EXHIBIT 4.1
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ASSISTED LIVING CONCEPTS, INC.
$86,250,000
5.625% Convertible Subordinated Debentures Due 2003
INDENTURE
Dated as of April 13, 1998
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
AS TRUSTEE
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TABLE OF CONTENTS
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Page
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ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE..................... 1
SECTION 1.1. Definitions.............................................. 1
SECTION 1.2. Other Definitions........................................ 5
SECTION 1.3. Incorporation by Reference to Trust Indenture Act........ 5
SECTION 1.4. Rules of Construction.................................... 6
ARTICLE II. THE SECURITIES................................................. 6
SECTION 2.1. Form; Dating; Incorporation of Form in Indenture......... 6
SECTION 2.2. Execution and Authentication............................. 7
SECTION 2.3. Registrar and Agents..................................... 8
SECTION 2.4. Paying Agent to Hold Money in Trust...................... 9
SECTION 2.5. Transfer and Exchange.................................... 9
SECTION 2.6. Replacement Securities................................... 14
SECTION 2.7. Outstanding Securities................................... 14
SECTION 2.8. Temporary Securities..................................... 15
SECTION 2.9. Cancellation............................................. 15
SECTION 2.10. Defaulted Interest....................................... 16
SECTION 2.11. Securityholder Lists..................................... 16
SECTION 2.12. Persons Deemed Owners.................................... 16
SECTION 2.13 CUSIP Number............................................. 16
ARTICLE III. REDEMPTION..................................................... 17
SECTION 3.1. Notices to Trustee....................................... 17
SECTION 3.2. Selection of Securities to be Redeemed................... 17
SECTION 3.3. Notice of Redemption by the Company...................... 18
SECTION 3.4. Effect of Notice of Redemption........................... 18
SECTION 3.5. Deposit of Redemption Price.............................. 19
SECTION 3.6. Securities Redeemed in Part.............................. 19
ARTICLE IV. COVENANTS...................................................... 19
SECTION 4.1. Payment of the Securities................................ 19
SECTION 4.2. Commission Reports....................................... 19
SECTION 4.3. Waiver of Stay, Extension or Usury Laws.................. 20
SECTION 4.4. Notice of Default........................................ 20
SECTION 4.5. Compliance Certificates.................................. 20
SECTION 4.6. Limitation on Dividends and Other Distributions.......... 21
ARTICLE V. SUCCESSOR CORPORATION.......................................... 21
SECTION 5.1. When Company May Merge, etc.............................. 21
SECTION 5.2. Successor Corporation or Trust Substituted............... 22
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ARTICLE VI. DEFAULTS AND REMEDIES.......................................... 22
SECTION 6.1. Events of Default........................................ 22
SECTION 6.2. Acceleration............................................. 24
SECTION 6.3. Other Remedies........................................... 24
SECTION 6.4. Waiver of Defaults and Events of Default................. 25
SECTION 6.5. Control by Majority...................................... 25
SECTION 6.6. Rights of Holders to Receive Payment..................... 25
SECTION 6.7. Collection Suit by Trustee............................... 26
SECTION 6.8. Trustee May File Proofs of Claim......................... 26
SECTION 6.9. Priorities............................................... 26
SECTION 6.10. Undertaking for Costs................................... 27
SECTION 6.11. Limitation on Suits..................................... 27
ARTICLE VII. TRUSTEE....................................................... 28
SECTION 7.1 Duties of Trustee........................................ 28
SECTION 7.2. Rights of Trustee........................................ 29
SECTION 7.3. Individual Rights of Trustee............................. 30
SECTION 7.4. Trustee's Disclaimer..................................... 30
SECTION 7.5. Notice of Defaults....................................... 30
SECTION 7.6. Reports by Trustee to Holders............................ 30
SECTION 7.7. Compensation and Indemnity............................... 31
SECTION 7.8. Replacement of Trustee................................... 32
SECTION 7.9. Successor Trustee by Merger, etc......................... 33
SECTION 7.10. Eligibility; Disqualification........................... 33
SECTION 7.11. Preferential Collection of Claims Against Company....... 33
ARTICLE VIII. SATISFACTION AND DISCHARGE OF INDENTURE...................... 33
SECTION 8.1. Satisfaction, Discharge and Defeasance of the Securities. 33
SECTION 8.2. Satisfaction and Discharge of Indenture.................. 34
SECTION 8.3. Survival of Certain Obligations.......................... 34
SECTION 8.4. Application of Trust Money............................... 35
SECTION 8.5. Paying Agent to Repay Monies Held........................ 35
SECTION 8.6. Return of Unclaimed Monies............................... 35
SECTION 8.7. Reinstatement............................................ 36
SECTION 8.8. Indemnity for Government Obligations..................... 36
ARTICLE IX. AMENDMENTS AND WAIVERS......................................... 36
SECTION 9.1. Amendments and Waivers Without Consent of Holders........ 36
SECTION 9.2. Amendments and Waivers with Consent of Holders........... 37
SECTION 9.3. Compliance with Trust Indenture Act...................... 38
SECTION 9.4. Revocation and Effect of Consents........................ 38
SECTION 9.5. Notation on or Exchange of Securities.................... 38
SECTION 9.6. Trustee to Sign Amendments, etc.......................... 39
ARTICLE X. CONVERSION OF SECURITIES........................................ 39
SECTION 10.1. Right of Conversion; Conversion Price.................... 39
SECTION 10.2. Issuance of Shares on Conversion......................... 40
SECTION 10.3. No Adjustment for Interest or Dividends.................. 40
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SECTION 10.4. Adjustment of Conversion Price.......................... 41
SECTION 10.5. Notice of Adjustment of Conversion Price................ 43
SECTION 10.6. Notice of Certain Corporate Action...................... 43
SECTION 10.7. Taxes on Conversions.................................... 45
SECTION 10.8. Fractional Shares....................................... 45
SECTION 10.9. Cancellation of Converted Securities.................... 45
SECTION 10.10. Provisions in Case of Consolidation, Merger or Sale of
Assets.................................................. 45
SECTION 10.11. Disclaimer by Trustee of Responsibility for Certain
Matters................................................. 46
SECTION 10.12. Covenant to Reserve Shares.............................. 46
ARTICLE XI. SUBORDINATION; SENIORITY....................................... 46
SECTION 11.1. Securities Subordinated to Senior Indebtedness.......... 46
SECTION 11.2. Company Not to Make Payments with Respect to Securities
in Certain Circumstances................................ 47
SECTION 11.3. Subrogation of Securities............................... 49
SECTION 11.4. Authorization by Holders of Securities.................. 50
SECTION 11.5. Notices to Trustee...................................... 50
SECTION 11.6. Trustee's Relation to Senior Indebtedness............... 51
SECTION 11.7. No Impairment of Subordination.......................... 52
SECTION 11.8. Article 11 Not To Prevent Events of Default............. 52
SECTION 11.9. Paying Agents other than the Trustee.................... 52
SECTION 11.10. Securities Senior to Subordinated Indebtedness......... 52
ARTICLE XII. RIGHT TO REQUIRE REPURCHASE.................................... 53
SECTION 12.1. Right to Require Repurchase.............................. 53
SECTION 12.2. Notice; Method of Exercising Repurchase Right........... 53
SECTION 12.3. Deposit Of Repurchase Price.............................. 54
SECTION 12.4. Notes Not Repurchased On Repurchase Date................. 54
SECTION 12.5. "Change in Control" Defined.............................. 54
ARTICLE XIII. MISCELLANEOUS................................................ 56
SECTION 13.1. Trust Indenture Act Controls............................ 56
SECTION 13.2. Notices................................................. 56
SECTION 13.3. Communications by Holders with Other Holders............ 57
SECTION 13.4. Certificate and Opinion as to Conditions Precedent...... 58
SECTION 13.5. Statements Required in Certificate and Opinion.......... 58
SECTION 13.6. Rules by Trustee and Agents............................. 58
SECTION 13.7. Record Date............................................. 59
SECTION 13.8. Legal Holidays.......................................... 59
SECTION 13.9. Governing Law........................................... 59
SECTION 13.10. No Adverse Interpretation of Other Agreements.......... 59
SECTION 13.11. No Recourse Against Others............................. 59
SECTION 13.12. Successors............................................. 59
SECTION 13.13. Multiple Counterparts.................................. 60
SECTION 13.14. Table of Contents, Headings, etc....................... 60
SECTION 13.15. Severability........................................... 60
EXHIBIT A - FORM OF SECURITY
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CROSS-REFERENCE TABLE
ASSISTED LIVING CONCEPTS, INC.
Trust Indenture
Act Section Indenture
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310(a)(1) 7.10; 12.1
(a)(2) 12.1
(a)(3) 12.1
(a)(4) 12.1
(a)(5) 12.1
(b) 7.10; 12.1
(c) 12.1
311(a) 7.11; 12.1
(b) 7.11; 12.1
(c) 12.1
312(a) 12.1
(b) 12.1; 12.3
(c) 12.1; 12.3
313(a) 7.6; 12.1
(b) 7.6; 12.1
(c) 7.6; 12.1
(d) 7.6; 12.1
314(a) 4.2; 12.1
(b) 12.1
(c) 12.1
(d) 12.1
(e) 12.1
(f) 12.1
315(a) 7.1; 12.1
(b) 7.1; 12.1
(c) 7.1; 12.1
(d) 7.1; 12.1
(e) 7.1; 12.1
316(a) 7.1; 12.1
(b) 7.1; 12.1
(c) 7.1; 12.1
317(a) 12.1
(b) 12.1
318(a) Not Applicable
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Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
INDENTURE dated as of April 13, 1998 by and between ASSISTED LIVING
CONCEPTS, INC., a Nevada corporation (the "Company"), and ▇▇▇▇▇▇ TRUST AND
SAVINGS BANK, an Illinois banking corporation, as trustee ("Trustee").
RECITALS OF THE COMPANY
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders (as defined herein) of the
Company's 5.625% Convertible Subordinated Debentures due 2003 (the
"Securities"):
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
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"Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities or by agreement
or otherwise.
"Agent" means any Registrar, Paying Agent, Conversion Agent, co-
registrar or agent for service of notices and demands.
"Bankruptcy Law" means Title 11 of the U.S. Code or any similar
Federal or State law for the relief of debtors.
"Board of Directors of the Company" means the Board of Directors of
the Company or any committee of the Board of Directors of the Company.
"Board Resolution" means a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of
Directors of the Company and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means any and all shares or other equivalents (however
designated) of capital stock, including all common stock and all preferred
stock, in the case of a corporation, or partnership interests or other
equivalents (however designated) in the case of a partnership or common shares
of beneficial interest or other equivalents (however designated) in the case of
a trust.
"Closing Price" means with respect to the shares of Capital Stock of
the Company on any day, (i) the reported last sale price regular way or, in case
no such reported sale takes
place on such day, the average of the reported closing bid and asked prices
regular way, in either case on the American Stock Exchange (the "AMEX"), or (ii)
if the shares of Capital Stock are not listed or admitted to trading on the
AMEX, the reported last sale price regular way or, in case no such reported sale
takes place on such day, the average of the reported closing bid and asked
prices regular way, in either case on the principal national securities exchange
on which the shares of Capital Stock are listed or admitted to trading, or (iii)
if the shares of Capital Stock are not listed or admitted to trading on any
national securities exchange, the average of the closing bid and asked prices as
furnished by any New York Stock Exchange member firm selected from time to time
by the Company for that purpose.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
"Custodian" means any receiver, trustee, liquidator or similar
official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Dollar" or "$" means the lawful money of the United States of
America.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Security Register.
"Indebtedness" as applied to any Person, means, without duplication:
(i) all indebtedness for borrowed money whether or not evidenced by a promissory
note, draft or similar instrument; (ii) that portion of obligations with respect
to any lease that is properly classified as a liability on a balance sheet in
accordance with generally accepted accounting principles; (iii) notes payable
and drafts accepted representing extensions of credit; (iv) any balance owed for
all or any part of the deferred purchase price of property or services, which
purchase price is due more than six months from the date of incurrence of the
obligation in respect thereof (except any such balance that constitutes (a) a
trade payable or an accrued liability arising in the ordinary course of business
or (b) a trade draft or note payable issued in the ordinary course of business
in connection with the purchase of goods or services), if and to the extent such
debt would appear as a liability upon a balance sheet of such Person prepared in
accordance with generally accepted accounting principles; (v) any debt of others
described in the preceding clauses (i) through (iv) which such Person has
guaranteed or for which it is otherwise liable; and (vi) any deferral,
amendment, renewal, extension, supplement or refunding of any of the foregoing
indebtedness; provided, however, that, in computing the "Indebtedness" of any
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Person, there shall be excluded any particular indebtedness if, upon or prior to
the maturity
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thereof and at the time of determination of such indebtedness, there shall have
been deposited with a depository in trust money (or evidences of indebtedness if
permitted by the instrument creating such indebtedness) in the necessary amount
to pay, redeem or satisfy such indebtedness as it becomes due, and the amount so
deposited shall not be included in any computation of the assets of such Person.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary or the Controller of the Company.
"Officers' Certificate" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer, Assistant Secretary or Assistant
Controller of the Company. See Sections 13.4 and 13.5.
"Opinion of Counsel" means a written opinion from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ 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 13.4 and 13.5.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).
"Redemption Date" when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture.
"Redemption Price" when used with respect to any Security to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
as specified in the form of Security annexed hereto as Exhibit A.
"Registration Statement" means the registration statement that the
Company is required to file with the Securities and Exchange Commission pursuant
to that certain Registration Rights Agreement, dated as of April 13, 1998, by
and between the Company and the Holders from time to time of the Securities.
"Regular Record Date" means, with respect to any Interest Payment
Date, the April 15 or October 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Restricted Security", means the Securities, upon original issuance
thereof, and all Securities issued upon registration of transfer thereof or in
exchange therefor, and at all times subsequent thereto, until, in the case of
any such Securities the earlier of the following: (i) such Securities have been
effectively registered under Section 5 of the Securities Act and disposed of in
accordance with a registration statement covering them or (ii) such Securities
have been distributed to the public pursuant to Rule 144 of the Securities Act
(or any similar provisions then in force). When any Security which is a
Restricted Security ceases to be a Restricted
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Security, such Restricted Security shall no longer be subject to the transfer
restrictions as imposed by Section 2.5(2) hereof.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Securities" means the securities in the form of Exhibit A hereto that
are issued under this Indenture as amended or supplemented from time to time.
"Senior Indebtedness" means the principal, premium, if any, and unpaid
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for post-filing interest is allowed in such proceeding), fees, charges,
expenses, reimbursement and indemnification obligations, and all other amounts
payable under or in respect of Indebtedness of the Company, whether any such
Indebtedness exists as of the date of this Indenture or shall hereafter be
created, incurred, assumed or guaranteed, as may be amended from time to time
and any renewals, extensions, refundings, amendments and modifications of any
such indebtedness or obligations or of the instruments creating or evidencing
such indebtedness or obligations or guarantees; provided, however, that Senior
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Indebtedness shall not include (A) Indebtedness owed to a Subsidiary, (B)
Indebtedness of the Company which is expressly pari passu to the Securities or
(C) Subordinated Indebtedness.
