations.
-------------------------------
Notwithstanding the satisfaction and discharge of this Indenture
pursuant to Section 8.01, the respective obligations of the Company specified in
Sections 2.04, 2.05, 2.06, 2.07, 2.12, 4.01, 7.07, 8.05, 8.06, 8.07 and in
Article 10 shall survive until the Securities are no longer outstanding, and
after the Securities are no longer outstanding, or upon compliance with Section
8.02, only the obligations of the Company in such Sections 7.07 and 8.06 shall
survive. Nothing contained in this Article Eight shall abrogate any of the
obligations or duties of the Trustee under this Indenture.
SECTION 8.04 Application of Trust Money.
--------------------------
(a) Subject to the provisions of Section 8.06, all money and U.S.
Government Obligations deposited with the Trustee for the Securities of any
series pursuant to Section 8.01 or Section 8.02, and all money received by the
Trustee in respect of U.S. Government Obligations deposited with the Trustee for
the Securities of any series pursuant to Section 8.01 or Section 8.02 shall be
held in trust and reinvested by the Trustee in U.S. Government Obligations in
accordance with the Company's written instructions and applied by the Trustee in
accordance with the provisions of the Securities of such series and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal, premium, if any,
and interest, if any, on the Securities of such series; but such money need not
be segregated from other funds except to the extent required by law.
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<PAGE>
(b) The Trustee shall deliver or pay to the Company from time to time
upon the Company's written request any U.S. Government Obligations, or money
held by it as provided in Section 8.01 or Section 8.02 which, in the written
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are then
in excess of the amount thereof which then would have been required to be
deposited for the purpose for which such U.S. Government Obligations, or money
were deposited or received.
SECTION 8.05 Paying Agent to Repay Monies Held.
---------------------------------
Upon the satisfaction and discharge of this Indenture with respect to
the Securities of any series, all monies then held by any Paying Agent for the
benefit of Securities of such series under the provisions of this Indenture
shall, upon written demand of the Company, be repaid to it or paid to the
Trustee, and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
SECTION 8.06 Return of Unclaimed Monies.
--------------------------
Any monies deposited with or paid to the Trustee or any Paying Agent
for the Securities of any series, or then held by the Company in trust, for the
payment of any principal, premium, if any, and interest, if any, on the
Securities of any series and not applied but remaining unclaimed by the Holders
of the Securities of such series for two years after the date upon which the
principal of and interest, if any, on the Securities of such series, as the case
may be, shall have become due and payable, shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Company by such Trustee or any Paying Agent on written
demand by the Company or (if then held by the Company) shall be discharged from
such trust; and the Holders of the Securities of such series entitled to receive
such payment shall thereafter look only to the Company for the payment thereof;
provided, however, that, before being required to make any such repayment, such
- -------- -------
Trustee may, or shall at the written request of the Company, at the expense of
the Company, cause to be published once in an authorized newspaper in the same
city in which the place of payment with respect to the Securities of such series
shall be located and in an authorized newspaper in the City of New York, or mail
to each such Holder, a notice (in such form as may be deemed appropriate by such
Trustee) that said monies remain unclaimed and that, after a date named therein,
any unclaimed balance of said monies then remaining will be returned to the
Company.
SECTION 8.07 Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations with respect to the Securities of any series in
accordance with Section 8.01 by reason of any legal proceeding or by reason of
any order or judgment of
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any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's obligations under this Indenture and
the Securities of such series shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.01 until such time as the Trustee or
Paying Agent is permitted to apply all such money or U.S. Government Obligations
in accordance with Section 8.04; provided, however, that if the Company has made
-------- -------
any payment of interest on or principal of any Securities of any series because
of the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the money
or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.01 Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
The Company, when authorized by Board Resolution, and the Trustee at
any time and from time to time, may amend this Indenture or enter into one or
more indentures supplemental hereto, to be in a form satisfactory to the Trustee
without notice to or consent of any Securityholder for any of the following
purposes:
(1) to comply with Section 5.01; or
(2) to provide for uncertificated Securities in addition to or in
place of certificated Securities; or
(3) to add to the covenants of the Company, for the benefit of the
Holders of all or any series of Securities (and if such covenants are
to be for the benefit of less than all series of Securities, stating
that such covenants are expressly being included solely for the
benefit of such series), or to surrender any right or power herein
conferred upon the Company; or
(4) to add any Events of Default (and if such Events of Default are
to be applicable to less than all series of Securities, stating that
such Events of Default are expressly being included solely to be
applicable to such series); or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective
only when there is no Security outstanding of any series created prior
to the execution of such supplemental indenture which is entitled to
the benefit of such provision; or
(6) to establish the form or terms of Securities of
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<PAGE>
any series as permitted by Sections 2.01 and 2.02; or
(7) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent
with any provision of this Indenture, provided such other provisions
shall not adversely affect the interests of the Holders of Securities
of any series in any material respect.
SECTION 9.02 Supplemental Indentures with Consent of Holders.
-----------------------------------------------
With the written consent of the Holders of not less than a majority in
aggregate principal amount of the Securities of each series at the time
outstanding affected by such supplemental indenture, the Company, when
authorized by Board Resolution, and the Trustee may amend this Indenture or from
time to time and at any time enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act of 1939
as in force at the date of the execution thereof) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture, except as otherwise permitted
by Section 9.01, or of modifying in any manner the rights of the Holders of the
Securities of each such series. Subject to Section 9.04, without the consent of
each Holder of Securities of any series affected, however, an amendment,
supplement or waiver, including a waiver pursuant to Section 6.04, may not:
(1) extend the fixed maturity of any Securities, or reduce the
principal amount thereof or premium, if any, or reduce the rate or
extend the time of payment of interest thereon, without the consent of
the Holder of each Security so affected;
(2) reduce the aforesaid percentage of Securities of each series, the
consent of the Holders of which is required for any such supplemental
indenture, without the consent of the Holders of all Securities then
outstanding affected thereby;
(3) waive (except, unless theretofore cured) a default in the payment
of the principal of (and premium, if any on), interest on or
redemption amounts with respect to any Security;
(4) make any Security payable in money other than that stated in the
Security;
(5) make any change in Sections 6.04, 6.06 or 9.02 (this sentence);
(6) make any change that adversely affects the right
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<PAGE>
to convert any Security; or
(7) make any change in Article 11 that adversely affects the rights
of any Securityholder.
Upon the request of the Company, accompanied by a copy of a Board
Resolution certified by the Secretary or an Assistant Secretary of the Company
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Securityholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
It shall not be necessary for the consent of the Securityholders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent shall approve
the substance thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Company
shall mail a notice, setting forth in general terms the substance of such
supplemental indenture, to all Holders of Securities of each series so affected
as the names and addresses of such Holders shall appear on the registry books.
Any failure of the Company so to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such supplemental
indenture.
SECTION 9.03 Compliance with Trust Indenture Act.
-----------------------------------
Every amendment or supplement to this Indenture or the Securities
shall comply with the TIA as then in effect.
SECTION 9.04 Revocation and Effect of Consents.
