1
EXHIBIT 1.1
EXECUTION COPY
ALTERNATIVE LIVING SERVICES, INC.
2,800,000 SHARES OF COMMON STOCK*
UNDERWRITING AGREEMENT
December 15, 1997
SCHRODER & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
SMITH BARNEY INC.
COWEN & COMPANY
MCDONALD & COMPANY SECURITIES, INC.
as Representatives of the
several Underwriters
c/o Schroder & Co. Inc.
787 Seventh Avenue
5th Floor
New York, New York 10019
Ladies and Gentlemen:
Alternative Living Services, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several Underwriters named in
Schedule 1 hereto (the "Underwriters"), for whom you have been duly authorized
to act as representatives (in such capacity, the "Representatives"), an
aggregate of 2,800,000 shares (the "Firm Securities") of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"). The Company has also
agreed to issue and sell pursuant to an option, subject to the terms and
conditions hereof, up to 420,000 additional shares of Common Stock. Any and all
shares of Common Stock to be issued and sold pursuant to such option are
referred to herein as the "Option Securities," and the Firm Securities and any
Option Securities are collectively referred to herein as the "Securities." The
Company hereby confirms its agreement with the several Underwriters, as set
forth below. If you are the only Underwriters, all references herein to the
Representatives shall be deemed to be the Underwriters.
1. Agreements to Sell and Purchase.
(a) The Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters, severally and not jointly, agrees to
purchase from the Company, upon
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*/ Plus an option to purchase from the Company up to 420,000 shares to
cover over-allotments.
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the basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, and at a
purchase price of $21.85 per share, the number of Firm Securities set forth
opposite the name of such Underwriter in Schedule 1 hereto. The Company shall
deliver, or cause to be delivered, to the Representatives for the respective
accounts of the Underwriters, one or more certificates in definitive form for
the Firm Securities that the several Underwriters have agreed to purchase
hereunder, and in such denomination or denominations and registered in such name
or names as the Representatives request upon notice to the Company at least 48
hours prior to the Firm Closing Date (as hereinafter defined), against payment
by or on behalf of the Underwriters of the purchase price therefor by wire
transfer of same-day funds. Such delivery of and payment for the Firm Securities
shall be made at the offices of Schroder & Co. Inc., 787 Seventh Avenue, 5th
Floor, New York, New York 10019 at 9:30 a.m., New York time, on December 19,
1997, or at such other place, time or date as the Representatives and the
Company may agree upon or as the Representatives may determine pursuant to
Section 8 hereof, such time and date of delivery against payment being herein
referred to as the "Firm Closing Date." The Company will make such certificate
or certificates for the Firm Securities available for checking and packaging by
the Representatives at the offices in New York, New York of the Company's
transfer agent or registrar at least 24 hours prior to the Firm Closing Date.
(b) Solely for the purpose of covering any over-allotments in
connection with the distribution and sale of the Firm Securities as contemplated
by the Prospectus (as hereinafter defined), the Company hereby grants to the
several Underwriters an option to purchase, severally and not jointly, the
Option Securities. The purchase price to be paid for any Option Securities shall
be the same price per share as the price per share for the Firm Securities sold
by the Company set forth above in paragraph (a) of this Section 1. The option
granted hereby may be exercised as to all or any part of the Option Securities
from time to time within thirty days after the date of the Prospectus. The
Underwriters shall not be under any obligation to purchase any of the Option
Securities prior to any exercise of such option. The Representatives may from
time to time exercise the option granted hereby by giving notice in writing or
by telephone (confirmed in writing) to the Company setting forth the aggregate
amount of Option Securities as to which the several Underwriters are then
exercising the option and the date and time for delivery of and payment for such
Option Securities. Any such date of delivery shall be determined by the
Representatives but shall not be earlier than two business days or later than
seven business days after such exercise of the option and, in any event, shall
not be earlier than the Firm Closing Date. The time and date set forth in such
notice, or such other time on such other date as the Representatives and the
Company may agree upon or as the Representatives may determine pursuant to
Section 8 hereof, is herein called the "Option Closing Date" with respect to
such Option Securities. Upon exercise of the option as provided herein, the
Company shall become obligated to sell to each of the several Underwriters, and,
subject to the terms and conditions herein set forth, each of the Underwriters
(severally and not jointly) shall become obligated to purchase from the Company
the same percentage of the total number of the Option Securities as to which the
several Underwriters are then exercising the option, as such Underwriter is
obligated to purchase of the aggregate number of Firm Securities, as adjusted by
the Representatives in such manner as they deem advisable to avoid fractional
shares. If the option is exercised as to all or any portion of the Option
Securities, one or more certificates in definitive form for such
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Option Securities, and payment therefor, shall be delivered on the related
Option Closing Date in the manner, and upon the terms and conditions, set forth
in paragraph (a) of this Section 1, except that reference therein to the Firm
Securities and the Firm Closing Date shall be deemed, for purposes of this
paragraph (b), to refer to such Option Securities and Option Closing Date,
respectively.
(c) It is understood that you, individually and not as the
Representatives, may (but shall not be obligated to) make payment on behalf of
any Underwriter or Underwriters for any of the Securities to be purchased by
such Underwriter or Underwriters. No such payment shall relieve such Underwriter
or Underwriters from any of its or their obligations hereunder.
2. Representations and Warranties. The Company represents and warrants
to, and agrees with, each of the several Underwriters that:
i) The Company has filed with the Securities and Exchange
Commission (the "Commission") a "shelf" registration statement on Form S-3 (File
No. 333-39705), which has become effective, relating to shares of Common Stock,
certain debt securities and shares of the Company's Preferred Stock. The Company
has also filed with the Commission a supplement to the form of prospectus
included in such registration statement specifically relating to the Securities
pursuant to Rule 424 under the Securities Act of 1933, as amended (the "Act").
Such registration statement, as amended at the date hereof, meets the
requirements of Rule 415 under the Act. As used in this Agreement, the term
"Registration Statement" means such registration statement as amended at the
date hereof, including exhibits, financial statements, schedules and documents
incorporated by reference therein. The term "Basic Prospectus" means the
prospectus dated November 28, 1997 constituting a part of the Registration
Statement. The term "Prospectus" means the Basic Prospectus together with the
final prospectus supplement specifically relating to the Securities as filed
with the Commission pursuant to such Rule 424. Any reference herein to the
Registration Statement or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein as of the date hereof or the
date of the Prospectus, as the case may be, and any reference herein to any
amendment or supplement to the Registration Statement or the Prospectus shall be
deemed to refer to and include any documents filed after such date and through
the date of such amendment or supplement under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and so incorporated by reference. For
purposes of the preceding sentence, any reference to the "effective date" of an
amendment to a registration statement shall, if such amendment is effected by
means of the filing with the Commission under the Exchange Act of a document
incorporated by reference in such registration statement, be deemed to refer to
the date on which such document was so filed with the Commission.
