EXHIBIT 1.1
$86,250,000
ASSISTED LIVING CONCEPTS, INC.
5.625% Convertible Subordinated Debentures Due 2003
PLACEMENT AGENCY AGREEMENT
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As of April 7, 1998
Xxxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
ASSISTED LIVING CONCEPTS, INC., a Nevada corporation (the "Company"),
proposes to issue and sell $75,000,000 aggregate principal amount of its 5.625%
Convertible Subordinated Debentures due May 1, 2003 (the "Firm Debentures"),
which are convertible into common stock, $.01 par value per share (the "Common
Stock"), of the Company, at a conversion price of $26.184 per share, subject to
adjustment under certain circumstances. In addition, the Company shall, at your
option (the "Option") issue and sell up to an additional $11,250,000 aggregate
principal amount of 5.625% Convertible Subordinated Debentures due May 1, 2003
on the terms and conditions set forth below (the "Option Debentures"). The Firm
Debentures and, if purchased, the Option Debentures are hereinafter collectively
referred to as the "Debentures." The shares of Common Stock issuable upon
conversion of the Debentures are hereinafter referred to as the "Conversion
Shares." The Debentures are to be issued pursuant to an Indenture to be dated
as of April 13, 1998 (the "Indenture"), between the Company and Xxxxxx Trust and
Savings Bank, as trustee (the "Trustee"). Copies of the Indenture, in
substantially final form, have been delivered to you.
Of the Debentures, the Company proposes to issue and sell (i) a portion
thereof (the "4(2) Debentures") to certain investors in transactions exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to Section 4(2) of the Securities Act ("Section
4(2)") and (ii) the remainder thereof (the "144A Debentures") to Xxxxxxxx & Co.
Inc. in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2), which will be resold by Xxxxxxxx & Co.
Inc. to certain investors pursuant to Rule 144A promulgated under the Securities
Act ("Rule 144A"). The offering of the Debentures as contemplated herein is
hereinafter referred to as the "Offering."
The Company hereby confirms its agreements with Xxxxxxxx & Co. Inc. as
follows:
1. Agreements of Xxxxxxxx & Co. Inc. and the Company. On the basis of the
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representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions of this Agreement:
(a) The Company hereby retains Xxxxxxxx & Co. Inc. as its exclusive
agent in connection with the placement of the 4(2) Debentures for a period
commencing on the date hereof and terminating on the Closing Date (as defined in
Section 2 hereof) and Xxxxxxxx & Co. Inc. agrees to act, on a best efforts
basis, as the Company's exclusive agent in connection with the placement of the
4(2) Debentures and in connection therewith to introduce the Company to certain
"accredited investors" (as such term is defined in Rule 501(a) under the
Securities Act) ("Accredited Investors") as prospective purchasers of the 4(2)
Debentures. Xxxxxxxx & Co. Inc. may, in its sole discretion, retain one or more
sub-placement agents. The Company agrees to pay to Xxxxxxxx & Co. Inc. a fee
equal to 3% of the gross proceeds to the Company from the sale of the 4(2)
Debentures (the "Placement Fee"). Such amount shall be payable by the Company on
the Closing Date.
(b) The Company agrees to issue and sell to Xxxxxxxx & Co. Inc. and
Xxxxxxxx & Co. Inc. agrees to subscribe and pay for, or procure the subscription
and payment for, the 144A Debentures on the Closing Date at a subscription price
of 100% of the principal amount of the 144A Debentures, less 3% of the aggregate
proceeds to the Company from the sale of the 144A Debentures (the "Subscription
Price"). Xxxxxxxx & Co. Inc. has advised the Company that it will reoffer (the
"Exempt Resales") the 144A Debentures purchased by it hereunder solely to
persons whom it reasonably believes to be "qualified institutional buyers"
("QIBs"), as such term is defined in Rule 144A. Xxxxxxxx & Co. Inc. has advised
the Company that it will reoffer the 144A Debentures to such purchasers
initially at a price equal to 100% of the principal amount of such Debentures.
(c) The Company hereby grants, for 30 days from the Closing Date, the
Option to Xxxxxxxx & Co. Inc. to purchase the Option Debentures at the same
price per Option Debenture as Xxxxxxxx & Co. Inc. shall pay for the Firm
Debentures. If executed, the Closing for the purchase of the Option Debentures
shall be governed by Section 2 hereunder. Xxxxxxxx & Co. Inc. shall not be under
any obligation to purchase any of the Option Debentures prior to any exercise of
such option. The Option may be exercised only to cover over-allotments in the
sale of the Firm Debentures by Xxxxxxxx & Co. Inc.
(d) Xxxxxxxx & Co. Inc. covenants and agrees that it will take no
action, nor fail to take any action, if such action or failure to take such
action would have the effect that the offer or sale of the Debentures would not
be exempt from the registration requirements of the Securities Act or the
registration or qualification requirements of any state or political subdivision
of the United States in which the Debentures are to be offered or sold. Xxxxxxxx
& Co. Inc. represents and agrees that (i) it has not offered or sold and will
not offer or sell any Debentures to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding, managing
or disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995 or the Financial Securities Act
1986 (the "Act"), and (ii) it has only issued or passed on, and will only issue
or pass
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on, in the United Kingdom any document received by it in connection with the
issue of the Debentures, other than any document which consists of or any part
of listing particulars, supplementary listing particulars or any other document
required or permitted to be published by listing rules under Part IV of the Act,
to a person who is of a kind described in Article 11(3) of the Financial
Services Xxx 0000 (Investment Advertisements) (Exemptions) Order 1995 or is a
person to whom the document may otherwise lawfully be issued or passed on.
1. Delivery and Payment. The closing for the purchase and sale of the
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Debentures (the "Closing") will occur at the offices of Stroock & Stroock &
Xxxxx LLP, counsel to Xxxxxxxx & Co. Inc., 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx
00000, on April 13, 1998, at 10:00 a.m., local time, or at such other time or on
such other date as may be agreed upon by the Company and Xxxxxxxx & Co. Inc.
(the "Closing Date"). At the Closing, (i) each purchaser of 4(2) Debentures
shall execute and deliver a purchase agreement in substantially the form
included as Exhibit D to the Private Placement Memorandum (as defined in Section
3(a) hereof) (the "Purchase Agreement"), (ii) the purchase and sale of the 4(2)
Debentures shall proceed in accordance with Section 3 of the Purchase Agreement
and (iii) the Company will pay to Xxxxxxxx & Co. Inc. the Placement Fee.
Delivery of the 144A Debentures shall also be made at the Closing against
payment (or the procurement of payment) by Xxxxxxxx & Co. Inc. of the
Subscription Price (net of any amounts described in Section 6 hereof and paid to
Xxxxxxxx & Co. Inc. on behalf of the Company). Such delivery shall be made to
The Depository Trust Company, a New York corporation (55 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx) (the "Depository"), of one or more global Debentures, each in
definitive form, registered in the name of Cede & Co., as nominee of the
Depository, having an aggregate amount corresponding to the aggregate principal
amount of the 144A Debentures. All payments by Xxxxxxxx & Co. Inc. and the
Company at the Closing shall be in same day funds. Payments by the purchasers
of the 4(2) Debentures shall be made in accordance with Section 3 of the
Purchase Agreement.