"Subordinated Indebtedness" means the principal, premium, if any, and
interest on any Indebtedness of the Company which by its terms is expressly
subordinated in right of payment to the Securities.
"Subsidiary" means a Person the majority of whose voting stock is
owned by the Company or a subsidiary of the Company. Voting stock is Capital
Stock having voting power under ordinary circumstances to elect directors or
similar positions.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa
- 77bbbb) as amended by the Trust Indenture Reform Act of 1990 and as in effect
on the date of this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Trust Officer", when used with respect to the Trustee, means an
officer of the Trustee assigned by the Trustee to administer its corporate trust
matters or any other officer of the Trustee to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"United States" means the United States of America.
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SECTION 1.2. Other Definitions.
Term Defined in Section
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"Common Stock" 10.1
"Company Order" 2.2
"Conversion Agent" 2.3
"conversion price" 10.1
"current market price" 10.4
"DTC" 2.3
"Depository" 2.3
"Event of Default" 6.1
"Interest Payment Date" 2.1
"Legal Holiday" 13.8
"Paying Agent" 2.3
"Payment or Distribution" 11.1
"Registered Accredited
"Investor Securities" 2.1
"Registrar" 2.3
"Rule 144A Securities" 2.1
"Rule 13e-3 Transaction" 10.6
"Security Register" 2.3
"U.S. Government Obligations" 8.1
SECTION 1.3. Incorporation by Reference to Trust Indenture Act.
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Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any
other obligor on the indenture securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rules have
the meanings assigned to them therein.
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SECTION 1.4. Rules of Construction.
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Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with United States generally accepted
accounting principles in effect as of the time as to which such
accounting principles are to be applied;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and in the plural
include the singular.
ARTICLE II.
THE SECURITIES
SECTION 2.1. Form; Dating; Incorporation of Form in Indenture.
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The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $86,250,000,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Sections
2.3, 2.5, 2.6, 2.8, 3.6, 9.5 or 10.1.
The Securities shall be known and designated as the 5.625% Convertible
Subordinated Debentures due 2003 of the Company. Their fixed maturity shall be
May 1, 2003, and they shall bear interest at the rate per annum of 5.625%, from
and including the date of issuance thereof until maturity or earlier redemption,
payable semiannually on May 1 and November 1 commencing November 1, 1998 (each
an "Interest Payment Date"), until the principal thereof is paid or made
available for payment. Subject to Section 2.10, such interest shall be paid to
the Holder in whose name each Security was registered at the close of business
on the Regular Record Date next preceding each Interest Payment Date.
The Securities shall be redeemable as provided in Article 3.
The Securities shall be subordinated in right of payment to Senior
Indebtedness, to the extent provided in Article 11.
The Securities shall be convertible as provided in Article 10.
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A which is incorporated in and made part
of this Indenture. The Securities may have notations, legends or endorsements
required by law, stock exchange rules, agreements to which the Company is
subject, or usage. The Company shall approve the form of the Securities and any
notation, legend or endorsement on them. Each Security shall be dated the date
of its authentication.
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The terms and provisions contained in the Securities shall constitute,
and are hereby expressly made, a part of this Indenture and to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
The Securities (the "Rule 144A Securities") offered and sold to
"qualified institutional buyers" (as such term is defined in Rule 144A under the
Securities Act) will initially be issued in the form of a global Security in the
aggregate principal amount of the Rule 144A Securities, which Security shall be
in substantially the form of Exhibit A hereto, including the paragraphs referred
to in footnotes 1 and 2, and is hereinafter referred to as the "Rule 144A Global
Security." The aggregate principal amount of the Rule 144A Global Security may
from time to time be increased or decreased as hereinafter provided.
All other Securities will be issued in fully registered form in
denominations of U.S. $1,000 and integral multiples thereof (the "Registered
Securities"), which Securities shall be in substantially the form of Exhibit A
hereto, excluding the information called for by footnote 1 thereto but
including, if applicable, the information called for by footnote 2 thereto. The
Registered Securities which are Restricted Securities are hereinafter
collectively referred to as "Registered Accredited Investor Securities."
SECTION 2.2. Execution and Authentication.
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Two Officers shall sign the Securities for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall
nevertheless be valid.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security. Such signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 2.9, for all purposes of this Indenture such Security shall
be deemed never to have been authenticated and delivered hereunder and shall
never be entitled to the benefits of this Indenture.
The Trustee shall authenticate Securities for original issue in the
aggregate principal amount of up to $86,250,000 upon the execution of the
Indenture and a written order or orders of the Company signed by two Officers or
by an Officer and an Assistant Treasurer of the Company (a "Company Order"). The
aggregate principal amount of the Securities outstanding at any time may not
exceed that amount.
The Trustee may appoint an authenticating agent to authenticate
Securities. An authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent.
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An authenticating agent has the same rights as an Agent to deal with the Company
or an Affiliate.
The Securities shall be issuable only in registered form without
coupons. The Securities shall be issuable only in denominations of $1,000
principal amount and any whole multiples thereof.
SECTION 2.3. Registrar and Agents.
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The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("Registrar"), an office
or agency where Securities may be presented for payment ("Paying Agent"), an
office or agency where Securities may be presented for conversion ("Conversion
Agent") and an office or agency where notices and demands to or upon the Company
in respect of the Securities and this Indenture may be served. The Registrar
shall keep a register of the Securities (the "Security Register") and of their
transfer and exchange. The Company may have one or more co-registrars, one or
more additional Paying Agents and one or more additional Conversion Agents. The
Company or any Subsidiary may act as Paying Agent and/or Conversion Agent. The
term "Paying Agent" includes any additional paying agent and the term
"Conversion Agent" includes any additional conversion agent.
The Company may change any Paying Agent, Registrar, Conversion Agent
or Co-Registrar on sixty (60) days' prior written notice to the Trustee. The
Company shall notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar, Paying Agent, Conversion
Agent or agent for service of notices and demands, or fails to give the
foregoing notice, the Trustee shall act as such.
The Company initially appoints the Trustee as Registrar, Paying Agent,
Conversion Agent and agent for service of notices and demands.
With respect to the Securities issuable or issued in whole or in part
in the form of Rule 144A Global Securities, the Company hereby appoints The
Depository Trust Company ("DTC"), at present located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ as the depository for the Rule 144A Global Securities upon
the terms and subject to the conditions herein set forth. (DTC and its
successor or successors as such depository are herein called the "Depository.")
SECTION 2.4. Paying Agent to Hold Money in Trust.
-----------------------------------
At least one Business Day prior to each due date of the principal of,
premium if any, and interest on any Securities, the Company shall deposit with
each Paying Agent a sum sufficient to pay such principal, premium, if any, and
interest so becoming due. The Company shall require each Paying Agent other
than the Trustee to agree in writing that it will hold in trust for the benefit
of Holders of Securities or the Trustee all money held by the Paying Agent for
the payment of principal of, premium if any, or interest on the Securities and
to notify the Trustee of any default by the Company (or any other obligor on the
Securities) in making any such payment. If the Company or a Subsidiary acts as
Paying Agent, it shall on or before each due
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date of the principal of, premium, if any, or interest on any Securities
segregate the money and hold it as a separate trust fund. The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee and
the Trustee may at any time during the continuance of any payment default, upon
written request to a Paying Agent, require such Paying Agent to forthwith pay to
the Trustee all sums so held in trust by such Paying Agent. Upon doing so, the
Paying Agent (if other than the Company or a Subsidiary thereof) shall have no
further liability for the money.
The final installment of principal of and premium, if any, on each
Security shall be payable only upon surrender of such Security at the office or
agency of the Company maintained for such purpose. Payments of principal and
premium, if any, and interest on this Security shall be made at the office or
agency of the Company maintained for such purpose, or, in the case of any such
payments other than the final payment of principal and premium, if any, at the
Company's option, by check mailed to the Person entitled thereto at such
Person's address last appearing on the Security Register maintained by the
Registrar.
SECTION 2.5. Transfer and Exchange.
---------------------
(1) When a Security is presented to the Registrar or a co-registrar
with a request to register the transfer thereof, the Registrar or co-registrar
shall register the transfer as requested, and when Securities are presented to
the Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other authorized denominations, the Registrar
shall make the exchange as requested provided that every Security represented or
surrendered for registration of transfer or exchange shall be duly endorsed and
accompanied by a written instrument of transfer satisfactory to the Company and
the Registrar duly executed by the Holder or such Holder's attorney-in-fact duly
authorized in writing; provided, further, that the Registrar or co-registrar, as
-------- -------
the case may be, shall not register the transfer of such Security if such
Security is a Restricted Security unless the conditions in Section 2.5(2) hereof
shall have been satisfied. The Holder of each Security, including each
Restricted Security, by such Holder's acceptance thereof, agrees to be bound by
the transfer restrictions set forth herein and in the legend on such Security.
(2) Whenever any Restricted Security is presented or surrendered for
registration of transfer or exchange for a Security registered in a name other
than that of the Holder, no registration of transfer or exchange shall be made
unless:
(a) The registered Holder presenting such Restricted
Security for transfer shall have certified to the Trustee in writing
that the registered Holder is transferring the Restricted Security to
the Company;
(b) The Trustee has received written certification from the
registered Holder, and a written opinion of counsel acceptable in form
and substance to the Company and the Trustee, indicating that the
transfer is being made pursuant to an available exemption from, or a
transaction not otherwise subject to, the registration requirements of
the Securities Act; or
-9-
(c) In the case of Rule 144A Securities, the registered
Holder presenting such Restricted Security for transfer shall have
certified to the Trustee in writing that such registered Holder is
transferring such Restricted Securities to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act) in
compliance with the exemption from registration as provided by Rule
144A under the Securities Act.
For purposes of this Section 2.5(2), such certification to the Trustee
in writing shall be in the form of the Transfer Notice set forth on the reverse
of such Security.
(3) Each certificate evidencing Restricted Securities shall bear a
legend in substantially the following form:
THIS SECURITY HAS BEEN ACQUIRED BY THE HOLDER FOR THE PURPOSE OF
INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY
DISTRIBUTION. THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE
HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE
COMPANY THAT: (I) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT OFFER,
SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO ASSISTED LIVING
CONCEPTS, INC., (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) IN THE CASE OF A
HOLDER WHO IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT), FOR SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, OR (D) IN ACCORDANCE WITH RULE 144 UNDER
THE SECURITIES ACT OR PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (AND CONFIRMED IN AN
OPINION OF COUNSEL ACCEPTABLE IN FORM AND SUBSTANCE TO THE ISSUER OF
THIS
-10-
SECURITY IF THE ISSUER SO REQUESTS) AND, IN EACH CASE, IN ACCORDANCE
WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION; AND (III) IT WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
SECURITY FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE.
Subject to compliance with Section 2.5(6) hereof, the above legend may be
removed from a certificate when it no longer evidences a Security which is a
Restricted Security.
(4) To permit registrations of transfers and exchanges, the Company
shall issue and the Trustee or any authenticating agent shall authenticate
Securities at the Registrar's or co-registrar's request. No service charge
shall be made for any registration of transfer or exchange of Securities but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto, but this provision
shall not apply to any exchange pursuant to Section 2.8, 3.6, 9.5 or 10.2 not
involving any transfer.
(5) The Registrar shall not be required (i) to issue, register the
transfer of or exchange Securities during a period beginning at the opening of
business 15 days before the day of any selection of Securities for redemption
under Section 3.2 and ending at the close of business on the day of selection,
or (ii) to register the transfer or exchange of any Security so selected for
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part.
(6) Any Restricted Security as to which the restrictions on transfer
set forth in Section 2.5(2) hereof shall have expired in accordance with their
terms or shall have terminated may, upon surrender of such Restricted Security
for exchange to the Trustee in accordance with the provisions of this Section
2.5(6) (accompanied, in the event that such restrictions on transfer have
terminated by reason of a transfer pursuant to Rule 144 (or any successor
provision), by an opinion of counsel reasonably acceptable to the Company,
addressed to the Company and the Trustee and in form and scope reasonably
satisfactory to the Company, to the effect that the transfer of such Restricted
Security has been made in compliance with Rule 144 (or such successor
provision)), be exchanged for a new Security, of like tenor and aggregate
principal amount, which shall not bear the restrictive legend required by
Section 2.5(3) hereof. The Company shall promptly inform the Trustee in writing
of the effective date of any registration statement registering the Securities
under the Securities Act.
(7) If the Security so surrendered for exchange is a Registered
Accredited Investor Security and the Holder thereof requests in writing that
such Registered Accredited Investor Security be exchanged for an interest in the
Rule 144A Global Security, such Registered Accredited Investor Security will be
exchangeable into an equal aggregate principal amount of beneficial interests in
the Rule 144A Global Security; provided, however, that, if such Registered
-------- -------
Accredited Investor Security is a Restricted Security, such exchange may only be
made if such Holder certifies to the Trustee in writing that such Holder is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) by completing the Transfer Notice on the reverse
-11-
of such Security. Upon any exchange as provided in the immediately preceding
sentence, the Trustee shall cancel such Registered Accredited Investor Security
and cause, or direct any custodian for the Rule 144A Global Security to cause,
in accordance with the standing instructions and procedures existing between the
Depository and any such custodian, the aggregate principal amount of Securities
represented by the Rule 144A Global Security to be increased accordingly. If no
Rule 144A Global Securities are then outstanding, the Company shall issue and
the Trustee shall authenticate a new Rule 144A Global Security in the
appropriate principal amount.
Any person having a beneficial interest in a Rule 144A Global Security
may upon request exchange such beneficial interest for a Registered Accredited
Investor Security only as provided in this paragraph. Upon receipt by the
Company and the Trustee of (i) written instructions (or such other form of
instructions as is customary) on behalf of any person having a beneficial
interest in a Rule 144A Global Security and (ii) in the case of a Restricted
Security, the following additional information and documents (all of which may
be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
person designated as being the beneficial owner, a
certification to that effect from such person; or
(B) if such beneficial interest is being transferred to a person
other than the person designated as being the beneficial
owner, the provisions of Section 2.5(2)(b) hereof have been
satisfied;
in which case the Trustee or any custodian for the Rule 144A Global Security, at
the direction of the Trustee, shall, in accordance with the standing
instructions and procedures existing between the Depository and such custodian,
cause the aggregate principal amount of the Rule 144A Global Security to be
reduced accordingly and, following such reduction, the Company shall execute and
the Trustee shall authenticate and deliver to the transferee a Registered
Security in the appropriate principal amount and, if such Security is a
Restricted Security, including the appropriate legend. Securities issued in
exchange for a beneficial interest in the Rule 144A Global Security pursuant to
this paragraph shall be registered in such names and in such authorized
denominations as shall be instructed to the Trustee by the Depository. The
Trustee shall deliver such Securities to the persons in whose names such
Securities are so registered.
(8) Notwithstanding any other provision of this Agreement (other than
the provisions set forth in Section 2.5(2)(c) hereof), the Rule 144A Global
Security may not be transferred as a whole except by the Depository to a nominee
of the Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by Depository or any such nominee to a successor
Depository or a nominee of such successor Depository.