---------------------------------
Subject to this Indenture, each amendment, supplement or waiver
evidencing other action shall become effective in accordance with its terms.
Until an amendment, supplement or waiver becomes effective, a consent to it by a
Holder of a Security of any series is a continuing consent by the Holder even if
notation of the consent is not made on any Security. Any such Holder or
subsequent Holder, however, may revoke the consent as to his Security or portion
of a Security, if the Trustee receives the notice of revocation before the date
the amendment, waiver or other action becomes effective.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those Persons who were
Holders at such record
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date (or their duly designated proxies) and only those Persons, shall be
entitled to consent to such amendment, supplement or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No consent shall be valid or effective for more than 90
days after such record date unless consent from Holders of the principal amount
of Securities of any series then outstanding required hereunder for such
amendment, supplement or waiver to be effective shall have also been given and
not revoked within such 90-day period.
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After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (6) of Section 9.02. In that case the amendment, supplement or
waiver shall only bind the Holders of a Security or portion of a Security of the
same series.
SECTION 9.05 Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of a Security
of any series, the Trustee may request the Holder of the Security of such series
to deliver it to the Trustee. The Trustee may place an appropriate notation on
the Security about the changed terms and return it to the Holder.
Alternatively, if the Company or the Trustee so determine, the Company in
exchange for the Security of such series shall issue and the Trustee shall
authenticate a new Security of such series that reflects the changed terms the
cost and expense of which will be borne by the Company.
SECTION 9.06 Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities of any applicable series theretofore or thereafter authenticated
and delivered hereunder shall be bound thereby.
SECTION 9.07 Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Board of Directors of the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Securities
outstanding of such series.
ARTICLE 10
CONVERSION OF SECURITIES
SECTION 10.01 Right of Conversion; Conversion Price.
-------------------------------------
If provided in the Board Resolution or Supplemental Indenture with
respect to such series of Securities, the Holder of any Security or Securities
of a particular series shall have the right, at his option, at any time after
such date as determined by such Board Resolution and before the close of
business on such date as determined by such Board Resolution (except that, with
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respect to any Security or portion of a Security of such series which shall be
called for redemption, such right shall terminate at the close of business on
the date fixed for redemption of such Security or portion of a Security unless
the Company shall default in payment due upon redemption thereof), to convert,
subject to the terms and provisions of this Article 10, the principal of any
Security or Securities of such series or any portion thereof which is $1,000
principal amount or an integral multiple thereof into shares of common stock of
the Company or Securities of another series of Securities, initially at the
conversion price per share specified in the Securities of such series; or, in
case an adjustment of such price has taken place pursuant to the provisions of
Section 10.04, then at the price as last adjusted (such price or adjusted price
being referred to herein as the "conversion price"), upon surrender of the
Security or Securities, the principal of which is so to be converted,
accompanied by written notice of conversion duly executed, to the Company, at
any time during usual business hours at the office or agency maintained by it
for such purpose, and, if so required by the Conversion Agent or Registrar,
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Conversion Agent or Registrar duly executed by the Holder or
his duly authorized representative in writing. For convenience, the conversion
of any portion of the principal of any Security or Securities into shares of
common stock of the Company or other Securities is hereinafter sometimes
referred to as the conversion of such Security or Securities.
SECTION 10.02 Issuance of Shares on Conversion.
--------------------------------
As promptly as practicable after the surrender, as herein provided, of
any Security or Securities of any series for conversion, the Company shall
deliver or cause to be delivered at its said office or agency, to or upon the
written order of the Holder of the Security or Securities so surrendered,
certificates representing the number of fully paid and nonassessable shares of
common stock of the Company or Securities of another series of the Company into
which such Security or Securities may be converted in accordance with the
provisions of this Article 10. Such conversion shall be deemed to have been
made as of the close of business on the date that such Security or Securities
shall have been surrendered for conversion by delivery thereof with a written
notice of conversion duly executed, so that the rights of the Holder of such
Security or Securities as a Securityholder shall cease at such time and, subject
to the following provisions of this paragraph, the Person or Persons entitled to
receive the shares of common stock or Securities of another series upon
conversion of such Security or Securities shall be treated for all purposes as
having become the record holder or holders of such shares of common stock or
Securities of another series at such time and such conversion shall be at the
conversion price in effect at such time; provided, however, that with respect to
-------- -------
shares of the Company's common stock, no such surrender on any date when the
stock transfer books of the Company shall be closed shall be effective to
constitute the Person or Persons entitled to
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receive the shares of common stock upon such conversion as the record holder or
holders of such shares of common stock on such date, but such surrender shall be
effective to constitute the Person or Persons entitled to receive such shares of
common stock as the record holder or holders thereof for all purposes at the
close of business on the next succeeding day on which such stock transfer books
are open; such conversion shall be at the conversion price in effect on the date
that such Security or Securities shall have been surrendered for conversion by
delivery thereof, as if the stock transfer books of the Company had not been
closed. The Company shall give or cause to be given to the Trustee written
notice whenever the stock transfer books of the Company shall be closed.
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Upon Conversion of any Security of any series which is converted in
part only, the Company shall execute and the Trustee shall authenticate and
deliver to or on the order of the Holder thereof, at the expense of the Company,
a new Security or Securities of such series of authorized denominations in
principal amount equal to the unconverted portion of such Security.
SECTION 10.03 No Adjustment for Interest or Dividends.
---------------------------------------
No payment or adjustment in respect of interest on the Securities of
any series or dividends on the shares of common stock shall be made upon the
conversion of any Security or Securities; provided, however, that if a Security
-------- -------
of any series or any portion thereof shall be converted subsequent to any
regular record date and on or prior to the next succeeding interest payment
date, the interest falling due on such interest payment date shall be payable on
such interest payment date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name such Security is registered at the close of business on
such regular record date and Securities surrendered for conversion during the
period from the close of business on any regular record date to the opening of
business on the corresponding interest payment date must be accompanied by
payment of an amount equal to the interest payable on such interest payment
date.
SECTION 10.04 Adjustment of Conversion Price.
------------------------------
(1) With respect to any series of Securities that is convertible into
shares of the Company's common stock, in case the Company shall pay or make a
dividend or other distribution on any class of Capital Stock of the Company in
shares of common stock, the conversion price for any series of Securities in
effect at the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such conversion price by a fraction
of which the numerator shall be the number of shares of common stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day following
the date fixed for such determination.
(2) With respect to any series of Securities that is convertible into
shares of the Company's common stock, in case the Company shall issue rights or
warrants to all or substantially all holders of its shares of common stock
entitling them to subscribe for or purchase shares of common stock at a price
per share (or having a conversion price per share) less than the current market
price per share (determined as provided in paragraph (6) of this Section) of the
shares of common stock on the date fixed for the determination of shareholders
entitled to receive such rights or warrants, the conversion price for any series
of Securities in
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effect at the opening of business on the day following the date fixed for such
determination shall be reduced by multiplying such conversion price by a
fraction of which the numerator shall be the number of shares of common stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of common stock which the aggregate of the
subscription price of the total number of shares of common stock so offered for
subscription or purchase would purchase at such current market price and the
denominator shall be the number of shares of common stock outstanding at the
close of business on the date fixed for such determination plus the number of
shares of common stock so offered for subscription or purchase, such reduction
to become effective immediately after the opening of business on the day
following the date fixed for such determination. In the event that all of the
shares of common stock subject to such rights or warrants have not been issued
when such rights or warrants expire, then the conversion price shall promptly be
readjusted to the conversion price which would then be in effect had the
adjustment upon the issuance of such rights or warrants been made on the basis
of the actual number of shares of common stock issued upon the exercise of such
rights or warrants. For the purposes of this paragraph (2), the number of shares
of common stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of common stock. The Company
will not issue any rights or warrants in respect of shares of common stock held
in the treasury of the Company.