2. Representations and Warranties of the Company. The Company represents,
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warrants and covenants to Xxxxxxxx & Co. Inc. as follows:
(b) A Confidential Private Placement Memorandum dated April 7, 1998
relating to the Debentures (the "Private Placement Memorandum") has been
prepared by the Company. No stop order or similar order preventing or suspending
the use of the Private Placement Memorandum has been issued; no proceedings for
that purpose are pending, or, to the knowledge of the Company, threatened by any
securities or other governmental authority in any jurisdiction (including,
without limitation, the Securities and Exchange Commission (the "Commission"));
no order asserting that any of the transactions contemplated by this Agreement
or the Private Placement Memorandum are subject to the registration requirements
of the Securities Act has been issued; and no securities or other governmental
authority (including, without limitation, the Commission) has requested any
additional information to be included in the Private Placement Memorandum or
otherwise. Copies of the Private Placement Memorandum have been delivered to
Xxxxxxxx & Co. Inc.. The Company will not distribute the Private Placement
Memorandum or prepare any amendment or supplement thereto to which Xxxxxxxx &
Co. Inc. shall reasonably object in writing after being furnished with a copy
thereof. Any reference herein to the Private Placement Memorandum or any
amendment or supplement thereto shall be deemed to refer to and include the
documents relating to the Company (including financial statements, financial
statement schedules and exhibits) included as exhibits and incorporated by
reference therein pursuant to the terms thereof, and all such documents relating
to the Company are hereinafter referred to as the "Incorporated Documents."
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(c) On the date hereof and on the date of the Private Placement
Memorandum and at all times subsequent to the date hereof through and including
the Closing Date, and on the date of any further amendment or supplement to the
Private Placement Memorandum, no part of the Private Placement Memorandum (as
amended or supplemented) relating to the Company contained or will contain any
untrue statement of a material fact or omitted or will omit to state a material
fact required to be stated therein or necessary to be stated therein in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. On the date on which each Incorporated Document was first
filed by the Company with the Commission pursuant to the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), each such
Incorporated Document, including the financial statements included in each such
Incorporated Document, complied in all material respects with the applicable
provisions of the Securities Act and the rules and regulations of the Commission
thereunder (the "Securities Act Rules and Regulations") or the Exchange Act and
the rules and regulations of the Commission thereunder (the "Exchange Act Rules
and Regulations"), as the case may be. The foregoing representations and
warranties in this Section 3(b) do not apply to any statements or omissions made
in reliance on and in conformity with information relating to Xxxxxxxx & Co.
Inc. furnished in writing to the Company by Xxxxxxxx & Co. Inc. expressly for
use in the Private Placement Memorandum. For all purposes of this Agreement
(including, but not limited to, Section 8 hereof), the statements set forth
under the "Plan of Distribution" section of the Private Placement Memorandum
constitute the only information relating to Xxxxxxxx & Co. Inc. furnished in
writing to the Company by Xxxxxxxx & Co. Inc. expressly for use in the Private
Placement Memorandum. The Company has not distributed any offering material in
connection with the Offering other than the Private Placement Memorandum.
(d) The Company has no significant subsidiaries as of the date hereof
and the Closing Date. The Company is, and at the Closing Date will be, duly
organized, validly existing and in good standing under the laws of the State of
Nevada. The Company has, and at the Closing Date will have, full corporate or
other power and authority to conduct all the activities conducted by it, to own
or lease all the properties and assets owned or leased by it and to conduct its
business as described in the Private Placement Memorandum. The Company is, and
at the Closing Date will be, duly licensed or qualified to do business and in
good standing as a foreign corporation in all jurisdictions in which the nature
of the activities conducted by it or the character of the properties and assets
owned or leased by it makes such licensing or qualification necessary, except
where the failure to be so qualified does not and will not have a material
adverse effect, singly or in the aggregate, on the business, properties,
prospects, condition (financial or otherwise), net worth or results of
operations of the Company (a "Material Adverse Effect"). Complete and correct
copies of (i) the articles of incorporation and bylaws of the Company and all
amendments thereto have been delivered to Xxxxxxxx & Co. Inc., and no changes
therein will be made subsequent to the date hereof and prior to the Closing
Date.
(e) The outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable and are
not subject to any preemptive or similar rights. The Company has an authorized,
issued and outstanding capitalization as set forth in the Private Placement
Memorandum. The description of the securities of the Company in the Private
Placement Memorandum is, and at the Closing Date will be, complete and accurate,
in all material respects. Except as set forth in the Private Placement
Memorandum, the Company does not have outstanding, and at the Closing Date will
not have
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outstanding, any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into, or any contracts or
commitments to issue or sell, any shares of its capital stock or any such
warrants, convertible securities or obligations.
(f) The combined financial statements and the related notes and
schedules of the Company and the Predecessor (as defined below) set forth in the
Private Placement Memorandum present fairly the financial condition of the
Company or the Predecessor, as the case may be, as of the dates indicated and
the combined results of operations, partners' and shareholders' equity (as
applicable) and cash flows of the Company or the Predecessor, as the case may
be, for the periods covered thereby, all in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
entire period involved, except as otherwise disclosed therein. The selected
financial data for the Company and the Predecessor set forth under the caption
"Selected Financial Data" in the Company's Annual Report on Form 10-K for the
year ended December 31, 1997 included as Exhibit A to the Private Placement
Memorandum and under the captions "Prospectus Summary -- Summary Financial and
Operating Data" and "Selected Financial Data" in the Company's Prospectus
Supplement dated October 21, 1997 included as Exhibit B to the Private Placement
Memorandum (the "Prospectus") have been prepared on a basis consistent with the
combined financial statements of the Company or the Predecessor, as the case may
be. No other financial statements or schedules of the Company are required by
the Exchange Act or the Exchange Act Rules and Regulations to be filed by the
Company with the Commission on or prior to the date hereof or the Closing Date.
KMPG Peat Marwick LLP (the "Company Accountants"), who have reported on those of
such financial statements and schedules which are audited, are independent
accountants with respect to the Predecessor and the Company as required by the
Securities Act and the Securities Act Rules and Regulations. For proposes
hereof, the term "Predecessor" shall mean Assisted Living Facilities, Inc., an
Oregon corporation, and Madras Elder Care, an Oregon co-partnership.