(9) If at any time either (i) the Depository for the Rule 144A Global
Security notifies the Company that the Depository is unwilling or unable to
continue as Depository for the Rule 144A Global Security and a successor
Depository for the Rule 144A Global Security is not appointed by the Company
within 90 days after delivery of such notice, or (ii) the Company, at its sole
discretion, notifies the Trustee in writing that it elects to cause the issuance
of Registered
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Securities under this Indenture, then the Company shall execute, and the Trustee
shall authenticate and deliver, Registered Securities in an aggregate principal
amount equal to the principal amount of the Rule 144A Global Security in
exchange for such Rule 144A Global Security.
(10) At such time as all beneficial interests in the Rule 144A Global
Security have either been exchanged for Registered Securities, redeemed,
repurchased or canceled, the Rule 144A Global Security shall be returned to or
retained and canceled by the Trustee. At any time prior to such cancellation,
if any beneficial interest in the Rule 144A Global Security is exchanged for
Registered Securities, redeemed, repurchased or canceled, the principal amount
of Securities represented by the Rule 144A Global Security shall be reduced
accordingly and an endorsement shall be made on the Rule 144A Global Security,
by the Trustee or any custodian therefor, at the direction of the Trustee, to
reflect such reduction.
(11) The transfer and exchange of the Rule 144A Global Security or
beneficial interests therein shall be effected through the Depository, in
accordance with this Indenture and the procedures of the Depository therefor,
which shall include restrictions on transfer comparable to those set forth
herein to the extent required by the Securities Act.
(12) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Rule 144A Global Security, a member of, or a participant
in the Depository or other Person with respect to any ownership interest in the
Securities, with respect to the accuracy of the records of the Depository or its
nominee or of any participant or member thereof or with respect to the delivery
to any participant, member, beneficial owner or other Person (other than the
Depository) of any notice (including any notice of redemption) or the payment of
any amount, under or with respect to such Securities. All notices and
communications to be given to the Holders and all payments to be made to Holders
under the Securities shall be given or made only to the registered Holders
(which shall be the Depository or its nominee in the case of a Rule ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇). The rights of beneficial owners in any Rule 144A Global Security in
global form shall be exercised only through the Depository subject to the
applicable rules and procedures of the Depository. The Trustee may rely and
shall be fully protected and indemnified pursuant to Section 7.7 in relying upon
information furnished by the Depository with respect to any beneficial owners,
its members and participants.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including without limitation any transfers between or among
Depository participants, members or beneficial owners in any Global Security)
other than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by, the terms of this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.
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SECTION 2.6. Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security presents evidence to the satisfaction of the Company and the
Trustee that the Security has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a new Security in
replacement of and substitution for such Security if the requirements of the
Trustee and the Company are met. An indemnity bond may be required by the
Company or the Trustee that is sufficient in the judgment of the Company to
protect the Company and is sufficient in the judgment of the Trustee to protect
the Trustee or any Agent from any loss which it may suffer if a Security is
replaced pursuant to this Section 2.6. The Company and the Trustee may charge
for its expense in replacing a Security.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its sole discretion
may, instead of issuing a new Security, pay or authorize the payment or convert
or authorize the conversion of such Security.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
SECTION 2.7. Outstanding Securities.
----------------------
Securities outstanding at any time are all Securities theretofore
authenticated and delivered under this Indenture except: (a) Securities
theretofore canceled by the Trustee or delivered to the Trustee for
cancellation; and (b) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this Indenture,
other than any Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid obligations of the
Issuer; provided, that in determining whether the Securityholders of the
--------
requisite principal amount of outstanding Securities are present at a meeting of
Securityholders for quorum purposes or have voted or taken or concurred in any
action under this Indenture, including the making of any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such determination as to the presence of a quorum or upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which a Trust Officer of the Trustee actually knows to be so owned
shall be disregarded.
If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding until the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
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If the Paying Agent (other than the Company or a Subsidiary) holds on
a Redemption Date or maturity date money deposited with it by or on behalf of
the Company sufficient to pay the principal of, premium, if any, and accrued
interest on Securities payable on that date, then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue.
A Security does not cease to be outstanding because the Company or an
Affiliate holds the Security.
SECTION 2.8. Temporary Securities.
--------------------
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have non-material variations that the Company considers appropriate for
temporary Securities. Without unreasonable delay, the Company shall prepare and
the Trustee shall authenticate definitive Securities in exchange for temporary
Securities upon written order of the Company signed by two Officers. Until so
exchanged, temporary Securities represent the same rights as definitive
Securities. Upon request of the Trustee, the Company shall provide a
certificate to the effect that the temporary Securities meet the requirements of
the second sentence of this Section 2.8.
SECTION 2.9. Cancellation.
------------
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, the Paying Agent and the Conversion Agent shall
forward to the Trustee any Securities surrendered to them for transfer,
exchange, payment or conversion. The Trustee shall cancel all Securities
surrendered for transfer, exchange, payment or conversion and destroy canceled
Securities and deliver a certificate of such destruction to the Company unless
the Company directs the Trustee in writing prior to such destruction to deliver
canceled Securities to the Company. Subject to Sections 2.6, 3.6 and the second
paragraph of Section 10.2, the Company may not issue Securities to replace
Securities that it has previously paid or delivered to the Trustee for
cancellation or that a Securityholder has converted pursuant to Article 10
hereof.
SECTION 2.10. Defaulted Interest.
------------------
If the Company defaults in a payment of interest on Securities when
the same becomes due and payable and such default continues for a period of 30
days, it shall pay the defaulted interest to the Persons who are Holders of the
Securities on a subsequent special record date. After the deposit by the Company
with the Trustee of money sufficient to pay such defaulted interest, the Trustee
shall fix the special record date and payment date. Each such special record
date shall be not less than 10 days prior to such payment date. Each such
payment date shall be not more than 60 days after the deposit by the Company of
money to pay the defaulted interest. At least 15 days before the special record
date, the Company shall mail to each Holder of a Security, with a copy to the
Trustee, a notice that states the special record date, the payment date, and the
amount of defaulted interest to be paid.
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SECTION 2.11. Securityholder Lists.
--------------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders, a copy of which list shall be provided to the Company upon its
written request. If the Trustee is not the Registrar, the Registrar shall
furnish to the Trustee at least seven Business Days prior to each semiannual
interest payment date and at such other times as the Trustee may reasonably
request in writing a list in such form and as of such date as the Trustee may
require of the names and addresses of Securityholders upon which the Trustee may
conclusively rely. The Trustee may destroy any such list upon receipt of a
replacement list. The Paying Agent will solicit from each Securityholder a
certification of social security number or taxpayer identification number in
accordance with its customary practice and as required by law, unless the Paying
Agent is in possession of such certification. Each Paying Agent is authorized
to impose back-up withholding with respect to payments to be made to
Securityholders to the extent required by law.
SECTION 2.12. Persons Deemed Owners.
---------------------
Prior to registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name such
Security is registered as the owner of such Security and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
SECTION 2.13. CUSIP Number.
------------
The Company shall use a "CUSIP" number when issuing the Rule 144A
Securities, but shall not use a "CUSIP" number when issuing Registered
Accredited Investor Securities. The Trustee may use the CUSIP number in notices
of redemption or exchange as a convenience to Securityholders; provided that any
such notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the Securities and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption or exchange shall not be affected by any
defect in or omission of such numbers.
ARTICLE III.
REDEMPTION
SECTION 3.1. Notices to Trustee.
------------------
If the Company wants to redeem the Securities pursuant to the optional
redemption provisions of Paragraph 5 of the Securities, it shall notify the
Trustee of the Redemption Date and the principal amount of Securities to be
redeemed. The notice shall be given to the Trustee in writing at least 60 days
prior to the Redemption Date (unless a shorter notice period shall be
satisfactory to the Trustee in its discretion) and accompanied by an Officers'
Certificate stating that the redemption complies with the provisions of this
Indenture.
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Redemptions provided for in Paragraph 5 of the Securities shall be effected as
provided in said Paragraph 5 or as otherwise agreed upon by the Company and the
Trustee.
SECTION 3.2. Selection of Securities to be Redeemed.
--------------------------------------
If less than all the Securities are to be redeemed, the Trustee shall
select the Securities to be redeemed pro rata or by lot or by any other method
that the Trustee considers fair and appropriate under the circumstances. The
Trustee shall promptly notify the Company of the Securities to be so called for
redemption. The Trustee shall make the selection from Securities outstanding
and not previously called for redemption. The Trustee may select for redemption
portions of the principal of Securities that have denominations larger than
$1,000 principal amount. Securities and portions of them it selects shall be in
principal amounts of $1,000 or multiples thereof. Provisions of this Indenture
that apply to Securities called for redemption also apply to portions of
Securities called for redemption. The Trustee's selection of Securities for
redemption by any method authorized by this Section 3.2 shall be conclusively
deemed reasonable.
Upon any redemption of less than all the Securities, the Company and
the Trustee, for the purpose of selecting Securities to be redeemed, may treat
as outstanding any Securities surrendered for conversion during the period of 15
days next preceding the selection of the Securities and need not treat as
outstanding any Security authenticated and delivered during such period in
exchange for the unconverted portion of any Security converted in part during
such period.
SECTION 3.3. Notice of Redemption by the Company.
------------------------------------
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first-class mail to each Holder
of Securities to be redeemed, with a copy to the Trustee.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the Conversion Price;
(4) the name and address of the Paying Agent and the Conversion
Agent;
(5) that Securities called for redemption may be converted at any
time before the close of business on the Redemption Date and, if not
converted prior to the close of business on the Redemption Date, the
right of conversion will be lost;
(6) that Holders who want to convert Securities must satisfy the
requirements of Paragraph 7 thereof;
-17-
(7) that Securities called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price;
(8) that interest on Securities called for redemption ceases to
accrue on and after the Redemption Date; and
(9) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
Redemption Date, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion thereof
will be issued.
At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. If a CUSIP
number is listed in such notice or printed on the Security, the notice shall
state that no representation is made as to the correctness or accuracy of such
CUSIP number.
SECTION 3.1. 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 3.2. Deposit of Redemption Price.
---------------------------
On or before the Redemption Date, the Company shall deposit with the
Paying Agent (or if the Company or a Subsidiary is the Paying Agent, shall
segregate and hold in trust or cause such Subsidiary to segregate and hold in
trust) in immediately available funds money sufficient to pay the Redemption
Price of and accrued interest on all Securities to be redeemed on that date.
The Trustee or the Paying Agent shall return to the Company any money so
deposited not required for that purpose.
SECTION 3.3. Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is redeemed in part, the Trustee
shall authenticate for the Holder, at the expense of the Company, a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE IV.
COVENANTS
SECTION 4.1. Payment of the Securities.
-------------------------
The Company shall pay the principal of, premium, if any, and interest
on the Securities on the dates and in the manner provided in the Securities and
this Indenture. An installment of principal, premium, if any, or interest shall
be considered paid on the date it is due
-18-
if the Trustee or Paying Agent (if other than the Company or a Subsidiary) holds
on that date money designated for and sufficient to pay the installment. The
Company shall pay interest on overdue principal and premium, if any, at the rate
borne by the Security; it shall pay interest, including post-petition interest
in the event of a proceeding under any Bankruptcy Law, on overdue installments
of interest at the same rate to the extent lawful.
SECTION 4.2. Commission Reports.
------------------
The Company shall file with the Trustee, promptly after filing with
the Commission, copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) which the Company is required
to file with the Commission pursuant to 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 stockholders (containing audited financial statements) and
any other financial reports furnished by it to stockholders to be mailed to the
Holders at their addresses appearing in the Security Register maintained by the
Registrar.
For so long as any of the Rule 144A Securities remain outstanding and
are "restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, the Company covenants and agrees that it shall, during any
period in which it is not subject to Section 13 or 15(d) of the Exchange Act,
make available to any holder or beneficial holder of securities which continue
to be restricted securities in connection with any sale thereof to any
prospective purchase of such securities from such holder or beneficial holder,
the information specified in, and meeting the requirements of the Rule
144A(d)(4) under the Securities Act.
SECTION 4.3. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company expressly waives (to the extent that it may lawfully do
so) any stay or extension law or any usury law or other law that would prohibit
or forgive the Company from paying all or any portion of the principal of,
premium, if any, or interest on Securities as contemplated herein, wherever
enacted, now or at any time hereafter in force, or that may affect the covenants
or the performance of this Indenture, and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 4.4. Notice of Default.
-----------------
The Company will, so long as any Securities are outstanding, deliver
to the Trustee, within 10 days of becoming aware of any Default or Event of
Default in the performance of any covenant, agreement or condition in this
Indenture, an Officers' Certificate
-19-
specifying such Default or Event of Default, the period of existence thereof and
what action the Company is taking or proposes to take with respect thereto.
SECTION 4.5. Compliance Certificates.
-----------------------
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company (which as of the date hereof is December 31),
a written statement signed by the principal executive officer, principal
financial officer or principal accounting officer of the Company, stating, as to
each signer thereof:
(1) that a review of the activities of the Company during such
year and of performance under this Indenture has been made under his
or her supervision;
(2) that to the best of his or her knowledge, based on such
review, the Company has kept, observed, performed and fulfilled in all
material respects each and every condition and covenant contained in
this Indenture throughout such year, or, if there has been a default
in the fulfillment of any such condition or covenant, specifying each
such default known to him or her and the nature and status thereof;
and
(3) the conversion price (as described in Article 10 of this
Indenture) then in effect.
The Company will give the Trustee written notice of a change in the
fiscal year of the Company, within a reasonable time after such change is
effected.
SECTION 4.6. Limitation on Dividends and Other Distributions.
-----------------------------------------------
The Company will not declare or pay any dividends or make any
distribution to holders of its Capital Stock (other than dividends or
distributions payable in Capital Stock of the Company), or purchase, redeem or
otherwise acquire or retire for value any of its Capital Stock or permit any
Subsidiary to purchase, redeem or otherwise acquire or retire for value any of
the Company's Capital Stock if at the time of any of the aforementioned actions
an Event of Default has occurred and is continuing or would exist immediately
after giving effect to such action.
Notwithstanding the foregoing, the provisions of this Section 4.6 will
not prevent (i) the payment of any dividend within 60 days after the date of
declaration when the payment would have complied with the foregoing provisions
on the date of declaration; or (ii) the retirement of any shares of the
Company's Capital Stock by exchange for, or out of the proceeds of the
substantially concurrent sale (other than to a Subsidiary) of, other shares of
its Capital Stock.
ARTICLE V.
SUCCESSOR CORPORATION
SECTION 5.1. When Company May Merge, etc.
----------------------------
-20-
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 which assumes by
supplemental indenture, in form satisfactory to the Trustee, all the obligations
of the Company under the Securities and this Indenture or is a reorganization
within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1986,
as amended; (ii) such corporation 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 5.2. Successor Corporation or Trust Substituted.
------------------------------------------
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.1,
the successor corporation formed by such consolidation or into which the Company
is merged or to which such transfer is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor corporation has been named as the
Company herein; the Company shall thereupon be relieved of any further
obligation or liability hereunder or upon the Securities; and the Company as the
predecessor corporation may thereupon or at any time thereafter be dissolved,
wound up or liquidated. Such successor corporation thereupon may cause to be
signed, and may issue either in its own name or in the name of Assisted Living
Concepts, Inc., any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee; and, upon the order of such successor corporation, instead of the
Company, and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered by the Officers
to the Trustee for authentication, and any Securities which such successor
corporation thereafter shall cause to be signed and delivered to the Trustee for
that purpose. All the Securities so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Securities theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
such Securities had been issued at the date of the execution hereof.