(3) With respect to any series of Securities that is convertible into
shares of the Company's common stock, in case the outstanding shares of common
stock shall be subdivided into a greater number of shares, the conversion price
for any series of Securities in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall be
proportionately reduced, and, conversely, in case outstanding shares of common
stock shall each be combined into a smaller number of shares, the conversion
price for any series of Securities in effect at the opening of business on the
day following the day upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
(4) With respect to any series of Securities that is convertible into
shares of the Company's common stock, in case the Company shall, by dividend or
otherwise, distribute to all or substantially all holders of shares of common
stock evidences of indebtedness or assets (including securities, but excluding
(i) any rights or warrants referred to in paragraph (2) of this Section, (ii)
any dividend or distribution not prohibited by Section 4.06 hereof and (iii) any
dividend or distribution referred to in paragraph (1) of this Section), the
conversion price for any series of Securities shall be adjusted so that the
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same shall equal the price determined by multiplying the conversion price in
effect immediately prior to the close of business on the day fixed for the
determination of shareholders entitled to receive such distribution by a
fraction of which the numerator shall be the current market price per share
(determined as provided in paragraph (6) of this Section) of the shares of
common stock on the date fixed for such determination less the then fair market
value as determined by the Board of Directors of the Company (whose
determination shall be conclusive and described in a resolution of the Board of
Directors of the Company filed with the Trustee) of the portion of the assets or
evidences of indebtedness so distributed allocable to one share of common stock
and the denominator shall be such current market price per share of the shares
of common stock, such adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for the determination of
shareholders entitled to receive such distribution.
(5) With respect to any series of Securities that is convertible into
shares of the Company's common stock, in case the shares of common stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or a stock dividend described
in paragraph (1) or paragraph (3) of this Section, or a consolidation, merger or
sale of assets described in Section 10.10), then and in each such event the
Holders of Securities of any series shall have the right thereafter to convert
such Securities into the kind and amount of shares of stock and other securities
and property receivable upon such reorganization, reclassification or other
change, by holders of the number of shares of common stock into which such
Securities might have been converted immediately prior to such reorganization,
reclassification or change.
(6) For the purpose of any computation under paragraphs (2) and (4)
of this Section, the current market price per share of common stock on any date
shall be deemed to be the average of the Closing Prices for the 15 consecutive
Business Days selected by the Company commencing not more than 30 and not less
than 20 Business Days before the date in question.
(7) No adjustment in the conversion price for the Securities of any
series shall be required unless such adjustment (plus any adjustments not
previously made by reason of this paragraph (7)) would require an increase or
decrease of at least 1% in such price; provided, however, that any adjustments
which by reason of this paragraph (7) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this paragraph (7) shall be made to the nearest cent.
(8) The Company may, but shall not be required to, make such
reductions in the conversion price for the Securities of any series, in addition
to those required by paragraph (1), (2),
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(3) and (4) of this Section, as the Board of Directors of the Company considers
to be advisable in order to avoid or diminish any income tax to any holders of
shares of common stock resulting from any dividend or distribution of stock or
issuance of rights or warrants to purchase or subscribe for stock or from any
event treated as such for income tax purposes or for any other reasons. The
Company's Board of Directors of the Company shall have the power to resolve any
ambiguity or correct any error in the adjustments made pursuant to this
Section 10.04 and its actions in so doing shall be final and conclusive.
(9) The adjustments provided for in this Section 10.04 shall be made
successively whenever any event listed above shall occur.
SECTION 10.05 Notice of Adjustment of Conversion Price.
----------------------------------------
Whenever the conversion price for the Securities of any series is
adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price in
accordance with Section 10.04 and shall prepare an Officers'
Certificate setting forth the adjusted conversion price and showing
the facts upon which such adjustment is based and the computation
thereof, and such certificate shall forthwith be filed at each office
or agency maintained for the purpose of conversion of Securities
pursuant to Section 2.04 and with the Trustee; and
(b) a notice stating that the conversion price has been adjusted
and setting forth the adjusted conversion price shall as soon as
practicable be mailed by the Company to all Holders of Securities of
such series at their last addresses as they shall appear in the
Security Register.
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(c) If the conversion price is adjusted and the Company fails to
file an Officers' Certificate with the Trustee as provided by Section
10.05(a) and the Trustee is acting as the Conversion Agent, the
Trustee shall be entitled to rely conclusively on the conversion price
set forth in the Officer's Certificate most recently received by the
Trustee (or as set forth in this Indenture if the conversion price
shall not have been adjusted).
SECTION 10.06 Notice of Certain Corporate Action.
----------------------------------
(1) In case:
(a) the Company shall authorize the granting to holders of its
shares of common stock of rights or warrants entitling them to
subscribe for or purchase any shares of Capital Stock of any class or
of any other rights; or
(b) of an y reclassification of the shares of common stock of
the Company, or of any consolidation or merger to which the Company is
a party and for which approval of any shareholders of the Company is
required, or of the sale or transfer of all or substantially all of
the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Securities of any series pursuant to Section 2.04
and shall cause to be mailed to all Holders of Securities of such series that
are convertible into shares of the Company's common stock at their last
addresses as they shall appear in the Security Register, at least 20 days (or 10
days in any case specified in clause (a) or (b) above) prior to the applicable
record date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which the Holders
of shares of common stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of shares of common stock of record shall be
entitled to exchange their shares of common stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up. Such notice shall also state
whether such transaction will result in any adjustment in the conversion price
applicable to the Securities of such series and, if so, shall state what the
adjusted conversion price will be and when it will become effective. Neither
the failure to give the notice required by
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this Section, nor any defect therein, to any particular Holder shall affect the
sufficiency of the notice or the legality or validity of any such dividend,
distribution, right, warrant, reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution or winding-up, or the vote on any action
authorizing such with respect to the other holders.
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(2) In case the Company or any Affiliate of the Company shall propose
to engage in a "Rule 13e-3 Transaction" as defined in the Commission's Rule 13e-
3 under the Exchange Act, the Company shall, no later than the date on which any
information with respect to such Rule 13e-3 Transaction is first required to be
given to the Commission or any other Person pursuant to such Rule 13e-3, cause
to be mailed to all Holders at their last addresses as they shall appear in the
Security Register, a copy of all information required to be given to the holders
of the Company's Capital Stock pursuant to such Rule 13e-3. The information
required to be given under this paragraph shall be in addition to and not in
lieu of any other information required to be given by the Company pursuant to
this Section 10.06 or any other provision of the Securities or this Indenture.