(g) The Company maintains a system of internal accounting control
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(h) Except as set forth or described in the Private Placement
Memorandum, subsequent to the respective dates as of which information is given
in the Private Placement Memorandum and prior to the Closing Date, (i) there has
not been, and will not have been, any change in the capitalization of the
Company or any material adverse change in the business, properties, prospects,
condition (financial or otherwise), net worth or results of operations of the
Company arising for any reason whatsoever, (ii) the Company has not incurred,
and will not have incurred, any material liabilities or obligations, direct or
contingent, (iii) the Company has not entered into, and will not have entered
into, any material transactions other than in the ordinary course of business or
pursuant to this Agreement, and (iv) the Company has not, and
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will not have, paid or declared any dividends or other distributions of any kind
on any class of its capital stock.
(i) Any deeds of trust, mortgages or similar instruments encumbering
the Company's properties are not convertible into equity interests in such
properties. Such deeds of trust, mortgages or similar instruments are not
cross-defaulted or cross-collateralized to any property not owned directly or
indirectly by the Company.
(i) Except as set forth in the Private Placement Memorandum, the
Company has fee simple title to all properties and assets described in the
Private Placement Memorandum as owned by it, free and clear of all liens,
security interests, pledges, charges, encumbrances, equities, claims, easements,
leases, tenancies or restrictions (collectively, "Encumbrances") the existence
of which would have a Material Adverse Effect, except such as are described in
the Private Placement Memorandum. The Company has valid, subsisting and
enforceable leases for the properties described in the Private Placement
Memorandum that are leased by it, free and clear of all Encumbrances the
existence of which would have a Material Adverse Effect, except such as are
described in the Private Placement Memorandum. Title insurance in favor of the
Company is in full force and effect with respect to all real property owned by
the Company in amounts at least equal to the purchase price paid by the Company
therefore. The Company has no notice of any claim which has been or could be
asserted by anyone adverse to the Company's rights as lessee under any lease or
affecting or questioning the Company's right to the continued possession of the
properties leased by the Company.
(ii) All Encumbrances on or affecting the Company's properties
which are required to be disclosed in the Private Placement Memorandum are
disclosed therein. The use and occupancy of each of the Company's properties
complies with all applicable codes and zoning laws and regulations, except where
the failure to so comply would not have a Material Adverse Effect, and there is
no pending or, to the best knowledge of the Company, threatened condemnation,
zoning change, environmental or other proceeding or action that will in any
material respect adversely affect the size of, use of, improvements on,
construction on, or access to the Company's properties.
(j) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(k) Except as set forth in the Private Placement Memorandum, there are
no actions, suits or proceedings pending or, to the Company's knowledge,
threatened against or affecting the Company or any of its directors, officers or
stockholders in their capacity as such, or any of the properties or assets owned
or leased by the Company, before or by any Federal or state court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign (collectively, a "Governmental Body"), which is reasonably likely to
result in a Material Adverse Effect.
(l) The Company has, and at the Closing Date will have, all
governmental licenses, permits, consents, orders, approvals, franchises,
certificates and other authorizations (collectively, "Licenses") necessary to
carry on its business and own or lease its properties as
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contemplated in the Private Placement Memorandum, except where the failure to
have such Licenses would not have a Material Adverse Effect. The Company has,
and at the Closing Date will have, complied in all material respects with all
laws, regulations and orders applicable to it or its business and properties,
except where the failure to so comply would not have a Material Adverse Effect.
The Company is not, and at the Closing Date will not be, in default (nor has any
event occurred which, with notice or lapse of time or both, would constitute a
default) in the due performance and observation of any term, covenant or
condition of any indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument (collectively, a
"contract or other agreement") to which it is a party or by which its properties
is bound or affected, which default would individually or in the aggregate have
a Material Adverse Effect. To the best knowledge of the Company, no other party
under any such contract or other agreement, is in default in any material
respect thereunder. Without limiting the generality of the foregoing, except as
otherwise described in the Private Placement Memorandum, each of the assisted
living residences operated by the Company are certified to participate in the
Medicaid programs. The Company has not received any notice of any governmental
proceedings or actions pending or, to the Company's knowledge, threatened for
the purpose of suspending, modifying or revoking any License held by the Company
(including, without limitation, any proceeding or action to decertify any of the
foregoing facilities from participation in any Medicaid program). The Company is
not in violation of any provision of its Restated Certificate of Incorporation,
as amended.
(m) No consent, approval, authorization or order of, or any filing or
declaration with, any Governmental Body is required for the consummation of the
transactions contemplated by this Agreement or in connection with the issuance
and sale of the Debentures by the Company and the issuance by the Company of the
Conversion Shares upon conversion of the Debentures, except such as have been
obtained and such as may be required under state securities or Blue Sky laws.
(n) The Company has full corporate power and authority to enter into
this Agreement and to carry out all the terms and provisions hereof to be
carried out by it. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with the terms
hereof, subject, as to enforcement, and except as limited by, applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
applicability now or hereafter in effect relating to or affecting creditors'
rights and to general principles of equity. Except as disclosed in the Private
Placement Memorandum, the execution, delivery and the performance of this
Agreement and the consummation of the transactions contemplated hereby will not
result in the creation or imposition of any Encumbrance upon any of the
properties or assets of the Company or any of its Subsidiaries pursuant to the
terms or provisions of, or result in a breach or violation of or conflict with
any of the terms or provisions of, or constitute a default under, or give any
other party a right to terminate any of its obligations under, or result in the
acceleration of any obligation under, (i) the articles of incorporation or
bylaws of the Company, as amended, or (ii) any contract or other agreement to
which the Company is a party or by which the Company or any of its assets or
properties are bound or affected, which is material to the Company, or (iii) any
judgment, ruling, decree, order, law, statute, rule or regulation of any
Governmental Body applicable to the business or properties of the Company. The
Company has full power and authority to authorize, issue, and sell the
Debentures and the Conversion Shares.
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(o) There is no document or contract of a character required to be
described in any Incorporated Document or to be filed as an exhibit to any
Incorporated Document which is not described or filed as required.
(p) All such contracts to which the Company is a party have been duly
authorized, executed and delivered by the Company and constitute valid and
binding agreements of the Company and are enforceable against the Company in
accordance with the terms thereof.
(q) Neither the Company nor any of its directors, officers or
affiliates (within the meaning of the Securities Act Rules and Regulations) has
taken, nor will he, she or it take, directly or indirectly, any action designed,
or which might reasonably be expected in the future, to cause or result in,
under the Securities Act or otherwise, or which has constituted, stabilization
or manipulation of the price of any security of the Company to facilitate the
sale or resale of the Debentures or otherwise.
(r) No holder of securities of the Company will have rights to the
registration of any securities of the Company as a result of the filing of the
registration statement contemplated by the Private Placement Memorandum with
respect to the Conversion Shares.
(s) The Company is not involved in any material labor dispute with its
employees, and to the Company's knowledge, no such dispute is threatened or
imminent.
(t) The Company owns, or is licensed or otherwise has the right to use,
all material trademarks and trade names which are used in or necessary for the
conduct of its business as described in the Private Placement Memorandum. To the
Company's knowledge, no claims have been asserted by any person to the use of
any such trademarks or trade names or challenging or questioning the validity or
effectiveness of any such trademark or trade name. The use, in connection with
the business and operations of the Company of such trademarks and trade names
does not, to the Company's knowledge, infringe on the rights of any person.