ii) When the Registration Statement or any amendment thereto
was declared effective, as of the date hereof, and at the time any amendment to
the Registration Statement filed after the date hereof becomes effective
(including the filing of any document incorporated by reference in the
Registration Statement), the Registration Statement (i) met, meets and will
meet, as the case may be, the requirements set forth in Rule 415(a)(1) under the
Act and complied, complies and will comply as the case may be, in all material
respects with said Rule,
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(ii) contained, contains and will contain, as the case may be, all statements
required to be stated therein in accordance with, and complied, complies and
will comply in all material respects with the requirements of, the Act, the
Exchange Act and the respective rules and regulations of the Commission
thereunder and (iii) did not, does not and will not, as the case may be, include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading. As of the date hereof,
and when the Prospectus is filed with the Commission pursuant to Rule 424(b), on
the date when the Prospectus is otherwise supplemented and on the Firm Closing
Date and any Option Closing Date, the Prospectus (as supplemented as of any such
time), (i) contains and will contain, as the case may be, all statements
required to be stated therein in accordance with, and complies and will comply
in all material respects with the requirements of, the Act, the Exchange Act and
the respective rules and regulations of the Commission thereunder and (ii) does
not and will not, as the case may be, include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing provisions of this paragraph (b) do not
apply to statements or omissions made in the Prospectus or the Registration
Statement or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein. The Company has not
distributed, and, prior to the later to occur of (i) the Closing Date or, if
later, the Option Closing Date and (ii) completion of the distribution of the
Securities, will not distribute, any offering material in connection with the
offering or sale of the Securities other than the Registration Statement, the
Prospectus or any other materials, if any, permitted by the Act.
iii) The Company's subsidiaries (excluding those subsidiaries
that do not own or operate, directly or indirectly, residences) are listed on
Schedule II hereto (the "Subsidiaries"). Except with respect to the
Subsidiaries, the Company does not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation or
have any equity interest in any firm, partnership, joint venture, association or
other entity (excluding those subsidiaries that do not own or operate, directly
or indirectly, residences). The Company is duly organized, validly existing and
in good standing under the laws of the State of Delaware. Each of the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the state of its incorporation or formation. The Company and each of the
Subsidiaries has full corporate or other power and authority to conduct all the
activities conducted by it, to own or lease all the properties and assets owned
or leased by it and to conduct its business as described in the Registration
Statement and the Prospectus. The Company and each of its Subsidiaries is duly
licensed or qualified to do business and in good standing as a foreign
corporation or partnership, as the case may be, in all jurisdictions in which
the nature of the activities conducted by it or the character of the properties
and assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to so qualify would not have a material
adverse effect on the Company and its Subsidiaries, taken as a whole. The
Company beneficially owns the percentage indicated on Schedule II hereto of the
outstanding equity interests in each of the Subsidiaries, free and clear of all
liens, security interests, restrictions, pledges, encumbrances, charges,
equities, claims, easements, assessments and tenancies (collectively,
"Encumbrances") other than Encumbrances described in the Registration Statement
and the Prospectus and other
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than those Encumbrances that do not materially affect the value of the equity
interests of such Subsidiaries as reflected in the consolidated financial
statements of the Company. All of the equity interests held by the Company in
each of the Subsidiaries have been duly authorized and are validly issued, fully
paid and nonassessable and were not issued in violation of any preemptive or
similar rights. Complete and correct copies of (i) the Restated Certificate of
Incorporation and the Restated Bylaws of the Company and all amendments thereto
and (ii) the organizational documents of each of the Subsidiaries and all
amendments thereto, have been made available to the Representatives or Stroock &
Stroock & Lavan LLP, counsel for the Underwriters, and no changes therein will
be made subsequent to the date hereof and prior to the Closing Date or the
Option Closing Date.
iv) The outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights arising by or through the Company. The shares to be issued and sold by
the Company are duly authorized and, upon such issuance and payment therefor in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable and are not the subject of any preemptive or similar rights
arising by or through the Company. The Company has, and upon completion of the
sale of the Shares will have, an authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus.
The description of the securities of the Company in the Registration Statement
and the Prospectus is complete and accurate in all material respects. Except as
set forth in the Registration Statement and the Prospectus, the Company does not
have outstanding any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into or exchangeable for, or
any contracts or commitments to issue or sell, any shares of its capital stock
or any such warrants, convertible securities or obligations. Except as described
below or as set forth in the Registration Statement and the Prospectus, no
person has any right to have any securities of the Company held by them
registered under the Act. All holders of securities of the Company who had a
right to register shares held by them as a result of the filing of the
Registration Statement have waived any such rights to the registration of any
securities of the Company.
v) The consolidated financial statements and the related
notes of the Company and its subsidiaries set forth or incorporated by reference
in the Registration Statement and the Prospectus present fairly the financial
condition of the Company and its subsidiaries as of the dates indicated and the
consolidated results of operations, stockholders' equity and cash flows of the
Company and its subsidiaries for the periods covered thereby, all in conformity
with generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the entire period involved. The supplemental consolidated
financial statements and related notes of the Company set forth or incorporated
by reference in the Registration Statement and Prospectus present fairly the
consolidated financial condition of the Company, Sterling House Corporation
("Sterling") and their respective subsidiaries and their respective subsidiaries
as of the dates indicated and the combined results of operations, stockholders'
equity and cash flows of the Company, Sterling and their respective subsidiaries
for the periods covered thereby, all in conformity with GAAP applied on a
consistent basis throughout the entire period involved. The selected
supplemental consolidated financial data for the Company, Sterling and their
respective
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subsidiaries set forth under the captions "Prospectus Summary--Summary
Supplemental Consolidated Financial and Other Data" and "Selected Supplemental
Consolidated Financial Data" in the Prospectus have been prepared on a basis
consistent with the historical consolidated financial statements of the Company.
The pro forma condensed combined financial information of the Company and the
related notes incorporated by reference in the Registration Statement and the
Prospectus comply in all material respects with the applicable requirements of
Rules 11-01 and 11-02 of Regulation S-X of the Commission and present fairly the
information shown therein; and the pro forma adjustments have been properly
applied to the historical amounts in the compilation of such statements. No
other financial statements or schedules of the Company and Sterling or any other
entity are required by the Act or the Rules and Regulations to be included in
the Registration Statement, any preliminary Prospectus or the Prospectus. KPMG
Peat Marwick LLP ("KPMG"), who have reported on certain of such financial
statements and schedules which are audited, are independent accountants with
respect to the Company and its subsidiaries, as required by the Act and the
Rules and Regulations.
vi) The Company and its Subsidiaries maintain a system of
internal accounting control sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization, (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain accountability
for assets, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
vii) Except as set forth or described in the Registration
Statement or the Prospectus, subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i) there
has not been, and will not have been, any material change in the capitalization
of the Company or any Subsidiary or any material adverse change in the business,
properties, prospects, condition (financial or otherwise), net worth or results
of operations of the Company and its Subsidiaries, taken as a whole, arising for
any reason whatsoever, (ii) neither the Company nor any of its Subsidiaries has
incurred, nor will it have incurred, any material liabilities or obligations,
direct or contingent, not in the ordinary course of business, (iii) neither the
Company nor any of its Subsidiaries has entered into, nor will it have entered
into any material transactions not in the ordinary course of business other than
pursuant to this Agreement, and (iv) neither the Company nor any Subsidiary has,
or will have, paid or declared any dividends or other distributions of any kind
on any class of its capital stock.