SECTION 10.07 Taxes on Conversions.
--------------------
The Company will pay any and all stamp or similar taxes that may be
payable in respect of the issuance or delivery of shares of common stock or
Securities of another series on conversion of Securities pursuant hereto. The
Company shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of shares of
common stock in a name other than that of the Holder of the Security or
Securities to be converted, and no such issuance or delivery shall be made
unless and until the Person requesting such issuance has paid to the Company the
amount of any such tax, or has established to the satisfaction of the Company
that such tax has been paid.
SECTION 10.08 Fractional Shares.
-----------------
No fractional shares or scrip representing fractional shares shall be
issued upon any conversion of Securities. If any such conversion would
otherwise require the issuance of a fractional share an amount equal to such
fraction multiplied by the current market price per share of common stock
(determined as provided in paragraph (6) of Section 10.04) on the day of
conversion shall be paid to the Holder in cash by the Company.
SECTION 10.09 Cancellation of Converted Securities.
------------------------------------
All Securities delivered for conversion shall be delivered to the
Trustee or the Conversion Agent to be canceled by or at the direction of the
Trustee or the Conversion Agent, which shall dispose of the same as provided in
Section 2.10.
SECTION 10.10 Provisions in Case of Consolidation, Merger or Sale of Assets.
-------------------------------------------------------------
(1) In case of any consolidation of the Company with, or merger of
the Company into, any other corporation or trust, or in case of any merger of
another corporation or trust into the Company (other than a consolidation or
merger which does not result in any reclassification, conversion, exchange or
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cancellation of outstanding shares of common stock of the Company), or in case
of any sale or transfer of all or substantially all of the assets of the
Company, the corporation or trust formed by such consolidation or resulting from
such merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security of any series then outstanding shall have the right thereafter,
during the period such Security shall be convertible as specified in Section
10.01 to convert such Security only into the kind and amount of securities, cash
and other property receivable upon such consolidation, merger, sale or transfer
by a holder of the number of shares of common stock of the Company into which
such Security might have been converted immediately prior to such consolidation,
merger, sale or transfer. Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Article. The above provisions of this
Section shall similarly apply to successive consolidations, mergers, sales or
transfers.
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(2) The Trustee shall not be under any responsibility to determine
the correctness of any provisions contained in any such supplemental indenture
relating either to the kind or amount of shares of stock or securities or
property receivable by Holders upon the conversion of their Securities after any
such reclassification, change, consolidation, merger, sale or conveyance or to
any adjustment to be made with respect thereto.
SECTION 10.11 Disclaimer by Trustee of Responsibility for Certain Matters.
-----------------------------------------------------------
The Trustee shall not at any time be under any duty or responsibility
to any Holder of Securities of any series to determine whether any facts exist
which may require any adjustment of the conversion price for such series, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. The Trustee shall not be
accountable with respect to the validity, value, kind or amount of any shares of
common stock, or of any securities or property, which may at any time be issued
or delivered upon the conversion of any Security; and it makes no representation
with respect thereto. The Trustee shall not be responsible for any failure of
the Company to issue, transfer or deliver any shares of common stock or stock
certificates or other securities or property upon the surrender of any Security
for the purpose of conversion or, subject to Section 7.01, to comply with any of
the covenants of the Company contained in this Article.
SECTION 10.12 Covenant to Reserve Shares.
--------------------------
The Company covenants that it will at all times reserve and keep
available, free from preemptive rights, out of its authorized shares of common
stock, solely for the purpose of issuance upon conversion of Securities as
herein provided, such number of shares of common stock as shall then be issuable
upon the conversion of all outstanding Securities. The Company covenants that
all shares of common stock which shall be so issuable shall be, when issued,
duly and validly issued and fully paid and non-assessable. For purposes of this
Section 10.12, the number of shares of common stock which shall be deliverable
upon the conversion of all outstanding Securities shall be computed as if at the
time of computation all outstanding Securities were held by a single holder.
ARTICLE 11
SUBORDINATION; SENIORITY
SECTION 11.01 Securities Subordinated to Senior Indebtedness.
----------------------------------------------
(a) Securities of any series which by their terms are subordinated
and junior in right of payment of the principal of, premium, if any, and
interest (all of the foregoing, a "Payment or
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Distribution") on such Securities ("Junior Securities") to the prior payment in
full of any Senior Indebtedness whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed, shall comply with the
provisions of this Article 11, and each Holder of Junior Securities of such
series by his acceptance thereof likewise agrees.
A Payment or Distribution shall include any asset of any kind or
character, and may consist of cash, securities or other property, by set-off or
otherwise, and shall include, without limitation, any purchase, redemption or
other acquisition of Junior Securities of the series or the making of any
deposit of funds or securities pursuant to this Indenture (including, without
limitation, any deposit pursuant to Article 8 hereof).
(b) The Senior Indebtedness of the Company shall continue to be
Senior Indebtedness and entitled to the benefit of these subordination
provisions irrespective of any amendment, modification or waiver of any term of
any instrument relating to refinancing of the Senior Indebtedness.
(c) All the provisions of this Indenture and the Junior Securities of
any series shall be subject to the provisions of this Article 11 so far as they
may be applicable thereto, except that nothing in this Article 11 shall apply to
claims for, or payments to, the Trustee under or pursuant to Section 7.07.
(d) No right of any holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time or in any way be affected or
impaired by any failure to act on the part of the Company, any Paying Agent, the
Holders of the Junior Securities of any series, the Trustee or the holders of
the Senior Indebtedness, or by any noncompliance by the Company, any Paying
Agent, the Holders of the Junior Securities of any series or the Trustee with
any of the terms, provisions and covenants of the Securities or this Indenture,
regardless of any knowledge thereof that any such holder of Senior Indebtedness
may have or be otherwise charged with.
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(e) In the event that the Junior Securities of any series are
declared due and payable before their expressed maturity because of the
occurrence of a default hereunder, the Company will give prompt notice in
writing of such happening to the holders of Senior Indebtedness.
SECTION 11.02 Company Not to Make Payments with Respect to Junior Securities in
-----------------------------------------------------------------
Certain Circumstances.
---------------------
No Payment or Distribution shall be made by the Company, the Trustee
or the Paying Agent on account of principal of (or premium, if any) or interest
on the Junior Securities of any series, whether upon stated maturity, upon
redemption or acceleration, or otherwise, or on account of the purchase or other
acquisition of Junior Securities of such series, whether upon stated maturity,
upon redemption or acceleration, or otherwise, if there shall have occurred and
be continuing a default with respect to any Senior Indebtedness permitting the
acceleration thereof or with respect to the payment of any Senior Indebtedness
and (a) such default is the subject of a judicial proceeding or (b) notice of
such default in writing or by telegram has been given to the Company by any
holder or holders of any Senior Indebtedness, unless and until the Company shall
have received written notice from such holder or holders that such default or
event of default shall have been cured or waived or shall have ceased to exist.