(u) Neither the Company nor, to the Company's knowledge, any employee
or agent of the Company has made any payment of funds of the Company or received
or retained any funds of the Company in violation of any law, rule or regulation
or of a character required to be disclosed in any Incorporated Document, except
as disclosed therein.
(v) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the business in which the Company is engaged; the Company has
not been refused any insurance coverage sought or applied for; and the Company
has no reason to believe that it will not be able to renew their existing
insurance coverage as and when such coverage expires.
(w) Except as set forth in the Private Placement Memorandum, the
business, operations and facilities of the Company have been and are being
conducted in compliance in all material respects with all applicable laws,
ordinances, rules regulations, Licenses, permits, approvals, plans,
authorizations or requirements relating to occupational safety and health, or
pollution, or protection of health or the environment (including, without
limitation, those relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants or hazardous or toxic substances, materials
or wastes into ambient air, surface water, groundwater or land, or relating
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to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes, whether solid, gaseous or
liquid in nature) of any governmental department, commission, board, bureau,
agency or instrumentality of the United States, any state or political
subdivision thereof, or any foreign jurisdiction , and all applicable judicial
or administrative agency or regulatory decrees, awards, judgments and orders
relating thereto; and the Company has not received any notice from any
governmental instrumentality or any third party alleging any violation thereof
or liability thereunder (including, without limitation, liability for costs of
investigating or remediating sites containing hazardous substances and/or
damages to natural resources).
(x) The Company filed all foreign, federal, state and local tax returns
that are required to be filed or has requested extensions thereof, and has paid
all taxes required to be paid by it and any other assessment, fine or penalty
levied against it, which alone or in the aggregate would have a Material Adverse
Effect, to the extent that any of the foregoing is due and payable.
(y) Each certificate signed by any officer of the Company and delivered
to Xxxxxxxx & Co. Inc. or counsel for Xxxxxxxx & Co. Inc. shall be deemed to be
a representation and warranty by the Company to Xxxxxxxx & Co. Inc. as to the
matters covered thereby.
(z) The Debentures have been duly and validly authorized and the
Debentures, when the Indenture has been duly executed and delivered by the
Company and the Trustee (assuming the due authorization, execution and delivery
of the Indenture by the Trustee) and when the Debentures have been authenticated
by the Trustee and issued, executed, delivered and sold by the Company in
accordance with the Indenture, will have been duly and validly executed,
authenticated, issued and delivered and will (i) constitute valid and legally
binding obligations of the Company enforceable against the Company in accordance
with their terms and entitled to the benefits provided in the Indenture,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors' rights and to
general principles of equity, and (ii) be convertible into the Conversion Shares
in accordance with the terms of the Indenture. The Conversion Shares have been
duly and validly authorized and reserved for issuance upon conversion of the
Debentures and, when issued and delivered upon such conversion, will be duly and
validly issued and outstanding, fully paid and nonassessable and will not have
been issued in violation of or subject to any preemptive or other similar
rights. The Debentures and the Conversion Shares, when issued, will conform to
the respective descriptions thereof set forth in the Private Placement
Memorandum.
(aa) The Indenture has been duly and validly authorized by the Company
and when the Indenture has been duly executed and delivered by the Company and
the Trustee (assuming the due authorization, execution and delivery of the
Indenture by the Trustee), the Indenture will constitute a valid and legally
binding instrument of the Company, enforceable against the Company in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general principles of equity. The Indenture will
conform to the description thereof set forth in the Private Placement
Memorandum.
(bb) Subject to Xxxxxxxx & Co. Inc.'s conformity to its obligations set
forth herein and in reliance upon the representations and warranties of each
purchaser of 4(2) Debentures to be
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set forth in their respective Purchase Agreements, the sale to Xxxxxxxx & Co.
Inc. and resale by Xxxxxxxx & Co. Inc. of the 144A Debentures as contemplated
herein and in reliance upon the representations and warranties of each purchaser
of 4(2) Debentures to be set forth in their respective Purchase Agreements, the
sale of the Debentures as contemplated herein and in the Private Placement
Memorandum is exempt from the registration and prospectus delivery requirements
of the Securities Act. With respect to the offer or sale of the Debentures and
the Exempt Resales, neither the Company nor any of its representatives (which,
for purposes of this Section 3(aa), shall not include Xxxxxxxx & Co. Inc.), has
engaged in any form of general solicitation or general advertising, including,
but not limited to, advertisements, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising (provided that any press
release being issued by the Company solely to disclose the transactions
contemplated herein shall not be deemed to constitute a general solicitation).
No securities of the same class as the Debentures or the Conversion Shares have
been issued and sold by the Company within the six-month period immediately
prior to the date hereof.
(cc) The Company has dealt with no broker, finder, commission agent or
other person in connection with the sale of the Debentures and the transactions
contemplated by this Agreement and the Private Placement Memorandum, other than
Xxxxxxxx & Co. Inc., and the Company is under no obligation to pay any broker's
fee or commission in connection with such transactions, other than the
commission to Xxxxxxxx & Co. Inc. contemplated hereby.
(dd) The Private Placement Memorandum, as of its date, and each
amendment or supplement thereto, as of its date, contains all the information
required by Rule 144A.
(ee) No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Debentures are listed on any
national securities exchange, registered under Section 6 of the Exchange Act or
are quoted in an automated inter-dealer quotation system.
1. Agreements of the Company. The Company covenants and agrees with
-------------------------
Xxxxxxxx & Co. Inc. as follows:
(d) The Company will not, at any time when the Private Placement
Memorandum is delivered in connection with sales of the Debentures, amend or
supplement the Private Placement Memorandum, unless a copy thereof shall first
have been submitted to Xxxxxxxx & Co. Inc. within a reasonable period of time
prior to the use thereof and Xxxxxxxx & Co. Inc. shall not have objected thereto
in good faith.
(e) The Company will notify Xxxxxxxx & Co. Inc. promptly, and will
confirm such advice in writing, (i) of any request by the securities or other
governmental authority of any jurisdiction for any additional information
(including, but not limited to, any amendments or supplements to the Private
Placement Memorandum), (ii) of the issuance by any securities or other
governmental authority of any jurisdiction (including, but not limited to, the
Commission) of any stop order suspending or preventing the use of the Private
Placement Memorandum or asserting that the offering and sale of the Debentures
is subject to the registration requirements of the Securities Act, or the
initiation of any proceedings for any such purposes or the threat thereof, (iii)
of the happening of any event during the period mentioned in Section 4(a) that
in the judgment of the
-10-
Company makes any statement made in the Private Placement Memorandum untrue or
that requires the making of any changes in the Private Placement Memorandum in
order to make the statements therein not misleading and (iv) of receipt by the
Company or any representative or attorney of the Company of any other
communication from any securities or other governmental authority of any
jurisdiction (including, without limitation, the Commission) relating to the
Company or the Private Placement Memorandum. If at any time any securities or
other governmental authority (including, without limitation, the Commission)
shall issue any order described in clause (ii) of the immediately preceding
sentence, the Company will make every reasonable effort to obtain the withdrawal
of such order at the earliest possible moment. The Company will use its best
efforts to prepare and deliver the Private Placement Memorandum to Xxxxxxxx &
Co. Inc. as promptly as practicable after the date hereof.