viii) The Company (either directly or through the
Subsidiaries) has good and indefeasible title to all properties and assets
described in the Registration Statement and Prospectus as owned by it, free and
clear of all Encumbrances other than those described in the Registration
Statement and Prospectus and other than those that do not materially adversely
affect the value of such properties and assets and do not materially interfere
with the use made or proposed to be made of such properties and assets. The
Company (either directly or through its Subsidiaries) has valid and subsisting
leasehold interests in the properties and assets described in the Registration
Statement and Prospectus as leased by it, free and clear of all Encumbrances,
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other than those described in the Registration Statement and Prospectus and
those that do not materially adversely affect the value of such properties and
assets and do not interfere with the use made, or proposed to be made, of such
properties and assets. Title insurance in favor of the Company or its
Subsidiaries (or, with respect to leased residences, in favor of its lessor) is
in full force and effect with respect to each parcel of real property and assets
thereon described in the Registration Statement and Prospectus (i) listed as
owned or leased by the Company (either directly or through its Subsidiaries) in
the chart captioned "Operating Residences" under the caption
"Business-Residences" and (ii) reflected as being under construction in the
chart captioned "Residences Under Construction or Development" under the caption
"Business-Residences" in amounts at least equal to the purchase price paid by
the Company or any Subsidiary for such property and assets thereon, except where
the failure to obtain such title insurance could not reasonably be expected to
have a material adverse effect on the business, properties, prospects, condition
(financial or otherwise), net worth or results of operations of the Company and
its Subsidiaries, taken as a whole. Except as set forth in the Registration
Statements and Prospectus, none of the mortgages encumbering any property owned
by the Company (either directly or through its Subsidiaries) (i) is convertible
into equity interests in the Company, any Subsidiary or any property owned by
the Company or any Subsidiary (other than such mortgaged property) or (ii)
cross-defaulted or cross-collateralized to any other property, except where such
cross-collateralization could not reasonably be expected to have a material
adverse effect on the business, properties, prospects, condition (financial or
otherwise), net worth or results of operations of the Company and its
Subsidiaries, taken as a whole.
ix) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms as defined in the Investment Company Act of
1940, as amended (the "Investment Company Act").
x) Except as set forth in the Registration Statement and
Prospectus, there are no actions, suits or proceedings pending or, to the
Company's knowledge, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective directors, officers or stockholders in
their capacity as such, or any of the properties or assets owned, leased or
operated by the Company or any of its Subsidiaries, before or by any Federal or
state court, commission, regulatory body, administrative agency or other
governmental body, domestic or foreign (collectively, a "Governmental Body"),
wherein an unfavorable ruling, decision or finding would have a material adverse
effect on the business, properties, prospects, condition (financial or
otherwise), net worth or results of operations of the Company and its
Subsidiaries, taken as a whole. There is no pending litigation or governmental
proceeding required to be described in the Registration Statement and the
Prospectus that is not described as required.
xi) Each of the Company and its Subsidiaries has all
governmental licenses, permits, consents, orders, approvals, franchises,
certificates and other authorizations (collectively, "Licenses") necessary to
carry on its business and own or lease its properties as contemplated in the
Registration Statement and Prospectus, except such Licenses, the failure to so
have would not have a material adverse effect on the business, properties,
prospects, condition (financial or otherwise), net worth or results of
operations of the Company and its Subsidiaries, taken as a whole. Each of the
Company and its Subsidiaries has complied in all material respects
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with all laws, regulations and order applicable to it or its business, assets
and properties. Each of the Company and its Subsidiaries is not in breach or
default (nor has any event occurred which, with notice or lapse of time or both,
would constitute a default) in the due performance and observation of any term,
covenant or condition of any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument (collectively, a
"contract or other agreement") to which it is a party or by which its properties
are bound or affected, which default could reasonably be expected, individually
or in the aggregate, to have a material adverse effect on the business,
properties, prospects, condition (financial or otherwise), net worth or results
of operations of the Company and its Subsidiaries, taken as a whole. To the best
knowledge of the Company, no other party under any such contract or other
agreement is in default in any respect thereunder which default could reasonably
be expected, individually or in the aggregate, to have a material adverse effect
on the business, properties, prospects, condition (financial or otherwise), net
worth or results of operations of the Company and its Subsidiaries, taken as a
whole. Except as otherwise described in the Registration Statement and
Prospectus, there are no governmental proceedings or actions pending or, to the
Company's knowledge, threatened for the purpose of suspending, modifying or
revoking any License held by the Company or any of its Subsidiaries which could
reasonably be expected, individually or in the aggregate, to have a material
adverse effect on the business, properties, prospects, condition (financial or
otherwise), net worth or results of operations of the Company and its
Subsidiaries, taken as a whole. The Company is not in violation of any provision
of its Restated Certificate of Incorporation or Restated Bylaws, as amended.
None of the Subsidiaries is in violation of its organizational documents, as
amended.
xii) No consent, approval, authorization or order of, or any
filing or declaration with, any Governmental Body is required for the
consummation of the transactions contemplated by this Agreement or in connection
with the issuance and sale of the shares by the Company, except such as have
been obtained under the Act or the Rules and Regulations.
xiii) The Company has full power and authority to enter into
this Agreement and to carry out all the terms and provisions hereof to be
carried out by it. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with the terms
hereof. The execution, delivery and the performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
creation or imposition of any Encumbrance upon any of the properties or assets
of the Company or any of its Subsidiaries pursuant to the terms or provisions
of, or result in a breach or violation of or conflict with any of the terms or
provisions of, or constitute a default under, or give any other party a right to
terminate any of its obligations under, or result in the acceleration of any
obligation under, (i) the Restated Certificate of Incorporation or Restated
Bylaws of the Company, in each case as amended, (ii) the organizational or
charter documents of any of the Subsidiaries, as amended, (iii) any contract or
other agreement to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective assets
or properties are bound or affected, or (iv) any judgment, ruling, decree,
order, law, statute, rule or regulation of any Governmental Body applicable to
the Company or any of its Subsidiaries or
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their business or properties, except, in the case of clauses (iii) and (iv), any
violation which could not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the business, properties,
prospects, condition (financial or otherwise), net worth or results of
operations of the Company and its Subsidiaries, taken as a whole. The Company
has full power and authority to authorize, issue, offer and sell the shares to
be sold by it, as contemplated by this Agreement, free of any preemptive or
similar rights.
xiv) There is no document or contract of a character
required to be described in the Registration Statement or Prospectus or in any
document incorporated by reference therein, or to be filed as an exhibit to the
Registration Statement, which is not described or filed as required.
xv) No statement, representation, warranty or covenant made
by the Company in this Agreement or made in any certificate or document required
by this Agreement to be delivered to the Representatives is or will be, when
made, inaccurate, untrue or incorrect.
xvi) Neither the Company nor any of its directors, officers
or affiliates (within the meaning of the Rules and Regulations) has taken, nor
will he, she or it take, directly or indirectly, any action designed, or which
might reasonably be expected in the future to cause or result in, under the Act
or otherwise, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares or otherwise.
xvii) The Securities have been approved for listing on the
American Stock Exchange, Inc. (the "AMEX"), subject only to notice of issuance.
xviii) Neither the Company nor any of its Subsidiaries is
involved in any labor dispute with its employees which could reasonably be
expected, individually or in the aggregate, to have a material adverse effect on
the business, properties, prospects, condition (financial or otherwise), net
worth or results of operations of the Company and its Subsidiaries, taken as a
whole nor, to the Company's knowledge, is any such dispute threatened or
imminent.
xix) Each of the Company and its Subsidiaries owns, or is
licensed or otherwise has the right to use, all material trademarks and trade
names which are used in or necessary for the conduct of its business as
described in the Registration Statement and Prospectus. To the Company's
knowledge, no claims have been asserted by any person to the use of any such
trademarks or trade names or challenging or questioning the validity or
effectiveness of any such trademark or trade name. The use of such trademarks
and trade names in connection with the business and operations of the Company
and its Subsidiaries does not, to the Company's knowledge, infringe on the
rights of any person.
xx) Neither the Company nor any of its Subsidiaries nor any
employee or agent of the Company or any Subsidiaries has made any payment of
funds of the Company or any Subsidiary or received or retained any funds of the
Company or any Subsidiary in violation of any law, rule or regulation or of a
character required to be disclosed in the Registration Statement and Prospectus
or in a document incorporated by reference.