Upon any acceleration of the principal of the Junior Securities of any
series or any payment by the Company or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding up or liquidation or reorganization of the
Company, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full in cash, or payment thereof
provided for to the satisfaction of the holders thereof, before any Payment or
Distribution is made on account of the redemption price or principal of (and
premium, if any) or interest on the Junior Securities of such series; and
(subject to the power of a court of competent jurisdiction to make other
equitable provision, which shall have been determined by such court to give
effect to the rights conferred in this Article upon the Senior Indebtedness and
the holders thereof with respect to the Junior Securities of such series or the
Holders thereof or the Trustee, by a lawful plan of reorganization or
readjustment under applicable law) upon any such dissolution or winding up or
liquidation or reorganization, any Payment or Distribution by the Company or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Junior Securities of any
series or the Trustee would be entitled except for the provisions of this
Article, shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such Payment or Distribution
directly to the holders of Senior Indebtedness of the Company or their
representative or representatives, or to the
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trustee or trustees under any indenture pursuant to which any instruments
evidencing any Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all Senior Indebtedness in
full in cash, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness, before any Payment or Distribution is
made to the Holders of the Securities of such series or to the Trustee, except
that the Trustee will have a lien for the payment of its fees and expenses.
In the event that, notwithstanding the foregoing, any Payment or
Distribution by the Company of any kind or character, whether such payment shall
be in cash, property or securities, prohibited by the foregoing, and the Company
shall have made payment to the Trustee or the Holders of the Junior Securities
of any series before all Senior Indebtedness is paid in full in cash, or
provision is made for such payment to the satisfaction of the holders thereof,
and if such fact shall then have been or thereafter be made known to a Trust
Officer of the Trustee or, as the case may be, such Holder, then and in such
event such Payment or Distribution shall be paid over by the Trustee (if the
Notice required by Section 11.05 has been received by the Trustee) or such
Holder or delivered to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, for application
to the payment of all Senior Indebtedness remaining unpaid to the extent
necessary to pay all Senior Indebtedness in full in cash, after giving effect to
any concurrent Payment or Distribution to or for the holders of such Senior
Indebtedness, and, until so delivered, the same shall be held in trust by any
Holder of a Junior Security as the property of the holders of Senior
Indebtedness.
The consolidation of the Company with, or the merger of the Company
into, another Person or the liquidation or dissolution of the Company following
the conveyance or transfer of its property as an entirety, or substantially as
an entirety, to another corporation upon the terms and conditions provided in
Article Five shall not be deemed a dissolution, winding up, liquidation or
reorganization for the purposes of this Section if such other Person shall, as a
part of such consolidation, merger, conveyance or transfer, comply with the
conditions stated in Article Five. Nothing in this Section shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 7.07.
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<PAGE>
The holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Holders of the Junior Securities
of any series, without incurring responsibility to the Holders of the Junior
Securities of such series and without impairing or releasing the obligations of
the Holders of the Junior Securities of such series hereunder to the holders of
Senior Indebtedness: (i) change the manner, place or terms of payment or change
or extend the time of payment of, or renew or alter, Senior Indebtedness, or
otherwise amend in any manner Senior Indebtedness or any instrument evidencing
the same or any agreement under which Senior Indebtedness is outstanding; (ii)
sell, exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing Senior Indebtedness; (iii) release any Person liable in
any manner for the collection of Senior Indebtedness; and/or (iv) exercise or
refrain from exercising any rights against the Company and any other Person.
SECTION 11.03 Subrogation of Junior Securities.
--------------------------------
Subject to the payment in full in cash of all amounts then due
(whether by acceleration of the maturity thereof or otherwise) on account of all
Senior Indebtedness at the time outstanding, the Holders of the Junior
Securities of any series shall be subrogated to the rights of the holders of
Senior Indebtedness to receive Payments or Distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal of (and premium, if any) and interest on the Securities shall be paid
in full; and, for the purposes of such subrogation, no Payments or Distributions
to the holders of Senior Indebtedness to which the Holders of the Junior
Securities of any series or the Trustee would be entitled except for the
provisions of this Article, and no payments over pursuant to the provisions of
this Article to the holders of Senior Indebtedness by Holders of the Junior
Securities of any series or the Trustee, shall, as between the Company, the
Company's creditors other than holders of Senior Indebtedness, and the Holders
of the Junior Securities of such series, be deemed to be a payment by the
Company to or on account of the Senior Indebtedness. It is understood that the
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Junior Securities of any
series, on the one hand, and the holders of Senior Indebtedness, on the other
hand.
Nothing contained in this Article or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of the
Securities of each series, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities of any series the
principal of (and premium, if any) and interest on the Securities of such series
as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the Holders of
the Junior Securities of any series and creditors of the Company other than
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<PAGE>
the holders of Senior Indebtedness, nor shall anything herein or therein prevent
the Trustee or the Holder of any Junior Security of any series from exercising
all remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article of the holders of
Senior Indebtedness in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
-61-
<PAGE>
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 7.01, and the
Holders of the Junior Securities of any series shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which any
dissolution, winding up, liquidation or reorganization proceedings are pending,
or certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the Junior Securities of such series, for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 11.04 Authorization by Holders of Junior Securities.
---------------------------------------------
Each holder of a Junior Security of any series by his acceptance
thereof authorizes and directs the Trustee on his behalf to take such action as
may be necessary or appropriate to effectuate, as between the Holder of the
Junior Security and the holders of Senior Indebtedness, the subordination
provided in this Article and appoints the Trustee his attorney-in-fact for any
and all such purposes including, without limitation, to execute, verify, deliver
and file any proofs of claim which any holder of Senior Indebtedness may at any
time require in order to prove and realize upon any rights or claims pertaining
to the Securities and to effectuate the full benefit of the subordination
contained herein. Upon failure of the Trustee so to do, any such holder of
Senior Indebtedness shall be deemed to be irrevocably appointed the agent and
attorney-in-fact of the Holder to execute, verify, deliver and file any such
proofs of claim.
SECTION 11.05 Notices to Trustee.
------------------
The Company shall give prompt written notice to the Trustee of any
fact known to it which would prohibit the making of any payment of moneys to or
by the Trustee in respect of the Junior Securities of any series pursuant to the
provisions of this Article. Notwithstanding the provisions of this Article or
any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment of moneys to or by the Trustee in respect of the Junior Securities of
any series pursuant to the provisions of this Article, unless and until a Trust
Officer of the Trustee shall have received at its Corporate Trust Office written
notice thereof from the Company or a holder or holders of Senior Indebtedness or
from any trustee or agent therefor; and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of Section 7.01, shall be
entitled in all respects to assume that no such facts exist; provided, however,
-------- -------
that if a Trust Officer of the Trustee shall not have received at least three
Business Days prior to the date upon which by the terms hereof any such moneys
may become payable for any
-62-
<PAGE>
purpose (including, without limitation, the payment of the principal of
(premium, if any) or interest on any Junior Security of any series) with respect
to such moneys the notice provided for in this Section, then, anything herein
contained to the contrary notwithstanding, the Trustee shall have the full power
and authority to receive such moneys and to apply the same to the purpose for
which they were received and shall not be affected by any notice to the contrary
which may be received by it within three Business Days prior to such date.
