<PAGE>
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 26, 1996
PENN TREATY AMERICAN CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
Pennsylvania 0-15972 23-1664166
<S> <C> <C>
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
</TABLE>
3440 Lehigh Street, Allentown Pennsylvania 18103
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (610) 965-2222
<PAGE>
ITEM 7. EXHIBITS
Exhibit 1.1 Purchase Agreement dated November 20, 1996 by and among
the Registrant and the Initial Purchasers
Exhibit 4.1 Indenture dated as of November 26, 1996 between the
Registrant and First Union National Bank, as trustee
Exhibit 4.2 Registration Rights Agreement dated November 26, 1996
by and among the Registrant and the Initial Purchasers
Exhibit 4.3 Form of Definitive Note
Exhibit 4.4 Form of Rule 144A Restricted Global Note
Exhibit 4.5 Form of Regulation S Global Note
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S
Pursuant to a purchase agreement (the "Purchase Agreement") dated
November 20, 1996, between the Registrant and the initial purchasers, on
November 26, 1996, the Registrant sold $74,750,000 ($65,000,000 plus $9,750,000
pursuant to the exercise of the over-allotment option granted to the initial
purchasers) aggregate principal amount of its 6-1/4% Convertible Subordinated
Notes due 2003 (the "Notes") to the initial purchasers at an initial offering
price of 100% of the principal amount thereof, less 3% gross commission.
The initial purchasers advised the Registrant that the Notes were to
be resold at 100% of the principal amount thereof (i) to qualified institutional
buyers in reliance on Rule 144A under the Securities Act of 1933, as amended
(the "Act") and to institutional "accredited investors" within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Act, that agreed in writing to comply
with the transfer restrictions and other conditions set forth in the Purchase
Agreement and (ii) outside the United States to certain persons in reliance on
Regulation S under the Act. The initial purchasers advised the Registrant that
$1,750,000 aggregate principal amount of Notes were sold outside the United
States to certain persons in reliance on Regulations S under the Act.
In connection with sales of the Notes outside the United States, each
initial purchaser agreed that, except for sales described above, it would not
offer, sell or deliver the Notes to, or for the account or benefit of, U.S.
persons (as
2
<PAGE>
defined in Regulation S under the Act) (i) as part of such initial
purchaser's distribution at any time or (ii) otherwise until 40 days after
the later of the commencement of the offering of the Notes and the last
closing date with respect to the Notes, and that it would send to each dealer
to whom it sold such Notes during such period a confirmation or other notice
setting forth the restrictions on offers and sales of the Notes within the
United States or to, or for the account or benefit of, U.S. persons.
The Notes were issued under an Indenture, dated as of November 26,
1996 (the "Indenture"), between the Registrant and First Union National Bank,
as trustee. The Notes represent general unsecured subordinated obligations
of the Registrant. The Notes are convertible into shares of the Registrant's
Common Stock, par value $.10 per share (the "Common Stock"), at the option of
the holder thereof, at any time after February 24, 1997 until the close of
business on November 28, 2003, subject to prior redemption or repurchase, at
an initial conversion price of $28.44 per share. The conversion price is
subject to adjustment (under formulae set forth in the Indenture) upon the
occurrence of certain events, including, but not limited to: (i) the issuance
of Common Stock as a dividend or distribution on the outstanding Common
Stock; (ii) the issuance to all holders of Common Stock of certain rights,
options or warrants to purchase Common Stock at less than the Current Market
Price (as defined in the Indenture); (iii) certain subdivisions, combinations
and reclassifications of Common Stock; (iv) certain defined distributions to
all holders of Common Stock of any class of capital stock of the Registrant;
(v) certain cash distributions; and (vi) the purchase of Common Stock
pursuant to a tender offer made by the Registrant or any of its subsidiaries
in certain defined circumstances.
The Registrant currently does not have a sufficient number of shares
of Common Stock available for issuance upon conversion of all of the Notes and
the exercise of all outstanding options granted by the Registrant pursuant to
the Registrant's Employee Incentive Stock Option Plan and Agent Stock Option
Plan. In order to provide a sufficient number of shares of Common Stock to
permit the conversion of all Notes, the Registrant has agreed as soon as
practicable to seek and recommend the approval of its shareholders to amend its
articles of incorporation to increase the number of authorized shares of Common
Stock to an amount at least sufficient to permit the conversion of all Notes.
In the event a holder of Notes desires to convert all, or any portion, of its
Notes into shares of Common Stock at a time when the Registrant does not have a
sufficient number of shares of Common Stock available for such conversion, in
lieu of delivering shares of Common Stock upon conversion of that portion of
such holder's Notes for which there
3
<PAGE>
is an insufficient number of shares of Common Stock (the "Cash Equivalent
Notes"), the Registrant will pay to the holder converting the Cash Equivalent
Notes an amount in cash equal to the Market Price of the shares of Common
Stock into which the Cash Equivalent Notes are then convertible. "Market
Price" means the average of the last reported closing prices of the Common
Stock for the ten trading day period (appropriately adjusted to take into
account the occurrence during such period of certain events that would result
in an adjustment of the conversion price), commencing on the first trading
day after delivery of notice to such holder that the Registrant must pay cash
in lieu of delivering shares of Common Stock.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PENN TREATY AMERICAN CORPORATION
<TABLE>
<C> <S>
Date: December 6, 1996 By: /s/ A. J. Carden
-----------------
A. J. Carden
Executive Vice President
</TABLE>
5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Numbered
Exhibit No. Description Page
<C> <S> <C>
1.1 Purchase Agreement dated
November 20, 1996 by and
among the Registrant and
the Initial Purchasers
4.1 Indenture dated as of
November 26, 1996 between
the Registrant and First
Union National Bank, as trustee
4.2 Registration Rights Agreement
dated November 26, 1996 by and
among the Registrant and the
Initial Purchasers
4.3 Form of Definitive Note
(included in Exhibit A to Exhibit
4.1)
4.4 Form of Rule 144A Restricted
Global Note (included in
Exhibit B to Exhibit 4.1)
4.5 Form of Regulation S Global
Note (included in Exhibit C
to Exhibit 4.1)
</TABLE>
6
<PAGE>
[Ballard Spahr Andrews & Ingersoll Letterhead Appears Here]
December 6, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Penn Treaty American Corporation
File No. 0-15972
Dear Sir or Madam:
Transmitted herewith for filing is the Current Report on Form 8-K of
Penn Treaty American Corporation dated December 6, 1996.
Sincerely,
/s/ Susan Sudick Colton
Susan Sudick Colton
7
<PAGE>
$65,000,000
6-1/4% Convertible Subordinated Notes due 2003
PENN TREATY AMERICAN CORPORATION
PURCHASE AGREEMENT
November 20, 1996
BEAR, STEARNS & CO. INC.
ADVEST, INC.
as the Initial Purchasers named in
Schedule I hereto
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
Dear Sirs:
Penn Treaty American Corporation, a Pennsylvania corporation (the
"COMPANY"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the several Initial Purchasers named in Schedule I hereto (the
"INITIAL PURCHASERS") an aggregate of $65,000,000 principal amount of its 6-1/4%
Convertible Subordinated Notes due 2003 (the "FIRM NOTES"). In addition, the
Company proposes to grant to the Initial Purchasers an option, for the sole
purpose of covering over allotments in connection with the sale of the Firm
Notes, to purchase up to an additional $9,750,000 principal amount of Notes (the
"OPTIONAL NOTES") as provided in Section 2 below. The Firm Notes and any
Optional Notes purchased by the Initial Purchasers are referred to herein as the
"NOTES".
The Notes are to be issued pursuant to an indenture to be dated as of
November 26, 1996 (the "INDENTURE") between the Company and First Union National
Bank, as trustee (the "TRUSTEE"), and, except as otherwise provided therein and
in the Indenture, will be convertible into shares of the Company's common stock,
par value $.10 per share (the "COMMON STOCK"), on the terms set forth therein.
The holders of the Notes will be entitled to certain registration rights
provided under a Registration Rights Agreement to be dated November 26, 1996
(the "REGISTRATION RIGHTS AGREEMENT") between the Company and the Initial
Purchasers.
<PAGE>
The Company has prepared a preliminary offering circular dated
November 8, 1996 (the "PRELIMINARY OFFERING CIRCULAR") and a final offering
circular dated November 20, 1996 (as supplemented from time to time with the
written consent of the Company and Bear, Stearns & Co. Inc. (as the
representative of the Initial Purchasers, the "REPRESENTATIVE") (the "OFFERING
CIRCULAR") with respect to the offering of the Notes contemplated by this
Agreement (the "OFFERING"). The terms "Preliminary Offering Circular" and
"Offering Circular" as used herein shall include all documents incorporated by
reference therein.
The Notes have not been registered under the Securities Act of 1933,
as amended (the "SECURITIES ACT"), and are being offered and sold in reliance on
exemptions from or in transactions not subject to the registration requirements
of the Securities Act, including sales (i) made in the United States to
"qualified institutional buyers" as defined in, and in reliance on, Rule 144A
under the Securities Act ("RULE 144A") or to institutional "accredited
investors" as defined in Rule 501(a)(1),(2), (3) and (7) of Regulation D under
the Securities Act ("REGULATION D") and (ii) made outside the United States in
reliance on Regulation S under the Securities Act ("REGULATION S").
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Initial Purchasers that:
(a) The Offering Circular, as of the date hereof, and as of the
Closing Date (as hereinafter defined) and as of the Additional Closing Date (as
hereinafter defined), if any, is and will be accurate in all material respects,
does not and will not contain an untrue statement of a material fact and does
not and will not omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. No representation and
warranty is made in this Section 1(a), however, with respect to any information
contained in or omitted from the Offering Circular or any amendment thereof or
supplement thereto in reliance upon and in conformity with information furnished
in writing to the Company by either Initial Purchaser expressly for use in
connection with the preparation of the Offering Circular or any amendment
thereof or supplement thereto, as the case may be.
(b) Coopers & Lybrand L.L.P., who have certified certain of the
financial statements and supporting schedules included or incorporated by
reference in the Offering Circular, are independent public accountants as
required by the Securities Act and the rules and regulations promulgated
thereunder (the "REGULATIONS").
2
<PAGE>
(c) The financial statements, including the notes thereto, and
supporting schedules, included or incorporated by reference in the Offering
Circular present fairly the consolidated financial position of the Company and
its subsidiaries as of the dates indicated and the consolidated results of
operations and changes in financial position of the Company and its subsidiaries
for the periods specified; except as otherwise stated in the Offering Circular,
such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis; and the supporting
schedules included or incorporated by reference in the Offering Circular present
fairly the information required to be stated therein. The pro forma financial
statements and other pro forma financial information included in the Offering
Circular have been prepared in all material respects in accordance with the
rules and regulations of the Securities and Exchange Commission (the
"COMMISSION") with respect to pro forma financial statements, have been properly
compiled on the pro forma bases described therein, and, in the opinion of the
Company, the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions or
circumstances referred to therein.
(d) Other than Penn Treaty Life Insurance Company, Network America
Life Insurance Company, American Network Insurance Company and Senior Financial
Consultants Company (each, a "SIGNIFICANT SUBSIDIARY" and together, the
"SIGNIFICANT SUBSIDIARIES"), the Company does not own or control, directly or
indirectly, any corporation, association or other entity that would constitute a
"significant subsidiary" within the meaning of Rule 1-02(w) of Regulation S-X
under the Securities Act.
(e) Subsequent to the respective dates as of which information is
given in the Offering Circular, except as set forth in the Offering Circular,
there has been no material adverse change in the business, properties,
operations, condition (financial or otherwise) or results of operations of the
Company and its subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, and since the date of the
latest balance sheet presented in the Offering Circular, neither the Company nor
any of the Significant Subsidiaries has incurred or undertaken any liabilities
or obligations, direct or contingent, that are material to the Company and its
subsidiaries taken as a whole, except for liabilities or obligations that are
disclosed in the Offering Circular.
(f) Each of the Company and the Significant Subsidiaries (i) has been
duly incorporated and is validly subsisting under the laws of its jurisdiction
of incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or
3
<PAGE>
licensed) or the nature or conduct of its business makes such qualification
necessary, except for those failures to be so qualified or in good standing
that will not in the aggregate have a material adverse effect on the Company
and its subsidiaries taken as a whole, and (iii) has all requisite power and
authority, and all necessary consents, approvals, authorizations, orders,
registrations, qualifications, licenses and permits of and from all public,
regulatory or governmental agencies and bodies (including without limitation
all licenses from the insurance departments of the various states in which
subsidiaries of the Company write business), to own, lease and operate its
properties and conduct its business as now being conducted and as described
in the Offering Circular. Each subsidiary of the Company engaged in
underwriting insurance has fulfilled and performed all of its material
obligations under, and is in compliance with all material requirements and
conditions of, all licenses from the insurance departments of the various
states in which it currently underwrites insurance and no event has occurred
that allows or, after notice or lapse of time, would allow or result in the
revocation or termination of, or any material impairment of the rights and
privileges of such subsidiary under, any such license.