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xxi) The Company and its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; and the Company has no reason to believe that it and its
Subsidiaries will not be able to renew their existing insurance coverage as and
when such coverage expires.
xxii) The business, operations and facilities of the Company
and its Subsidiaries have been and are being conducted in compliance in all
material respects with all applicable laws, ordinances, rules, regulations,
Licenses, permits, approvals, plans, authorizations or requirements relating to
occupational safety and health, or pollution, or protection of health or the
environment (including, without limitation, those relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants or
hazardous or toxic substances, materials or wastes into ambient air, surface
water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
chemical substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes, whether solid, gaseous or liquid in nature) of any
governmental department, commission, board, bureau, agency or instrumentality of
the United States or any state or political subdivision thereof, and all
applicable judicial or administrative agency or regulatory decrees, awards,
judgments and orders relating thereto; and none of the Company or any of its
Subsidiaries has received any notice from any governmental instrumentality or
any third party alleging any violation thereof or liability thereunder
(including, without limitation, liability for costs of investigating or
remediating sites containing hazardous substances and/or damages to natural
resources), which violation would have, or could reasonably be expected to have,
a material adverse effect on the business, properties, prospectus, condition
(financial or otherwise), net worth or results of operations of the Company and
its Subsidiaries, taken as a whole. The intended use and occupancy of each of
the facilities owned or operated by the Company or any of its Subsidiaries
complies in all material respects with applicable codes and zoning laws and
regulations and there is no pending or, to the knowledge of the Company,
threatened condemnation, zoning change, environmental or other proceeding or
action that will in any material respect adversely affect the size of, use of,
improvements on, construction on, or access to such facilities.
xxiii) The Company and each of its Subsidiaries has filed all
foreign, federal, state and local tax returns that are required to be filed or
has requested extensions thereof and has paid all taxes required to be paid by
it and any other assessment, fine or penalty levied against it, to the extent
due and payable, except where such failure to file or pay could not reasonably
be expected, individually or in the aggregate, to have a material adverse effect
on the business, properties, prospects, condition (financial or otherwise), net
worth or results of operations of the Company and its subsidiaries, taken as a
whole.
xxiv) Each executive officer and director of the Company has
delivered or prior to the Closing Date will deliver, to Schroder & Co. Inc. an
agreement (the "Lockup Agreement") in the form of Exhibit C attached hereto.
- 10 -
11
xxv) Each certificate signed by an officer of the Company and
delivered to the Representatives or counsel for the Underwriters shall be deemed
to be a representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
xxvi) None of the Company, any Subsidiary or any affiliate
thereof does business with the government of Cuba or with any person or
affiliate located in Cuba and the Company and each Subsidiary has complied to
the extent necessary with the provisions of Florida H.B. 1771.
3. Representations and Warranties of the Underwriters. Upon your
authorization of the release of the Firm Shares, the several Underwriters
propose to offer the Firm Shares for sale to the public upon the terms set forth
in the Prospectus.
4. Agreements. (a) The Company covenants and agrees with each of the
Underwriters that:
i) Subject to the next sentence, the Company has filed, or
shall file in a timely manner in accordance with Rule 424 under the Act, the
Prospectus with the Commission pursuant to Rule 424 under the Act. During any
time when a prospectus relating to the Securities is required to be delivered
under the Act, the Company (i) will comply with all requirements imposed upon it
by the Act and the Exchange Act and the respective rules and regulations of the
Commission thereunder to the extent necessary to permit the continuance of sales
of or dealings in the Securities in accordance with the provisions hereof and of
the Prospectus, as then amended or supplemented, and (ii) will not file with the
Commission the Prospectus, any amendment or supplement to the Prospectus, or any
amendment to the Registration Statement, of which the Representatives shall not
previously have been advised and furnished with a copy a reasonable period of
time prior to the proposed filing and as to which filing the Representatives
shall not have given their consent. The Company will advise the Representatives,
promptly after receiving notice thereof, of the time when (i) the Prospectus has
been filed with the Commission and (ii) any amendment to the Registration
Statement has been filed or declared effective or any amendment or supplement to
the Prospectus has been filed and will provide evidence satisfactory to the
Representatives of each such filing or effectiveness.
ii) The Company will advise the Representatives, promptly
after receiving notice or obtaining knowledge thereof, of (i) the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or any order
directed at any document incorporated by reference in the Registration Statement
or the Prospectus or any amendment or supplement thereto or any order preventing
or suspending the use of the Prospectus, (ii) the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, (iii)
the institution, threatening or contemplation of any proceeding for any such
purpose or (iv) any request made by the Commission for amending or supplementing
the Registration Statement, for amending the Prospectus or for additional
information. The Company will use its best efforts to prevent the issuance of
any such stop order and, if any such stop order is issued, to obtain the
withdrawal thereof as promptly as possible.
- 11 -
12
iii) The Company will arrange for the qualification of the
Securities for offering and sale under the securities or blue sky laws of such
jurisdictions as the Representatives may designate and will continue such
qualifications in effect for as long as may be necessary to complete the
distribution of the Securities; provided, however, that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction.
iv) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs as a
result of which the Prospectus, as then amended or supplemented, would include
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if for any other
reason it is necessary at any time to amend or supplement the Prospectus to
comply with the Act, the Exchange Act or the respective rules or regulations of
the Commission thereunder, the Company will promptly notify the Representatives
thereof and, subject to Section 4(a) hereof, will prepare and file with the
Commission, at the Company's expense, an amendment to the Registration Statement
or an amendment to the Basic Prospectus or the Prospectus that corrects such
statement or omission or effects such compliance.
v) The Company will, without charge, provide (i) to the
Representatives and to counsel for the Underwriters, upon request, a signed copy
of the registration statement originally filed with respect to the Securities
and each amendment thereto (in each case including exhibits thereto), (ii) to
each Underwriter, a conformed copy of such registration statement and each
amendment thereto (in each case without exhibits thereto) and (iii) so long as a
prospectus relating to the Securities is required to be delivered under the Act,
as many copies of the Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request.
vi) The Company, as soon as practicable, will make generally
available to its security holders and to the Representatives a consolidated
earnings statement of the Company and its Subsidiaries (which need not be
audited) that satisfies the provisions of Section 11(a) of the Act and Rule 158
thereunder.
vii) The Securities will be listed on the American Stock
Exchange, subject to notice of issuance.
viii) The Company and its executive officers and directors
will not, directly or indirectly, offer, sell or otherwise dispose of any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for, or any rights to purchase or acquire, Common Stock for a
period of 90 days after the date hereof without the prior written consent of
Schroder & Co., Inc. (other than the issuance by the Company of Common Stock
upon exercise of outstanding options and grants of employee stock options or
upon conversion of the Company's outstanding debentures).
- 12 -
13
ix) Concurrently with the sale of the Securities hereunder,
the Company is offering $125,000,000 aggregate principal amount of Convertible
Subordinated Debentures pursuant to an underwritten public offering (the
"Concurrent Offering"). The consummation of the Concurrent Offering is not a
condition to the consummation of the sale of the Securities hereunder and the
consummation of the sale of the Securities is not a condition to the
consummation of the Concurrent Offering. The Company intends to use the net
proceeds from the sale of the Securities sold by it hereunder, together with the
net proceeds of the Concurrent Offering, if any, as set forth under "Use of
Proceeds" in the Prospectus.