ARTICLE VI.
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default.
-----------------
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An "Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article 11 or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order or any court or any order, rule or regulation of any
administrative or governmental body):
(1) the Company defaults in the payment of interest on any
Security when the same becomes due and payable and such default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of or
premium, if any, on any Security when the same becomes due and payable
at maturity, upon redemption or otherwise, and such default continues
for five Business Days;
(3) the Company fails to comply with any of its other covenants,
agreements or conditions in the Securities or this Indenture and such
default continues for the period and after the notice specified in the
last paragraph of this Section 6.1;
(4) there shall be a default under any bond, debenture, note or
other evidence of Indebtedness or under any mortgage, indenture or
other instrument under which there may be issued or by which there may
be secured or evidenced any Indebtedness of the Company or any
Subsidiary, whether any such Indebtedness now exists or shall
hereafter be created, if (a) either (i) such event of default results
from the failure to pay any such Indebtedness at maturity or (ii) as a
result of such event of default, the maturity of such Indebtedness has
been accelerated prior to its stated maturity and such acceleration
shall not be rescinded or annulled or the accelerated amount paid
within ten days after notice to the Company of such acceleration, or
such Indebtedness having been discharged and (b) the principal amount
of such Indebtedness, together with the principal amount of any other
such Indebtedness in default for failure to pay principal or interest
thereon, or the maturity of which has been so accelerated, aggregates
$5,000,000 or more;
(5) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(a) commences a voluntary case or proceeding,
(b) consents to the entry of an order for relief against it
in an involuntary case or proceeding,
(c) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or
-22-
(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:
(a) for relief against the Company in an involuntary case or
proceeding,
(b) appointing a Custodian of the Company or for all or
substantially all of its property, or
(c) ordering the liquidation of the Company,
and the order or decree remains unstayed and in effect for 90 days.
A default under clause (3) is not an Event of Default until the
Trustee notifies the Company, or the Holders of a majority in principal amount
of the Securities then outstanding notify the Company and the Trustee in
writing, of the default and the Company does not cure the default within 60 days
after receipt of such notice. The notice must specify the default, demand that
it be remedied and state that the notice is a "Notice of Default." The Trustee
shall give such notice to the Company only if directed to do so in writing by
the Holders of a majority in principal amount of the Securities then
outstanding. Such notice by the Trustee shall not be deemed to be a
certification by the Trustee as to whether an Event of Default has occurred.
SECTION 6.2. Acceleration.
------------
If an Event of Default (other than an Event of Default specified in
Section 6.1(5) or 6.1(6) occurs and is continuing, the Trustee by notice to the
Company, or the Holders of a majority in principal amount of the Securities then
outstanding by notice to the Company and the Trustee, may declare to be due and
payable immediately the principal amount of the Securities plus accrued interest
to the date of acceleration. Upon any such declaration, such amount shall be
due and payable immediately, and upon payment of such amount all of the
Company's obligations with respect to the Securities, other than obligations
under Section 7.7, shall terminate. If an Event of Default specified in Section
6.1(5) or 6.1(6) occurs, all unpaid principal and accrued interest on the
Securities then outstanding shall become and be immediately due and payable
without any declaration or the act on the part of the Trustee or any Holder.
The Holders of a majority in principal amount of the outstanding Securities by
written notice to the Trustee may rescind an acceleration and its consequences
if (x) all existing Events of Default, other than the non-payment of the
principal of the Securities, which have become due solely by such declaration of
acceleration, have been cured or waived, (y) to the extent the payment of such
interest is lawful, interest on overdue installments of interest and overdue
principal and premium, if any, which has become due otherwise than by such
declaration of acceleration, has been paid, and (z) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction. The
Trustee may rely upon such notice of rescission without any independent
investigation as to the satisfaction of conditions (x), (y) and (z).
-23-
SECTION 6.3. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of and premium, if any, or interest on the Securities or to
enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.4. Waiver of Defaults and Events of Default.
----------------------------------------
Subject to Section 9.2, the Holders of a majority in principal amount
of the Securities then outstanding, on behalf of all the Securityholders, by
written notice to the Trustee may waive a Default or Event of Default with
respect to the Securities and its consequences. When a Default or Event of
Default is waived, it is considered to be cured and ceases to exist; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
SECTION 6.5. Control by Majority.
-------------------
The Holders of a majority in principal amount of the Securities then
outstanding may direct in writing the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on it. The Trustee, however, may refuse to follow any direction
that conflicts with law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of other Securityholders, it being understood
that (subject to Section 7.1) the Trustee shall have no duty to ascertain
whether or not such actions or forbearances are unduly prejudicial to such
Securityholders, or that may involve the Trustee in personal liability or for
which the Trustee does not have indemnification reasonably satisfactory to the
Trustee pursuant to Sections 7.1(5) and 7.2(6); provided that, the Trustee may
--------
take any other action deemed proper by the Trustee which is not inconsistent
with such direction.
SECTION 6.6. Rights of Holders to Receive Payment.
------------------------------------
Subject to Article 11, notwithstanding any other provision of this
Indenture, the right of any Securityholder to receive payment of principal of,
premium, if any, and interest on the Security, on or after the respective due
dates expressed in the Security, or to bring suit for the enforcement of any
such payment on or after such respective dates, is absolute and unconditional
and shall not be impaired or affected without the consent of the Holder.
-24-
Notwithstanding any other provision of this Indenture, the right of
any Holder of any Security to convert such Security or to bring suit for the
enforcement of such right shall not be impaired or affected without the written
consent of the Holder.
SECTION 6.7. Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of interest or principal, and
premium, if any, specified in Section 6.1(1) or (2) occurs and is continuing,
the Trustee may recover judgment in its own name and as trustee of an express
trust against the Company or any other obligor on the Securities for the whole
amount of unpaid principal, and premium, if any, and accrued interest remaining
unpaid on the Securities, together with interest on overdue principal, and
premium, if any, and to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate borne by
the Securities and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.8. Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of Securities allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Securities), its creditors or its
property and shall be entitled and empowered to collect and receive any monies
or other property payable or deliverable on any such claims and to distribute
the same. Any Custodian in any such judicial proceeding is hereby authorized by
each Securityholder to make such payments to the Trustee, and in the event that
the Trustee shall consent to the making of such payments directly to the Holders
of Securities, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan or reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceedings.
SECTION 6.9. Priorities.
----------
If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:
FIRST: to the Trustee amounts due under Section 7.7;
SECOND: to holders of any Senior Indebtedness as required by Article
11;
-25-
THIRD: to the Holders of the Securities for amounts due and unpaid on
the Securities for principal, premium, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts
due and payable on the Securities for principal, premium, if any, and
interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders of Securities pursuant to this Section 6.9.
SECTION 6.10. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorney's fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.10 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.6 or a suit by Holders of more than 10% in principal
amount of the Securities then outstanding or a suit by any holder of Senior
Indebtedness.
SECTION 6.11. Limitation on Suits.
-------------------
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that
an Event of Default is continuing;
(2) the Holders of at least 25% in aggregate principal amount of
the Securities at the time outstanding make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense
satisfactory to the Trustee;
(4) the Trustee does not comply with the request within 60 days
after receipt of notice, the request and the offer of security or
indemnity; and
(5) the Holders of a majority in aggregate principal amount of
the Securities at the time outstanding do not give the Trustee a
direction inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
any other Securityholder or to obtain a preference or priority over any other
Securityholder.
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ARTICLE VII.
TRUSTEE
SECTION 7.1. Duties of Trustee.
-----------------
(1) The duties and responsibilities of the Trustee shall be as
provided by the TIA. If an Event of Default has occurred and is continuing, the
Trustee shall exercise its rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent Person
would exercise or use under the circumstances in the conduct of his own affairs.
(2) Except during the continuance of an Event of Default and after the
curing or waiving of all such Events of Default which may have occurred:
(a) The Trustee need perform only those duties that are
specifically set forth in this Indenture, and the Trustee shall not be
liable except for the performance of such duties as are specifically
set forth in this Indenture, and no others, and no implied covenants
or obligation shall be read into this Indenture against the Trustee.
(b) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any statements,
certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture. The Trustee, however, shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(3) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(a) This paragraph does not limit the effect of paragraph (2) of
this Section 7.1.
(b) The Trustee shall not be liable for any error in judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(c) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it
-27-
shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(4) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (1), (2) and (3) of this Section 7.1 and
subject to Sections 315 and 316 of the TIA.
(5) Subject to subsection (3), the Trustee may refuse to perform any
duty or exercise any right or power unless, subject to the provisions of the
TIA, it receives indemnity satisfactory to it against any loss, liability,
expense or fee.
(6) The Trustee shall not be liable for interest on any money received
by it. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
SECTION 7.2. Rights of Trustee.
-----------------
(1) The Trustee may rely on and shall be protected in acting or
refraining from acting upon any document believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both, which shall conform to
Section 13.5. 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 of its choice and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by the Trustee hereunder in good faith and reliance thereon.
(6) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders of Securities pursuant to this Indenture, unless such Holders
shall have offered to the Trustee security or indemnity reasonably satisfactory
to the Trustee against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
SECTION 7.3. Individual Rights of Trustee.
----------------------------
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The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. The Trustee, however, is subject to Sections
7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in the Indenture or any statement in the Securities
other than its certificate of authentication or in any document used in the sale
of the Securities other than any statement in writing provided by the Trustee
expressly for use in such document.
SECTION 7.5. Notice of Defaults.
------------------
If a Default or Event of Default occurs and is continuing and if it is
actually known to the Trustee, the Trustee shall mail to each Holder of
Securities notice of the Default or Event of Default within 90 days after it
becomes known to the Trustee. Except in the case of a default in payment of
principal of, premium, if any, or interest on any Security, the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in good
faith determines that withholding the notice is in the interests of Holders of
Securities. Notwithstanding anything to the contrary expressed in this
Indenture, the Trustee shall not be deemed to have knowledge of any Event of
Default hereunder unless and until a Trust Officer shall have actual knowledge
thereof, or shall have received written notice thereof from the Company at its
principal Corporate Trust Office as specified in Section 13.1. The Trustee
shall not be deemed to have actual knowledge of an Event of Default hereunder,
except in the case of an Event of Default under Sections 6.1(1) or 6.1(2)
(provided that the Trustee is the Paying Agent), until a Trust Officer receives
written notice thereof from the Company or any Securityholder that such a
Default or an Event of Default has occurred.
SECTION 7.6. Reports by Trustee to Holders.
-----------------------------
Within 60 days after each April 15 beginning with April 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 April 15 of such year that complies with TIA (S)
313(a). The Trustee also shall comply with TIA (S) 313(b), (S) 313(c) and (S)
313(d).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the Securities and Exchange Commission and each securities
exchange, if any, on which the Securities are listed. The Company agrees to
notify the Trustee in writing whenever the Securities become listed or delisted
on or from any securities exchange.
SECTION 7.7. Compensation and Indemnity
--------------------------
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The Company shall pay to the Trustee from time to time, and the
Trustee shall be entitled to, reasonable compensation for its services (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust). The Company shall reimburse the
Trustee upon request for all reasonable disbursements, expenses and advances
incurred or made by it. Such expenses may include, but shall not be limited to,
the reasonable compensation, disbursements and expenses of the Trustee's agents,
consultants and counsel.
The Company shall indemnify the Trustee and its officers, directors,
stockholders, agents and employees for, and hold them harmless against, any loss
or liability incurred by it in connection with the acceptance or administration
of this trust, including the costs and expenses of defending themselves against
any claim or liability in connection with the Securities or the exercise or
performance of any of the Trustee's powers or duties hereunder. The Trustee
shall notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity; provided, however, that any failure to so notify
-------- -------
the Company shall not relieve the Company of its indemnity obligations hereunder
except to the extent the Company's ability to defend such claim shall be
prejudiced thereby. The Company may elect by written notice to the Trustee to
assume the defense of any such claim at the Company's expense with counsel
reasonably satisfactory to the Trustee; provided, however, that if the Trustee
is advised by counsel that the interests of the Company and the Trustee
conflict, the Trustee shall have the right to retain separate counsel.
The Company need not reimburse the Trustee for any expense or
indemnify it against any loss or liability incurred by it through the Trustee's
negligence or willful misconduct. The Company shall not be liable for any
settlement of any claim or action effected without the Company's consent, which
consent shall not be unreasonably withheld. To secure the Company's payment
obligations in this Section, the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1 occurs, the expenses and the compensation for
the services are intended to constitute expenses of administration under any
applicable bankruptcy or comparable law. The provisions of this Section shall
survive termination of this Indenture.
SECTION 7.8. Replacement of Trustee.
----------------------
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.8.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Securities then outstanding may remove the
Trustee by so notifying the Trustee and may appoint a successor Trustee with the
Company's written consent. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
-30-
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.
If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in principal amount of the Securities then outstanding may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall, upon payment of its fees and expenses, transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7, the resignation or removal of the retiring Trustee
shall become effective, and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. Notwithstanding the
replacement of the Trustee pursuant to this Section 7.8, the Company's
obligations under Section 7.7 shall continue for the benefit of the retiring
Trustee with respect to expenses and liabilities incurred by it and compensation
earned by it prior to such replacement or otherwise or the Indenture. A
successor Trustee shall mail notice of its succession to each Holder of
Securities.
SECTION 7.9. Successor Trustee by Merger, etc.
---------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (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.
-------------------------------------------------
-31-
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 VIII.
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.1. Satisfaction, Discharge and Defeasance of the
---------------------------------------------
Securities.
The Company shall be deemed to have paid and discharged the entire
indebtedness on the Securities after the date of the deposit referred to in
paragraph (1) below, the provisions of this Indenture shall no longer be in
effect in respect of the Securities, and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of such indebtedness; provided that the following conditions shall
--------
have been satisfied:
(1) the Company has deposited or caused to be deposited with the
Trustee irrevocably as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of
the Securities, with reference to this Section 8.1, (a) money or (b)
U.S. Government Obligations or (c) a combination thereof, sufficient,
in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge the entire indebtedness on all the
Securities for principal, premium, if any, and interest, if any, to
the maturity date of the Securities as such principal, premium, if
any, or interest becomes due and payable in accordance with the terms
of this Indenture and the Securities;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company in connection with all of the
Securities, including all fees and expenses of the Trustee; and
(3) the Company has delivered to the Trustee an Opinion of
Counsel and an Officers' Certificate, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of the entire Indebtedness on the Securities and the
discharge of this Indenture and the termination of the Company's
obligations hereunder have been complied with.
"U.S. Government Obligations" means direct, non-callable obligations
of, or non-callable obligations guaranteed by, the United States of America for
the timely payment of which obligation or guarantee the full faith and credit of
the United States of America is pledged.
SECTION 8.2. Satisfaction and Discharge of Indenture.