(g) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement, the
Indenture, the Notes and the Registration Rights Agreement (collectively, the
"TRANSACTION AGREEMENTS"), and to consummate the transactions contemplated
hereby and thereby, including (without limitation) (i) the issuance, sale and
delivery of the Notes hereunder and (ii) the filing of any Registration
Statement under and as defined in the Registration Rights Agreement.
(h) The execution, delivery, and performance of this Agreement and
the other Transaction Agreements and the consummation of the transactions
contemplated hereby and thereby do not and will not (i) conflict with or result
in a breach of any of the terms and provisions of, or constitute a default (or
an event which with notice or lapse of time, or both, would constitute a
default) under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of the Significant
Subsidiaries (other than as disclosed in the Offering Circular) pursuant to, any
agreement, instrument, franchise, license or permit to which the Company or any
of the Significant Subsidiaries is a party or by which any of such corporations
or their respective properties or assets is bound, except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not have a
material adverse effect on the condition (financial or otherwise), earnings or
business affairs of the Company and its subsidiaries, taken as a whole, (ii)
violate or conflict with any provision of the articles of incorporation or
bylaws of the Company or any of the Significant Subsidiaries or any judgment,
decree, order, statute, rule or regulation of any
4
<PAGE>
court or any public, governmental or regulatory agency or body having
jurisdiction over the Company or any of the Significant Subsidiaries or any
of their respective properties or assets, except for such violations or
conflicts that would not have a material adverse effect on the condition
(financial or otherwise), earnings or business affairs of the Company and
its subsidiaries, taken as a whole, or (iii) require any consent, approval,
authorization, order, registration, filing, qualification, license or permit
of or with any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of the Significant Subsidiaries
or any of their respective properties or assets, except (in the case of
clause (iii) above) as disclosed in the Offering Circular and except for any
such consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as have been made or obtained or as may
be required under state securities or Blue Sky laws or the securities laws of
any jurisdiction outside the United States in connection with the purchase
and distribution of the Notes by the Initial Purchasers, and except where the
failure to obtain or make any such consents, approvals, authorizations,
orders, registrations, filings, qualifications, licenses and permits would
not have a material adverse effect on the condition (financial or otherwise),
earnings or business affairs of the Company and its subsidiaries, taken as a
whole.
(i) This Agreement and the transactions contemplated hereby have been
duly and validly authorized by the Company. This Agreement has been duly and
validly executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforcement may be subject to or
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, or general equitable principles (whether considered in a proceeding
in equity or at law), and except as the enforceability thereof may be limited by
considerations of public policy.
(j) The Indenture has been duly and validly authorized by the Company
and, when executed and delivered by the Company and the Trustee, will have been
duly and validly executed and delivered by the Company and will constitute the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such enforcement may be subject
to or limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, or general equitable principles (whether considered in a proceeding
in equity or at law). The Indenture conforms in all material respects to the
description thereof contained in the Offering Circular.
5
<PAGE>
(k) The Notes have been duly and validly authorized by the Company
and, when authenticated by the Trustee and issued, sold and delivered in
accordance with this Agreement and the Indenture, will have been duly and
validly executed, authenticated, issued and delivered and will constitute the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with their terms and entitled to the benefits of the
Indenture, except as such enforcement may be subject to or limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, or
general equitable principles (whether considered in a proceeding in equity or at
law). The Notes conform in all material respects to the description thereof
contained in the Offering Circular.
(l) The Registration Rights Agreement and the transactions
contemplated therein have been duly and validly authorized by the Company. The
Registration Rights Agreement, when executed and delivered by the Company and
the Initial Purchasers, will have been duly and validly executed and delivered
by the Company and will constitute the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as such enforcement may be subject to or limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, or general equitable
principles (whether considered in a proceeding in equity or at law), and except
as the enforceability thereof may be limited by considerations of public policy.
The Registration Rights Agreement conforms in all material respects to the
description thereof contained in the Offering Circular.
(m) Except as described in the Offering Circular, there is no
litigation or governmental proceeding to which the Company or any Significant
Subsidiary is a party or to which any property of the Company or any Significant
Subsidiary is subject or which is pending or, to the knowledge of the Company,
contemplated against the Company or any Significant Subsidiary that could
reasonably be expected to result in any material adverse change or any
development involving a material adverse change in the business, properties,
operations, condition (financial or otherwise) or results of operations of the
Company and its subsidiaries taken as a whole.
(n) Each of the Company and the Significant Subsidiaries is
conducting its business in compliance with all applicable local, state, federal
and foreign laws, rules and regulations in the jurisdictions in which it is
conducting business, except to the extent that such failure to comply would not
have a material adverse effect on the condition (financial or otherwise),
earnings or business affairs of the Company and its subsidiaries, taken as a
whole.
6
<PAGE>
(o) The Company had, at September 30, 1996, an authorized and
outstanding capitalization as set forth in the Offering Circular. All of the
outstanding shares of capital stock of the Company have been duly and validly
authorized and issued, are fully paid and nonassessable and were not issued in
violation of or subject to any preemptive rights. Except as otherwise disclosed
in the Offering Circular, all of the outstanding shares of capital stock of each
Significant Subsidiary have been duly and validly authorized and issued, are
fully paid and nonassessable, were not issued in violation of or subject to any
preemptive rights and all such shares owned by the Company are owned, directly
or indirectly, free and clear of any lien, claim, encumbrance, security
interest, restriction on transfer, shareholders' agreement, voting trust or
other preferential arrangement or defect of title whatsoever. The capital stock
of the Company conforms to the descriptions thereof contained in the Offering
Circular.
(p) As of the date hereof, no event has occurred nor has any
circumstance arisen which, had the Notes been issued on the date hereof, would
constitute a default or Event of Default (as such terms are defined in the
Indenture).
(q) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which constitutes or
that might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Notes to facilitate the sale or resale of the
Notes.
(r) (i) None of the Company or any of its affiliates (as defined in
Rule 501(b) under the Securities Act) or any person acting on behalf of any such
person (excluding the Initial Purchasers and their respective affiliates, as to
whom this representation shall not apply) has engaged in any directed selling
efforts (as such term is defined in Regulation S) in the United States with
respect to the Notes, and (ii) each of the Company, its affiliates and each
person acting on behalf of any of them (other than the Initial Purchasers and
their respective affiliates, as to which no representation made) has complied
with the offering restrictions requirement of Regulation S.
(s) None of the Company or any of its affiliates or any person acting
on behalf of any of them (excluding the Initial Purchasers and their respective
affiliates, as to whom this representation shall not apply) has sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect of any
security (as such term is defined in the Securities Act) that is or may be
integrated with the sale of the Notes in a manner that would require
registration under the Securities Act.
(t) The Notes are eligible for resale pursuant to Rule 144A and, when
issued, will not be of the same class as any securities listed on a national
securities
7
<PAGE>
exchange registered under section 6 of the Exchange Act (as hereinafter
defined) or quoted in a U.S. automated inter-dealer quotation system.
(u) The Company is subject to section 13 or 15(d) of the Exchange Act
and is in compliance in all material respects with the provisions of such
section.
(v) Subject to: (i) compliance by the Initial Purchasers with the
procedures set forth in Section 3 hereof, (ii) the accuracy of the
representations and warranties of the Initial Purchasers in Section 3 hereof,
(iii) the accuracy of the representations and warranties made in accordance with
this Agreement and the Offering Circular by purchasers to whom the Initial
Purchasers initially resell Notes, and (iv) receipt by the purchasers to whom
the Initial Purchasers initially resell Notes of a copy of the Offering Circular
prior to such resale, it is not necessary, in connection with the offer, sale
and delivery of the Notes to the Initial Purchasers in the manner contemplated
by this Agreement and the Offering Circular, to register the Notes under the
Securities Act or to qualify the Indenture under the Trust Indenture Act of
1939, as amended.
(w) Except to the extent set forth in the Offering Circular, the
shares of Common Stock issuable upon conversion of the Notes have been duly
authorized and, when issued in accordance with the terms of the Notes and the
Indenture, will be validly issued, fully paid and nonassessable and will conform
in all material respects to the description thereof contained in the Offering
Circular. The shares of Common Stock issuable on conversion of the Notes at the
initial conversion price set forth in the Indenture, to the extent authorized
and available for issuance for such purpose, have been reserved for issuance
and, except as set forth in the Offering Circular, no further approval or
authority of the shareholders or the Board of Directors of the Company will be
required for such issuance of Common Stock.
(x) The Company is not, and upon consummation of the transactions
contemplated hereby will not be, subject to registration as an "investment
company" under the Investment Company Act of 1940, as amended.
2. PURCHASE, SALE AND DELIVERY OF THE NOTES.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Initial Purchasers, and the Initial
Purchasers, severally and not jointly, agree to purchase from the Company, the
principal amount of the Firm Notes set forth opposite their respective names in
Schedule I hereto at a purchase price equal to 100% of such principal amount
LESS an underwriting discount of 3% of such
8
<PAGE>
principal amount. Payment of the purchase price for, and delivery of, the
Firm Notes will be made at the offices of Bear Stearns & Co. Inc. (the
"Representative") at 245 Park Avenue, New York, New York at 10:00 a.m. (New
York City time) on November 26, 1996, unless postponed in accordance with
Section 9 hereof, or at such other place, time and date as may be mutually
agreed in writing between you and the Company (the time and date of such
payment and delivery being herein called the "CLOSING DATE").
(b) In addition, on the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants to the Initial Purchasers
the option to purchase, severally and not jointly, up to U.S. $9,750,000
aggregate principal amount of Optional Notes, for the sole purpose of covering
over-allotments in the sale of Firm Notes by the Initial Purchasers, at the same
purchase price to be paid by the Initial Purchasers to the Company for the Firm
Notes as set forth in Section 2(a). This option may be exercised, in whole or
in part, on one occasion only at any time on or before the 30th day following
the date of the Offering Circular, by written notice to the Company by the
Representative on behalf of the Initial Purchasers. Such notice shall set forth
the aggregate principal amount of Optional Notes to be purchased pursuant to
such exercise of the option and the date and time, as reasonably determined by
the Representative, when the Optional Notes are to be delivered (such date and
time being herein sometimes referred to as the "ADDITIONAL CLOSING DATE");
PROVIDED that the Additional Closing Date shall not be earlier than (x) the
Closing Date or (y) the second full business day after the date on which the
option shall have been exercised, nor later than the eighth full business day
after the date on which the option shall have been exercised (unless such date
and time are postponed in accordance with Section 9 hereof). The principal
amount of the Optional Notes to be purchased by each Initial Purchaser upon such
exercise shall bear the same ratio to the aggregate principal amount of Optional
Notes being purchased upon such exercise as the principal amount of Firm Notes
set forth opposite the name of such Initial Purchaser in Schedule I hereto (or
such number increased as set forth in Section 9 hereof) bears to the aggregate
principal amount of Firm Notes, subject to such adjustments to eliminate
fractional amounts as the Representative in its sole discretion may make.
(c) At or prior to the Closing Date and the Additional Closing Date
(if any) hereunder, the Company shall execute and deliver for authentication the
Notes to be purchased and sold on such date and shall deposit such Notes (except
for those purchased by "institutional accredited investors" which shall be in
definitive form) with The Depositary Trust Company ("DTC") for the account or
accounts of participants in DTC (including Euroclear and CEDEL, as the case may
be) purchasing beneficial interests therein. The Initial Purchasers shall pay
or cause the purchase price for such
9
<PAGE>
Notes to be paid to or upon the order of the Company by wire transfer of same
day funds against delivery of such Notes to or for the respective accounts of
the Initial Purchasers. Certificates evidencing the Notes shall be
registered in the name of Cede & Co. as nominee for DTC or such other name or
names and in such authorized denominations as the Representative may request
in writing at least two full business days prior to the Closing Date or the
Additional Closing Date, as the case may be. The Company will permit the
Representative to inspect such certificates at the offices of the
Representative at least one full business day prior to the Closing Date and
the Additional Closing Date (if any).
3. SUBSEQUENT OFFERS AND RESALES OF THE NOTES. The Initial
Purchasers and the Company hereby establish and agree to observe the following
procedures in connection with the offer and sale of the Notes:
(a) Each Initial Purchaser has advised the Company and the
Representative that it will offer the Notes for resale only upon the terms and
conditions set forth in this Agreement and the Offering Circular. The Notes have
not been and will not be registered under the Securities Act. Each Initial
Purchaser agrees that it will not take, and acknowledges that the Company has
not taken, any action that would constitute a public offering of the Notes in
any jurisdiction and further agrees that, with respect to the offer or sale of
any Notes or the delivery or distribution of any Offering Circular, it will
comply with applicable laws and regulations in such jurisdictions or to which it
is otherwise subject.