5. Expenses. The Company will pay all costs and expenses incident to
the performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 10 hereof, including all costs and expenses incident to (i)
the printing or other production of all documents with respect to the
transactions, including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment thereto and
the Prospectus and any amendment or supplement thereto, this Agreement and any
blue sky memoranda, (ii) all arrangements relating to the delivery to the
Underwriters of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, accountants and any other experts or advisors
retained by the Company, (iv) preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Securities, including transfer
agent's and registrar's fees, (v) the qualification of the Securities under
state securities and blue sky laws, including filing fees and fees and
disbursements of counsel for the Underwriters relating thereto, (vi) the filing
fees of the Commission relating to the Securities, (vii) the listing of the
Securities on the American Stock Exchange and (viii) expenses of Company
personnel in connection with their attendance at meetings with prospective
investors in the Securities. If the sale of the Securities provided for herein
is not consummated because any condition to the obligations of the Underwriters
set forth in Section 6 hereof is not satisfied, because this Agreement is
terminated pursuant to Section 10(i) hereof because trading in the Common Stock
has been suspended by the Commission or because of any failure, refusal or
inability on the part of the Company to perform all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder other than by
reason of a default by any of the Underwriters, the Company will reimburse the
Underwriters upon demand for all out-of-pocket expenses (including reasonable
fees and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities. The Company
shall not in any event be liable to any of the Underwriters for the loss of
anticipated profits from the transactions covered by this Agreement.
6. Conditions to the Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy in all
material respects of the representations and warranties of the Company contained
herein as of the date hereof and as of the Firm Closing Date as if made on and
as of the Firm Closing Date, to the accuracy in all material respects of the
statements of the Company's officers made pursuant to the provisions hereof, to
the performance by the Company of its covenants and agreements hereunder and to
the following additional conditions:
- 13 -
14
(a) The Prospectus shall have been filed with the Commission
in the manner and within the time period required by Rule 424(b) under the Act;
no stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto and no order directed at any document
incorporated by reference in the Registration Statement or the Prospectus or any
amendment or supplement thereto shall have been issued and no proceedings for
that purpose shall have been instituted or threatened or, to the knowledge of
the Company or the Representatives, shall be contemplated by the Commission; and
the Company shall have complied with any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise).
(b) The Representatives shall have received an opinion, dated
the Firm Closing Date, of Rogers & Hardin LLP, to the effect set forth in
Exhibit A hereto.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
laws of jurisdictions in which such counsel is not admitted to practice, to the
extent satisfactory to counsel for the Underwriters, upon the opinion of local
counsel in such jurisdictions and in the case of the opinion described in this
section 6(b) upon certificates of public officials. The foregoing opinion shall
also state that the Underwriters are justified in relying upon any such opinion
of such local counsel, and copies of the opinion of such local counsel shall be
delivered to the Representatives and counsel for the Underwriters.
In addition to the matters set forth above, such counsel shall also
state that in the course of the preparation of the Registration Statement and
the Prospectus, such counsel has participated in conferences with officers and
representatives of the Company and with the Company's independent auditors, your
representatives and your counsel, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed and
although they are not passing upon, and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus (except as set forth therein) and have
not made any independent check or verification thereof, during the course of
such participation (relying as to the factual matters underlying the
determination of materiality to a large extent upon the statements of officers
or other representatives of the Company), no facts came to their attention that
caused them to believe that the Registration Statement, as of the date it became
effective and as of the date of such opinion, contained or contains any untrue
statement of a material fact or omitted or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus, as of its date and the date of such opinion,
included or includes any untrue statement of a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. It is
understood that such counsel will express no belief with respect to the
financial statements, the notes thereto and related schedules and other
financial, numerical, statistical and accounting data included or omitted from
the Registration Statement or the Prospectus and will express no belief with
respect to the Statement of Eligibility and Qualification of the Trustee on Form
T-1.
- 14 -
15
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment thereto at the date of such opinion.
(c) The Representatives shall have received an opinion, dated
the Firm Closing Date, of Stroock & Stroock & Lavan LLP, counsel for the
Underwriters, with respect to the issuance and sale of the Firm Securities, the
Registration Statement, the Prospectus, and such other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(d) The Representatives shall have received one or more
opinions, dated the Closing Date and the Option Closing Date, from regulatory
counsel for the Company in each of the States listed on Exhibit B-1, which
counsel shall be acceptable to the Underwriters, each such opinion to relate to
matters involving health care licensing and to be substantially in the form
attached hereto as Exhibit B-2 or in such other form as is satisfactory to
counsel for the Underwriters.
(e) The Representatives shall have received from KPMG Peat
Marwick LLP a letter or letters dated, respectively, the date hereof and the
Firm Closing Date, in form and substance satisfactory to the Representatives, to
the effect that:
i) they are independent accountants with respect
to the Company and its consolidated subsidiaries within the meaning of
the Act, the Exchange Act and the applicable rules and regulations
thereunder;
ii) in their opinion, the audited consolidated
financial statements and schedules examined by them and included in the
Registration Statement and the Prospectus comply in form and in all
material respects with the applicable accounting requirements of the
Act, the Exchange Act and the related published rules and regulations
thereunder;
iii) on the basis of a reading of the latest
available interim unaudited consolidated financial statements of the
Company and its consolidated subsidiaries, carrying out certain
specified procedures (which do not constitute an audit made in
accordance with generally accepted auditing standards) that would not
necessarily reveal matters of significance with respect to the comments
set forth in this paragraph (iii), a reading of the minute books of the
stockholders, the board of directors and any committees thereof of the
Company and each of its consolidated subsidiaries, and inquiries of
certain officials of the Company and its consolidated subsidiaries who
have responsibility for financial and accounting matters, nothing came
to their attention that caused them to believe that at a specific date
not more than five business days prior to the date of such letter,
there were any changes in the shares of capital stock or indebtedness
of the Company and its consolidated subsidiaries or any decreases in
total assets, current assets or stockholders' equity of the Company and
its consolidated subsidiaries, in each case compared with amounts shown
on the September 30, 1997 consolidated balance
- 15 -
16
sheet included by incorporation by reference to the Company's Report on
Form 10-Q for the fiscal quarter ended September 30, 1997 in the
Registration Statement and the Prospectus, or for the period from
October 1, 1997 to such specified date there were any decreases, as
compared with the corresponding period of the preceding fiscal year, in
net revenues, net income before income taxes or total or per share
amounts of net income of the Company and its consolidated subsidiaries,
except in all instances for changes, decreases or increases set forth
in such letter or as set forth in or contemplated in the Prospectus;
and
iv) they have carried out certain specified
procedures, not constituting an audit, with respect to certain amounts,
percentages and financial information that are derived from the general
accounting records of the Company and its consolidated subsidiaries and
are included in its Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1997, incorporated by reference in the
Registration Statement and the Prospectus, and have compared such
amounts, percentages and financial information with such records of the
Company and its consolidated subsidiaries and with information derived
from such records and have found them to be in agreement, excluding any
questions of legal interpretation.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Securities as contemplated by the Registration Statement, as amended as of the
date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (e) with respect to either letter referred to above shall include any
amendment thereto at the date of such letter.