(f) If, at any time when the Private Placement Memorandum relating to
the Debentures is required to be delivered under the laws of any jurisdiction,
any event occurs as a result of which the Private Placement Memorandum, as then
amended, would include any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein not
misleading, or if for any other reason it is necessary at any time to amend the
Private Placement Memorandum to comply with the laws of any jurisdiction, the
Company will promptly notify Xxxxxxxx & Co. Inc. thereof and, subject to Section
4(b) hereof, will prepare an amendment to the Private Placement Memorandum that
corrects such statement or omission or effects such compliance.
(g) The Company will deliver to Xxxxxxxx & Co. Inc., without charge, as
many copies of the Private Placement Memorandum or any amendment thereto as
Xxxxxxxx & Co. Inc. may reasonably request. The Company consents to the use of
the Private Placement Memorandum or any amendment or supplement thereto by
Xxxxxxxx & Co. Inc. in connection with the Offering.
(h) It will arrange for the qualification of the Debentures for offer
and sale under the securities or Blue Sky laws of such jurisdictions as Xxxxxxxx
& Co. Inc. may designate and will continue such qualifications in effect for as
long as may be necessary to complete the Offering; provided, however, that in
connection therewith the Company shall not be obligated to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction where it is not now so subject.
(i) The Company will apply the net proceeds from the sale of the
Debentures as set forth under "Use of Proceeds" in the Private Placement
Memorandum.
(j) The Company will not at any time, directly or indirectly, take any
action intended, or which might reasonably be expected, to cause or result in,
or which will constitute, stabilization of the price of any security of the
Company to facilitate the sale or resale of any of the Debentures.
(k) Neither the Company nor any affiliate (as defined in Rule 501(b) of
Regulation D under the Securities Act) will sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
the Securities Act) which will be integrated with the sale of the Debentures or
the Conversion Shares in a manner which would require the registration under the
Securities Act of the Debentures or the Conversion Shares.
-11-
(l) To the extent the Company remains bound by the Registration Rights
Agreement, dated as of April 7, 1998, by and among the Company and each of the
Purchasers (the "Registration Rights Agreement"), the Company agrees that it
will comply with the terms and provisions thereof.
(m) The Company will cause the Debentures to be listed for trading on
the Private Offering Resales and Trading through Automated Linkages (the "PORTAL
Market") System of the National Association of Securities Dealers, Inc.
("NASD"), subject only to notice of issuance.
(n) The Company will cause the Conversion Shares to be listed on the
American Stock Exchange ("AMEX") no later than the time the Debentures become
convertible pursuant to the Indenture.
(o) Neither the Company nor any affiliate (as defined in Rule 501(b) of
Regulation D under the Securities Act) will sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
the Securities Act) which will be integrated with the sale of the Debentures or
the Conversion Shares in a manner which would require the registration under the
Securities Act of the offer and sale of the Debentures and the Conversion Shares
pursuant to this Agreement.
(p) For so long as any of the Rule 144A Debentures 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 purchaser of such securities from such holder or beneficial holder,
the information specified in, and meeting the requirements of Rule 144A(d)(4)
under the Securities Act.
1. Expenses. The Company will pay, or reimburse if paid by Xxxxxxxx & Co.
--------
Inc., all costs and expenses incident to the performance of the Company's
obligations under this Agreement, whether or not the transactions contemplated
herein are consummated or this Agreement is terminated, including, but not
limited to all costs and expenses of or relating to (i) the printing or other
production of all documents with respect to the transactions, including any
costs of printing the Private Placement Memorandum, and any amendment or
supplement to either thereof, this Agreement, the Indenture and any blue sky
memoranda; (ii) all arrangements relating to the delivery to Xxxxxxxx & Co. Inc.
of copies of the foregoing documents, (iii) the fees and disbursements of the
counsel, accountants and any other experts or advisors retained by the Company,
(iv) preparation, issuance and delivery of any certificates evidencing the
Debentures and the Conversion Shares, including Trustee's, transfer agent's and
registrar's fees, (v) the qualification of the Debentures and the Conversion
Shares under blue sky laws, including filing fees and fees and disbursements of
counsel for Xxxxxxxx & Co. Inc. relating thereto; (vi) the listing of the
Conversion Shares on the AMEX and the qualification for trading of the
Debentures on the National Association of Securities Dealers' PORTAL system, and
(vii) expenses of Company personnel in connection with their attendance at
meetings with prospective investors in the Debentures and advertising relating
to the Offering (other than shall have been specifically approved by Xxxxxxxx &
Co. Inc. to be paid for by it). If the sale of the Debentures provided for
herein is not consummated because any condition to the obligations of Xxxxxxxx &
Co. Inc. set forth in Section 6 hereof is not satisfied, because this
-12-
Agreement is otherwise terminated pursuant to Section 9 hereof or because of any
failure, refusal or inability on the part of the Company to perform all
obligations and satisfy all conditions on its part to be performed or satisfied
hereunder other than by reason of a default by Xxxxxxxx & Co. Inc., the Company
will reimburse Xxxxxxxx & Co. Inc. for all out-of-pocket expenses (including the
reasonable fees, disbursements, and other charges of counsel to Xxxxxxxx & Co.
Inc.) incurred by them in connection herewith. The Company shall not in any
event be liable to Xxxxxxxx & Co. Inc. for the loss of anticipated profits from
the transactions covered by this Agreement.
2. Conditions of the Obligations of Xxxxxxxx & Co. Inc. The obligations of
----------------------------------------------------
Xxxxxxxx & Co. Inc. hereunder are subject to the following conditions:
(g) No stop order or similar order preventing or suspending the use of
the Private Placement Memorandum has been issued; no proceedings for that
purpose are pending, or, to the knowledge of the Company or Xxxxxxxx & Co. Inc.,
threatened by any securities or other governmental authority in any jurisdiction
(including, without limitation, the Commission); no order asserting that any of
the transactions contemplated by this Agreement or the Private Placement
Memorandum are subject to the registration requirements of the Securities Act
has been issued; no securities or other governmental authority (including,
without limitation, the Commission) has requested any additional information to
be included in the Private Placement Memorandum or otherwise; no order
suspending the qualification or registration of the Debentures or the Conversion
Shares under the securities or Blue Sky laws of any jurisdiction shall be in
effect and no proceeding for such purpose shall be pending before or, to the
knowledge of the Company, threatened by the authorities of any such
jurisdiction; and after the date hereof no amendment or supplement to the
Private Placement Memorandum shall have been prepared unless a copy thereof was
first submitted to Xxxxxxxx & Co. Inc. and Xxxxxxxx & Co. Inc. did not object
thereto in good faith.