(b) Each Initial Purchaser represents and warrants that (i) it is a
"qualified institutional buyer" within the meaning of Rule 144A or an
institution that is an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act and (ii) that neither it nor
any of its affiliates nor any person acting on behalf of it or any such
affiliate has engaged in any general solicitation or general advertising, as
such terms are defined in Rule 502(c) under the Securities Act, in connection
with the offer or sale of the Notes.
(c) In connection with sales outside the United States, each Initial
Purchaser agrees that it will not offer, sell or deliver Notes (i) as part of
the distribution thereof at any time or (ii) otherwise until 40 days after
completion of the distribution, as determined by the Representative, to or for
the account or benefit of U.S. Persons (as defined in Regulation S). Each
Initial Purchaser confirms that neither it nor any of its affiliates nor any
person acting on behalf of it or any such affiliate has engaged in any "directed
selling efforts" (as such term is defined in Regulation S) with respect to the
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Notes and that it, its affiliates and each such other person has complied with
the offering restrictions required by Regulation S with respect to the Notes.
(d) Each of the Initial Purchasers acknowledges and agrees that it
has not and will not offer, sell or deliver the Notes in the United States or to
or for the account of any U.S. Person other than (i) distributors (as defined in
Regulation S), (ii) institutional buyers that are reasonably believed to be
"qualified institutional buyers" (as defined in Rule 144A) and (iii)
institutional purchasers that are reasonably believed by the Initial Purchasers
to be "accredited investors" (as defined in Rule 501(a) (1), (2), (3) or (7)
under the Securities Act) and that have executed and delivered to the
Representative a letter in the form of Annex A to the Offering Circular.
(e) Each of the Initial Purchasers has advised the Company and the
Representative that, prior to the confirmation of sale of any Notes, it will
have sent to each dealer, distributor or person that purchases any Notes from it
during the restricted period and receives a selling concession, fee or other
remuneration in connection therewith a confirmation or notice substantially to
the following effect:
"The Notes have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), and may not be offered
and sold within the United States or to, or for the account or
benefit of U.S. persons (i) as part of the initial distribution
thereof at any time or (ii) otherwise until 40 days after the
later of the completion of the distribution of the Notes, as
determined by Bear Stearns & Co. Inc., except in accordance with
Regulation S or Rule 144A under the Securities Act."
(f) Each Initial Purchaser represents, warrants and agrees that (i)
it has not offered or sold and will not offer or sell Notes in the United
Kingdom, other than to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (whether as principal
or agent) for the purposes of their businesses or otherwise in circumstances
that will not result in an offer to the public within the meaning of the Public
Offers of Securities Regulations 1995, (ii) it has complied and will comply with
all applicable provisions of the Public Offers of Securities Regulations 1995
and the Financial Services Act of 1986 with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United Kingdom, and
(iii) it has only issued or passed on, and will only issue or pass on, to any
person in the United Kingdom any documents received by it in connection with the
issue of the Notes if the person is of a kind described in Article 11(c) of the
Financial Services Act of 1986 (Investment Advertisements) (Exemptions) Order
1988 or is a
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person to whom the documents may lawfully be issued or passed on. Each
Initial Purchaser further agrees that it will not offer or sell any Notes
directly or indirectly in Japan or to any resident of Japan except (A)
pursuant to an exemption from the registration requirements of the Securities
and Exchange Law of Japan and (B) in compliance with any applicable
requirements of Japanese law. Each Initial Purchaser further agrees that it
will not offer or sell any Notes directly or indirectly in any province of
Canada except in compliance with all requirements of applicable securities
laws and that it will not offer or sell any Notes in the Republic of France.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with
the Initial Purchasers that:
(a) If at any time prior to the Closing Date or the Additional
Closing Date (if any) any event shall have occurred as a result of which the
Offering Circular as then amended or supplemented would in the reasonable
judgment of the Initial Purchasers or the Company include an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, the Company will notify the
Representative promptly and prepare and deliver to the Representative on behalf
of the Initial Purchasers an amendment or supplement (in form and substance
satisfactory to you) which will correct such statement or omission.
(b) The Company will promptly deliver to the Initial Purchasers such
number of copies of the Offering Circular and all amendments thereof and
supplements thereto as the Representative reasonably may request.
(c) The Company will apply the proceeds from the sale of the Notes as
set forth under "Use of Proceeds" in the Offering Circular.
(d) The Company will cooperate with the Initial Purchasers in
arranging for the Notes to be designated Private Offerings, Resales and Trading
through Automated Linkage ("PORTAL") market securities in accordance with the
rules and regulations of the National Association of Securities Dealers, Inc.,
relating to trading in the PORTAL market.
(e) For a period of ninety (90) days from the date of the Offering
Circular, the Company will not, without the prior written consent of the
Representative, offer to sell, sell, contract to sell, grant any option for the
sale of, or otherwise dispose of, directly or indirectly, any shares of Common
Stock or any rights to acquire Common Stock, other than the Notes and other than
Common Stock or options issued or granted
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pursuant to existing stock option and other compensation plans. In addition,
the Company will obtain and deliver to the Representative a letter from each
of its executive officers and directors confirming the agreement of such
person not to engage in any of the aforementioned transactions on his or her
own behalf during such ninety (90)-day period.
(f) So long as any of the Notes are "restricted securities" within
the meaning of Rule 144(a)(3) under the Securities Act, the Company will provide
to any holder of the Notes or to any prospective purchaser of the Notes
designated by any holder, upon request of such holder or prospective purchaser,
information required to be provided by Rule 144A(d)(4) of the Securities Act if
at the time of such request, the Company is not subject to the reporting
requirements under Section 13 or 15(d) of the Exchange Act.
(g) None of the Company, its subsidiaries, its affiliates or any
person acting on behalf of any of them (other than the Initial Purchasers and
their respective affiliates, as to whom this undertaking by the Company shall
not be deemed to apply) will solicit any offer to buy or offer or sell the Notes
by means of any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of the Securities Act.
(h) None of the Company, its subsidiaries, its affiliates or any
person acting on behalf of any of them (other than the Initial Purchasers and
their respective affiliates, as to whom this undertaking by the Company shall
not be deemed to apply) will offer to sell, sell or solicit offers to buy or
otherwise negotiate in respect of the sale of any security (as defined in the
Securities Act) that would be integrated with the sale of the Notes so as to
require the registration of the Notes under the Securities Act.
(i) During the period of three (3) years from and after the Closing
Date, none of the Company, its subsidiaries or its or their affiliates will
resell any Notes that may have been purchased or otherwise acquired by them,
except in a transaction registered or exempt from registration under the
Securities Act.
(j) None of the Company, its subsidiaries, its affiliates or any
person acting on behalf of any of them (other than the Initial Purchasers and
their respective affiliates, as to whom this undertaking shall not be deemed to
apply) will engage in any directed selling efforts (as that term is defined in
Regulation S) with respect to the Notes offered and sold pursuant to Regulation
S, and the Company, its subsidiaries, its affiliates and each person acting on
behalf of any of them (other than the Initial Purchasers
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and their respective affiliates, as to whom this undertaking by the Company
shall not be deemed to apply) will comply with the offering restrictions of
Regulation S with respect to those Notes offered and sold pursuant thereto.
(k) The Company will cooperate with the Initial Purchasers in
arranging for the Notes to be accepted for clearance and settlement through
Euroclear, CEDEL and The Depository Trust Company.
(l) Each of the Notes will bear, to the extent applicable, the legend
contained under the heading "Transfer Restrictions" in the Offering Circular for
the time period and upon the other terms stated therein, except after the Notes
are resold in a transaction registered under the Securities Act.
(m) The Company will use its reasonable commercial efforts to obtain
a rating of the Notes by Standard & Poor's Corporation and will provide to such
organization such information as such organization reasonably shall require in
order to issue a rating of the Notes.
5. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is terminated,
the Company agrees to pay all costs and expenses incident to the performance of
its obligations hereunder, including those in connection with (i) preparing,
printing, duplicating, filing and distributing the Offering Circular and any
amendments or supplements thereto (including, without limitation, fees and
expenses of the Company's accountants and counsel), and all other documents
related to the offering of the Notes (including those supplied to the Initial
Purchasers in quantities provided for herein), in each case excluding any fees
of counsel to the Initial Purchasers, (ii) the issuance, transfer and delivery
of the Notes to the Initial Purchasers, including any transfer or other taxes
payable thereon, (iii) the cost of printing the Notes, (iv) the cost and charges
of any transfer agent, registrar, Trustee (or successor trustee) or fiscal
paying agent and conversion agent and (v) the costs and charges of DTC,
Euroclear and CEDEL.
6. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations
of the Initial Purchasers to purchase and pay for the Firm Notes and the
Optional Notes, as provided herein, shall be subject to the accuracy in all
material respects of the representations and warranties of the Company herein
contained, as of the date hereof and as of the Closing Date (for purposes of
this Section 6 "Closing Date" shall refer to the Closing Date and the Additional
Closing Date, if different), to the absence from any certificates, opinions,
written statements or letters furnished to you pursuant to this
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Section 6 of any material misstatement or omission, to the performance by the
Company of its obligations hereunder, and to the following additional
conditions:
(a) At the Closing Date you shall have received the opinion of
Ballard Spahr Andrews and Ingersoll, counsel for the Company, dated the Closing
Date, addressed to the Initial Purchasers and in form and scope reasonably
satisfactory to Weil, Gotshal & Manges LLP ("Counsel for the Initial
Purchasers"), to the effect that:
(i) The Company and each Significant Subsidiary has
been duly incorporated and is validly existing and in good standing
as a corporation under the laws of the jurisdiction of its
incorporation and has full corporate power and authority to own,
lease and operate its properties and conduct its business as
described in the Offering Circular.
(ii) The Indenture has been duly authorized,
executed and delivered by the Company and, assuming due
authorization, execution and delivery thereof by the Trustee,
constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(iii) The Notes have been duly authorized, executed
and issued by the Company and, assuming due authentication thereof
by the Trustee, upon payment therefor and delivery thereof in
accordance with this Agreement and the Indenture, will constitute
the legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their terms and will be
entitled to the benefits of the Indenture, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability,
to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(iv) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery thereof by the Initial
Purchasers, constitutes the legal,
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valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability,
to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding in equity or at law) and
except as the enforceability of rights to indemnification
thereunder may be limited by federal or state securities laws or
public policy relating thereto.
(v) This Agreement has been duly authorized, executed
and delivered by the Company.
(vi) The statements made in the Offering Circular
under the caption "Description of the Notes," insofar as they
purport to constitute summaries of certain terms of documents
referred to therein, constitute accurate summaries of the terms of
such documents in all material respects.
(vii) The issue and sale of the Notes by the Company
and the compliance by the Company with all of the provisions of
this Agreement and the Registration Rights Agreement will not
conflict with, violate the terms of or result in a default under
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument filed or incorporated by reference as an
exhibit to the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 (the "1995 FORM 10-K"), or its Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1996, June
30, 1996 and September 30, 1996 or any material agreement entered
into by the Company subsequent to September 30, 1996 of which such
counsel has knowledge, nor will such action violate the articles of
incorporation or by-laws of the Company or any federal or
Pennsylvania statute, rule or regulation applicable to the Company
or any order known to such counsel issued by any governmental
agency or body or court having jurisdiction over the Company or any
of its subsidiaries or any of its or their respective properties.
(viii) No consent, approval, authorization, order,
registration or qualification of or with any federal or
Pennsylvania governmental agency or body is required for the issue
and sale of the Notes by the Company and compliance by the Company
with the provisions of this Agreement and the Registration Rights
Agreement, except for the registration of the Notes under the
Securities Act (as to which no opinion is expressed in this
paragraph), and such
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consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue
Sky laws or the securities laws of any jurisdiction outside the
United States in connection with the purchase and resale of the
Notes by the Initial Purchasers (as to which no opinion is
expressed).
(ix) The statements made in the Offering Circular
under the heading "Certain Tax Considerations," insofar as they
purport to constitute summaries of matters of United States federal
tax law and regulations or legal conclusions with respect thereto,
constitute accurate summaries of the matters described therein in
all material respects.
(x) No registration under the Securities Act of the
Notes or the shares of Common Stock issuable upon conversion of the
Notes in accordance with the Indenture, and no qualification of the
Indenture under the Trust Indenture Act of 1939, as amended, is
required for the offer and sale of the Notes by the Company to the
Initial Purchasers or the initial reoffer and resale of the Notes
by the Initial Purchasers solely in the manner contemplated by the
Offering Circular and this Agreement.