(f) The Representatives shall have received a certificate,
dated the Firm Closing Date, of the Chief Executive Officer and the Chief
Financial Officer of the Company to the effect that:
i) the representations and warranties of the Company
in this Agreement are true and correct as if made on and as of the Firm
Closing Date; the Registration Statement, as amended as of the Firm
Closing Date, does not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein not misleading, and the Prospectus, as amended or supplemented
as of the Firm Closing Date, does not include any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; and the Company has performed all
covenants and agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Firm Closing Date;
- 16 -
17
ii) no stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment thereto and
no order directed at any document incorporated by reference in the
Registration Statement or any amendment thereto or the Prospectus has
been issued, and no proceedings for that purpose have been instituted
or threatened or, to the best of the Company's knowledge, are
contemplated by the Commission; and
iii) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
there has not been any material adverse change, or any development
involving a prospective material adverse change (including, without
limitation, a change in management or control of the Company), in the
condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and the Subsidiaries, taken as
whole, except in each case as described in or contemplated by the
Prospectus (exclusive of any amendment or supplement thereto after the
date hereof).
(g) On or before the Firm Closing Date, the Representatives
and counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
(h) The Securities shall have been accepted for listing on the
American Stock Exchange.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Option Securities shall be subject, in their discretion, to each of
the foregoing conditions to purchase the Firm Securities, except that all
references to the Firm Securities and the Firm Closing Date shall be deemed to
refer to such Option Securities and the related Option Closing Date,
respectively.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act against any losses, claims, damages or liabilities to
which such Underwriter or such controlling person may become subject under the
Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
i) any untrue statement or alleged untrue statement made by
the Company in Section 2 of this Agreement,
ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the registration statement originally
filed with respect to the Securities or
- 17 -
18
any amendment thereto, the Prospectus or any amendment thereto or (B)
any application or other document, or any amendment or supplement
thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in
order to qualify the Securities under the securities or blue sky laws
thereof or filed with the Commission or any securities association or
securities exchange (each an "Application") or
iii) the omission or alleged omission to state in such
registration statement or any amendment thereto, the Prospectus or any
amendment or supplement thereto, or any Application a material fact
required to be stated therein or necessary to make the statements
therein not misleading,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement or
any amendment thereto, the Prospectus or any amendment or supplement thereto, or
any Application in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein and provided, further, that the Company will not be
liable to any underwriter or any person controlling such underwriter with
respect to any such untrue statement or omission made in any preliminary
supplemental Prospectus that is corrected in the supplemental Prospectus (or any
amendment or supplement thereto) if the person asserting any such loss, claim,
damage or liability purchased Securities from such Underwriter but was not sent
or given a copy of the supplemental Prospectus (as amended or supplemented),
other than the document incorporated by reference therein, at or prior to the
written confirmation of the sale of such Securities to such person in any case
where such delivery of the supplemental Prospectus (as amended or supplemented)
as required by the Act, unless such failure to deliver the supplemental
Prospectus (as amended or supplemented) was the result of noncompliance by the
Company with Section 4(a)(v). This indemnity agreement will be in addition to
any liability which the Company may otherwise have. The Company will not,
without the prior written consent of each Underwriter, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought hereunder
(whether or not such Underwriter or any person who controls such Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of such Underwriter and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding.
(b) Each Underwriter will indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act against any losses,
claims, damages or liabilities to which the Company and any
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19
such director, officer or controlling person may become subject under the Act,
the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment thereto, the Prospectus or any
amendment or supplement thereto, or any Application or (ii) the omission or the
alleged omission to state therein a material fact required to be stated in the
Registration Statement or any amendment thereto, the Prospectus or any amendment
or supplement thereto, or any Application or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representatives
specifically for use therein; and, subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses reasonably incurred by the Company and any such director, officer
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability or any action in respect thereof. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 7, notify the indemnifying party of the commencement thereof;
but the failure so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 7. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 7 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Representatives in the case of
paragraph (a) of this Section 7, representing the indemnified parties under such
paragraph (a) who are parties to such action or
- 19 -
20
actions) or (ii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party. After such
notice from the indemnifying party to such indemnified party, the indemnifying
party will not be liable for the costs and expenses of any settlement of such
action effected by such indemnified party without the consent of the
indemnifying party, unless such indemnified party waived its rights under this
Section 7, in which case the indemnified party may effect such a settlement
without such consent.
In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 7 is unavailable or insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total proceeds from
the offering (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the Underwriters. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters, the parties' relative intents,
knowledge, access to information and opportunity to correct or prevent statement
or omission, and any other equitable considerations appropriate in the
circumstances. The Company and the Underwriters agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take into account
the equitable considerations referred to in the first sentence of this paragraph
(d). Notwithstanding any other provision of this paragraph (d), no Underwriter
shall be obligated to make contributions hereunder that in the aggregate exceed
the total underwriting discounts received by it with respect to the Securities
purchased by such Underwriter under this Agreement, less the aggregate amount of
any damages that such Underwriter has otherwise been required to pay in respect
of the same or any substantially similar claim, and no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
hereunder are several in proportion to their respective underwriting obligations
and not joint, and contributions among Underwriters shall be governed by the
provisions of the Agreement Among Underwriters. For purposes of this paragraph
(d), each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Underwriter,
- 20 -
21
and each director of the Company, each officer of the Company who signed the
Registration Statement, each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, shall have
the same rights to contribution as the Company.
8. Default of Underwriters. If one or more Underwriters default in
their obligations to purchase Firm Securities or Option Securities hereunder and
the aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or Option
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If one or more Underwriters so default with respect to an aggregate
number of Securities that is more than ten percent of the aggregate number of
Firm Securities or Option Securities, as the case may be, to be purchased by all
of the Underwriters at such time hereunder, and if arrangements satisfactory to
the Representatives are not made within 36 hours after such default for the
purchase by other persons who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company other than as provided
in Section 10 hereof. In the event of any default by one or more Underwriters as
described in this Section 8, the Representatives shall have the right to
postpone the Firm Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 1 hereof for not more than seven business
days in order that any necessary changes may be made in the arrangements or
documents for the purchase and delivery of the Firm Securities or Option
Securities, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 8. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
9. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers and the
several Underwriters set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the Company,
any of its officers or directors, any Underwriter or any controlling person
referred to in Section 7 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 5 and 7 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
10. Termination. This Agreement may be terminated with respect to the
Firm Securities or any Option Securities in the sole discretion of the
Representatives by notice to the Company given prior to the Firm Closing Date or
the related Option Closing Date, respectively, in the event that the Company
fails to perform all obligations and satisfy all conditions on its part
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22
to be performed or satisfied hereunder at or prior thereto or, if at or prior to
the Firm Closing Date or such Option Closing Date, respectively, the
Representatives determine in their sole discretion that:
i) trading in the Securities or trading in the
Common Stock shall have been suspended by the Commission or trading in
securities generally on the American Stock Exchange or the
International Stock Exchange of the United Kingdom shall have been
suspended or minimum or maximum prices shall have been established for
the Common Stock on either such exchange;
ii) a banking moratorium shall have been declared by
New York, United Kingdom or United States authorities; or
iii) there shall have been (A) an outbreak or
escalation of hostilities between the United States or the United
Kingdom and any foreign power, (B) an outbreak or escalation of any
other insurrection or armed conflict involving the United States or the
United Kingdom or (C) any other calamity or crisis having an effect on
the financial markets that makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the securities as
contemplated by the Registration Statement.
11. Information Supplied by Underwriters. The statements set forth in
the last paragraph on the front cover page and under the heading "Underwriting"
in the Prospectus (to the extent such statements relate to the Underwriters)
constitute the only information furnished by any Underwriter through the
Representatives to the Company for the purposes of Sections 2 and 7(b) hereof.
The Underwriters confirm that such statements (to such extent) are correct.