The Trustee shall be entitled to rely conclusively on the delivery to
it of a written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior Indebtedness or a trustee or agent
on behalf of any such holder. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
SECTION 11.06 Trustee's Relation to Senior Indebtedness.
-----------------------------------------
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article in respect of any Senior Indebtedness at any
time held by it, to the same extent as any other holder of Senior Indebtedness,
and nothing in Section 7.11 or elsewhere in this Indenture shall deprive the
Trustee of any of its rights as such holder.
-63-
<PAGE>
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not owe any
fiduciary duty to the holders of Senior Indebtedness and shall not be liable to
any such holder if it shall mistakenly pay over or distribute to Holders of the
Junior Securities of any series or the Company or any other Person money or
assets to which any holder of Senior Indebtedness shall be entitled by virtue of
this Article or otherwise.
SECTION 11.07 No Impairment of Subordination.
------------------------------
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company,
the Trustee or the Holder of any of the Securities of any series or by any act,
or failure to act, in good faith, by any such holder of Senior Indebtedness, or
by any noncompliance by the Company, the Trustee or the Holder of any of the
Securities of any series with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with.
SECTION 11.08 Article 11 Not To Prevent Events of Default.
-------------------------------------------
The failure to make a payment on account of principal of (premium, if
any) or interest on the Junior Securities of any series by reason of any
provision in this Article 11 shall not be construed as preventing the occurrence
of an Event of Default with respect to such series under Section 6.01.
SECTION 11.09 Paying Agents other than the Trustee.
------------------------------------
In any case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 11 shall in such case (unless the context
shall otherwise require) be construed as extending to and including such Paying
Agent within its meaning as fully for all intents and purposes as if such Paying
Agent were named in this Article 11 in addition to or in place of the Trustee.
SECTION 11.10 Securities Senior to Subordinated Indebtedness.
----------------------------------------------
The indebtedness represented by the Securities of any series will be
senior and prior in right of payment to all Subordinated Indebtedness, to the
extent and in the manner provided in such Subordinated Indebtedness.
-64-
<PAGE>
ARTICLE 12
SINKING FUND
SECTION 12.01 Mandatory and Optional Sinking Fund Payments.
--------------------------------------------
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of any series, except as otherwise permitted or
required by any form of Security of a series issued pursuant to this Indenture.
The minimum amounts of any sinking fund payments provided for by the
terms of Securities of any series are herein referred to as "mandatory sinking
fund payments", and any payments in excess of those minimum amounts provided for
by the terms of Securities of that series are herein referred to as "optional
sinking fund payments". If provided for by the terms of the Securities of any
series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 12.02. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of that series.
SECTION 12.02 Satisfaction of Sinking Fund Payments with Securities.
-----------------------------------------------------
The Company may, in satisfaction of all or any part of any sinking
fund payment with respect to the Securities of any series, as provided for by
the terms of that series (1) deliver to the Holders of outstanding Securities of
that series (other than any of such Securities previously called for redemption
or any of such Securities by mandatory sinking fund payment in respect of which
cash shall have been released to the Company), (2) apply as a credit Securities
of that series which have been redeemed either at the election of the Company
pursuant to the terms of that series of Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, provided that no Securities of such series have been previously so
credited and (3) apply as a credit Securities of that series which have been
converted or exchanged into shares of the Company's common stock or Securities
of another series pursuant to the terms of that series of Securities, provided
that such series of Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly. If as a result of the delivery or credit of Securities of any
series in lieu of cash payments pursuant to this Section, the principal amount
of Securities of that series to be redeemed in order to exhaust the aforesaid
cash payment shall be less than $100,000, the Trustee need not call Securities
of that series for redemption, except upon the request of the Company, and such
cash payment shall be held by the Trustee or a Paying Agent and applied to the
next succeeding sinking fund payment, provided, however, that the Trustee or
such Paying Agent shall at the request of the Company from time to time pay over
and deliver to the Company any
-65-
<PAGE>
cash payment so being held by the Trustee or such Paying Agent upon delivery by
the Company to the Trustee of Securities of that series purchase by the Company
having an unpaid principal amount equal to the cash payment requested to be
released to the Company.
SECTION 12.03 Redemption of Securities for Sinking Funds.
------------------------------------------
Not less than 60 days prior to each mandatory sinking fund payment
date for any series of Securities, the Company will deliver to the Trustee an
Officers' Certificate specifying the amount of the mandatory sinking fund
payment for that series pursuant to the terms of that series, the portion
thereof, if any, which is to be satisfied by payment of cash and the portion
thereof, if any, which is to be satisfied by delivery or credit of Securities
pursuant to Section 12.02 hereof, and the optional amount, if any, to be added
in cash to the mandatory sinking fund payment, and will also deliver to the
Trustee any Securities to be so credited and not theretofore delivered. If such
Officers' Certificate shall specify an optional amount to be added in cash to
the mandatory sinking fund payment, the Company shall thereupon be obligated to
pay the amount therein specified. Not less than 30 days before each such
sinking fund payment date the Trustee shall select the Securities to be redeemed
upon such sinking fund payment date in the manner specified in Section 3.02
hereof and cause notice of the redemption thereof to be given in the name of and
at the expense of the Company in the manner provided in Section 3.03 hereof.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01 Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provisions shall control.
SECTION 13.02 Notices.
-------
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
or first class mail, postage prepaid (except that any notice by the Trustee to
the Company of a default or an Event of Default under this Indenture shall be by
registered or certified mail, postage prepaid, return receipt requested), or by
a nationally-recognized overnight express courier service (which notices or
communications shall be deemed received the business day after the receipt
thereof by such service), addressed as follows:
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<PAGE>
if to the Company:
Assisted Living Concepts, Inc.
9955 S.E. Washington, Suite 201
Portland, Oregon 97216
Attention: President
if to the Trustee:
Harris Trust and Savings Bank
311 West Monroe Street
12th Floor
Chicago, IL 60606
Attention: Corporate Trust Department
The Company or the Trustee by notice to the other may designate additional or
different addresses as shall be furnished in writing by either party. Any
notice or communication to the Company or the Trustee shall be deemed to have
been given or made as of the date so delivered if personally delivered, and five
(5) calendar days after mailing if sent by registered or certified mail (except
that a notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to the address of such Securityholder as it appears on the registration books of
the Registrar and shall be sufficiently given if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice, as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
If the Company mails any notice or communication to Securityholders,
it shall mail a copy to the Trustee and all Agents at the same time.
SECTION 13.03 Communications by Holders with Other Holders.
--------------------------------------------
Securityholders of any series may communicate pursuant to TIA
(S) 312(b) with other Securityholders of such series with respect to their
rights under this Indenture or the Securities of such series. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA
(S) 312(c).
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<PAGE>
SECTION 13.04 Certificate and Opinion as to Conditions
----------------------------------------
Precedent.
---------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the statements set
forth in Section 13.05) stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel (which shall include the statements set
forth in Section 13.05) stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 13.05 Statements Required in Certificate and Opinion.
----------------------------------------------
Each Certificate and Opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition
has been complied with; and
-68-
<PAGE>
(4) a statement as to whether or not, in the opinion of such Person,
such covenant or condition has been complied with.