(xi) The authorized capital stock of the Company
conforms as to legal matters to the description thereof contained
in the Offering Circular under the heading "Description of Capital
Stock." The outstanding shares of the Company's Common Stock have
been duly authorized and validly issued and are fully paid and
nonassessable. The shares of Common Stock initially issuable upon
conversion of the Notes have been duly authorized and reserved for
issuance upon such conversion, except for and subject to the
limitations described in the Offering Circular on the number of
such shares available for that purpose, and, when issued and
delivered upon such conversion in accordance with the provisions of
the Indenture (assuming payment for and delivery of the Notes in
accordance with this Agreement), will be validly issued, fully paid
and nonassessable and no further approval or authority of the
shareholders or the Board of Directors of the Company will be
required for such issuance.
(xii) There are no preemptive rights to subscribe for
or purchase shares of the Company's Common Stock provided in the
Company's articles of incorporation or by-laws or, to the knowledge
of such counsel, in any agreement to which the Company is a party.
(xiii) To the knowledge of such counsel, no holders of
securities of the Company have rights to require the registration
of such securities because
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of the filing by the Company of the Shelf Registration Statement or the
New Notes Registration Statement (as such terms are defined in the
Offering Circular) except such as have been validly waived.
(xiv) Except as disclosed in the Offering Circular
and any document incorporated by reference therein, and except for
stock options outstanding under the Company's existing stock option
plan(s), to the knowledge of such counsel there are no outstanding
options, warrants or other rights calling for the issuance of, and
no commitments or obligations on the part of the Company to issue,
any shares of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the Company.
In addition, such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company,
representatives of the Initial Purchasers and Counsel for the Initial
Purchasers at which the contents of the Offering Circular and related matters
were discussed and, although such counsel did not independently verify such
information and is not passing upon and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Offering Circular, on the basis of the foregoing (relying as to the factual
matters upon the statements of officers and other representatives of the
Company and public officials) no facts have come to such counsel's attention
that caused such counsel to believe that the Offering Circular (other than
the financial statements and notes thereto and other financial and accounting
data included or incorporated by reference therein, or omitted therefrom, as
to which such counsel need express no belief) at the date of the Offering
Circular and as of the Closing Date contained or contains an 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, in light of
the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely (x) as to matters
involving the application of laws other than the laws of the United States
and jurisdictions in which such counsel are admitted, to the extent such
counsel may deem proper and to the extent specified in such opinion, if at
all, upon an opinion or opinions (in form and substance reasonably
satisfactory to Counsel for the Initial Purchasers) of other counsel,
reasonably acceptable to Counsel for the Initial Purchasers, familiar with
the applicable laws (it being understood, however, that with respect to the
validity and binding effect of the Indenture, the Notes and the Registration
Rights Agreement, counsel may opine as if such instruments were governed by
the laws of the Commonwealth of Pennsylvania); (y) as to matters of fact, to
the extent they deem
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proper, on the representations and warranties of the Company contained
herein, on certificates of responsible officers of the Company and
certificates or other written statements of officers of departments of
various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company and its subsidiaries, provided that
copies of any such statements or certificates shall be delivered to Counsel
for the Initial Purchasers. The opinion of such counsel for the Company
shall state that the opinion of any such other counsel is in form
satisfactory to such counsel and, in their opinion, the Initial Purchasers
and they are justified in relying thereon.
(b) All proceedings taken in connection with the sale of the Notes as
herein contemplated shall be reasonably satisfactory in form and substance to
you and to Counsel for the Initial Purchasers, and the Initial Purchasers shall
have received from said Counsel for the Initial Purchasers a favorable opinion,
dated as of the Closing Date with respect to the issuance and sale of the Notes,
the Offering Circular and such other related matters as you may reasonably
require, and the Company shall have furnished to Counsel for the Initial
Purchasers such documents as they reasonably may request for the purpose of
enabling them to pass upon such matters.
(c) At the Closing Date you shall have received a certificate of the
Chief Executive Officer and Chief Financial Officer of the Company, dated the
Closing Date, to the effect that (i) as of the date hereof and as of the Closing
Date, the representations and warranties of the Company set forth in Section 1
hereof are accurate in all material respects, (ii) as of the Closing Date, the
obligations of the Company to be performed hereunder on or prior thereto have
been duly performed in all material respects and (iii) subsequent to the
respective dates as of which information is given in the Offering Circular, the
Company and its subsidiaries have not sustained any material loss or
interference with their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, and there has
not been any material adverse change, or any development involving a material
adverse change, in the business, properties, operations, condition (financial or
otherwise), or results of operations of the Company and its subsidiaries taken
as a whole, except in each case as disclosed in the Offering Circular.
(d) At the time this Agreement is executed and at the Closing Date,
you shall have received a letter, from Coopers & Lybrand L.L.P., independent
accountants for the Company, dated, respectively, as of the date of this
Agreement and as of the Closing Date and addressed to the Initial Purchasers, in
form, scope and substance as shall have been previously agreed to by the
Representative.
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(e) Prior to the Closing Date, the Company shall have furnished to
the Initial Purchasers such further information, certificates and documents as
the Initial Purchasers may reasonably request.
(f) You shall have received from each person who is a director or
executive officer (as defined in the proxy rules of the Securities and Exchange
Commission) of the Company an agreement to the effect that during the period of
90 days from the date of the Offering Circular, such person will not, directly
or indirectly, without the prior written consent of the Representative, offer to
sell, sell, contract to sell, grant any option or rights to acquire or purchase
any option to sell, or otherwise dispose of, any shares of Common Stock.
(g) At the Closing Date, the Notes shall have been approved for
quotation in the PORTAL market.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as required by this Agreement,
or if any of the certificates, opinions, written statements or letters furnished
to you or to Counsel for the Initial Purchasers pursuant to this Section 6 shall
not be in all material respects reasonably satisfactory in form and scope to the
Representative and to Counsel for the Initial Purchasers, all obligations of the
Initial Purchasers hereunder may be canceled by the Representative at, or at any
time prior to, the Closing Date and the obligations of the Initial Purchasers to
purchase the Optional Notes may be canceled by the Representative at, or at any
time prior to, the Additional Closing Date. Notice of such cancellation shall
be given to the Company in writing, or by telephone, telex or telegraph,
confirmed in writing.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Initial
Purchaser and each person, if any, who controls any Initial Purchaser within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), against any and all
losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue
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statement of a material fact contained in the Offering Circular or any
related Preliminary Offering Circular or any amendment or supplement thereto
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the Company will not be liable
in any such case to the extent but only to the extent that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Initial Purchaser through the
Representative expressly for use therein, and PROVIDED FURTHER, that the
foregoing indemnity with respect to any untrue statement contained in or
omission from a Preliminary Offering Circular shall not inure to the benefit
of any Initial Purchaser (or any person controlling such Initial Purchaser)
from whom the person asserting any such loss, liability, claim, damage or
expense purchased any of the Notes if a copy of the Offering Circular (as
then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of
such Initial Purchaser to such person at or prior to the written confirmation
of the sale of such Notes to such person, and if the Offering Circular (as so
amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability. This indemnity agreement will be in
addition to any liability which the Company may otherwise have including
under this Agreement.
(b) Each Initial Purchaser severally, and not jointly, agrees to
indemnify and hold harmless the Company, each of the directors of the Company,
each of the officers of the Company, and each other person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act, against any losses, liabilities, claims, damages and
expenses whatsoever as incurred (including but not limited to attorneys' fees
and any and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), jointly or severally, to which they or any of them may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Offering Circular, or any related
Preliminary Offering Circular, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
any such
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loss, liability, claim, damage or expense arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Initial Purchaser
through the Representative expressly for use therein; PROVIDED, HOWEVER, that
in no case shall any Initial Purchaser be liable or responsible for any
amount in excess of the aggregate principal amount of the Notes purchased by
such Initial Purchaser hereunder. This indemnity will be in addition to any
liability which any Initial Purchaser may otherwise have including under this
Agreement. The Company acknowledges that the statements set forth in the
last paragraph of the cover page and under the caption "Plan of Distribution"
in the Offering Circular constitute the only information furnished in writing
by or on behalf of any Initial Purchaser through Bear Stearns expressly for
use in the Offering Circular or in any amendment thereof or supplement
thereto, as the case may be.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have otherwise than under this Section 7). In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent it may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by one of the
indemnifying parties in connection with the defense of such action, (ii) the
indemnifying parties shall not have employed counsel to have charge of the
defense of such action within a reasonable time after notice of commencement of
the action, or (iii) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to one or all of the indemnifying parties
(in which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the indemnifying parties.
In no event shall the indemnifying party be liable for the fees and expenses of
more than one counsel in connection with any one such action or separate but
similar related actions in the same jurisdiction arising out of the same general
22
<PAGE>
allegations or circumstances. Anything in this subsection to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent; PROVIDED, HOWEVER,
that such consent was not unreasonably withheld.
8. CONTRIBUTION. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 7 hereof is
for any reason held to be unavailable from any indemnifying party, or to any
indemnified party, or is insufficient to hold harmless a party indemnified
thereunder, the Company and the Initial Purchasers shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Company any contribution received by the Company from persons,
other than the Initial Purchasers, who may also be liable for contribution,
including persons who control the Company within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act, officers and directors
of the Company) as incurred to which the Company and one or more of the Initial
Purchasers may be subject, in such proportions as is appropriate to reflect the
relative benefits received by the Company and the Initial Purchasers from the
offering of the Notes or, if such allocation is not permitted by applicable law
or indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 7 hereof, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the Initial Purchasers in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Initial Purchasers shall
be deemed to be in the same proportion as (x) the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and (y) the underwriting discounts and
commissions received by the Initial Purchasers respectively. The relative fault
of the Company and of the Initial Purchasers 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 Initial Purchasers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Initial
Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if the
Initial Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
23
<PAGE>
referred to above. Notwithstanding the provisions of this Section 8, (i) in no
case shall any Initial Purchaser be liable or responsible for any amount in
excess of the underwriting discount applicable to the Notes purchased by such
Initial Purchaser hereunder, (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation and (iii) no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at which
the Note purchased by it and sold in the Offering were offered to subsequent
purchasers exceeds the amount of any damages that such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. For purposes of this Section 8, each
person, if any, who controls an Initial Purchaser within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act shall have the
same rights to contribution as such Initial Purchaser, and each person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act, each officer and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to clauses (i) and (ii) of this Section 8. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party or
parties from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under this Section 8 or
otherwise. No party shall be liable for contribution with respect to any action
or claim settled without its consent; PROVIDED, HOWEVER, that such consent was
not unreasonably withheld.
9. DEFAULT BY AN INITIAL PURCHASER. If either of the Initial
Purchasers shall fail at the Closing Date to purchase the Notes which it is
obligated to purchase under this Agreement (the "Defaulted Notes"), the
non-defaulting Initial Purchaser shall have the right, within 24 hours
thereafter, to make arrangements for it to purchase all, but not less than
all, of the Defaulted Notes upon the terms herein set forth; PROVIDED,
HOWEVER, that if the non-defaulting Initial Purchaser shall not have
completed such arrangements within such 24-hour period, then, upon the
expiration of such 24-hour period, this Agreement shall terminate without
liability on the part of the non-defaulting Initial Purchaser.
No action taken pursuant to this Section shall relieve the defaulting
Initial Purchaser from liability in respect of its default.
24
<PAGE>
In the event of any such default which does not result in a
termination of this Agreement, either the non-defaulting Initial Purchaser or
the Company shall have the right to postpone the Closing Date for a period not
exceeding seven days in order to effect any required changes in the Offering
Circular or in any other documents or arrangements.
10. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All representations
and warranties, covenants and agreements of the Initial Purchasers and the
Company contained in this Agreement, including the agreements contained in
Section 5, the indemnity agreements contained in Section 7 and the contribution
agreements contained in Section 8, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Initial
Purchasers or any agent, representative or controlling person thereof or by or
on behalf of the Company, any of its officers and directors or any controlling
person thereof, and shall survive delivery of and payment for the Notes to and
by the Initial Purchasers. The representations contained in Section 1 and the
agreements contained in Sections 5, 7, 8 and 11(c) hereof shall survive the
termination of this Agreement, including termination pursuant to Section 9 or 11
hereof.