---------------------------------------
In addition to its rights under Section 8.1, the Company may terminate
all of its obligations under this Indenture when:
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(1) all of the Securities theretofore authenticated and delivered
(other than (a) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 2.7 hereof
and (b) Securities for whose payment money has theretofore been
deposited with the Trustee or the Paying Agent in trust or segregated
and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust, as provided in Section 2.4 and Section
8.6 hereof) have been delivered to the Trustee for cancellation
(including any cancellation resulting from the conversion of such
Securities pursuant to Paragraph 7 of the Securities); and
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company in connection with the outstanding
Securities, including all fees and expenses of the Trustee.
SECTION 8.3. Survival of Certain Obligations.
-------------------------------
Notwithstanding the satisfaction and discharge of this Indenture
pursuant to Section 8.1, the respective obligations of the Company specified in
Sections 2.3, 2.4, 2.5, 2.6, 2.11, 4.1, 7.7, 8.5, 8.6, 8.7 and in Article 10
shall survive until the Securities are no longer outstanding, and after the
Securities are no longer outstanding, or upon compliance with Section 8.2, only
the obligations of the Company in such Sections 7.7 and 8.6 shall survive.
Nothing contained in this Article 8 shall abrogate any of the obligations or
duties of the Trustee under this Indenture.
SECTION 8.4. Application of Trust Money.
--------------------------
(1) Subject to the provisions of Section 8.6, all money and U.S.
Government Obligations deposited with the Trustee for the Securities pursuant to
Section 8.1 or Section 8.2, and all money received by the Trustee in respect of
U.S. Government Obligations deposited with the Trustee for the Securities
pursuant to Section 8.1 or Section 8.2 shall be held in trust and reinvested by
the Trustee in (a) U.S. Government Obligations or (b) beneficial interests in
one or more mutual funds which invest solely in U.S. Government Obligations and
which are rated in the highest applicable rating category by a nationally-
recognized statistical rating organization in accordance with the Company's
written instructions and applied by the Trustee in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company or any Subsidiary acting as
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal, premium, if any, and interest, if any, on the Securities; but
such money need not be segregated from other funds except to the extent required
by law. Money and U.S. Government Obligations so held in trust are not subject
to the subordination provisions of Article 11.
(2) The Trustee shall deliver or pay to the Company from time to time
upon the Company's written request any U.S. Government Obligations or money held
by it as provided in Section 8.1 or Section 8.2 which, in the written opinion of
a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are then in excess of
the amount thereof which then would have been required to be
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deposited for the purpose for which such U.S. Government Obligations, or money,
were deposited or received.
SECTION 8.5. Paying Agent to Repay Monies Held.
---------------------------------
Upon the satisfaction and discharge of this Indenture, all monies then
held by any Paying Agent under the provisions of this Indenture shall, upon
written demand of the Company, be repaid to it or paid to the Trustee, and
thereupon such Paying Agent shall be released from all further liability with
respect to such monies.
SECTION 8.6. Return of Unclaimed Monies.
--------------------------
Any monies deposited with or paid to the Trustee or any Paying Agent
for the Securities, or then held by the Company in trust, for the payment of any
principal, premium, if any, and interest, if any, on the Securities and not
applied but remaining unclaimed by the Holders of the Securities for two years
after the date upon which the principal of, premium, if any, and interest, if
any, on the Securities, as the case may be, shall have become due and payable,
shall, unless otherwise required by mandatory provisions of applicable escheat
or abandoned or unclaimed property law, be repaid to the Company by such Trustee
or any Paying Agent on written demand by the Company or (if then held by the
Company or any Affiliate) shall be discharged from such trust; and the Holders
of the Securities entitled to receive such payment shall thereafter look only to
the Company for the payment thereof; provided, however, that, before being
-------- -------
required to make any such repayment, the Trustee may, or shall at the written
request of the Company, at the expense of the Company, cause to be published
once in an authorized newspaper in the same city in which the place of payment
with respect to the Securities shall be located and in an authorized newspaper
in the City of New York, or mail to each such Holder, a notice (in such form as
may be deemed appropriate by the Trustee) that said monies remain unclaimed and
that, after a date named therein, any unclaimed balance of said monies then
remaining will be returned to the Company.
SECTION 8.7. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.1 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.1 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 8.4; provided, however,
-------- -------
that if the Company has made any payment of principal of, premium, if any, or
interest on the Securities because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
SECTION 8.8. Indemnity for Government Obligations.
------------------------------------
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The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against U.S. Government Obligations
deposited with the Trustee pursuant hereto or the principal and interest
received on such U.S. Government Obligations.
ARTICLE IX.
AMENDMENTS AND WAIVERS
SECTION 9.1. Amendments and Waivers Without Consent of Holders.
-------------------------------------------------
The Company, when authorized by Board Resolution, and the Trustee at
any time and from time to time, may amend or supplement this Indenture, (any
such amendment or supplement to be in a form satisfactory to the Trustee) or the
Securities without notice to or consent of any Securityholder for any of the
following purposes:
(1) to comply with Section 5.1; or
(2) to provide for uncertificated Securities in addition to or in
place of certificated Securities; or
(3) to cure any ambiguity, defect or inconsistency, or to make
any other change that does not adversely affect the interests of the
Holders of Securities in any material respect; or
(4) to add to the covenants of the Company, for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company; or
(5) to add any Event of Default.
The Trustee shall be entitled to receive upon request an Opinion of
Counsel to its satisfaction with respect to any supplement to this Indenture
without consent of the Holders that all conditions precedent have been
satisfied.
SECTION 9.2. Amendments and Waivers with Consent of Holders.
----------------------------------------------
With the written consent of the Holders of not less than 66-2/3% in
aggregate principal amount of the Securities at the time outstanding, the
Company, when authorized by Board Resolution, and the Trustee may amend or
supplement this Indenture (any such amendment or supplement to be in a form
satisfactory to the Trustee) or the Securities for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders of the Securities. The Holders of a majority in
principal amount of the Securities then outstanding may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Securities without notice to any Securityholder. Subject to Section 9.4, without
the consent of each Holder of Securities affected, however, an amendment,
supplement or waiver, including a waiver pursuant to Section 6.4, may not:
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(1) reduce the amount of Securities whose Holders must consent to
an amendment or waiver;
(2) reduce the rate of or extend the time for payment of interest
on any Security;
(3) reduce the principal of or extend the fixed maturity of any
Security;
(4) waive (except unless theretofore cured) a default in the
payment of the principal of (and premium, if any on), interest on or
redemption amounts with respect to any Security;
(5) make any Security payable in currency other than that stated
in the Security;
(6) make any change in Sections 6.4, 6.6 or 9.2;
(7) make any change that adversely affects the right to convert
any Security; or
(8) make any change in Article 11 that adversely affects the
rights of any Securityholder.
To secure a consent of the Holders under this Section, it shall not be
necessary for the Holders to approve the particular form of any proposed
amendment or waiver; rather, it shall be sufficient if such consent approves the
substance thereof.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment.
SECTION 9.3. Compliance with Trust Indenture Act.
-----------------------------------
Every amendment or supplement to this Indenture or the Securities
shall comply with the TIA as then in effect.
SECTION 9.4. Revocation and Effect of Consents.
---------------------------------
Subject to this Indenture, each amendment, supplement or waiver
evidencing other action shall become effective in accordance with its terms.
Until an amendment, supplement or waiver becomes effective, a consent to it by a
Holder of a Security is a continuing consent by the Holder even if notation of
the consent is not made on any Security. Any such Holder or subsequent Holder,
however, may revoke the consent as to his Security or portion of a Security, if
the Trustee receives the notice of revocation before the date the amendment,
waiver or other action becomes effective.
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The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies) and only those
Persons, shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such Persons continue to
be Holders after such record date. No consent shall be valid or effective for
more than 90 days after such record date unless consent from Holders of the
principal amount of Securities then outstanding required hereunder for such
amendment, supplement or waiver to be effective shall have also been given and
not revoked within such 90-day period.
After an amendment, waiver or other action becomes effective, pursuant
to Section 9.1 or Section 9.2, as the case may be, it shall bind every Holder of
a Security.
SECTION 9.5. Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may request the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determine, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms the
cost and expense of which will be borne by the Company.
SECTION 9.6. Trustee to Sign Amendments, etc.
--------------------------------
The Trustee need not sign any amendment that adversely affects its
rights or interests, as determined by the Trustee in its sole discretion. In
signing or refusing to sign any amendment the Trustee shall be entitled to
receive and shall be fully protected in relying upon, an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture. The
Company may not sign an amendment until its Board of Directors approves it.
ARTICLE X.
CONVERSION OF SECURITIES
SECTION 10.1. Right of Conversion; Conversion Price.
-------------------------------------
Subject to the provisions of Section 7 of the Securities, the Holder
of any Security or Securities shall have the right, at such Holder's option, at
any time after the effective date of the Registration Statement and before the
close of business on May 1, 2003 (except that, with respect to any Security or
portion of a Security which shall be called for redemption, such right shall
terminate at the close of business on the Redemption Date fixed for redemption
of such Security or portion of a Security unless the Company shall default in
payment due upon redemption thereof), to convert, subject to the terms and
provisions of this Article 10, the principal of any such Security or Securities
or any portion thereof which is $1,000 principal amount or an integral multiple
thereof into shares of common stock of the Company, $.01 par
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value per share ("Common Stock"), initially at the conversion price per share of
$26.184 or, in case an adjustment of such price has taken place pursuant to the
provisions of Section 10.4, then at the price as last adjusted (such price or
adjusted price being referred to herein as the "conversion price"), upon
surrender of the Security or Securities, the principal of which is so to be
converted, accompanied by written notice of conversion duly executed, to the
Company, at any time during usual business hours at the office or agency
maintained by it for such purpose, and, if so required by the Conversion Agent
or Registrar, accompanied by a written instrument or instruments of transfer in
form satisfactory to the Conversion Agent or Registrar duly executed by the
Holder or his duly authorized representative in writing. For convenience, the
conversion of any portion of the principal of any Security or Securities into
shares of Common Stock is hereinafter sometimes referred to as the conversion of
such Security or Securities.
SECTION 10.2. Issuance of Shares on Conversion.
--------------------------------
As promptly as practicable after the surrender, as herein provided, of
any Security or Securities for conversion, the Company shall deliver or cause to
be delivered at its said office or agency, to or upon the written order of the
Holder of the Security or Securities so surrendered, certificates representing
the number of fully paid and nonassessable shares of Common Stock into which
such Security or Securities may be converted in accordance with the provisions
of this Article 10. Such conversion shall be deemed to have been made as of the
close of business on the date that such Security or Securities shall have been
surrendered for conversion by delivery thereof with a written notice of
conversion duly executed, so that the rights of the Holder of such Security or
Securities as a Securityholder shall cease at such time and, subject to the
following provisions of this paragraph, the Person or Persons entitled to
receive the shares of Common Stock upon conversion of such Security or
Securities shall be treated for all purposes as having become the record holder
or holders of such shares of Common Stock at such time and such conversion shall
be at the conversion price in effect at such time; provided, however, that no
-------- -------
such surrender on any date when the stock transfer books of the Company shall be
closed shall be effective to constitute the Person or Persons entitled to
receive the shares of Common Stock upon such conversion as the record holder or
holders of such shares of Common Stock on such date, but such surrender shall be
effective to constitute the Person or Persons entitled to receive such shares of
Common Stock as the record holder or holders thereof for all purposes at the
close of business on the next succeeding day on which such stock transfer books
are open; and provided, further, that in such event such conversion shall be at
-------- -------
the conversion price in effect on the date that such Security or Securities
shall have been surrendered for conversion by delivery thereof, as if the stock
transfer books of the Company had not been closed. The Company shall give or
cause to be given to the Trustee written notice whenever the stock transfer
books of the Company shall be closed.
Upon Conversion of any Security which is converted in part only, the
Company shall execute and the Trustee shall authenticate and deliver to or on
the order of the Holder thereof, at the expense of the Company, a new Security
or Securities of authorized denominations in principal amount equal to the
unconverted portion of such Security.
SECTION 10.3. No Adjustment for Interest or Dividends.
---------------------------------------
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No payment or adjustment in respect of interest on the Securities or
dividends on the shares of Common Stock shall be made upon the conversion of any
Security or Securities; provided, however, that if a Security or any portion
-------- -------
thereof shall be converted subsequent to any Regular Record Date and on or prior
to the next succeeding Interest Payment Date, the interest falling due on such
Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion, and such interest (whether or not punctually
paid or duly provided for) shall be paid to the Person in whose name such
Security is registered at the close of business on such Regular Record Date and
Securities surrendered for conversion during the period from the close of
business on any Regular Record Date to the opening of business on the
corresponding Interest Payment Date must be accompanied by payment of an amount
equal to the interest payable on such Interest Payment Date.
SECTION 10.4. Adjustment of Conversion Price.
-------------------------------
(1) In case the Company shall pay or make a dividend or other
distribution on any class of Capital Stock of the Company in shares of Common
Stock, the conversion price in effect at the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
conversion price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for such determination.
(2) In case the Company shall issue rights or warrants to all or
substantially all holders of its shares of Common Stock entitling them to
subscribe for or purchase shares of Common Stock (or securities convertible into
or exchangeable for Common Stock) at a price per share (or having a conversion
or exchange price per share) less than the current market price per share
(determined as provided in paragraph (6) of this Section 10.4) of the shares of
Common Stock on the date fixed for the determination of stockholders entitled to
receive such rights or warrants, the conversion price in effect at the opening
of business on the day following the date fixed for such determination shall be
reduced by multiplying such conversion price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination plus the number of shares
of Common Stock which the aggregate of the subscription price of the total
number of shares of Common Stock so offered for subscription or purchase (or the
aggregate conversion of exchange price of the convertible or exchangeable
securities so offered) would purchase at such current market price and the
denominator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination plus the number of
shares of Common Stock so offered for subscription or purchase, such reduction
to become effective immediately after the opening of business on the day
following the date fixed for such determination. In the event that all of the
shares of Common Stock subject to such rights or warrants have not been issued
when such rights or warrants expire, then the conversion price shall promptly be
readjusted to the conversion price which would then be in effect had the
adjustment upon the issuance of such
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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. No adjustment
will be required for rights to purchase Common Stock pursuant to a Company plan
for reinvestment of dividends or interest, or for a change in the par value of
the Common Stock. For the purposes of this paragraph (2), the number of shares
of Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
will not issue any rights or warrants in respect of shares of Common Stock held
in the treasury of the Company.
(3) In case the outstanding shares of Common Stock shall be subdivided
into a greater number of shares, the conversion price in effect at the opening
of business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely, in case outstanding
shares of Common Stock shall each be combined into a smaller number of shares,
the conversion price in effect at the opening of business on the day following
the day upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(4) In case the Company shall, by dividend or otherwise, distribute to
all or substantially all holders of shares of Common Stock evidences of
indebtedness or assets (including securities, but excluding any (a) rights or
warrants referred to in paragraph (2) of this Section 10.4, (b) any dividend or
distribution not prohibited by Section 4.6 hereof and (c) any dividend or
distribution referred to in paragraph (1) of this Section 10.4), the conversion
price shall be adjusted so that the same shall equal the price determined by
multiplying the conversion price in effect immediately prior to the close of
business on the day fixed for the determination of stockholders entitled to
receive such distribution by a fraction of which the numerator shall be the
current market price per share (determined as provided in paragraph (6) of this
Section) of the shares of Common Stock on the date fixed for such determination
less the then fair market value as determined by the Board of Directors of the
Company (whose determination shall be conclusive and described in a resolution
of the Board of Directors of the Company filed with the Trustee) of the portion
of the assets or evidences of indebtedness so distributed allocable to one share
of Common Stock and the denominator shall be such current market price per share
of the shares of Common Stock, such adjustment to become effective immediately
prior to the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such distribution.