12. Notices. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be mailed or delivered or telegraphed and
confirmed in writing to Schroder & Co. Inc., 787 Seventh Avenue, 5th Floor, New
York, New York 10019, Attention: Bradley G. Razook, if sent to the Company,
shall be mailed, delivered or telegraphed and confirmed in writing to the
Company at 450 North Sunnyslope Road, Suite 300, Brookfield, Wisconsin 53005,
Attention: Chief Executive Officer.
13. Successors. This Agreement shall inure to the benefit of and shall
be binding upon the several Underwriters, the Company and its respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 7 of this Agreement shall
also be for the benefit of any person or persons who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Underwriters contained in Section 7 of this
Agreement shall also be for the benefit of the directors of the Company, the
officers of the Company who have signed the Registration Statement and any
person or persons who control the
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23
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act. No purchaser of Securities from any Underwriter shall be deemed a
successor because of such purchase.
14. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
- 23 -
24
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company and each
of the several Underwriters.
Very truly yours,
ALTERNATIVE LIVING SERVICES, INC.
By:
-----------------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
SCHRODER & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
SMITH BARNEY INC.
COWEN & COMPANY
MCDONALD & COMPANY SECURITIES, INC.
For themselves and the other
several Underwriters, if any,
named in Schedule 1 to the
foregoing Agreement
By: SCHRODER & CO. INC.
By:
------------------------------
Name:
Title:
For itself and the other Representatives
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25
SCHEDULE 1
UNDERWRITERS' COMMITMENTS
Number of
Firm Securities
to be Purchased
Underwriter from the Company
- ----------------------------- ----------------
Schroder & Co. Inc........................................................................ 700,000
Donaldson, Lufkin & Jenrette Securities Corporation....................................... 700,000
Smith Barney Inc.......................................................................... 700,000
Cowen & Company........................................................................... 350,000
McDonald & Company Securities, Inc........................................................ 350,000
TOTAL......................................... 2,800,000
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EXHIBIT A
FORM OF OPINION OF COMPANY COUNSEL
_______________, 1997
SCHRODER & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
SMITH BARNEY INC.
COWEN & COMPANY
McDONALD & COMPANY SECURITIES INC.
As Representatives of the Several Underwriters
c/o Schroder & Co. Inc.
787 Seventh Avenue
5th Floor
New York, New York 10019
Re: 2,800,000 Shares of Common Stock, par value
$.01 per share of Alternative Living Services, Inc.
Ladies and Gentlemen:
We have acted as counsel to Alternative Living Services, Inc., a
Delaware corporation (the "Company"), in connection with the purchase on this
date by you and the other underwriters (collectively, the "Underwriters") named
in Schedule I of that certain Underwriting Agreement dated December 19, 1997,
among the Underwriters and the Company (the "Underwriting Agreement") of an
aggregate of 2,800,000 shares (the "Firm Shares") of the Company's common stock,
par value $.01 (the "Common Stock"). This opinion is furnished to you pursuant
to Section 6(b) of the Underwriting Agreement. Terms used herein and not defined
herein are used as defined in the Underwriting Agreement.
In connection with this opinion, we have reviewed such documents and
matters of law as we have deemed necessary for the purposes of expressing the
opinions set forth herein. Based upon the foregoing, we are of the opinion that:
1. The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware. We are not aware of any
subsidiaries of the Company other than the Subsidiaries. Each of the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the state of its incorporation or formation. The Company and each of the
Subsidiaries has full corporate or other power and authority to conduct all the
activities conducted by it, to own or lease all the properties and assets owned
or leased by it and
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27
to conduct its business as described in the Registration Statement and the
Prospectus. The Company and each of its Subsidiaries is duly licensed or
qualified to do business and in good standing as a foreign corporation or
partnership, as the case may be, in all jurisdictions in which the nature of the
activities conducted by it or the character of the properties and assets owned
or leased by it makes such licensing or qualification necessary, except where
the failure to so qualify would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole. To the best of our knowledge
after due inquiry, the Company beneficially owns the percentage indicated in
Exhibit [___] of the Registration Statement of the outstanding equity interests
in each of the Subsidiaries, free and clear of all Encumbrances. All of the
equity interests held by the Company in each of the Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights.
2. The outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and nonassessable and
were not issued in violation of any preemptive or similar rights arising by or
through the Company. The shares to be issued and sold by the Company are duly
authorized and, upon such issuance and payment therefor in accordance with the
terms of the Underwriting Agreement will be, validly issued, fully paid and
nonassessable and are not the subject to any preemptive or similar rights
arising by or through the Company. The Company has, and, upon completion of the
sale of the shares, will have, an authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus.
The description of the securities of the Company in the Registration Statement
and the Prospectus is complete and accurate in all material respects.
3. To the best our knowledge after due inquiry, except as set
forth in the Registration Statement and the Prospectus, the Company does not
have outstanding any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into or exchangeable for, or
any contracts or commitments to issue or sell, any shares of its capital stock
or any such warrants, convertible securities or obligations.
4. To the best of our knowledge after due inquiry, except as
set forth in the Registration Statement and the Prospectus, no person has any
right to have any securities of the Company held by them registered under the
Act.
5. The Company (either directly or through its Subsidiaries)
has good and indefeasible title to all properties and assets described in the
Registration Statement and Prospectus as owned by it, free and clear of all
Encumbrances other than those described in the Registration Statement and
Prospectus and other than those that do not materially adversely affect the
value of such properties and assets and do not interfere with the use made or
proposed to be made of such properties and assets. The Company (either directly
or through its Subsidiaries) has valid and subsisting leasehold interests in the
properties and assets described in the Registration Statement and Prospectus as
leased by it, free and clear of all Encumbrances, other than those described in
the Registration Statement and Prospectus and those that do not materially
adversely affect the value of such properties and assets and do not materially
interfere with the use made, or proposed to be made, of such properties and
assets. The Company (either
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28
directly or through its Subsidiaries) has valid and subsisting options to
purchase the properties described in the Registration Statement and Prospectus
under the caption "Business - Properties- Properties Under
Construction/Development" as being under development.
6. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act.
7. Except as set forth in the Registration Statement and
Prospectus, there are no actions, suits or proceedings pending or, to the best
of our knowledge after due inquiry, threatened against or affecting the Company
or any of its Subsidiaries or any of their respective directors, officers or
stockholders in their capacity as such, or ally of the properties or assets
owned, leased or operated by the Company or any of its Subsidiaries, before or
by any Governmental Body, wherein an unfavorable ruling, decision or finding
would have- a material adverse effect on the business, properties, prospects,
condition (financial or otherwise), net worth or results of operations of the
Company and its Subsidiaries, taken as a whole. There is no pending litigation
or governmental proceeding required to be described in the Prospectus that is
not described as required.
8. To the best of our knowledge after due inquiry, none of
the Company and its Subsidiaries is in breach or default (nor has an event
occurred which, with notice or lapse of time or both, would constitute a
default) in the due performance and observation of any term, covenant or
condition of any contract or other agreement to which it is a party or by which
its properties is bound or affected, which default could reasonably be expected,
individually or in the aggregate, to have a material adverse effect on the
business, properties, prospects, condition (financial or otherwise), net worth
or results of operations of the Company and its Subsidiaries, taken as a whole.
To the best of our knowledge after due inquiry, (i) the Company is not in
violation of any provision of its Restated Certificate of Incorporation or
Reststed Bylaws, as amended, and (ii) none of the Subsidiaries is in violation
of its organizational documents, as amended.