SECTION 13.06 Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Registrar, Paying Agent or Conversion Agent may make
reasonable rules for its functions.
SECTION 13.07 Record Date.
-----------
Whenever the Company or the Trustee solicits an act of Securityholders
of any series, the Company or the Trustee may fix in advance of the solicitation
of such act a date as the record date for determining Securityholders of such
series entitled to perform said act. The record date shall be not more than 15
days prior to the date fixed for the solicitation of said act.
SECTION 13.08 Legal Holidays.
--------------
A "Legal Holiday" is a Saturday, a Sunday or a day on which banks or
trust companies in the city in which either the Trustee or the Company is
located are not required to be open. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
-69-
<PAGE>
SECTION 13.09 Governing Law.
-------------
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND THE
SECURITIES WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 13.10 No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 13.11 No Recourse Against Others.
--------------------------
No shareholder, director or officer, as such, past, present or future,
of the Company or of any successor corporation or trust shall have any liability
for any obligation of the Company under the Securities or the Indenture or for
any claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder of a Security of any series by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
SECTION 13.12 Successors.
----------
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture shall
bind its successor.
SECTION 13.13 Multiple Counterparts.
---------------------
The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of them together
represent the same agreement.
SECTION 13.14 Table of Contents, Headings, etc.
--------------------------------
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 13.15 Severability.
------------
In case any provision in this Indenture or in the Securities of any
series shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, and a Holder shall have no claim therefor against any party
hereto.
-70-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
ASSISTED LIVING CONCEPTS, INC.
By: __________________________________
Name:
Title:
This rest of this page intentionally left blank.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By: _______________________________
Authorized Officer
The rest of this page intentionally left blank.
<PAGE>
EXHIBIT 5.1
LATHAM & WATKINS
Attorneys at Law
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
Telephone (213) 485-1234
Fax (213) 891-8763
September 11, 1997
Assisted Living Concepts, Inc.
9955 SE Washington, Ste 201
Portland, Oregon 97216
Re: Assisted Living Concepts, Inc.
Ladies and Gentlemen:
At your request, we have examined the registration statement on Form S-3
(the "Registration Statement") being filed by you with the Securities and
Exchange Commission in connection with the registration, under the Securities
Act of 1933, as amended, of up to $150,000,000 aggregate offering price of
securities (the "Securities"), consisting of one or more series of debt
securities (the "Debt Securities"), one or more series of shares of preferred
stock, par value $.01 per share (the "Preferred Stock"), and shares of common
stock, par value $.01 per share (the "Common Stock"). We also have examined the
form of indenture by and between Assisted Living Concepts, Inc. (the "Company")
and Harris Trust and Savings Bank, as trustee, relating to the Debt Securities
(the "Indenture").
In our capacity as your counsel in connection with such registration, we
are familiar with the proceedings taken and proposed to be taken by the Company
in connection with the authorization and issuance of the Securities and for the
purposes of this opinion, have assumed such proceedings will be timely completed
in the manner presently proposed. In addition, we have made such legal and
factual examinations and inquiries, including an examination of originals or
copies certified or otherwise identified to our satisfaction of such documents,
corporate records and instruments, as we have deemed necessary or appropriate
for purposes of this opinion.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to authentic original documents of all documents submitted to us as copies.
Subject to the foregoing and the other matters set forth herein, it is our
opinion that, as of the date hereof:
1. The Debt Securities have been duly authorized by the Company, and when
the Debt Securities have been duly established by the Indenture, duly
authenticated by the Trustee and duly executed and delivered on behalf
of the Company against payment therefor in accordance with the terms
and provisions of the Indenture and as contemplated by the
Registration Statement, the Debt Securities will constitute legally
valid and binding obligations of the Company.
2. The Preferred Stock has been duly authorized by the Company, and when
the Preferred Stock has been duly established in accordance with the
terms of the Company's Articles of Incorporation and applicable law
and, upon issuance, delivery and payment therefor in the manner
contemplated
<PAGE>
by the Registration Statement, the Preferred Stock will be validly
issued, fully paid and nonassessable.
3. The Common Stock, including any Common Stock that may be issuable
pursuant to the conversion of any Debt Securities or Preferred Stock,
has been duly authorized, and upon issuance, delivery and payment
therefore in the manner contemplated by the Registration Statement,
will be validly issued, fully paid and nonassessable.
The opinion rendered in clause 1 above is subject to the following
exceptions, limitations and qualifications: (i) the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting the rights and remedies of creditors; (ii) the
effect of general principles of equity, whether enforcement is considered in a
proceeding in equity or law, the discretion of the court before which any
proceeding therefor may be brought; and (iii) we express no opinion with respect
to whether acceleration of Debt Securities may affect the collectibility of any
portion of the stated principal amount thereof which might be determined to
constitute unearned interest thereon.
To the extent that the obligations of the Company under the Indenture may
be dependent upon such matters, we assume for purposes of this opinion that the
Trustee is duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization; that the Trustee is duly qualified to
engage in the activities contemplated by the Indenture; that the Indenture has
been duly authorized, executed and delivered by the Trustee and constitutes the
legally valid, binding and enforceable obligation of the Trustee enforceable
against the Trustee in accordance with its terms; that the Trustee is in
compliance, generally with respect to acting as a trustee under the Indenture,
with all applicable laws and regulations; and that the Trustee has the requisite
organizational and legal power and authority to perform its obligations under
the Indenture.
We consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters" in
the prospectus included therein.
Very truly yours,
/s/ LATHAM & WATKINS
<PAGE>
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in thousands)
<TABLE>
<CAPTION>
The Company
-------------------------------------------------------------------------
Six Months Three Months Year ended Year ended Month ended
Ended June 30, Ended June 30, December 31, December 31, December 31,
1997 1997 1996 1995(1) 1994
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income before provision for income taxes $ 2,099 $ 1,294 $ 149 $ (575) $ (64)
Add fixed charges
Interest expense including amortization of debt
issuance costs 408 245 - 133 8
---------- ---------- --------- --------- ---------
Earnings 2,507 1,539 149 (442) (56)
========== ========== ========= ========= =========
Fixed Charges
Interest expense including amortization of debt
issuance costs 408 245 - 133 8
Capitalized interest 2,944 1,606 2,188 577 -
---------- ---------- --------- --------- ---------
Total fixed charges $ 3,352 $ 1,851 $ 2,188 $ 710 $ 8
========== ========== ========= ========= =========
Ratio of earnings to fixed charges 0.75 0.83 0.07 (0.62) (7.00)
(Deficiency of) Earnings to cover fixed charges (845) (312) (2,039) (1,152) (64)
<CAPTION>
Predecessor
----------------------
Eleven Months
ended November 31,
----------------------
1994
----------------------
<S> <C>
Income before provision for income taxes $ 231
Add fixed charges
Interest expense including amortization of debt
issuance costs 297
--------
Earnings 528
========
Fixed Charges
Interest expense including amortization of debt
issuance costs 297
Capitalized interest 11
--------
Total fixed charges $ 308
========
Ratio of earnings to fixed charges 1.71
(Deficiency of) Earnings to cover fixed charges 220
</TABLE>
- ----------------
(1) December 31, 1991 is unaudited
(2) Amortization of debt issuance costs is $37,000 for year ended
December 31, 1995.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our reports
dated March 17, 1995, which appear on pages 30 and 31 of Assisted Living
Concepts, Inc.'s Annual Report on Form 10-K for the year ended December
31, 1996 relating to the financial statements of Assisted Living Concepts
Group (which is comprised of Assisted Living Facilities, Inc., a subchapter
S Corporation, Madras Elder Care (dba Aspen Court), a general partnership,
and Lincoln City Partners, a general partnership) for the eleven months
ended November 30, 1994, and of Assisted Living Concepts, Inc. for the one
month period ended December 31, 1994. We also consent to the reference to
us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
- --------------------------
PRICE WATERHOUSE LLP
PORTLAND, OREGON
SEPTEMBER 11, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Assisted Living Concepts, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Portland, Oregon
September 11, 1997
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of Eligibility
Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as
Trustee
Check if an Application to Determine
Eligibility of a Trustee Pursuant to Section
305(b)(2) ______________
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
Illinois 36-1194448
(I.R.S Employer
(State of Incorporation) Identification No.)