11. TERMINATION.
(a) The Representative shall have the right to terminate this
Agreement at any time prior to the Closing Date or the obligations of the
Initial Purchasers to purchase the Optional Notes at any time prior to the
Additional Closing Date, as the case may be, if (A) any domestic or
international event, act or occurrence shall have materially disrupted, or in
the Representative's reasonable opinion will in the immediate future materially
disrupt, the United States or international securities markets; or (B) trading
on the New York Stock Exchange shall have been suspended, or materially limited;
or (C) a banking moratorium shall have been declared by any United States
federal or New York or Pennsylvania state authority or if any new restriction
materially adversely affecting the distribution of the Firm Notes or the
Optional Notes, as the case may be, shall have become effective; or (D) any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Securities Act) shall have announced that it is (i)
downgrading its rating assigned to any class of the Company's debt securities or
(ii) reviewing any such rating with a view to possible downgrading or with
negative implications; or (E) there shall have occurred any outbreak or
escalation of hostilities involving the United States, or a declaration of war
or national emergency by the United States, or any change in political,
financial or economic conditions the effect of which is such, in the judgment of
the Representative, to make it impracticable or inadvisable to proceed with the
offering, sale and delivery of the Firm
25
<PAGE>
Notes or the Optional Notes, as the case may be, on the terms contemplated by
the Offering Circular.
(b) Any notice of termination pursuant to this Section 11 shall be by
telephone, telex, or telegraph, confirmed in writing by letter.
(c) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to Section 9 or 11(a) hereof), or if
the sale of the Notes provided for herein is not consummated because any
condition to the obligations of the Initial Purchasers set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, upon demand by the Representative, reimburse the Initial
Purchasers for all reasonable out-of-pocket expenses (including the reasonable
fees and expenses of Counsel for the Initial Purchasers), incurred by the
Initial Purchasers solely and directly in connection with the transactions
contemplated by this Agreement, and thereafter the Company shall have no further
liability to the Initial Purchaser.
12. NOTICE. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and shall be mailed,
delivered, or telexed or telegraphed and confirmed in writing, (i) if to either
of the Initial Purchasers, to such Initial Purchaser in care of Bear, Stearns &
Co. Inc., 245 Park Avenue, New York, New York 10167, Attention: Brian A.
McCarthy, Senior Managing Director or (ii) if to the Company, to the Company at
3440 Lehigh Street, Allentown, Pennsylvania 18103, Attention: Cameron Waite,
Chief Financial Officer.
13. PARTIES. This Agreement shall inure solely to the benefit of,
and shall be binding upon, the Initial Purchasers and the Company and their
respective successors and assigns, and no other person shall have or be deemed
to have any legal or equitable right, remedy or claim under or in respect of or
by virtue of this Agreement or any provision hereof. The term "successors and
assigns" shall not include a purchaser, in its capacity as such, of Notes from
any of the Initial Purchasers.
14. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of New York.
26
<PAGE>
If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
PENN TREATY AMERICAN CORPORATION
By: /s/ Irving Levit
________________________
Name: Irving Levit
Title: President and
Chief Executive Officer
Accepted as of the date first above written
BEAR, STEARNS & CO. INC.
By: /s/ Stephen Parish
____________________________
Name: Stephen Parish
Title: Senior Managing Director
ADVEST, INC.
By: /s/ David T.W. Minot
____________________________
Name: David T.W. Minot
Title: Managing Director
27
<PAGE>
SCHEDULE I
Principal Amount of Firm
Name of Initial Purchaser Notes to be Purchased
- ------------------------- ------------------------
Bear, Stearns & Co. Inc. . . . . . . . . . . . $ 47,125,000
Advest, Inc. . . . . . . . . . . . . . . . . . $ 17,875,000
------------
Total . . . . . . . . . . . . . $ 65,000,000
------------
------------
28
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PENN TREATY AMERICAN CORPORATION
Issuer
AND
FIRST UNION NATIONAL BANK
Trustee
INDENTURE
Dated as of November 26, 1996
6-1/4% Convertible Subordinated Notes Due 2003
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
- --------------- -----------------
310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5). . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.14
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.14
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5(a); 5.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
(b)(1). . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2). . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8(a); 5.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . . 16.7
(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . . 16.7
(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.7
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
316(a)(last sentence). . . . . . . . . . . . . . . . . . . . 8.4
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . 6.7
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . 6.7
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.10; 16.11
N.A. means Not applicable.
- -----------
* This Cross-Reference Table is not part of the Indenture.
i
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Incorporation by Reference of Trust Indenture Act . . . . . . . 10
Section 1.3 Rules of Construction . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES
Section 2.1 Designation, Amount and Issue of Notes. . . . . . . . . . . . . 11
Section 2.2 Form of Notes . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.3 Date and Denomination of Notes; Payments of Interest. . . . . . 13
Section 2.4 Execution of Notes. . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.5 Exchange and Registration of Transfer of Notes;
Restrictions on Transfer; Depositary. . . . . . . . . . . . . 15
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes. . . . . . . . . . . 27
Section 2.7 Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.8 Cancellation of Notes Paid, Etc . . . . . . . . . . . . . . . . 29
Section 2.9 CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE III
REDEMPTION AND REPURCHASE OF NOTES
Section 3.1 Redemption Prices . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.2 Notice of Redemption; Selection of Notes. . . . . . . . . . . . 30
Section 3.3 Payment of Notes Called for Redemption. . . . . . . . . . . . . 32
Section 3.4 Conversion Arrangement on Call for Redemption . . . . . . . . . 33
Section 3.5 Repurchase of Notes Upon a Change of Control. . . . . . . . . . 33
ARTICLE IV
PARTICULAR COVENANTS OF THE COMPANY
Section 4.1 Payment of Principal, Premium and Interest. . . . . . . . . . . 35
Section 4.2 Maintenance of Office or Agency . . . . . . . . . . . . . . . . 36
Section 4.3 Appointments to Fill Vacancies in Trustee's Office. . . . . . . 37
Section 4.4 Provisions as to Paying Agent . . . . . . . . . . . . . . . . . 37
Section 4.5 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.6 Rule 144A Information Requirement . . . . . . . . . . . . . . . 38
ii
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PAGE
----
Section 4.7 Stay, Extension and Usury Laws. . . . . . . . . . . . . . . . . 39
Section 4.8 Compliance Statement; Notice of Defaults. . . . . . . . . . . . 39
Section 4.9 Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries. . . . . . . . . . . . . . . . . . . . 39
Section 4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE V
NOTEHOLDERS' LISTS AND REPORTS BY
THE COMPANY
Section 5.1 Noteholders' Lists. . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.2 Reports by Company. . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.2 Payments of Notes on Default; Suit Therefor . . . . . . . . . . 44
Section 6.3 Application of Monies Collected by Trustee. . . . . . . . . . . 46
Section 6.4 Proceedings by Noteholder . . . . . . . . . . . . . . . . . . . 47
Section 6.5 Proceedings by Trustee. . . . . . . . . . . . . . . . . . . . . 48
Section 6.6 Remedies Cumulative and Continuing. . . . . . . . . . . . . . . 48
Section 6.7 Direction of Proceedings and Waiver of Defaults by Majority of
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.8 Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.9 Undertaking to Pay Costs. . . . . . . . . . . . . . . . . . . . 50
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.1 Duties and Responsibilities of Trustee. . . . . . . . . . . . . 50
Section 7.2 Reports by Trustee to Holders . . . . . . . . . . . . . . . . . 51
Section 7.3 Reliance on Documents, Opinions, Etc. . . . . . . . . . . . . . 52
Section 7.4 No Responsibility for Recitals, Etc . . . . . . . . . . . . . . 53
Section 7.5 Trustee, Paying Agents, Conversion Agents or Registrar May Own
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.6 Monies to Be Held in Trust. . . . . . . . . . . . . . . . . . . 54
Section 7.7 Compensation and Expenses of Trustee. . . . . . . . . . . . . . 54
Section 7.8 Officers' Certificate as Evidence . . . . . . . . . . . . . . . 54
Section 7.9 Conflicting Interests of Trustee. . . . . . . . . . . . . . . . 55
Section 7.10 Eligibility of Trustee . . . . . . . . . . . . . . . . . . . . 55
Section 7.11 Resignation or Removal of Trustee. . . . . . . . . . . . . . . 55
Section 7.12 Acceptance by Successor Trustee. . . . . . . . . . . . . . . . 57
Section 7.13 Successor, by Merger, Etc. . . . . . . . . . . . . . . . . . . 57
Section 7.14 Limitation on Rights of Trustee as Creditor. . . . . . . . . . 58
iii
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PAGE
----
ARTICLE VIII
CONCERNING THE NOTEHOLDERS
Section 8.1 Action by Noteholders . . . . . . . . . . . . . . . . . . . . . 58
Section 8.2 Proof of Execution by Noteholders . . . . . . . . . . . . . . . 58
Section 8.3 Who Are Deemed Absolute Owners. . . . . . . . . . . . . . . . . 59
Section 8.4 Company-Owned Notes Disregarded . . . . . . . . . . . . . . . . 59
Section 8.5 Revocation of Consents, Future Holders Bound. . . . . . . . . . 60
ARTICLE IX
NOTEHOLDERS' MEETINGS
Section 9.1 Purposes for Which Meetings May be Called . . . . . . . . . . . 60
Section 9.2 Manner of Calling Meetings; Record Date . . . . . . . . . . . . 61
Section 9.3 Call of Meeting by Company or Noteholders . . . . . . . . . . . 61
Section 9.4 Who May Attend and Vote at Meetings . . . . . . . . . . . . . . 62
Section 9.5 Manner of Voting at Meetings and Record to be Kept. . . . . . . 62
Section 9.6 Exercise of Rights of Trustee and Noteholders Not To Be
Hindered or Delayed . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 10.1 Supplemental Indentures Without Consent of Noteholders . . . . 63
Section 10.2 Supplemental Indentures With Consent of Noteholders. . . . . . 64
Section 10.3 Effect of Supplemental Indentures. . . . . . . . . . . . . . . 65
Section 10.4 Notation on Notes. . . . . . . . . . . . . . . . . . . . . . . 65
Section 10.5 Evidence of Compliance of Supplemental Indenture to Be
Furnished to the Trustee . . . . . . . . . . . . . . . . . . 66
ARTICLE XI
CONSOLIDATION, MERGER, SALE, CONVEYANCE,
TRANSFER AND LEASE
Section 11.1 Company May Consolidate, Etc. on Certain Terms . . . . . . . . 66
Section 11.2 Successor Company To Be Substituted. . . . . . . . . . . . . . 66
Section 11.3 Opinion of Counsel To Be Given to Trustee. . . . . . . . . . . 67
iv
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PAGE
----
ARTICLE XII
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 12.1 Legal Defeasance and Covenant Defeasance of the Notes. . . . . 67
Section 12.2 Termination of Obligations upon Cancellation of the Notes. . . 70
Section 12.3 Survival of Certain Obligations. . . . . . . . . . . . . . . . 70
Section 12.4 Acknowledgment of Discharge by Trustee . . . . . . . . . . . . 71
Section 12.5 Application of Trust Assets. . . . . . . . . . . . . . . . . . 71
Section 12.6 Repayment to the Company; Unclaimed Money. . . . . . . . . . . 71
Section 12.7 Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE XIII
IMMUNITY OF INCORPORATORS, SHAREHOLDERS,
OFFICERS AND DIRECTORS
Section 13.1 Indenture and Notes Solely Corporate Obligations . . . . . . . 72
ARTICLE XIV
CONVERSION OF NOTES
Section 14.1 Right to Convert . . . . . . . . . . . . . . . . . . . . . . . 73
Section 14.2 Exercise of Conversion Privilege; Issuance of Common Stock on
Conversion; No Adjustment for Interest or Dividends. . . . . 74
Section 14.3 Cash Payments in Lieu of Fractional Shares . . . . . . . . . . 76
Section 14.4 Conversion Price . . . . . . . . . . . . . . . . . . . . . . . 77
Section 14.5 Adjustment of Conversion Price . . . . . . . . . . . . . . . . 77
Section 14.6 Effect of Reclassification, Consolidation, Merger or Sale. . . 87
Section 14.7 Taxes on Shares Issued . . . . . . . . . . . . . . . . . . . . 88
Section 14.8 Reservation of Shares; Shares to Be Fully Paid; Listing of
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 14.9 Responsibility of Trustee. . . . . . . . . . . . . . . . . . . 89
Section 14.10 Notice to Holders Prior to Certain Actions . . . . . . . . . . 90
ARTICLE XV
SUBORDINATION
Section 15.1 Agreement to Subordinate . . . . . . . . . . . . . . . . . . . 91
Section 15.2 Certain Definitions. . . . . . . . . . . . . . . . . . . . . . 91
Section 15.3 Liquidation; Dissolution; Bankruptcy . . . . . . . . . . . . . 92
Section 15.4 Default on Senior Indebtedness . . . . . . . . . . . . . . . . 93
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PAGE
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Section 15.5 When Distribution Must Be Paid Over. . . . . . . . . . . . . . 93
Section 15.6 Notice by Company. . . . . . . . . . . . . . . . . . . . . . . 94
Section 15.7 Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 15.8 Relative Rights. . . . . . . . . . . . . . . . . . . . . . . . 95
Section 15.9 Subordination May Not Be Impaired by Company . . . . . . . . . 95
Section 15.10 Distribution or Notice to Representative . . . . . . . . . . . 95
Section 15.11 Rights of Trustee and Paying Agent . . . . . . . . . . . . . . 95
Section 15.12 Authorization to Effect Subordination. . . . . . . . . . . . . 96
Section 15.13 Conversions Not Deemed Payment . . . . . . . . . . . . . . . . 97
Section 15.14 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 97
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . 97
Section 16.2 Provisions Binding on Company's Successors . . . . . . . . . . 97
Section 16.3 Official Acts by Successor Company . . . . . . . . . . . . . . 97
Section 16.4 Addresses for Notices, Etc . . . . . . . . . . . . . . . . . . 97
Section 16.5 Communications by Holders with Other Holders . . . . . . . . . 98
Section 16.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 16.7 Evidence of Compliance with Conditions Precedent; Certificates
to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 16.8 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 16.9 No Security Interest Created . . . . . . . . . . . . . . . . . 99
Section 16.10 Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . 99
Section 16.11 Trust Indenture Act Controls . . . . . . . . . . . . . . . . . 100
Section 16.12 Benefits of Indenture. . . . . . . . . . . . . . . . . . . . . 100
Section 16.13 Table of Contents, Headings Etc. . . . . . . . . . . . . . . . 100
Section 16.14 Authenticating Agent . . . . . . . . . . . . . . . . . . . . . 100
Section 16.15 Execution in Counterparts. . . . . . . . . . . . . . . . . . . 101
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INDENTURE, dated as of November 26, 1996, by and between PENN TREATY
AMERICAN CORPORATION, a Pennsylvania corporation (the "Company"), and FIRST
UNION NATIONAL BANK, a national banking corporation (the "Trustee").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issuance of its 6-1/4% Convertible Subordinated Notes Due 2003
(the "Notes"), in an aggregate principal amount not to exceed $65,000,000 (up to
$74,750,000 aggregate principal amount assuming the full exercise of the
over-allotment option granted to the initial purchasers) and, to provide the
terms and conditions upon which the Notes are to be authenticated, issued and
delivered, the Company has duly authorized the execution and delivery of this
Indenture; and
WHEREAS, the Notes, the certificate of authentication to be borne by
the Notes, a form of assignment, a form of option to require repurchase by the
Company upon a Change of Control (as hereinafter defined), a form of conversion
notice and a certificate of transfer to be borne by the Notes are to be
substantially in the forms hereinafter provided for; and
WHEREAS, all acts and things necessary to make the Notes, when
executed by the Company and authenticated and delivered by the Trustee or a duly
authorized authenticating agent, as in this Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute these presents a
valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issuance hereunder of the Notes have in all
respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes
are, and are to be, authenticated, issued and delivered, and in consideration of
the premises and of the purchase and acceptance of the Notes by the holders
thereof, the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below) as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. The terms defined in this Section 1.1
(except as herein otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section 1.1. All
other terms used in this Indenture that are defined in the Trust Indenture Act
(as hereinafter defined) or that are by reference defined in the Securities Act
(as hereinafter defined), except as herein otherwise expressly provided for or
unless the context otherwise requires, shall have the meanings assigned to such
terms in said Trust Indenture Act and in said Securities Act as in force on the
date of this Indenture. The words "herein," "hereof," "hereunder" and words of
similar import refer to this Indenture as a whole and not to any particular
Article or Section.