9. No consent, approval, authorization or order of, or any
filing or declaration with, any Governmental Body is required for the
consummation of the transactions contemplated by the Underwriting Agreement or
in connection with the issuance and sale of the shares to be sold by the
Company, except such as have been obtained under the Act or the Rules and
Regulation d such as may be required under state securities or Blue Sky laws or
the bylaws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the shares to be sold by the Company.
10. The Company has full power and authority to enter into the
Underwriting Agreement and to carry out all the terms and provisions thereof to
be carried out by it. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company and is enforceable against the Company in accordance
with the terms thereof, except as limited by general principles of equity
A-3
29
relating to the availability of remedies and except as rights to indemnity or
contribution may be limited by federal or state securities laws and the public
policy underlying such laws.
11. The execution, delivery and the performance of the
Underwriting Agreement and the consummation of the transactions contemplated
thereby will not result in the creation or imposition of any Encumbrance upon
any of the properties or assets of the Company or any of its Subsidiaries
pursuant to the terms or provisions of, or result in a breach or violation of or
conflict with any of the terms or provisions of, or constitute a default under,
or give any other party a right to terminate any of its obligations under, or
result in the acceleration of any obligation under, (i) the Restated Certificate
of Incorporation or Restated Bylaws of the Company, in each case as amended,
(ii) the organizational or charter documents of any of the Subsidiaries, as
amended, or (iii) any contract or other agreement to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its subsidiaries
or any of their respective assets or properties are bound or affected, or (iv)
any judgment, ruling, decree, order, law, statute, rule or regulation of any
Governmental Body applicable to the Company or any of its Subsidiaries or their
business or properties, except, in the case of clauses (iii) and (iv), any
violation which could not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the business, properties,
prospects, condition (financial or otherwise), net worth or results of
operations of the Company and its Subsidiaries, taken as a whole.
12. The Company has full power and authority to authorize,
issue, offer and sell the shares to be sold by it, as contemplated by the
Underwriting Agreement, free of any preemptive or similar rights.
13. All holders of securities of the Company have waived any
rights to the registration of any securities of the Company which they may have
as a result of the filing of the Registration Statement.
14. There is no document or contract of a character required
to be described in the Registration Statement or Prospectus or to be filed as a
exhibit to the Registration Statement which is not described or filed as
required.
15. Each of the Company and its Subsidiaries owns, or is
licensed or otherwise has the right to use, all material trademarks and trade
names which are used in or necessary for the conduct of its business as
described in the Registration Statement and Prospectus. To the best of our
knowledge after due inquiry, no claims have been asserted by any person to the
use of any such trademarks or trade names or challenging or questioning the
validity or effectiveness of any such trademark or trade name.
16. The Registration Statement has become effective under the
Act and, to the best of our knowledge after due inquiry, no stop order
preventing or suspending the use of the Registration Statement or Prospectus,
has been issued and no proceeding for that purpose has been instituted or is
pending or threatened by the Commission.
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30
17. The Registration Statement, as of the Effective Date, and
the Prospectus, as of its date and as of the date hereof, complied or complies,
as the case may be, in all material respects with the applicable requirements of
the Act and the Rules and Regulations of the Commission.
18. The form of certificate evidencing the shares has been
duly approved by all necessary corporate action of the Company and complies as
to form with the requirements of the Delaware General Corporation Law.
19. The statements in the Prospectus under the captions
"Business - Joint Ventures and Strategic Alliances," insofar as they purport to
summarize the provisions of documents referred to therein, and the statements in
the Prospectus under the captions "Description of Capital Stock" and insofar as
they purport to summarize the provisions of documents or matters of law referred
to therein or constitute legal conclusions, are accurate in all material
respects.
Very truly yours,
Rogers & Hardin
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31
EXHIBIT B
FORM OF OPINION OF COMPANY REGULATORY COUNSEL
__________________, 1997
SCHRODER & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
SMITH BARNEY INC.
COWEN & COMPANY
McDONALD & COMPANY SECURITIES INC.
As Representatives of Several Underwriters
c/o Schroder & Co. Inc.
787 Seventh Avenue
5th Floor
New York, New York 10019
Re: 2,800,000 Shares of Common Stock, par value $.01
per share of Alternative Living Services, Inc.
Ladies and Gentlemen:
We have acted as counsel to Alternative Living Services, Inc., a
Delaware corporation (the "Company"), in connection with the purchase on this
date by you and the other underwriters (collectively, the "Underwriters") named
in Schedule I of that certain Underwriting Agreement dated December 19, 1997,
among the Underwriters, the Company and the Selling Stockholders (as defined
therein) (the "Underwriting Agreement") of an aggregate of 2,800,000 shares (the
"Firm Shares") of the Company's common stock, par value $.01 (the "Common
Stock"). This opinion is furnished to you pursuant to Section 6(d) of the
Underwriting Agreement. Terms used herein and not defined herein are used as
defined in the Underwriting Agreement.
In connection with this opinion, we have reviewed such documents and
matters of law as we have deemed necessary for the purposes of expressing the
opinions set forth herein. Based upon the foregoing, we are of the opinion that:
1. Except as otherwise described in the Registration Statement
and Prospectus, each of the facilities described in the Registration Statement
under the captions "Business Residences" and located in the State of ___________
is organized, licensed and operated in conformity with the requirements for
qualification as a licensed facility of the type set forth next to the name of
such Facility in Exhibit A hereto under the applicable laws, rules and
regulations of the State of in which the Facilities are located and is therefore
able to conduct
B-1
32
the Company's business of "assisted living" described as being conducted at each
such Facility in its beds as set forth more fully in the Prospectus.
Furthermore, the Company's ___________ facility in _____________, is not
currently a licensed facility but is operated as an independent living facility.
Those facilities listed herein which are not licensed under state law or which
contain unlicensed beds do not currently provide in those facilities or
unlicensed beds services of a nature which would require the Company or its
Subsidiaries to be duly licensed to provide the same.
2. The statements set forth under the headings "Risk
Factors-Governmental Regulation" and "Business-Government Regulation" in the
Registration Statement and the Prospectus, insofar as such statements constitute
a summary of the legal matters, documents or proceedings referred to therein,
provide accurate summaries of such legal matters, documents and proceedings.
3. To our knowledge after reasonable investigation, the
conduct of the business of the Company and its Subsidiaries is not in violation
of any federal, state or local statute, administrative regulation or other law,
which violation is likely to have a material adverse effect on the Company and
its Subsidiaries, taken as a whole; and each of the Company and its Subsidiaries
has either (i) obtained all Licenses which are necessary or required to be
issued to the Company and its Subsidiaries for the ownership, leasing and
operation of its Facilities and the conduct of its business as presently
conducted, except where the failure to obtain such Licenses would not have a
material adverse affect on each of the Company and its Subsidiaries or (ii)
taken all steps necessary to obtain such Licenses an depending issuance thereof
is lawfully operating its Facilities under Licenses issued in the name of the
prior operator thereof.
Although we assume no responsibility for the accuracy,
completeness and fairness of the statements contained in the Registration
Statement and Prospectus, we have participated in discussions with officers of
the Company regarding the provisions of the Prospectus described in Paragraph 2
of this opinion and no facts have come to our attention that lead us to believe
that the provisions of the Registration Statement described in Paragraph 2 of
this opinion as of the date it was declared effective and as of the date hereof
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the provisions of the
Prospectus described in Paragraph 2 of this opinion as of its date and the date
hereof, contained or contains any untrue statement of a material fact or omitted
or omits to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading (it being understood that we have not been requested
to comment on, and express no comment with respect to, financial, operating and
statistical data and the historical and pro forma financial statements,
including the notes and schedules thereto, in the Prospectus).
Sincerely,
B-2