111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)
Daniel G. Donovan, Harris Trust and Savings Bank,
11 West Monroe Street, Chicago, Illinois, 60603
312-461-2908
(Name, address and telephone number for agent for service)
ASSISTED LIVING CONCEPTS, INC.
(Name of Obligor)
Nevada 93-1148702
(I.R.S Employer
(State of Incorporation) Identification No.)
9955 SE Washington, Suite 201
Portland, OR 97216
(Address of principal executive offices)
Debt Securities
(Title of indenture securities)
<PAGE>
1. GENERAL INFORMATION. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Commissioner of Banks and Trust Companies, State of Illinois,
Springfield, Illinois; Chicago Clearing House Association, 164
West Jackson Boulevard, Chicago, Illinois; Federal Deposit
Insurance Corporation, Washington, D.C.; The Board of Governors
of the Federal Reserve System, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Harris Trust and Savings Bank is authorized to exercise corporate
trust powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the Trustee,
describe each such affiliation.
The Obligor is not an affiliate of the Trustee.
3. thru 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee as now in effect
which includes the authority of the trustee to commence business and
to exercise corporate trust powers.
A copy of the Certificate of Merger dated April 1, 1972 between Harris
Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc. which
constitutes the articles of association of the Trustee as now in
effect and includes the authority of the Trustee to commence business
and to exercise corporate trust powers was filed in connection with
the Registration Statement of Commercial Federal Corporation, File
No. 33320711, and is incorporated herein by reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed in connection
with the Registration Statement of C-Cube Microsystems, Inc., File No.
33-97166, and is incorporated herein by reference.
3. The consents of the Trustee required by Section 321(b) of the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
(included as Exhibit B on page 3 of this statement)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing under the
laws of the State of Illinois, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago, and State of Illinois, on the 9th day of September, 1997.
Harris Trust and Savings Bank
BY:/s/ D.G. Donovan
------------------------------
D.G. Donavan
Assistant Vice President
EXHIBIT A
The consents of the Trustee required by Section 321(b) of the Act.
Harris Trust and Savings Bank, as the Trustee herein named, hereby consents that
reports of examinations of said trustee by Federal and State authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
Harris Trust and Savings Bank
By:/s/ D.G. Donavan
------------------------------
D.G Donavan
Assistant Vice President
2
<PAGE>
EXHIBIT B
Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of June 30, 1997, as published in accordance with a
call made by the State Banking Authority and by the Federal Reserve Bank of the
Seventh Reserve District.
[LOGO] HARRIS BANK
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at the close of
business on June 30, 1997, a state banking institution organized and operating
under the banking laws of this State and a member of the Federal Reserve System.
Published in accordance with a call made by the Commissioner of Banks and Trust
Companies of the State of Illinois and by the Federal Reserve Bank of this
District.
Bank's Transit Number 71000288
<TABLE>
<CAPTION>
THOUSANDS
ASSETS OF DOLLARS
<S> <C> <C>
Cash and balances due from depository
institutions:
Non-interest bearing balances and
currency and coin..................... $ 1,707,824
Interest bearing balances.............. $ 628,916
Securities:.............................
a. Held-to-maturity securities $ 0
b. Available-for-sale securities $ 3,766,727
Federal funds sold and securities
purchased under agreements to resell in
domestic offices of the bank and of
its Edge and Agreement
subsidiaries, and in IBF's:
Federal funds sold.................... $ 275,425
Securities purchased under agreements
to resell............................ $ 0
Loans and lease financing receivables:
Loans and leases, net of unearned
income............................... $8,346,198
LESS: Allowance for loan and lease
losses............................... $ 110,230
----------
Loans and leases, net of unearned
income, allowance, and reserve
(item 4.a minus 4.b).................. $ 8,235,968
Assets held in trading accounts......... $ 164,281
Premises and fixed assets (including
capitalized leases).................... $ 199,292
Other real estate owned................. $ 524
Investments in unconsolidated
subsidiaries and associated companies.. $ 69
Customer's liability to this bank on
acceptances outstanding................ $ 46,107
Intangible assets....................... $ 287,575
Other assets............................ $ 670,230
-----------
TOTAL ASSETS $15,982,938
===========
</TABLE>
3
<PAGE>
<TABLE>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices................... $ 9,243,162
Non-interest bearing............. $3,411,145
Interest bearing................. $5,832,017
In foreign offices, Edge and
Agreement subsidiaries, and IBF's.... $ 1,738,871
Non-interest bearing............. $ 34,386
Interest bearing................. $1,704,485
Federal funds purchased and securities
sold under agreements to repurchase in
domestic offices of the bank and of
its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds purchased & securites
sold under agreements to repurchase.. $ 2,985,911
Trading Liabilities
Other borrowed money:................... 62,083
a. With remaining maturity of one year
or less $ 244,781
b. With remaining maturity of more
than one year $ 0
Bank's liability on acceptances
executed and outstanding $ 46,107
Subordinated notes and debentures....... $ 325,000
Other liabilities....................... $ 119,695
---------- -----------
TOTAL LIABILITIES $14,765,610
===========
EQUITY CAPITAL
Common stock............................ $ 100,000
Surplus................................. $ 600,715
a. Undivided profits and capital
reserves............................... $ 534,395
b. Net unrealized holding gains
(losses) on available-for-sale
securities ($17,782)
---------- -----------
TOTAL EQUITY CAPITAL $ 1,217,328
===========
Total liabilities, limited-life
preferred stock, and equity capital.... $15,982,938
===========
</TABLE>
I, Steve Neudecker, Vice President of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
STEVE NEUDECKER
7/30/97
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and, to the best of our
knowledge and belief, has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and the
Commissioner of Banks and Trust Companies of the State of Illinois and is true
and correct.
EDWARD W. LYMAN,
ALAN G. McNALLY,
RICHARD JAFFEE
Directors.
4