ACQUISITION PRICE: The term "Acquisition Price" shall mean the
weighted average price paid by the person or group in acquiring the Voting
Stock.
AFFILIATE: An "Affiliate" of any specified person shall mean an
"affiliate" as defined in Rule 144(a) as promulgated under the Securities Act.
BOARD OF DIRECTORS: The term "Board of Directors" shall mean the
Board of Directors of the Company or a committee of such Board of Directors duly
authorized to act for it.
BOARD RESOLUTION: The term "Board Resolution" shall mean a copy of a
resolution certified by the Secretary or an Assistant Secretary of the Company
to have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification.
BUSINESS DAY: The term "Business Day" shall mean a day, other than a
Saturday, a Sunday or a day on which the banking institutions in the State and
City of New York are authorized or obligated by law or executive order to close
or a day that is declared a national or New York state holiday.
CAPITAL STOCK: The term "Capital Stock" of any person shall mean any
and all shares, interests, participations or other equivalents (however
designated) of such person's corporate stock or any and all equivalent ownership
interests in a person (other than a corporation) whether now outstanding or
issued after the date hereof.
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CASH EQUIVALENT NOTES: The term "Cash Equivalent Notes" shall have
the meaning specified in Section 14.1(b).
CEDE: The term "Cede" shall have the meaning specified in
Section 2.2.
CEDEL: The term "Cedel" shall mean Cedel Bank societe anonyme.
CHANGE OF CONTROL: The term "Change of Control" shall have the
meaning specified in Section 3.5(d).
CHANGE OF CONTROL PURCHASE PRICE: The term "Change of Control
Purchase Price" shall have the meaning specified in Section 3.5(a).
CHANGE OF CONTROL PURCHASE DATE: The term "Change of Control Purchase
Date" shall have the meaning specified in Section 3.5(a).
CHANGE OF CONTROL OFFER: The term "Change of Control Offer" shall
have the meaning specified in Section 3.5(a).
CLOSING DATE: The term "Closing Date" shall mean November 26, 1996.
COMMISSION: The term "Commission" shall mean the Securities and
Exchange Commission, as from time to time constituted, created under the
Exchange Act or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, the body performing such duties at such time.
COMMON STOCK: The term "Common Stock" shall mean any stock of any
class of the Company that does not have a preference in respect of dividends or
of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and that is not subject to redemption
by the Company. Subject to the provisions of Section 14.6, however, shares
issuable on conversion of Notes shall include only shares of the class
designated as common stock of the Company at the date of this Indenture or
shares of any class or classes resulting from any reclassification or
reclassifications thereof and that do not have a preference in respect of
dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company and that are not subject
to redemption by the Company; provided that if at any time there shall be more
than one such resulting class, the shares of each such class then so issuable
shall be substantially in the proportion that the total number of shares of such
class
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resulting from all such reclassification bears to the total number of shares
of all such classes resulting from all such reclassifications.
COMPANY: The term "Company" shall mean Penn Treaty American
Corporation, a Pennsylvania corporation, and subject to the provisions of
Article XI, shall include its successors and assigns.
CONVERSION PRICE: The term "Conversion Price" shall have the meaning
specified in Section 14.4.
CORPORATE TRUST OFFICE OF THE TRUSTEE: The term "Corporate Trust
Office of the Trustee," or other similar term, shall mean the office of the
Trustee at which at any particular time its corporate trust business shall be
principally administered, which office is, at the date as of which this
Indenture is dated, located at 123 S. Broad Street, Philadelphia,
Pennsylvania 19109; Attention: Corporate Trust Administration. The Trustee
also maintains an office at 40 Broad Street, New York, New York 10004,
Attention: Corporate Trust Administration, at which office it is authorized
to receive notices hereunder.
COVENANT DEFEASANCE: The term "covenant defeasance" shall have the
meaning specified in Section 12.1(c).
CUSTODIAN: The term "Custodian" shall mean the Trustee, as custodian
for the Depositary pursuant to Section 2.2 with respect to the Notes in global
form, or any successor entity thereto.
DEFAULT: The term "default" shall mean any event that is, or after
notice or passage of time, or both, would be, an Event of Default.
DEFAULTED INTEREST: The term "Defaulted Interest" shall have the
meaning specified in Section 2.3.
DEFINITIVE NOTES; IN DEFINITIVE FORM: The term "definitive Notes"
shall have the meaning specified in Section 2.2, any reference to Notes "in
definitive form" shall mean definitive Notes, and any reference to securities
"in definitive form" shall mean definitive Notes or Common Stock as the context
requires.
DEPOSITARY: The term "Depositary" shall mean, with respect to the
Notes issuable or issued in whole or in part in global form, the person
specified in Section 2.5(c) as the Depositary with respect to the Notes, until a
successor shall have been appointed and become such pursuant to the applicable
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provisions of this Indenture, and thereafter, "Depositary" shall mean or include
such successor.
DWAC: The term "DWAC" shall mean Deposit and Withdrawal at Custodian
Service.
EUROCLEAR: The term "Euroclear" shall mean Morgan Guaranty Trust
Company of New York, Brussels office, as operator of the Euroclear System.
EVENT OF DEFAULT: The term "Event of Default" shall mean any event
specified in Section 6.1(a) through (g).
EXCHANGE ACT: The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
EXPIRATION TIME: The term "Expiration Time" shall have the meaning
specified in Section 14.5(f).
GLOBAL NOTE: The term "global Note" shall mean any and all notes in
global form.
INDENTURE: The term "Indenture" shall mean this instrument as
originally executed or, if amended or supplemented as herein provided, as so
amended or supplemented.
INSTITUTIONAL ACCREDITED INVESTOR: The term "Institutional Accredited
Investor" shall have the meaning specified in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
INTEREST PAYMENT DATE: The term "Interest Payment Date" shall mean
each June 1 and December 1, beginning June 1, 1997.
LEGAL DEFEASANCE: The term "legal defeasance" shall have the meaning
specified in Section 12.1(b).
MARKET CASH CONVERSION PRICE: The term "Market Cash Conversion Price"
means with respect to any exchange, the average of the closing prices of the
Common Stock (or other securities, as the case may be) for the ten Trading Day
period (appropriately adjusted to take into account the occurrence during such
period of certain events that would result in an adjustment of the Conversion
Price with respect to the Common Stock or other consideration) commencing on the
first Trading Day after delivery of notice by the Company to the Trustee and
holders that the Company has elected to pay cash in lieu of delivering shares of
Common Stock or other securities. The period between the date of delivery by a
holder to an office or agency maintained by the
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Company of a notice of conversion as required pursuant to Section 14.2
hereof, and the date of determination of the Market Cash Conversion Price may
not exceed fifteen Trading Days.
NONPAYMENT DEFAULT: The term "Nonpayment Default" shall have the
meaning specified in Section 15.4(b).
NON-U.S. PERSON: The term "Non-U.S. Person" shall have the meaning
set forth in Section 2.2.
NOTE OR NOTES: The terms "Note" or "Notes" shall mean any one or
more, as the case may be, of the 6-1/4% Convertible Subordinated Notes Due 2003
authenticated and delivered under this Indenture.
NOTEHOLDER; HOLDER: The terms "Noteholder" or "holder" as applied to
any Note, or other similar terms (but excluding the term "beneficial holder"),
shall mean any person in whose name at the time a particular Note is registered
on the Note registrar's books.
NOTE REGISTER: The term "Note register" shall have the meaning
specified in Section 2.5(a).
NOTE REGISTRAR: The term "Note registrar" shall have the meaning
specified in Section 2.5(a).
OFFICERS' CERTIFICATE: The term "Officers' Certificate," when used
with respect to the Company, shall mean a certificate signed by two authorized
officers which shall include (a) any of the President, the Chief Executive
Officer, the Chief Operating Officer or the Chief Financial Officer and (b) any
Treasurer or Secretary or any Assistant Secretary of the Company, that is
delivered to the Trustee. Each such certificate shall include the statements
provided for in Section 16.7 if and to the extent required by the provisions of
such Section.
OPINION OF COUNSEL: The term "Opinion of Counsel" shall mean an
opinion in writing signed by legal counsel, who may be an employee of or counsel
to the Company or other counsel acceptable to the Trustee, that is delivered to
the Trustee. Each such opinion shall include the statements provided for in
Section 16.7 if and to the extent required by the provisions of such Section.
OUTSTANDING: The term "outstanding" with reference to Notes as of any
particular time shall mean, subject to the provisions of Section 8.4, all Notes
authenticated and delivered by the Trustee under this Indenture, except
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(a) Notes theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(b) Notes, or portions thereof, for which monies in the
necessary amount shall have been deposited in trust with the Trustee
for payment, redemption or repurchase; provided that if such Notes are
to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given pursuant to Article III or provision
satisfactory to the Trustee shall have been made for giving such
notice;
(c) Notes paid or converted pursuant to Section 2.6 hereof or
Notes in lieu of or in substitution for which other Notes shall have
been authenticated and delivered pursuant to the terms of Section 2.6
unless proof satisfactory to the Trustee is presented that any such
Notes are held by BONA FIDE holders in due course; and
(d) Notes converted into Common Stock or cash pursuant to
Article XIV and Notes not deemed outstanding pursuant to Section 3.2
and 3.5.
PAYMENT BLOCKAGE NOTICE: The term "Payment Blockage Notice" shall
have the meaning specified in Section 15.4(b).
PAYMENT DEFAULT: The term "Payment Default" shall have the meaning
specified in Section 6.1(d).