(h) Since the respective dates as of which information is given in the
Private Placement Memorandum, (i) there shall not have been a material adverse
change in the general affairs, business, business prospects, properties,
management, condition (financial or otherwise) or results of operations of the
Company, whether or not arising from transactions in the ordinary course of
business, and (ii) the Company shall not have sustained any material loss or
interference with its business, assets or properties from fire, explosion, flood
or other casualty, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order or
decree, which is not set forth in the Private Placement Memorandum, if in the
judgment of Xxxxxxxx & Co. Inc. any such development makes it impracticable or
inadvisable to consummate the sale and delivery of the Debentures.
(i) Since the respective dates as of which information is given in the
Private Placement Memorandum, there shall have been no litigation or other
proceeding instituted against the Company or any of its officers, directors or
stockholders in their capacities as such, or any of their respective assets or
properties, before or by any Governmental Body in which litigation or proceeding
is reasonably likely to result in a Material Adverse Effect.
(j) Each of the representations and warranties of the Company contained
herein shall be true and correct in all material respects at the Closing Date,
as if made on such date, and all covenants and agreements herein contained to be
performed on the part of the Company and all
-13-
conditions herein contained to be fulfilled or complied with by the Company at
or prior to the Closing Date shall have been fully performed, fulfilled or
complied with.
(k) Xxxxxxxx & Co. Inc. shall have received an opinion, dated the
Closing Date from Xxxxxx & Xxxxxxx, counsel for the Company in form and
substance satisfactory to Xxxxxxxx & Co. Inc. Xxxxxxxx & Co. Inc. shall have
received an opinion, dated the Closing Date, from Xxxxxxx Xxxxxx, Nevada counsel
for the Company, in form and substance satisfactory to Xxxxxxxx & Co. Inc. In
rendering any such opinion, such counsel may rely, as to matters of fact, to the
extent such counsel deems proper, on certificates of responsible officers of the
Company and public officials. The foregoing opinion of Xxxxxx & Xxxxxxx shall
also state that Xxxxxxxx & Co. Inc. is justified in relying upon such opinion of
Xxxxxxx Xxxxxx, and a copy of such opinion shall be delivered to Xxxxxxxx & Co.
Inc. and Xxxxxxxx & Co. Inc.'s counsel.
(l) No later than April 13, 1998, the Company Accountants shall have
furnished to Xxxxxxxx & Co. Inc. a letter, dated the date of its delivery (the
"Original Letter"), addressed to Xxxxxxxx & Co. Inc. and in form and substance
satisfactory to Xxxxxxxx & Co. Inc., confirming that (i) they are independent
public accountants with respect to the Company and the Predecessor within the
meaning of the Securities Act and the Securities Act Rules and Regulations; (ii)
in their opinion, the financial statements and any supplementary financial
information and schedules (and pro forma financial information) included or
incorporated in the Private Placement Memorandum, and examined by them comply as
to form in all material respects with the applicable accounting requirements of
the Securities Act and the Securities Act Rules and Regulations; (iii) on the
basis of procedures, not constituting an examination in accordance with the
generally accepted auditing standards, set forth in detail in the Original
Letter, including a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and the Predecessor, inspections of the
minute books of the Company and the minute books and partnership records of the
Predecessor since the latest audited financial statements included or
incorporated in the Private Placement Memorandum, inquiries of officials of the
Company and the Predecessor responsible for financial and accounting matters and
such other inquiries and procedures as may be specified in the Original Letter
to a date not more than five days prior to the date of the Original Letter,
nothing came to their attention that caused them to believe that: (A) the
unaudited financial statements and schedules of the Company and the Predecessor
included or incorporated in the Private Placement Memorandum do not comply as to
form in all material respects with the applicable accounting requirements of the
Securities Act and the Securities Act Rules and Regulations, or are not fairly
presented in conformity with generally accepted accounting principles applied on
a basis substantially consistent with the basis for the audited financial
statements included in the prospectus; (B) any other unaudited income statement
data and balance sheet items included or incorporated in the Private Placement
Memorandum do not agree with the corresponding items in the unaudited financial
statements from which such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited financial statements included
or incorporated in the Private Placement Memorandum; (C) the unaudited financial
statements which were not included or incorporated in the Private Placement
Memorandum but from which were derived an unaudited financial statements
referred to in Clause A and any unaudited income statement data and balance
sheet items included or incorporated in the Private Placement Memorandum and
referred to in Clause (B) were not determined on a basis substantially
consistent with the basis for the audited financial statements included or
incorporated in the Private
-14-
Placement Memorandum; (D) the unaudited pro forma financial statements included
or incorporated in the Private Placement Memorandum do not comply as to form in
all material respects with the applicable accounting requirements of the
Securities Act and the Securities Act Rules and Regulations or the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of those statements; (E) as of a specified date not more than five
days prior to the date of the Original Letter, there have been any changes in
the capital stock or partnership interest of the Company or the Predecessor of
any increase in the long-term debt of the Company or the Predecessor, or any
decreases in net current assets or net assets or other items specified by
Xxxxxxxx & Co. Inc., or any increases in any items specified by Xxxxxxxx & Co.
Inc., in each case as compared with amounts shown in the latest balance sheet
included or incorporated in the Private Placement Memorandum, except in each
case for changes, increases or decreases which the Private Placement Memorandum
discloses have occurred or may occur or which are described in the Original
Letter; and (F) for the period from the date of the latest financial statements
included or incorporated in the Private Placement Memorandum to the specified
date referred to in Clause E, there were any decreases in revenues or the total
or per share amounts of net income or other items specified by Xxxxxxxx & Co.
Inc., or any increases in any items specified by Xxxxxxxx & Co. Inc., in each
case as compared with the comparable period of the preceding year and with any
other period of corresponding length specified by Xxxxxxxx & Co. Inc. , except
in each case for decreases or increases which the Private Placement Memorandum
discloses have occurred or may occur or which are described in the Original
Letter; and (iv) in addition to the examination referred to in their reports
included in the Private Placement Memorandum, and the procedures referred to in
clause (iii) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by Xxxxxxxx & Co. Inc., which are derived from the general
accounting, financial or other records of the Company or the Predecessor, as the
case may be, which appear in the Private Placement Memorandum or in any
Incorporated Document, and have compared such amounts, percentages and financial
information with such accounting, financial and other records and have found
them to be in agreement. At the Closing Date, the Company Accountants shall have
furnished to Xxxxxxxx & Co. Inc. a letter, dated the date of its delivery, which
shall confirm, on the basis of a review in accordance with the procedures set
forth in the Original Letter, that nothing has come to their attention during
the period from the date of the Original Letter referred to in the prior
sentence to a date (specified in the letter) not more than five days prior to
the Closing Date which would require any change in the Original Letter if it
were required to be dated and delivered at the Closing Date.