(5) In case the shares of Common Stock shall be changed into the same
or a different number of shares of any class or classes of stock, whether by
capital reorganization, reclassification, or otherwise (other than a subdivision
or combination of shares or a stock dividend described in paragraph (1) or (3)
of this Section 10.4, or a consolidation, merger or sale of assets described in
Section 10.10), then and in each such event the Holders of Securities shall have
the right thereafter to convert such Securities into the kind and amount of
shares of stock and other securities and property receivable upon such
reorganization, reclassification or other
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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 shall be required unless
such adjustment (plus any adjustments not previously made by reason of this
paragraph (7)) would require an increase or decrease of at least 1% in such
price; provided, however, that any adjustments which by reason of this paragraph
-------- -------
(7) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this paragraph (7) shall
be made to the nearest cent.
(8) The Company may, but shall not be required to, make such
reductions in the conversion price, in addition to those required by paragraph
(1), (2), (3), (4) and (5) of this Section 10.4 as the Company's Board of
Directors considers to be advisable in order to avoid or diminish any income tax
to any holders of shares of Common Stock resulting from any dividend or
distribution of stock or issuance of rights or warrants to purchase or subscribe
for stock or from any event treated as such for income tax purposes or for any
other reason. The Company's Board of Directors shall have the power to resolve
any ambiguity or correct any error in the adjustments made pursuant to this
Section 10.4 and its actions in so doing shall be final and conclusive.
(9) The adjustments provided for in this Section 10.4 shall be made
successively whenever any event listed above shall occur.
SECTION 10.5. Notice of Adjustment of Conversion Price.
----------------------------------------
Whenever the conversion price for the Securities is adjusted as herein
provided:
(1) the Company shall compute the adjusted conversion price in
accordance with Section 10.4 and shall prepare an Officers'
Certificate setting forth the adjusted conversion price and showing in
reasonable detail the facts upon which such adjustment is based and
the computation thereof, and such certificate shall forthwith be filed
at each office or agency maintained for the purpose of conversion of
the Securities pursuant to Section 2.4 and with the Trustee; and
(2) a notice stating that the conversion price has been adjusted
and setting forth the adjusted conversion price shall as soon as
practicable be mailed by the Company to all Holders of the Securities
at their last addresses as they shall appear in the Security Register.
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(3) If the conversion price is adjusted and the Company fails to
file an Officers' Certificate with the Trustee as provided by Section
10.5(1) and the Trustee is acting as the Conversion Agent, the Trustee
shall be entitled to rely conclusively on the conversion price set
forth in the Officer's Certificate most recently received by the
Trustee (or as set forth in the Securities and this Indenture if the
conversion price shall not have been adjusted).
SECTION 10.6. Notice of Certain Corporate Action.
----------------------------------
(1) In case:
(a) the Company shall authorize the granting to holders of its
shares of Common Stock of rights or warrants entitling them to
subscribe for or purchase any shares of Capital Stock of any class or
of any other rights; or
(b) of any reclassification of the shares of Common Stock of the
Company, or of any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially all of
the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of the Securities pursuant to Section 2.3 and shall
cause to be mailed to the Trustee and all Holders of the Securities at their
last addresses as they shall appear in the Security Register, at least 20 days
(or 10 days in any case specified in clause (a) or (b) above) prior to the
applicable record date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
rights or warrants, or, if a record is not to be taken, the date as of which the
Holders of shares of Common Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of shares of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up. Such notice shall also state
whether such transaction will result in any adjustment in the conversion price
applicable to the Securities and, if so, shall state what the adjusted
conversion price will be and when it will become effective. Neither the failure
to give the notice required by this Section, nor any defect therein, to any
particular Holder shall affect the sufficiency of the notice or the legality or
validity of any such dividend, distribution, right, warrant, reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding-up,
or the vote on any action authorizing such with respect to the other holders.
(2) In case the Company or any Affiliate of the Company shall propose
to engage in a "Rule 13e-3 Transaction" as defined in the Commission's Rule 13e-
3 under the
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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
10.6 or any other provision of the Securities or this Indenture.
SECTION 10.7. Taxes on Conversions.
--------------------
The Company will pay any and all stamp or similar taxes that may be
payable in respect of the issuance or delivery of shares of Common Stock on
conversion of the Securities pursuant hereto. The Company shall not, however,
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of shares of Common Stock in a name other
than that of the Holder of the Security or Securities to be converted, and no
such issuance or delivery shall be made unless and until the Person requesting
such issuance has paid to the Company the amount of any such tax, or has
established to the satisfaction of the Company that such tax has been paid.
SECTION 10.8. Fractional Shares.
-----------------
No fractional shares or scrip representing fractional shares shall be
issued upon any conversion of the Securities. If any such conversion would
otherwise require the issuance of a fractional share an amount equal to such
fraction multiplied by the current market price per share of Common Stock
(determined as provided in paragraph (6) of Section 10.4) on the day of
conversion shall be paid to the Holder in cash by the Company.
SECTION 10.9. Cancellation of Converted Securities.
------------------------------------
All Securities delivered for conversion shall be delivered to the
Trustee or the Conversion Agent to be canceled by or at the direction of the
Trustee or the Conversion Agent, which shall dispose of the same as provided in
Section 2.10.
SECTION 10.10. Provisions in Case of Consolidation, Merger or Sale of
------------------------------------------------------
Assets.
------
(1) In case of any consolidation of the Company with, or merger of the
Company into, any Person, or in case of any merger of another Person into the
Company (other than a consolidation or merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock), or in case of any sale or transfer of all or substantially all of
the assets of the Company, the Person formed by such consolidation or resulting
from such merger or which acquires such assets, as the case may be, shall
execute and deliver to the Trustee a supplemental indenture providing that the
Holder of each Security then outstanding shall have the right thereafter, during
the period such Security shall be convertible as specified in Section 10.1 to
convert such Security only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, sale or
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transfer by a holder of the number of shares of Common Stock into which such
Security might have been converted immediately prior to such consolidation,
merger, sale or transfer. Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Article 10. The above provisions of this
Section 10.10 shall similarly apply to successive consolidations, mergers, sales
or transfers.
(2) The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any such supplemental indenture
relating either to the kind or amount of shares of stock or securities or
property receivable by Holders upon the conversion of their Securities after any
such reclassification, change, consolidation, merger, sale or conveyance or to
any adjustment to be made with respect thereto.
SECTION 10.11. Disclaimer by Trustee of Responsibility for Certain
---------------------------------------------------
Matters.
-------
The Trustee and each Conversion Agent (other than the Company or any
Subsidiary) shall not at any time be under any duty or responsibility to any
Holder of the Securities to determine whether any facts exist which may require
any adjustment of the conversion price, how it should be calculated or what it
should be, or with respect to the nature or extent of any such adjustment when
made, or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. The Trustee and each
Conversion Agent (other than the Company or any Subsidiary) shall not be
accountable with respect to the validity, value, kind or amount of any shares of
Common Stock, or of any securities or property, which may at any time be issued
or delivered upon the conversion of any Security; and it makes no representation
with respect thereto. The Trustee and each Conversion Agent (other than the
Company or any Subsidiary) shall not be responsible for any failure of the
Company to issue, transfer or deliver any shares of Common Stock or stock
certificates or other securities or property upon the surrender of any Security
for the purpose of conversion or, subject to Section 7.1, to comply with any of
the covenants of the Company contained in this Article 10.
SECTION 10.12. Covenant to Reserve Shares.
--------------------------
The Company covenants that it will at all times reserve and keep
available, free from preemptive rights, out of its authorized shares of Common
Stock, solely for the purpose of issuance upon conversion of the Securities as
herein provided, such number of shares of Common Stock as shall then be issuable
upon the conversion of all outstanding Securities. The Company covenants that
all shares of Common Stock which shall be so issuable shall be, when issued,
duly and validly issued and fully paid and non-assessable. For purposes of this
Section 10.12, the number of shares of Common Stock which shall be deliverable
upon the conversion of all outstanding Securities shall be computed as if at the
time of computation all outstanding Securities were held by a single holder.
ARTICLE XI.
SUBORDINATION; SENIORITY
SECTION 11.1. Securities Subordinated to Senior Indebtedness.
----------------------------------------------
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(1) The Company agrees, and each Holder of the Securities by his
acceptance thereof likewise agrees, that the payment of the principal of,
premium, if any, and interest on the Securities (all of the foregoing, a
"Payment or Distribution") is subordinated and junior in right of payment, to
the extent and in the manner provided in this Article 11, except as provided in
Article 8, to the prior payment in full in cash of all Senior Indebtedness
whether outstanding on the date hereof or hereafter created, incurred, assumed
or guaranteed.
A Payment or Distribution shall include any asset of any kind or
character, and may consist of cash, securities or other property, by set-off or
otherwise, and shall include, without limitation, any purchase, redemption or
other acquisition of Securities or the making of any deposit of funds or
securities pursuant to this Indenture (including, without limitation, any
deposit pursuant to Article 8 hereof).
(2) The Senior Indebtedness of the Company shall continue to be Senior
Indebtedness and entitled to the benefit of these subordination provisions
irrespective of any amendment, modification or waiver of any term of any
instrument relating to refinancing of the Senior Indebtedness.
(3) All the provisions of this Indenture and the Securities shall be
subject to the provisions of this Article 11 so far as they may be applicable
thereto, except that nothing in this Article 11 shall apply to claims for, or
payments to, the Trustee under or pursuant to Section 7.7.
(4) No right of any holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time or in any way be affected or
impaired by any failure to act on the part of the Company, any Paying Agent, the
Holders of the Securities, the Trustee or the holders of the Senior
Indebtedness, or by any noncompliance by the Company, any Paying Agent, the
Holders of the Securities or the Trustee with any of the terms, provisions and
covenants of the Securities or this Indenture, regardless of any knowledge
thereof that any such holder of Senior Indebtedness may have or be otherwise
charged with.
SECTION 11.2. Company Not to Make Payments with Respect to Securities
-------------------------------------------------------
in Certain Circumstances.
------------------------
No Payment or Distribution shall be made by the Company, the Trustee
or any Paying Agent on account of principal of, premium, if any, or interest on
the Securities, whether upon stated maturity, upon redemption or acceleration,
or otherwise, or on account of the purchase or other acquisition of Securities,
whether upon stated maturity, upon redemption or acceleration, or otherwise, if
there shall have occurred and be continuing a default with respect to any Senior
Indebtedness permitting the acceleration thereof or with respect to the payment
of any Senior Indebtedness and (a) such default is the subject of a judicial
proceeding or (b) written notice of such default has been given to the Company
by any holder or holders of any Senior Indebtedness, unless and until such
default or event of default shall have been cured or waived or shall have ceased
to exist.
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Upon any acceleration of the principal of the Securities or any
payment by the Company or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors upon any
dissolution or winding up or liquidation or reorganization of the Company,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due or to become due upon all Senior Indebtedness
shall first be paid in full in cash, or payment thereof provided for to the
satisfaction of the holders thereof, before any Payment or Distribution is made
on account of the redemption price or principal of (and premium, if any) or
interest on the Securities; and (subject to the power of a court of competent
jurisdiction to make other equitable provision, which shall have been determined
by such court to give effect to the rights conferred in this Article upon the
Senior Indebtedness and the holders thereof with respect to the Securities or
the Holders thereof or the Trustee, by a lawful plan of reorganization or
readjustment under applicable law) upon any such dissolution or winding up or
liquidation or reorganization, any Payment or Distribution by the Company or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (other than securities of the Company as reorganized or
readjusted or securities of the Company or any other company, trust or
corporation provided for by a plan of reorganization or readjustment, the
payment of which is junior or otherwise subordinate, at least to the extent
provided in this Article 11 with respect to the Securities to the payment of all
Senior Indebtedness at the time outstanding and to the payment of all securities
issued in exchange therefor to the holders of the Senior Indebtedness at the
time outstanding, and the rights of the holders of Senior Indebtedness of the
Company are not altered by such plan of reorganization or readjustment), to
which the Holders of the Securities or the Trustee would be entitled except for
the provisions of this Article 11, shall be paid by the Company or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such Payment or Distribution directly to the holders of Senior
Indebtedness of the Company or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing any Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all Senior Indebtedness in
full in cash, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness, before any Payment or Distribution is
made to the Holders of the Securities or to the Trustee, except that the Trustee
will have a lien for the payment of its fees and expenses.
In the event that, notwithstanding the foregoing, any Payment or
Distribution by the Company of any kind or character, (whether such payment
shall be in cash, property or securities) which is prohibited by the foregoing,
shall have been made to the Trustee or the Holders of the Securities before all
Senior Indebtedness is paid in full in cash, or provision is made for such
payment to the satisfaction of the holders thereof, and if such fact shall then
have been or thereafter be made known to a Trust Officer of the Trustee or, as
the case may be, such Holder, then and in such event such Payment or
Distribution shall be paid over by the Trustee (if the Notice required by
Section 11.5 has been timely received by the Trustee) or such Holder or
delivered to the holders of Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in cash, after giving effect to any concurrent Payment or
Distribution to or
-46-
for the holders of such Senior Indebtedness, and, until so delivered, the same
shall be held in trust by any Holder of a Security as the property of the
holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of the Company
into, another Person or the liquidation or dissolution of the Company following
the conveyance or transfer of its property as an entirety, or substantially as
an entirety, to another corporation upon the terms and conditions provided in
Article 5 shall not be deemed a dissolution, winding up, liquidation or
reorganization for the purposes of this Section 11.2 if such other Person shall,
as a part of such consolidation, merger, conveyance or transfer, comply with the
conditions stated in Article 5. Nothing in this Section shall apply to claims
of, or payments to, the Trustee under or pursuant to Section 7.7.
The holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and without impairing
or releasing the obligations of the Holders of the Securities hereunder to the
holders of Senior Indebtedness: (i) change the manner, place or terms of payment
or change or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend in any manner Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of Senior Indebtedness; (iv)
apply any amounts received to any liability of the Company owing to holders of
Senior Indebtedness; and/or (v) exercise or refrain from exercising any rights
against the Company and any other Person.
SECTION 11.3. Subrogation of Securities.