PERSON: The term "person" shall mean a corporation, an association, a
partnership, an individual, a joint venture, a joint stock company, a trust, an
unincorporated organization or a government or an agency or a political
subdivision thereof.
PORTAL MARKET: The term "PORTAL Market" shall mean the Private
Offerings, Resales and Trading through Automated Linkages Market operated by the
National Association of Securities Dealers, Inc. or any successor thereto.
PREDECESSOR NOTE: The term "Predecessor Note" of any particular Note
shall mean every previous Note evidencing all or a portion of the same debt as
that evidenced by such particular Note; and, for the purposes of this
definition, any Note authenticated and delivered under Section 2.6 in lieu of a
lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
lost, destroyed or stolen Note.
PURCHASED SHARES: The term "Purchased Shares" shall have the meaning
specified in Section 14.5(f).
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QIB: The term "QIB" shall mean a "qualified institutional buyer" as
defined in Rule 144A.
RECORD DATE: The term "record date" with respect to any interest
payment date shall have the meaning set forth in Section 2.3 hereof.
REGULATION S: The term "Regulation S" shall mean Regulation S under
the Securities Act and any successor regulation thereto.
REGULATION S GLOBAL NOTE: The term "Regulation S Global Note" shall
have the meaning specified in Section 2.2.
RESPONSIBLE OFFICER: The term "Responsible Officer" with respect to
the Trustee, shall mean an officer of the Trustee assigned and duly authorized
by the Trustee to administer its corporate trust matters.
RESTRICTED PERIOD: The term "Restricted Period" shall have the
meaning specified in Section 2.2.
RESTRICTED GLOBAL NOTE: The term "Restricted Global Note" shall have
the meaning specified in Section 2.2.
RESTRICTED SECURITIES: The term "Restricted Securities" shall have
the meaning specified in Section 2.5(c).
RULE 144A: The term "Rule 144A" shall mean Rule 144A as promulgated
under the Securities Act.
SECURITIES: The term "Securities" shall have the meaning specified in
Section 14.5(d).
SECURITIES ACT: The term "Securities Act" shall mean the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.
SUBSIDIARY: The term "Subsidiary" of any specified person shall mean
(i) a corporation a majority of whose capital stock with voting power under
ordinary circumstances to elect directors is at the time directly or indirectly
owned by such person or (ii) any other person (other than a corporation) in
which such person or such person and a Subsidiary or Subsidiaries of such person
or a Subsidiary or Subsidiaries of such person directly or indirectly, at the
date of determination thereof, has at least majority ownership.
SUCCESSOR COMPANY: The term "Successor Company" shall have the
meaning specified in Section 11.1.
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TRADING DAY: The term "Trading Day" shall mean (x) if the applicable
security is listed or admitted for trading on the New York Stock Exchange or
another national security exchange, a day on which the New York Stock Exchange
or such other national security exchange is open for business or (y) if the
applicable security is quoted on the Nasdaq National Market, a day on which
trades may be made thereon or (z) if the applicable security is not so listed,
admitted for trading or quoted, any day other than a Saturday or Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
TRANSFER: The term "transfer" shall have the meaning specified in
Section 2.5(c).
TRIGGER EVENT: The term "Trigger Event" shall have the meaning
specified in Section 14.5(d).
TRUST INDENTURE ACT: The term "Trust Indenture Act" shall mean the
Trust Indenture Act of 1939, as amended, as it was in force at the date of
execution of this Indenture, except as provided in Sections 10.3 and 14.6;
provided that in the event said Trust Indenture Act of 1939 is amended after the
date hereof, the term "Trust Indenture Act" shall mean, to the extent required
by such amendment, said Trust Indenture Act of 1939 as so amended.
TRUSTEE: The term "Trustee" shall mean First Union National Bank, its
successors and any corporation resulting from or surviving any consolidation or
merger to which it or its successors may be a party and any successor trustee at
the time serving as successor trustee hereunder.
U.S. GOVERNMENT OBLIGATIONS: The term "U.S. Government Obligations"
shall mean securities that are (i) direct obligations of the United States of
America for the payment of which its full faith and credit is pledged or (ii)
obligations of a person controlled or supervised by, and acting as an agency or
instrumentality of, the United States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt issued
by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian
with respect to any such U.S. Government Obligation or a specific payment of
principal or interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository receipt; provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by such custodian in
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<PAGE>
respect of the U.S. Government Obligation or the specific payment of
principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
VOTING STOCK: The term "Voting Stock" shall have the meaning set
forth in Section 3.5(e) hereof.
Section 1.2 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the Trust Indenture
Act, the provision is incorporated by reference in and made a part of this
Indenture.
The following Trust Indenture Act terms used in this Indenture have
the following meanings:
"INDENTURE SECURITIES" means the Notes;
"INDENTURE SECURITY HOLDER" means a holder of Notes;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the Notes means the Company and any successor obligor
upon the Trust Indenture Act.
All other terms used in this Indenture that are defined by the Trust
Indenture Act, defined by Trust Indenture Act reference to another statute or
defined by Commission rule under the Trust Indenture Act have the meanings so
assigned to them.
Section 1.3 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) provisions apply to successive events and transactions.
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ARTICLE II
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES
Section 2.1 DESIGNATION, AMOUNT AND ISSUE OF NOTES. The Notes shall
be designated as "6-1/4% Convertible Subordinated Notes Due 2003." Notes not to
exceed the aggregate principal amount of $65,000,000 (up to $74,750,000
aggregate principal amount assuming the full exercise of the over-allotment
option granted to the initial purchasers of the Notes) upon the execution of
this Indenture, or from time to time thereafter, may be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and make available for delivery said Notes upon the written order
of the Company, signed by its (a) Chief Executive Officer, President, Chief
Operating Officer or Chief Financial Officer, and (b) any Treasurer or Secretary
or any Assistant Secretary, without any further action by the Company hereunder.
Section 2.2 FORM OF NOTES. Notes sold to Institutional Accredited
Investors that are neither QIBs nor Non-U.S. Persons will be issued in
definitive form in substantially the form of Exhibit A hereto, with the legends
in substantially the form indicated in Exhibit A hereto and such other legends
as may be applicable thereto, which definitive Notes shall be registered in the
name of the holders thereof, duly executed by the Company and authenticated by
the Trustee or the authenticating agent as provided herein.
Notes held by QIBs shall be issued initially in the form of one or
more global Notes (the "Restricted Global Note"), substantially in the form of
Exhibit B hereto, with the legends as may be applicable thereto, which
Restricted Global Note shall be deposited on behalf of the holders of the Notes
represented thereby with the Depositary and registered in the name of Cede & Co.
("Cede") as nominee of the Depositary, duly executed by the Company and
authenticated by the Trustee or the authenticating agent as provided herein.
Notes offered and sold to persons outside the United States (each, a
"Non-U.S. Person") in reliance on Regulation S shall be issued initially in the
form of a global Note (the "Regulation S Global Note"), substantially in the
form of Exhibit C hereto, with the legends in substantially the form set forth
in Exhibit C hereto and such other legends as may be applicable thereto, which
Regulation S Global Note shall be deposited on behalf of the holders of the
Notes represented thereby with or on behalf of the Depositary, and registered in
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the name of Cede as the Depositary's nominee, duly executed by the Company and
authenticated by the Trustee or an authenticating agent as provided herein, for
credit to the accounts of Euroclear and Cedel (or such other accounts as they
may direct). Prior to and including the 40th day after the later of the
commencement of the offering of the Notes and the Closing Date (the "Restricted
Period"), beneficial interests in the Regulation S Global Note may only be held
through Euroclear or Cedel Bank. During the Restricted Period, interests in the
Regulation S Global Note may be exchanged for interests in the Restricted Global
Note or for definitive Notes only in accordance with the certification
requirements described in this Article II.
QIBs and, after the expiration of the Restricted Period, Non-U.S.
Persons may request that definitive Notes be issued in exchange for Notes
represented by the applicable global Note. In addition, if at any time the
Depositary for the global Notes is unable or unwilling to act as Depositary and
no successor Depositary is appointed pursuant to Section 2.5(c) herein,
definitive Notes may be issued in exchange for Notes represented by the global
Notes. Unless determined otherwise by the Company in accordance with applicable
law, after the expiration of the Restricted Period, definitive Notes issued upon
transfer or exchange of beneficial interests in Notes represented by the
Regulation S Global Note shall not bear the legend set forth in Section 2.5(c).
Any definitive Note issued to a QIB pursuant to this paragraph shall bear the
legend set forth in Section 2.5(c).
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the Company
officers executing the same may approve (execution thereof to be conclusive
evidence of such approval) and as are not inconsistent with the provisions of
this Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Notes may be listed, or to conform to usage.
Any global Note shall represent such of the outstanding Notes as shall
be specified therein and shall provide that it shall represent the aggregate
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate amount of outstanding Notes represented thereby may from time to time
be increased or reduced to reflect transfers or exchanges permitted hereby. Any
endorsement of a global Note to reflect the amount of any increase or decrease
in the amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in such manner and
upon written instructions given by the holder of such Notes in accordance with
the Indenture. Payment of principal of and
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interest and premium, if any, on any global Note shall be made in accordance
with the provisions of Section 2.3 hereof.
The terms and provisions contained in the forms of Notes attached as
Exhibits A, B and C hereto shall constitute, and are hereby expressly made, a
part of this Indenture and to the extent applicable, the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
Section 2.3 DATE AND DENOMINATION OF NOTES; PAYMENTS OF INTEREST.
The Notes shall be issuable in registered form only without coupons in
denominations of $1,000 principal amount and integral multiples thereof. Every
Note shall be dated the date of its authentication, shall bear interest from
November 26, 1996 and shall be payable semiannually on each June 1, and
December 1, commencing June 1, 1997, as specified on the faces of the forms of
Notes, attached as Exhibits A, B and C hereto.
The person in whose name any Note (or its Predecessor Note) is
registered at the close of business on any record date with respect to any
interest payment date (including any Note that is converted after the record
date and on or before the interest payment date) shall be entitled to receive
the interest payable on such interest payment date notwithstanding the
cancellation of such Note upon any transfer, exchange or conversion subsequent
to the record date and prior to such interest payment date. Interest may, at
the option of the Company, be paid by check mailed to the address of such person
as it appears on the Note register; provided that, with respect to any holder of
Notes with an aggregate principal amount equal to or in excess of $5,000,000, at
the request (such request to include appropriate wire instructions) of such
holder in writing to the Trustee on or before the record date preceding any
interest payment date, interest on such holder's Notes shall be paid by wire
transfer in immediately available funds. The term "record date" with respect to
any interest payment date shall mean the May 15 or November 15 preceding said
June 1, or December 1.
None of the Company, the Trustee or any paying agent shall have any
responsibility or liability for any aspect of the records relating to or payment
made on account of beneficial ownership interests in the global Notes or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
Interest on the Notes shall be computed on the basis of a 360-day year
composed of twelve 30-day months.
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Any interest on any Note that is payable, but is not punctually paid
or duly provided for, on any said June 1, or December 1, (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Noteholder on
the relevant record date by virtue of his having been such Noteholder; and such
Defaulted Interest shall be paid by the Company, at its election in each case,
as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the persons in whose names the Notes (or their respective Predecessor
Notes) are registered at the close of business on a special record date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest to be paid on each Note and the date of the
payment (which shall be not less than 25 days after the receipt by the
Trustee of such notice, unless the Trustee shall consent to an earlier
date), and at the same time, the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the persons entitled to
such Defaulted Interest as in this clause provided. Thereupon, the Trustee
shall fix a special record date for the payment of such Defaulted Interest,
which shall be not more than 15 days and not less than 10 days prior to the
date of the payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such special record date and, in the name and at the
expense of the Company, shall cause notice of the payment of such Defaulted
Interest and the special record date therefor to be mailed, first-class
postage prepaid, to each Noteholder at his address as it appears in the
Note register, not less than 10 days prior to such special record date.
Notice of the proposed payment of such Defaulted Interest and the special
record date therefor having been so mailed, such Defaulted Interest shall
be paid to the persons in whose names the Notes (or their respective
Predecessor Notes) were registered at the close of business on such special
record date and shall no longer be payable pursuant to the following
clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Company
to the Trustee of the proposed payment pursuant to this clause,
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such manner of payment shall be deemed practicable by the Trustee.
Section 2.4 EXECUTION OF NOTES. The Notes shall be signed in the
name and on behalf of the Company by the signature of its Chief Executive
Officer, President, Chief Operating Officer or Chief Financial Officer and
attested by the signature of its Treasurer, Secretary or any of its Assistant
Secretaries (any of which signatures may be printed, engraved or otherwise
reproduced thereon, by facsimile or otherwise). Only such Notes as shall bear
thereon a certificate of authentication substantially in the form set forth on
forms of Notes attached as Exhibits A, B and C hereto, manually executed by the
Trustee (or an authenticating agent appointed by the Trustee as provided by
Section 16.14), shall be entitled to the benefits of this Indenture or be valid
or obligatory for any purpose. Such certificate by the Trustee (or such an
authenticating agent) upon any Note executed by the Company shall be conclusive
evidence that the Note so authenticated has been duly authenticated and
delivered hereunder and that the holder is entitled to the benefits of this
Indenture.