(m) At the Closing Date, there shall be furnished to Xxxxxxxx & Co. Inc.
a certificate, dated the Closing Date, signed by each of the Chief Executive
Officer and the Vice President and Controller of the Company, to the effect
that:
(i) Each signer of such certificate has carefully examined the
Private Placement Memorandum and (A) as of the date of such certificate,
the Private Placement Memorandum does not contain any untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading and (B) since the date of
the Private Placement Memorandum no event has occurred as a result of
which it is necessary to amend or supplement the Private Placement
Memorandum in order to make the statements therein not untrue or
misleading in any material respect;
-15-
(ii) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the
time such certificate is delivered, true and correct in all respects;
(iii) Each of the covenants required herein to be performed by the
Company on or prior to the date of such certificate has been duly,
timely and fully performed and each condition herein required to be
complied with by the Company on or prior to the delivery of such
certificate has been duly, timely and fully complied with; and
(iv) No stop order or similar order preventing or suspending the
use of the Confidential Placement Memorandum or the Preliminary
Confidential Placement Memorandum has been issued; no proceedings for
that purpose are pending, or, to the knowledge of the Company,
threatened by any securities or other governmental authority in any
jurisdiction (including, without limitation, the Commission); no order
asserting that any of the transactions contemplated by this Agreement or
the Confidential Placement Memorandum are subject to the registration
requirements of the Securities Act has been issued; no securities or
other governmental authority (including, without limitation, the
Commission) has requested any additional information to be included in
the Confidential Placement Memorandum, the Preliminary Confidential
Placement Memorandum or otherwise; no order suspending the qualification
or registration of the Debentures or the Conversion Shares under the
securities or Blue Sky laws of any jurisdiction shall be in effect and
no proceeding for such purpose shall be pending before or, to the
Company's knowledge, threatened by the authorities of any such
jurisdiction.
(n) The Company shall have furnished to Xxxxxxxx & Co. Inc. such
certificates, in addition to those specifically mentioned herein, as Xxxxxxxx &
Co. Inc. may have reasonably requested as to the accuracy and completeness at
the Closing Date of any statement in the Private Placement Memorandum, as to the
accuracy at the Closing Date of the representations and warranties of the
Company as to the performance by the Company of its obligations hereunder, or as
to the fulfillment of the conditions concurrent and precedent to the obligations
hereunder of Xxxxxxxx & Co. Inc.
(o) All opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you. The Company will furnish you with such conformed
copies of such opinions, certificates, letters and other documents as you shall
reasonably request.
(p) The Debentures shall have been approved for listing on the National
Association of Securities Dealers' PORTAL system, subject only to notice of
issuance.
7. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless Xxxxxxxx & Co.
Inc. and each person, if any, who controls Xxxxxxxx & Co. Inc. within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
from and against any and all losses, claims,
-16-
damages or liabilities, joint or several (and actions in respect thereof), to
which they, or any of them, may become subject under the Securities Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement made by the Company in Section 3 of this Agreement, (ii) any
untrue statement or alleged untrue statement of any material fact contained in
(A) the Private Placement Memorandum or any amendment or supplement thereto or
(B) any application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to qualify the
Debentures and the Conversion Shares under the securities or blue sky laws
thereof or filed with the Commission or any securities association or securities
exchange (each, an "Application"), or (iii) the omission or alleged omission to
state in the Private Placement Memorandum or any amendment or supplement thereto
or in any Application a material fact required to be stated therein or necessary
to make the statements therein not misleading, and will reimburse, as incurred,
Xxxxxxxx & Co. Inc. and each such controlling person for any legal or other
expenses reasonably incurred by Xxxxxxxx & Co. Inc. or such controlling person
in connection with investigating, defending or appearing as a third-party
witness in connection with any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
-------- -------
extent that any such loss, claim, damage or liability based upon an untrue
statement or omission or alleged untrue statement or omission in any of such
documents made in reliance upon and in conformity with written information
furnished to the Company by Xxxxxxxx & Co. Inc. expressly for use therein;
provided, further, that such indemnity with respect to the Private Placement
-------- -------
Memorandum shall not inure to the benefit of Xxxxxxxx & Co. Inc. (or any such
controlling person) from whom the person asserting any such loss, claim, damage,
liability or action purchased Debentures which are the subject thereof to the
extent that any such loss, claim, damage or liability (i) results from the fact
that Xxxxxxxx & Co. Inc. failed to send or give a copy of the Private Placement
Memorandum (as amended or supplemented) to such person at or prior to the
confirmation of the sale of such Debentures to such person in any case where
such delivery is required by the Securities Act and (ii) arises out of or is
based upon an untrue statement or omission of a material fact contained in the
Private Placement Memorandum that was corrected in any amendment or supplement
to the Private Placement Memorandum, unless such failure to deliver the Private
Placement Memorandum (as amended or supplemented) was the result of
noncompliance by the Company with Section 5(c) or 5(d). This indemnity agreement
will be in addition to any liability that the Company might otherwise have. The
Company will not, without the prior written consent of Xxxxxxxx & Co. Inc.,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not Xxxxxxxx & Co. Inc. or any person who
controls Xxxxxxxx & Co. Inc. within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act is a party to each claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of Xxxxxxxx & Co. Inc. and each such controlling person
from all liability arising out of such claim, action, suit or proceeding.
(b) Xxxxxxxx & Co. Inc. will indemnify and hold harmless the Company,
and each person, if any, who controls the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, each director of the
Company and each officer of the Company against any losses, claims, damages or
liabilities (or actions in respect thereof) to which the Company, and any such
director, officer or controlling person may become subject under the Securities
Act or other federal or state statutory law or regulation, at common law or
otherwise,
-17-
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Private Placement
Memorandum or any amendment or supplement to the Private Placement Memorandum or
any Application, or material fact required to be stated therein or (ii) the
omission or the alleged omission to state in the Private Placement Memorandum or
any amendment or supplement thereto, or any Application, a material fact
required to be stated therein or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by
Xxxxxxxx & Co. Inc. expressly for use therein; and, subject to the limitation
set forth immediately preceding this clause, will reimburse, as incurred, any
legal or other expenses reasonably incurred by the Company, and any such
director, officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or any action in respect
thereof. This indemnity agreement will be in addition to any liability which
such Placement Agent may otherwise have. The Company acknowledges that for all
purposes under this Agreement, the statements set forth under the heading "Plan
of Distribution" of the Private Placement Memorandum constitute the only
information Xxxxxxxx & Co. Inc. furnished in writing to the Company expressly
for inclusion in the Private Placement Memorandum. This indemnity agreement will
be in addition to any liability that Xxxxxxxx & Co. Inc. might otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party or parties
under this Section 7, notify such indemnifying party or parties of the
commencement thereof; but the omission so to notify the indemnifying party or
parties will not relieve it or them from any liability which it or they may have
to any indemnified party otherwise than under subsection (a) or (b) of this
Section 7 or to the extent that the indemnifying party was not adversely
affected by such omission. If any such action is brought against an indemnified
party and it notifies an indemnifying party or parties of the commencement
thereof, the indemnifying party or parties against which a claim is to be made
will be entitled to participate therein and, to the extent that it or they may
wish, to assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
-------- -------
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnifying party shall not have the right to direct the defense of such action
on behalf of such indemnified party or parties and such indemnified party or
parties shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election to assume the defense thereof
and approval by such indemnified party of counsel appointed to defend such
action, the indemnifying party will not be liable to such indemnified party
under this Section 7 for any legal or other expenses other than reasonable costs
of investigation subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, designated by Xxxxxxxx &
-18-
Co. Inc. in the case of paragraph (a) of this Section 7, representing the
indemnified parties under such paragraph (a) who are parties to such action or
actions), or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified party
without the consent of the indemnifying party, unless such indemnified party
waived its rights under this Section 7 in which case the indemnified party may
effect such a settlement without such consent.