-------------------------
Subject to the payment in full in cash of all amounts then due
(whether by acceleration of the maturity thereof or otherwise) on account of all
Senior Indebtedness at the time outstanding, the Holders of the Securities shall
be subrogated to the rights of the holders of Senior Indebtedness to receive
Payments or Distributions of cash, property or securities of the Company
applicable to the Senior Indebtedness until the principal of, premium, if any,
and interest on the Securities shall be paid in full; and, for the purposes of
such subrogation, no Payments or Distributions to the holders of Senior
Indebtedness to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article 11, and no payments over
pursuant to the provisions of this Article 11 to the holders of Senior
Indebtedness by Holders of the Securities or the Trustee, shall, as between the
Company, the Company's creditors other than holders of Senior Indebtedness, and
the Holders of the Securities, be deemed to be a payment by the Company to or on
account of the Senior Indebtedness. It is understood that the provisions of
this Article 11 are and are intended solely for the purpose of defining the
relative rights of the Holders of the Securities, on the one hand, and the
holders of Senior Indebtedness, on the other hand.
Nothing contained in this Article 11 or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as among the Company, its
creditors other than the
-47-
holders of Senior Indebtedness, and the Holders of the Securities, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders of the Securities the principal of, premium, if any, and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders of the Securities and creditors of the Company other than the holders of
Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or
the Holder of any Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article 11 of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy. Nothing in this Article 11 shall prevent conversions of Securities
pursuant to Article 10.
Upon any payment or distribution of assets of the Company referred to
in this Article 11, the Trustee, subject to the provisions of Section 7.1, and
the Holders of the Securities shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which any dissolution, winding
up, liquidation or reorganization proceedings are pending, or certificate of the
receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of the Securities, for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article 11.
SECTION 11.4. Authorization by Holders of Securities.
--------------------------------------
Each holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate, as between the Holder of the Security and the holders
of Senior Indebtedness, the subordination provided in this Article 11 and
appoints the Trustee his attorney-in-fact for any and all such purposes
including, without limitation, to execute, verify, deliver and file any proofs
of claim which any holder of Senior Indebtedness may at any time require in
order to prove and realize upon any rights or claims pertaining to the
Securities and to effectuate the full benefit of the subordination contained
herein. If the Trustee shall fail to do so prior to 30 days prior to the
expiration of the period for filing such claims, any such holder of Senior
Indebtedness shall be deemed to be irrevocably appointed the agent and attorney-
in-fact of the Holder to execute, verify, deliver and file any such proofs of
claim; provided that no holder of Senior Indebtedness shall incur any liability
for any failure to exercise its right to file any such proofs of claim.
SECTION 11.5. Notices to Trustee.
------------------
The Company shall give prompt written notice to the Trustee of any
fact known to it which would prohibit the making of any payment of moneys to or
by the Trustee in respect of the Securities pursuant to the provisions of this
Article 11. Notwithstanding the provisions of this Article 11 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment of
-48-
moneys to or by the Trustee in respect of the Securities pursuant to the
provisions of this Article 11 unless and until a Trust Officer of the Trustee
shall have received at its Corporate Trust Office written notice thereof from
the Company or a holder or holders of Senior Indebtedness or from any trustee or
agent therefor; and, prior to the receipt of any such written notice, the
Trustee, subject to the provisions of Section 7.1, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if a Trust
-------- -------
Officer of the Trustee shall not have received at least three Business Days
prior to the date upon which by the terms hereof any such moneys may become
payable for any purpose (including, without limitation, the payment of the
principal of, premium, if any, or interest on any Security) with respect to such
moneys the notice provided for in this Section 11.5, then, anything herein
contained to the contrary notwithstanding, the Trustee shall have the full power
and authority to receive such moneys and to apply the same to the purpose for
which they were received and shall not be affected by any notice to the contrary
which may be received by it within three Business Days prior to such date or at
any time thereafter.
The Trustee shall be entitled to rely conclusively on the delivery to
it of a written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior Indebtedness or a trustee or agent
on behalf of any such holder. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article 11, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article 11, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 11.6. Trustee's Relation to Senior Indebtedness.
-----------------------------------------
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article 11 in respect of any Senior Indebtedness at any
time held by it, to the same extent as any other holder of Senior Indebtedness,
and nothing in Section 7.11 or elsewhere in this Indenture shall deprive the
Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article 11, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not owe any
fiduciary duty to the holders of Senior Indebtedness and shall not be liable to
any such holder if it shall mistakenly pay over or distribute to Holders of the
Securities or the Company or any other Person money or assets to which any
holder of Senior Indebtedness shall be entitled by virtue of this Article 11 or
otherwise.
SECTION 11.7. No Impairment of Subordination.
-------------------------------
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No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company,
the Trustee or the Holder of any of the Securities or by any act, or failure to
act, in good faith, by any such holder of Senior Indebtedness, or by any
noncompliance by the Company, the Trustee or the Holder of any of the Securities
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
SECTION 11.8. Article 11 Not To Prevent Events of Default.
-------------------------------------------
The failure to make a payment on account of principal of, premium, if
any, or interest on the Securities by reason of any provision in this Article 11
shall not be construed as preventing the occurrence of an Event of Default with
respect to such Securities under Section 6.1.
SECTION 11.9. Paying Agents other than the Trustee.
------------------------------------
In any case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 11 shall in such case (unless the context
shall otherwise require) be construed as extending to and including such Paying
Agent within its meaning as fully for all intents and purposes as if such Paying
Agent were named in this Article 11 in addition to or in place of the Trustee.
SECTION 11.10. Securities Senior to Subordinated Indebtedness.
----------------------------------------------
The indebtedness represented by the Securities will be senior and
prior in right of payment to all Subordinated Indebtedness, to the extent and in
the manner provided in such Subordinated Indebtedness.
ARTICLE XII.
RIGHT TO REQUIRE REPURCHASE
SECTION 12.1. Right to Require Repurchase.
---------------------------
In the event that there shall occur a Change in Control (as defined in
Section 12.5), each Holder shall have the right, at such Holder's option, to
require the Company to purchase, and upon the exercise of such right, the
Company shall, subject to the provisions of Article XI, purchase, all or any
part of such Holder's Notes on the date (the "Repurchase Date") that is 75 days
after the date the Company gives notice of the Change in Control as contemplated
in Section 12.2(1) at a price (the "Repurchase Price") equal to 101% of the
principal amount thereof, together with accrued and unpaid interest to the
Repurchase Date. In connection with the exercise of the repurchase right by a
Holder prior to a Redemption Date, a Holder's right to exercise his repurchase
right shall terminate at the close of business on the Business Day prior to the
Redemption Date.
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SECTION 12.2. Notice; Method of Exercising Repurchase Right.
---------------------------------------------
(1) On or before the 15th day after the occurrence of a Change in
Control, the Company or, at the request of the Company, the Trustee (in the name
and at the expense of the Company), shall give notice of the occurrence of the
Change in Control and of the repurchase right set forth herein arising as a
result thereof by first-class mail, postage prepaid, to each Holder of the Notes
at such Holder's address appearing in the Note Register. The Company shall also
deliver a copy of such notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(a) the event constituting the Change in
Control and the date thereof;
(b) the Repurchase Date;
(c) the date by which the repurchase right must
be exercised;
(d) the Repurchase Price; and
(e) the procedures a Holder must follow to
exercise a repurchase right.
No failure of the Company to give the foregoing notice shall limit any
Holder's right to exercise a repurchase right. The Trustee shall have no
affirmative obligation to determine if there shall have occurred a Change in
Control.
(2) To exercise a repurchase right, a Holder shall deliver to the
Company (or an agent designated by the Company for such purpose in the notice
referred to in (1) above) and to the Trustee on or before the tenth day prior to
the Repurchase Date (a) written notice of the Holder's exercise of such right,
which notice shall set forth the name of the Holder, the principal amount of the
Note or Notes (or portion of a Note) to be repurchased and a statement that an
election to exercise the repurchase right is being made thereby and (b) the Note
or Notes with respect to which the repurchase right is being exercised, duly
endorsed for transfer to the Company. Such written notice shall be irrevocable.
If the Repurchase Date falls between any Regular Record Date and the next
succeeding Interest Payment Date, Notes to be repurchased must be accompanied by
payment from the Holder of an amount equal to the interest thereon which the
registered Holder thereof is to receive on such Interest Payment Date. A Holder
that fails to exercise a repurchase right in accordance with the terms hereof
shall waive such repurchase right but the rights of such Holder to receive
principal of and interest on the Notes and all other rights of such Holder under
this Indenture shall not be affected thereby.
(3) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall on the Repurchase Date pay or cause to
be paid in cash to the Holder thereof the Repurchase Price of the Note or Notes
as to which the repurchase right has been exercised. In the event that a
repurchase right is exercised with respect to less than the entire principal
amount of a surrendered Note, the Company shall execute and deliver to the
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Trustee and the Trustee shall authenticate for issuance in the name of the
Holder a new Note or Notes in the aggregate principal amount of the
unrepurchased portion of such surrendered Note.
SECTION 12.3. Deposit Of Repurchase Price.
---------------------------
On or prior to the Repurchase Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 2.4) an amount of
money sufficient to pay the Repurchase Price of the Notes which are to be repaid
on the Repurchase Date.
SECTION 12.4. Notes Not Repurchased On Repurchase Date.
----------------------------------------
If any Note surrendered for repurchase shall not be so paid on the
Repurchase Date, the principal shall, until paid, bear interest to the extent
permitted by applicable law from the Repurchase Date at the rate per annum borne
by such Note.
SECTION 12.5. "Change In Control" Defined.
---------------------------
For purposes of this Article, "Change In Control" means any of the
following events that occur after the date of this Indenture and on or prior to
Maturity:
(1) all or substantially all of the Company's assets are sold as an
entirety to any person or related group of persons;
(2) there shall be consummated any consolidation or merger of the
Company (a) in which the Company is not the continuing or surviving corporation
(other than a consolidation or merger with a wholly-owned subsidiary of the
Company in which all Common Stock outstanding immediately prior to the
effectiveness thereof are changed into or exchanged for the same consideration)
or (b) pursuant to which the Common Stock are converted into cash, securities or
other property, in each case other than a consolidation or merger of the Company
in which the holders of the Common Stock immediately prior to the consolidation
or merger have, directly or indirectly, at least a majority of the common shares
of the continuing or surviving corporation immediately after such consolidation
or merger; or
(3) any person, or any persons acting together which would constitute
a "group" for purposes of Section 13(d) of the Securities Exchange Act of 1934
(a "Group"), together with any Affiliates thereof, shall acquire beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of at least 50% of the total voting power of all classes of capital shares of
the Company entitled to vote generally in the election of directors of the
Company.
Notwithstanding anything to the contrary set forth in this definition,
a Change in Control shall not be deemed to have occurred:
(A) under paragraph (3) above, solely by virtue of the Company, any
Subsidiary, any employee share purchase plan, share option plan or other share
incentive plan or
-52-
program, retirement plan or automatic dividend reinvestment plan or any
substantially similar plan of the Company or any Subsidiary or any Person
holding securities of the Company for or pursuant to the terms of any such
employee benefit plan, filing or becoming obligated to file a report under or in
response to Schedule 13D or Schedule 14D-1 (or any successor schedule, form or
report) under the Securities Exchange Act of 1934 disclosing beneficial
ownership by it of shares or securities of the Company, whether at least 50% of
the total voting power referred to in paragraph (3) above, or otherwise; a
recapitalization or a leveraged buyout or similar transaction involving members
of management or their affiliates will constitute a Change in Control if it
meets the foregoing definition; or
(B) under paragraphs (1), (2) or (3) above if:
(i) the Current Market Price of the Common Stock on the date the
Change in Control shall have occurred is at least equal to 105% of the
Conversion Price in effect immediately preceding the time of such Change in
Control; or
(ii) all of the consideration (excluding cash payments for fractional
shares) in the transaction giving rise to such Change in Control to the holders
of Common Stock consists of common shares that are, or immediately upon issuance
will be, listed on a national securities exchange or quoted on the Nasdaq
National Market, and as a result of such transaction the Notes become
convertible solely into such common shares; or
(iii) the consideration in the transaction giving rise to such Change
in Control to the holders of Common Stock consists of cash, securities that are,
or immediately upon issuance will be, listed on a national securities exchange
or quoted on the Nasdaq National Market, or a combination of cash and such
securities, and the aggregate fair market value of such consideration (which, in
the case of such securities, shall be equal to the average of the daily Closing
Prices of such securities during the ten consecutive Trading Days commencing
with the sixth Trading Day following consummation of such transaction) is at
least 105% of the Conversion Price in effect on the date immediately preceding
the closing date of such transaction.
If a Change in Control shall have occurred under paragraph (2) above,
the Company shall deliver the Officers' Certificate and Opinion of Counsel
called for under Section 13.4 as well as the notices called for under Section
10.5.
For purposes of this definition of Change of Control, "Current Market
Price" on any date means the average daily Closing Prices for the five
consecutive Trading Days selected by the Company commencing not more than ten
Trading Days before, and ending not later than, the date in question; "Closing
Price" for any Trading Day means the last reported sale price (or, if none on
any day, the mean between the bid and asked quotations on such day) of the
securities in question for such date, in either case on the New York Stock
Exchange or, if the securities are not listed or admitted to trading on such
exchange, on the principal national securities exchange on which such securities
are listed or admitted to trading or, if not listed or admitted to trading on
any national securities exchange, on The Nasdaq
-53-
National Market or, if the securities are not listed or admitted to trading on
any national securities exchange or quoted on the Nasdaq National Market, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected by the Company for
such purpose; and "Trading Day", with respect to any stock exchange or
securities market, means any Monday, Tuesday, Wednesday, Thursday or Friday on
which such stock exchange or securities market is open for business.
ARTICLE XIII.
MISCELLANEOUS
SECTION 13.1. Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provisions shall control. The provisions of TIA Sections 310
through 317 that impose duties on any Person (including the provisions
automatically deemed included herein unless expressly excluded by this
Indenture) are a part of and govern this Indenture, whether or not physically
contained herein.
SECTION 13.2. Notices.
-------
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
or first class mail, postage prepaid (except that any notice by the Trustee to
the Company of a default or an Event of Default under this Indenture shall be by
registered or certified mail, postage prepaid, return receipt requested), or by
a nationally-recognized overnight express courier service (which notices or
communications shall be deemed received, in the case of the Company, the
business day after the receipt thereof by such service and, in the case of the
Trustee, upon receipt), addressed as follows:
if to the Company:
Assisted Living Concepts, Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
if to the Trustee:
▇▇▇▇▇▇ Trust and Savings Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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
-54-
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 13.3. Communications by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA (S) 312(c).
SECTION 13.4. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the statements
set forth in Section 13.5) stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel (which shall include the statements set
forth in Section 13.5) stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
-55-
SECTION 13.5. Statements Required in Certificate and Opinion.
----------------------------------------------
Each Certificate and Opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
Person, such covenant or condition has been complied with.
SECTION 13.6. Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Registrar, Paying Agent or Conversion Agent may make
reasonable rules for its functions.
SECTION 13.7. Record Date.
-----------
Whenever the Company or the Trustee solicits an act of
Securityholders, the Company or the Trustee may fix in advance of the
solicitation of such act a date as the record date for determining
Securityholders entitled to perform said act. The record date shall be not more
than 15 days prior to the date fixed for the solicitation of said act.
SECTION 13.8. Legal Holidays.
--------------
A "Legal Holiday" is a Saturday, a Sunday or a day on which banks or
trust companies in the city in which either the Trustee or the Company is
located are not required to be open. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
-56-
SECTION 13.9. Governing Law.