(d) If the indemnification provided for in the preceding paragraphs of
this Section 7 is unavailable or insufficient to hold harmless an indemnified
party under paragraph (a) or (b) above in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties, on the one
hand, and the indemnified party, on the other, from the Offering or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand, and the indemnified party, on
the other, in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and Xxxxxxxx & Co. Inc., on the other, shall be deemed to be in the same
proportion as the total proceeds from the Offering (before deducting expenses,
but after deducting Xxxxxxxx & Co. Inc.'s fee) received by the Company bears to
the total commissions and fee received by Xxxxxxxx & Co. Inc. Relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or Xxxxxxxx & Co.
Inc., the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission, as well as
any other relevant equitable considerations appropriate in the circumstances.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities (or actions in respect thereof) referred to above
in this Section 7(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. The Company and Xxxxxxxx & Co. Inc. agree
that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to in the first sentence of this paragraph (d). Notwithstanding any other
provision of this paragraph (d), Xxxxxxxx & Co. Inc. shall not be obligated to
make contributions hereunder that in the aggregate exceed the fee received by it
with respect to the Debentures purchased under this Agreement, less the
aggregate amount of any damages that such Placement Agent has otherwise been
required to pay in respect of the same or any substantially similar claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 7(d), each person, if any, who controls Xxxxxxxx & Co. Inc. within the
meaning of Section 15
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of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as Xxxxxxxx & Co. Inc., and each director of the Company,
and each person, if any, who controls the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, shall have the same
rights to contribution as the Company, subject in each case to the provisions of
this paragraph (d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect to which a claim for contribution may be made against another
party or parties under this Section 7(d), notify any such party or parties from
whom contribution may be sought, but the omission to notify such party or
parties shall not relieve the party or parties from whom contribution may be
sought from any other obligation(s) it or they may have hereunder or otherwise
than under this paragraph (d) or (y) to the extent that such party or parties
were not adversely affected by such omission. The contribution agreement set
forth above shall be in addition to any liabilities which any indemnifying party
may otherwise have.
8. Survival. The respective representations, warranties, agreements,
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covenants, indemnities and other statements of the Company, its officers, and
Xxxxxxxx & Co. Inc. set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company, any of
its officers or directors, Xxxxxxxx & Co. Inc. or any controlling person
referred to in Section 7 hereof and (ii) delivery of and payment for the
Debentures. The respective agreements, covenants, indemnities and other
statements set forth in Sections 5 and 7 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
9. Termination. The obligations of Xxxxxxxx & Co. Inc. under this
-----------
Agreement may be terminated at any time prior to the Closing Date by notice to
the Company from Xxxxxxxx & Co. Inc., without liability on the part of Xxxxxxxx
& Co. Inc. to the Company if, prior to delivery and payment for the Debentures,
in the sole judgment of Xxxxxxxx & Co. Inc.:
(i) the Company shall have failed, refused or been unable to
perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder at or prior thereto;
(ii) trading in any of the equity securities of the Company shall
have been suspended by the Commission or by an exchange that lists the
Common Stock;
(iii) trading in securities generally on the AMEX, New York Stock
Exchange or the International Stock Exchange of the United Kingdom and
The Republic of Ireland, Limited shall have been suspended or limited or
minimum or maximum prices shall have been generally established on
either such exchanges, or additional material governmental restrictions,
not in force on the date of this Agreement, shall have been imposed upon
trading in securities generally by any of such exchanges or by order of
the Commission or any court or other governmental authority;
(iv) a general banking moratorium shall have been declared by
Federal, New York State or United Kingdom authorities; or
(v) any material adverse change in the financial or securities
markets in the United States or United Kingdom or any outbreak or
escalation of hostilities or declaration by the United States or the
United Kingdom of a national emergency or war or other calamity or
crisis shall have occurred, the effect of any of which is such as to
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make it, in the sole judgment of Xxxxxxxx & Co. Inc., impracticable or
inadvisable to proceed with the Offering or the delivery of the
Debentures on the terms and in the manner contemplated by the
Confidential Placement Memorandum.
Any termination pursuant to this Section 9 shall be without liability of
any party to any other party except as provided in Sections 5 and 7.
10. Notices. Notice given pursuant to any of the provisions of this
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Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, 0000 XX
Xxxxxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxx 00000, Attention: Chief Executive
Officer, with a copy to Xxxxxx & Xxxxxxx, 000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxx, XX 00000, Attention: Xxxx Xxxxx, Esq., or (b) if to Xxxxxxxx & Co.
Inc., at the offices of Xxxxxxxx & Co. Inc., 000 Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxxx. Any such notice shall be
effective only upon receipt. Any notice under Section 8 or 9 may be made by
facsimile or telephone, but if so made shall be subsequently confirmed in
writing.
11. Successors. This Agreement shall inure to the benefit of and shall be
----------
binding upon Xxxxxxxx & Co. Inc., the Company, and their respective successors
and legal representatives, and nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the indemnities
of the Company contained in Section 7 of this Agreement shall also be for the
benefit of any person or persons who control Xxxxxxxx & Co. Inc. within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
and (ii) the indemnities of Xxxxxxxx & Co. Inc. contained in Section 7 of this
Agreement shall also be for the benefit of the directors of the Company, the
officers of the Company and any person or persons who control the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act. No purchaser of 144A Debentures from Xxxxxxxx & Co. Inc. shall be deemed a
successor because of such purchase. This Agreement shall not be assignable by
either party hereto without the prior written consent of the other party.
12. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
--------------
AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
13. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same instrument.
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If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company and Xxxxxxxx & Co.
Inc.
ASSISTED LIVING CONCEPTS, INC.
By: /s/ Xxxxx Xxxxx Xxxxxx
----------------------------------
Name: Xxxxx Xxxxx Xxxxxx
Title: President and Chief Operating Officer
XXXXXXXX & CO. INC.
By: /s/ Xxxxxxx X xx Xxxxxx
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Name: Laurent X de Marvel
Title: Managing Director
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