-------------
The laws of the State of New York shall govern this Indenture and the
Securities without regard to principles of conflicts of law. Each of the
parties hereto agrees to submit to the jurisdiction of the Courts of the State
of New York and the U.S. Federal Courts, in each case sitting in the Borough of
Manhattan, and waives any objection as to venue or forum non conveniens.
SECTION 13.10. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 13.11. No Recourse Against Others.
--------------------------
No stockholder, director or officer, as such, past, present or future,
of the Company or of any successor corporation or trust shall have any liability
for any obligation of the Company under the Securities or the Indenture or for
any claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder of a Security 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 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.
-57-
(Signature page follows.)
-58-
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.
a Nevada corporation
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and
Chief Operating Officer
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
as Trustee
By: /S/ ▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇. ▇. ▇▇▇▇▇▇▇
Title: Assistant Vice President
-59-
EXHIBIT A
FORM OF SECURITY
[Attached]
FORM OF SECURITY
[FORM OF FACE OF SECURITY]
Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation (55 ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇) ("▇▇▇"), to the issuer or its agent for registration
of transfer, exchange or payment, and any certificate issued is registered in
the name of Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein./1/
[THIS SECURITY HAS BEEN ACQUIRED BY THE HOLDER FOR THE PURPOSE OF INVESTMENT AND
NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION. THIS
SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF
THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR
THE BENEFIT OF THE COMPANY THAT: (I) IT HAS ACQUIRED A "RESTRICTED" SECURITY
WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT OFFER,
SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO ASSISTED LIVING CONCEPTS,
INC., (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) IN THE CASE OF A HOLDER WHO IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), FOR SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, OR (D) IN ACCORDANCE WITH RULE 144 UNDER THE
SECURITIES ACT OR PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS
----------------------------
/1/ This paragraph should be included only if the Security is issued in global
form.
OF THE SECURITIES ACT, (AND CONFIRMED IN AN OPINION OF COUNSEL ACCEPTABLE IN
FORM AND SUBSTANCE TO THE ISSUER OF THIS SECURITY IF THE ISSUER SO REQUESTS)
AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND (III) IT
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
SECURITY FROM IT OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE.]/2/
ASSISTED LIVING CONCEPTS, INC.
5.625% Convertible Subordinated Debenture Due 2003
ASSISTED LIVING CONCEPTS, INC., a Nevada corporation, promises to pay
to ________________________________ or registered assigns, the principal sum of
_____________ Dollars, on May 1, 2003.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Additional provisions of this Security are set forth on other side of this
Security.
Dated:
CERTIFICATE OF AUTHENTICATION ASSISTED LIVING CONCEPTS, INC.
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
as Trustee, certifies that this
is one of the Securities referred
to in the within mentioned By:___________________
Indenture.
By:______________________
Authorized Signatory By:___________________
SEAL
-------------------
/2/ To be included on all Securities which are Restricted Securities.
-2-
[FORM OF REVERSE OF SECURITY]
ASSISTED LIVING CONCEPTS, INC.
5.625% Convertible Subordinated Debenture Due 2003
1. Interest. Assisted Living Concepts, Inc., a Nevada corporation
--------
(the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
semiannually on May 1 and November 1 of each year beginning November 1, 1998.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from April 13, 1998;
provided that, if there is no existing Default in the payment of interest, and
if this Security is authenticated between a record date referred to on the face
hereof and the next succeeding interest payment date, interest shall accrue from
such interest payment date. Interest will be computed on the basis of a 360 day
year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Securities
-----------------
(except defaulted interest) to the persons who are the registered Holders of the
Securities at the close of business on the April 15 or October 15 immediately
preceding the interest payment date. Holders must surrender Securities to a
Paying Agent to collect principal and premium payments. The Company will pay
principal, premium and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts. The
Company, however, may pay principal, premium and interest by its check payable
in such money. It may mail an interest check to a Holder's registered address.
The payment of principal of and premium, if any, on this Security shall
be payable only upon surrender of this Security at the office or agency of the
Paying Agent in the Borough of Manhattan, City and State of New York. Payments
of principal of, premium, if any, and interest on this Security shall be made at
the office or agency of the Trustee maintained in the Borough of Manhattan, City
and State of New York, or, in the case of any such payments other than the
payment of principal and premium, if any, at the Company's option, by check
mailed to the Person entitled thereto at such Person's address last appearing on
the Company's register.
3. Registrar and Agents. Initially, ▇▇▇▇▇▇ Trust and Savings Bank
--------------------
will act as Registrar, Paying Agent, Conversion Agent and agent for service of
notices and demands. The Company may change any Registrar, co-registrar, Paying
Agent, Conversion Agent and agent for service of notices and demands without
notice. The Company or any of its Subsidiaries may act as Paying Agent or
Conversion Agent. The address of ▇▇▇▇▇▇ Trust and Savings Bank is ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
4. Indenture; Limitations. The Company issued the Securities under an
----------------------
Indenture, dated as of April 13, 1998 (the "Indenture"), between the Company and
▇▇▇▇▇▇ Trust and Savings Bank (the "Trustee"). Capitalized terms herein are
used as defined in the Indenture unless otherwise defined herein. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.
Code (S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture. The
Securities are subject to all such terms, and the Holders of the Securities are
referred to the Indenture and said Act for a statement of them.
The Securities are general unsecured obligations of the Company limited
to $86,250,000 principal amount. The Indenture imposes certain limitations on
the ability of the Company to, among other things, make payments in respect of
its Capital Stock, merge or consolidate with any other Person and sell, lease,
transfer or otherwise dispose of its properties or assets.
5. Optional Redemption by the Company. The Company may, at its
----------------------------------
option, at any time on or after May 15, 2001, redeem all of the Debentures or
some of them, on at least 30 days' but not more than 60 days' notice to each
holder of Debentures to be redeemed at his or her registered address, at a
redemption price equal to 100% of the principal amount thereof, plus accrued
interest to the redemption date. The Debentures may not be so redeemed before
May 15, 2001.
6. Certain Rights to Require Repurchase of Debentures by the Company.
-----------------------------------------------------------------
In the event that there shall occur a Change in Control of the Company, each
Holder shall have the right, at such Holder's option, to require the Company to
purchase, all or any part of such Holder's Notes, 75 days after the date the
Company gives notice of the Change in Control as contemplated in the Indenture,
at a price equal to 101% of the principal amount thereof, together with accrued
and unpaid interest.
7. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 principal amount may be redeemed in part, but
only in whole multiples thereof. On and after the Redemption Date interest
ceases to accrue on Securities or portions of them called for redemption.
8. Conversion. A Holder of a Security may convert such Security into
----------
shares of common stock of the Company after the effective date of the
Registration Statement and before the close of business on May 1, 2003. If the
Security is called for redemption, the Holder may convert it at any time before
the close of business on the date fixed for such redemption. The initial
conversion price is $26.184 per share, subject to adjustment in certain events.
To determine the number of shares issuable upon conversion of a Security, divide
the principal amount to be converted by the conversion price in effect on the
conversion date. The Company will deliver a check for any fractional share.
To convert a Security, a Holder must (1) complete and sign the
conversion notice on the back of the Security, (2) surrender the Security to the
Conversion Agent, (3) furnish appropriate endorsements and transfer documents if
required by the Registrar or Conversion Agent and (4) pay any transfer or
similar tax if required. No payment or adjustment is to be made on conversion
for interest accrued hereon or for dividends on shares of common stock issued on
conversion; provided, however, that if a Security is surrendered for conversion
-------- -------
after the
record date for a payment of interest and on or before the interest payment
date, then, notwithstanding such conversion, the interest falling due to such
interest payment date will be paid to the Person in whose name the Security is
registered at the close of business on such record date and any Security
surrendered for conversion during the period from the close of business on any
regular record date to the opening of business on the corresponding interest
payment date must be accompanied by payment of an amount equal to the interest
payable on such interest payment date. A Holder may convert a portion of a
Security if the portion is $1,000 principal amount or an integral multiple
thereof.
If the Company is a party to a consolidation or merger or a transfer
or lease of all or substantially all of its assets, the right to convert a
Security into shares of common stock may be changed into a right to convert it
into securities, cash or other assets of the Company or another Person.
9. Subordination. This Security is subordinated to all Senior
-------------
Indebtedness of the Company. To the extent and in the manner provided in the
Indenture, Senior Indebtedness must be paid before any payment may be made to
any Holders of Securities. Any Securityholder by accepting this Security agrees
to such subordination and authorizes the Trustee to give it effect.
In addition to all other rights of Senior Indebtedness described in
the Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness
and entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of any instrument relating to the
Senior Indebtedness or extension or renewal of the Senior Indebtedness.
10. Denominations, Transfer, Exchange. The Securities issued under
---------------------------------
the Indenture are in the aggregate principal amount of up to $86,250,000. The
Securities are in registered form without coupons in denominations of $1,000
principal amount and integral multiples thereof. A Holder may register the
transfer of or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption or register the transfer
of or exchange any Securities for a period of 15 days before a selection of
Securities to be redeemed.
11. Persons Deemed Owners. The registered Holder of a Security may
---------------------
be treated as its owner for all purposes.
12. Unclaimed Money. If money for the payment of principal or
---------------
interest on any Securities remains unclaimed for two years, the Trustee and the
Paying Agent will pay the money back to the Company at its written request.
After that, Holders may look only to the Company for payment.
13. Discharge Prior to Redemption or Maturity. The Indenture will be
-----------------------------------------
discharged and canceled except for certain sections thereof upon payment of all
the Securities, or
-3-
upon the irrevocable deposit with the Trustee of funds or U.S. Government
Obligations maturing on or before such payment date or Redemption Date,
sufficient to pay principal, premium, if any, and interest on such payment or
redemption.
14. Amendment and Waiver. Subject to certain exceptions, without
--------------------
notice to the Holders of the Securities, the Indenture or the Securities may be
amended with the consent of the Holders of at least 66-2/3% in principal amount
of the Securities then outstanding and any existing default or compliance with
any provision may be waived with the consent of the Holders of a majority in
principal amount of the Securities then outstanding. Without the consent of or
notice to any Securityholder, the Company may amend or supplement the Indenture
or the Securities to, among other things, provide for uncertificated Securities,
to cure any ambiguity, defect or inconsistency or make any other change that
does not adversely affect the rights of any Securityholder.
15. Successors. When a successor assumes all the obligations of its
----------
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
16. Defaults and Remedies. If an Event of Default, as defined in the
---------------------
Indenture (other than a Event of Default relating to bankruptcy of the Company),
occurs and is continuing, the Trustee or the Holders of a majority in principal
amount of Securities may declare all the Securities to be due and payable
immediately in the manner and with the effect provided in the Indenture. If an
Event of Default relating to bankruptcy of the Company occurs, then all
Securities shall become immediately due and payable without any declaration or
act on the part of the Trustee or any Holder. Holders of Securities may not
enforce the Indenture or the Securities except as provided in the Indenture.
The Trustee may require indemnity satisfactory to it, subject to the provisions
of the TIA, before it enforces the Indenture or the Securities. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
then outstanding may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of Securities notice of any continuing
default (except a default in payment of principal or interest) if it determines
that withholding notice is in their interests. The Company is required to file
periodic reports with the Trustee as to the absence of any Default or Event of
Default.
17. Trustee Dealings with the Company. ▇▇▇▇▇▇ Trust and Savings
---------------------------------
Bank, the Trustee under the Indenture, in its individual or any other capacity,
may make loans to, accept deposits from, and perform services for the Company or
its Affiliates, and may otherwise deal with the Company or its Affiliates, as if
it were not Trustee.
18. No Recourse Against Others. No stockholder, director, officer or
--------------------------
incorporator, as such, past, present or future, of the Company or any successor
corporation shall have any liability for any obligation of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
-4-
19. Authentication. This Security shall not be valid until the
--------------
Trustee signs the certificate of authentication on the other side of this
Security.
20. Abbreviations. Customary abbreviations may be used in the name of
-------------
a Securityholder or an assignee, such as: TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to
Minors Act).
The Company will furnish to any Securityholder upon written request and
without charge a copy for the Indenture. It also will furnish the text of this
Security in larger type. Requests may be made to: Assisted Living Concepts,
Inc., ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇. Attention:
President.
-5-
TRANSFER NOTICE
If you, the Holder, wants to assign this Security, fill in the form below and
have your signature guaranteed:
For value received, I or we assign and transfer this Security to
________________________________________________________________________________
(INSERT ASSIGNEE'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
_______________________________________________________________
_______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
_________________________________________________________________________ agent
to transfer this Security on the books of the Company. The agent may substitute
another to act for him.
In connection with the transfer of this Security, the undersigned
certifies that:
(Check one)
[_] (a) This Security is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the
Securities Act) in compliance with the exemption from
registration under the Securities Act provided by Rule
144A.
[_] (b) This Security is being transferred to Assisted Living
Concepts, Inc.
[_] (c) Transfer other than those above in connection with which
the Company has received an opinion of counsel
(satisfactory to it in form and substance) to the effect
that the transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the
registration requirements of the Securities Act.
[_] (d) This Security is being exchanged for a beneficial
interest in the Rule 144A Global Security and the
undersigned is a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act of 1933).
Date:___________________________________________________________________________
Your signature:_________________________________________________________________
(Sign exactly as your name appears on the other side of this
Security)
Signature Guaranteed by*:_______________________________________________________
* Signature must be guaranteed by an eligible guarantor institution within the
meaning of Securities and Exchange Commission Rule 17Ad-15 (including banks,
stock brokers, savings and loan associations, national securities exchanges,
registered securities associations, clearing agencies and credit unions) with
membership or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other signature guarantee medallion program as may be approved
by the Registrar in addition to, or substitution for, STAMP, if this Security is
to be delivered other than to and in the name of the registered holder.
IF NONE OF THE FOREGOING BOXES IS CHECKED, THE TRUSTEE SHALL NOT BE OBLIGATED TO
REGISTER THE TRANSFER OF THIS SECURITY UNLESS AND UNTIL THE CONDITIONS TO ANY
SUCH TRANSFER OF REGISTRATION SET FORTH HEREIN, ON THE FACE HEREOF AND IN THE
INDENTURE SHALL HAVE BEEN SATISFIED.
-2-
CONVERSION NOTICE
To convert this Security into shares of common stock of the Company, check the
box:
______________
______________
To convert only part of this Security, state the principal amount to be
converted (which must be a minimum of $1,000 or any multiple thereof):
________________________________________________________
$
________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
If you want the Security certificate, if any, made out in another person's name,
fill in the form below:
(INSERT OTHER PERSON'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
______________________________________________________________________
______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
Date:.__________________________________________________________________________
Your signature:.________________________________________________________________
(Sign exactly as your name appears on the other side of this Security)
Signature Guaranteed By*:_______________________________________________________
*Signature must be guaranteed by an eligible guarantor institution within the
meaning of Securities and Exchange Commission Rule 17Ad-15 (including banks,
stock brokers, savings and loan associations, national securities exchanges,
registered securities associations, clearing agencies and credit unions) with
membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other signature guarantee medallion program
as may be approved by the Registrar in addition to, or substitution for, STAMP,
if this Security is to be delivered other than to and in the name of the
registered holder.
-2-