In case any officer of the Company who shall have signed any of the
Notes shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
Section 2.5 EXCHANGE AND REGISTRATION OF TRANSFER OF NOTES;
RESTRICTIONS ON TRANSFER; DEPOSITARY.
(a) The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such office and in any
other office or agency of the Company designated pursuant to Section 4.2 being
herein sometimes collectively referred to as the "Note register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Notes and of transfers of Notes. Such Note
register shall be in written form or in any form capable of being converted into
written form within a reasonable period of time. The Trustee is hereby
appointed "Note registrar" for the purpose of registering Notes and transfers of
Notes as herein provided. The Company may appoint one or more co-registrars.
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Upon surrender for registration of transfer of any Note to the Note
registrar or any co-registrar and satisfaction of the requirements for such
transfer set forth in this Section 2.5, the Company shall execute, and the
Trustee shall authenticate and make available for delivery, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denominations and of a like aggregate principal amount and bearing such
restrictive legends as may be required by Sections 2.5(c) and (d).
Notes may be exchanged for other Notes of any authorized denominations
and of a like aggregate principal amount, upon surrender of the Notes to be
exchanged at any such office or agency. Whenever any Notes are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
make available for delivery, the Notes that the Noteholder making the exchange
is entitled to receive bearing certificate numbers not contemporaneously
outstanding.
All Notes presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company, the Trustee, the Note registrar
or any co-registrar) be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Company, executed by the Noteholder
thereof or his attorney duly authorized in writing.
No service charge shall be charged to the Noteholder for any exchange
or registration of transfer of Notes, but the Company may require payment of a
sum sufficient to cover any tax, assessments or other governmental charges that
may be imposed in connection therewith.
None of the Company, the Trustee, the Note registrar or any
co-registrar shall be required to exchange or register a transfer of (a) any
Notes for a period of 15 days next preceding the mailing of a notice of
redemption, (b) any Notes called for redemption or, if a portion of any Note is
selected or called for redemption, such portion thereof selected or called for
redemption, (c) any Notes surrendered for conversion or, if a portion of any
Note is surrendered for conversion, such portion thereof surrendered for
conversion or (d) any Notes surrendered for repurchase pursuant to Section 3.5
or, if a portion of any Note is surrendered for repurchase pursuant to
Section 3.5, such portion thereof surrendered for repurchase pursuant to
Section 3.5.
All Notes issued upon any transfer or exchange of Notes shall be the
valid obligations of the Company, evidencing the same debt and entitled to the
same benefits under this Indenture as the Notes surrendered upon such
registration of transfer or exchange. All Notes, the transfer, exchange and/or
registration
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of which is effectuated by the Trustee pursuant to this Section 2.5, shall be
accompanied by an Officers' Certificate of the Company, executed by a
Responsible Officer thereof, certifying that such transfer, exchange and/or
registration is authorized by the Company and permitted hereunder.
(b) So long as the Notes are eligible for book-entry settlement with
the Depositary, or unless otherwise required by law, all Notes to be traded on
the PORTAL Market shall be represented by the Restricted Global Note registered
in the name of the Depositary or the nominee of the Depositary. The transfer
and exchange of beneficial interests in any global Note that does not involve
the issuance of a definitive Note or the transfer of interests to another global
Note shall be effected through the Depositary (and not the Trustee or the
Custodian) in accordance with this Indenture (including the restrictions on
transfer set forth herein) and the procedures of the Depositary therefor.
Neither the Trustee nor the Custodian (in such respective capacities) shall have
any responsibility for the transfer and exchange of beneficial interests in such
global Note that does not involve the issuance of a definitive Note or the
transfer of interests to another global Note.
Any beneficial interest in Notes represented by the Restricted Global
Note that is transferred to an Institutional Accredited Investor that is not a
QIB shall be delivered in the form of a definitive Note in registered form in
accordance with Section 2.2 herein and shall cease to be an interest in Notes
represented by such Restricted Global Note and accordingly shall thereafter be
subject to all transfer restrictions and other procedures applicable to a
definitive Note held by Institutional Accredited Investors.
Any transfer of a beneficial interest in a global Note that cannot be
effected through book-entry settlement must be effected by the delivery to the
transferee (or its nominee) of a definitive Note or Notes registered in the name
of the transferee (or its nominee) on the books maintained by the Trustee, in
accordance with the transfer instructions set forth herein. With respect to any
such transfer, the Trustee or the Custodian, at the direction of the Trustee,
shall cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Custodian, the aggregate principal
amount of the global Note to be reduced by the principal amount of the
beneficial interest in the Note being transferred and, following such reduction,
the Company shall execute and the Trustee shall authenticate and make available
for delivery to the transferee (or such transferee's nominee, as the case may
be), a definitive Note or Notes in the appropriate aggregate principal amount in
the name of such transferee (or its nominee) and bearing such restrictive
legends as may be required by this Indenture. As a
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condition to such transfer, if such transfer is made to an Institutional
Accredited Investor, the Trustee or the Custodian, at the direction of the
transferor, shall be provided with such representations and agreements
relating to the restrictions on transfer of such Note or Notes from such
transferee (or such transferee's nominee) substantially in the form as set
forth in Exhibit D hereto and as the Trustee (or the Custodian) may otherwise
reasonably require.
Any transfer of a definitive Note or Notes must be effected by the
delivery to the transferee (or its nominee) of a definitive Note or Notes
registered in the name of the transferee (or its nominee) on the books
maintained by the Trustee. With respect to any such transfer, the Company shall
execute and the Trustee shall authenticate and make available for delivery to
the transferee (or such transferee's nominee, as the case may be), a definitive
Note or Notes in the appropriate aggregate principal amount in the name of such
transferee (or its nominee) and bearing such restrictive legends as may be
required by this Indenture. As a condition to such transfer, if such transfer
is made to an Institutional Accredited Investor, the Trustee or the Custodian,
at the direction of the transferor shall be provided with such representations
and agreements relating to the restrictions on transfer of such Note or Notes
from such transferee (or such transferee's nominee) substantially in the form as
set forth in Exhibit D hereto.
So long as the Notes are eligible for book-entry settlement, or unless
otherwise required by law, upon any transfer of a definitive Note to a QIB in
accordance with Rule 144A, unless otherwise requested by the transferor, and
upon receipt of the definitive Note or Notes being so transferred, together with
a certificate in the form of Exhibit E hereto from the transferor that the
transferor reasonably believes the transferee is a QIB and is obtaining such
beneficial interest in a transaction meeting the requirements of Rule 144A and
any applicable securities laws of any state of the United States or any other
jurisdiction (or other evidence satisfactory to the Trustee), the Trustee shall
cancel such definitive Note or Notes and cause, or direct the Custodian to
cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Custodian, the aggregate principal amount of
Notes represented by the Restricted Global Note to be increased accordingly.
So long as the Notes are eligible for book-entry settlement, or unless
otherwise required by law, upon any transfer of a definitive Note in accordance
with Regulation S, if requested by the transferor, and upon receipt of the
definitive Note or Notes being so transferred, together with a certificate in
the form of Exhibit F hereto from the transferor that the
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transfer was made in accordance with Rule 903 or 904 of Regulation S under
the Securities Act (or other evidence satisfactory to the Trustee), the
Trustee shall cancel such definitive Note or Notes and cause, or direct the
Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Custodian, the aggregate
principal amount of Notes represented by the Regulation S Global Note to be
increased accordingly.
If a holder of a beneficial interest in the Restricted Global Note
wishes at any time to exchange its interest in the Restricted Global Note for an
interest in the Regulation S Global Note, or to transfer its interest in the
Restricted Global Note to a person who wishes to take delivery thereof in the
form of an interest in the Regulation S Global Note, whether before or after the
expiration of the Restricted Period, such holder may, subject to the rules and
procedures of the Depositary and to the requirements set forth in the following
sentence, exchange or cause the exchange or transfer or cause the transfer of
such interest for an equivalent beneficial interest in the Regulation S Global
Note. Upon receipt by the Trustee, as transfer agent, of (1) written
instructions given in accordance with the Depositary's procedures from or on
behalf of a holder of a beneficial interest in the Restricted Global Note,
directing the Trustee (via DWAC), as transfer agent, to credit or cause to be
credited a beneficial interest in the Regulation S Global Note in an amount
equal to the beneficial interest in the Restricted Global Note to be exchanged
or transferred, (2) a written order given in accordance with the Depositary's
procedures containing information regarding the Euroclear or Cedel account to be
credited with such increase and the name of such account, and (3) a certificate
in the form of Exhibit G given by the holder of such beneficial interest stating
that the exchange or transfer of such interest has been made pursuant to and in
accordance with Rule 903 or Rule 904 of Regulation S under the Securities Act
and that if such transfer occurs prior to the expiration of the Restricted
Period, the interest transferred will be held immediately thereafter, until the
expiration of the Restricted Period, through Euroclear or Cedel (or other
evidence satisfactory to the Trustee), the Trustee, as transfer agent, shall
promptly deliver appropriate instructions to the Depositary (via DWAC), its
nominee, or the custodian for the Depositary, as the case may be, to reduce or
reflect on its records a reduction of the Restricted Global Note by the
aggregate principal amount of the beneficial interest in such Restricted Global
Note to be so exchanged or transferred from the relevant participant, and the
Trustee, as transfer agent, shall promptly deliver appropriate instructions (via
DWAC) to the Depositary, its nominee, or the custodian for the Depositary, as
the case may be, concurrently with such reduction, to increase or reflect on its
records an increase of the principal amount of such Regulation S Global Note
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by the aggregate principal amount of the beneficial interest in such
Restricted Global Note to be so exchanged or transferred, and to credit or
cause to be credited to the account of the person specified in such
instructions (who shall be Morgan Guaranty Trust Company of New York,
Brussels office, as operator of Euroclear or Cedel or another agent member of
Euroclear or Cedel, or both, as the case may be, acting for and on behalf of
them) a beneficial interest in such Regulation S Global Note equal to the
reduction in the principal amount of such Restricted Global Note.
Prior to the expiration of the Restricted Period, a beneficial
interest in the Regulation S Global Note may be transferred to a person who
takes delivery in the form of a beneficial interest in the Restricted Global
Note, subject to the rules and procedures of Euroclear or Cedel and the
Depositary, as the case may be, and to the requirements set forth in the
following sentence. Upon receipt by the Trustee, as transfer agent, from the
transferror of (1) written instructions given in accordance with the procedures
of Euroclear or Cedel and the Depositary, as the case may be, from or on behalf
of a beneficial owner of an interest in the Regulation S Global Note directing
the Trustee, as transfer agent, to credit or cause to be credited a beneficial
interest in the Restricted Global Note in an amount equal to the beneficial
interest in the Regulation S Global Note to be exchanged or transferred, (2) a
written order given in accordance with the procedures of Euroclear or Cedel and
the Depositary, as the case may be, containing information regarding the account
with the Depositary to be credited with such increase and the name of such
account, and (3) prior to the expiration of the Restricted Period, a certificate
in the form of Exhibit H given by the holder of such beneficial interest and
stating that such transfer is being made to a person who the transferor
reasonably believes is purchasing for its own account or accounts as to which it
exercises sole investment discretion and that such person and each such account
is a QIB in each case and is obtaining such beneficial interest in a transaction
meeting the requirements of Rule 144A and any applicable securities laws of any
state of the United States or any other jurisdiction (or other evidence
satisfactory to the Trustee), the Trustee, as transfer agent, shall promptly
deliver (via DWAC) appropriate instructions to the Depositary, its nominee, or
the custodian for the Depositary, as the case may be, to reduce or reflect on
its records a reduction of the Regulation S Global Note by the aggregate
principal amount of the beneficial interest in such Regulation S Global Note to
be exchanged or transferred, and the Trustee, as transfer agent, shall promptly
deliver (via DWAC) appropriate instructions to the Depositary, its nominee, or
the custodian for the Depositary, as the case may be, concurrently with such
reduction, to increase or reflect on its records an increase of the principal
amount of the Restricted Global Note by
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the aggregate principal amount of the beneficial interest in the Regulation S
Global Note to be so exchanged or transferred, and to credit or cause to be
credited to the account of the person specified in such instructions a
beneficial interest in the Restricted Global Note equal to the reduction in
the principal amount of the Regulation S Global Note. After the expiration
of the Restricted Period, the certification requirement set forth in clause
(3) of the second sentence of this paragraph shall no longer apply to such
exchanges and transfers.
If a holder of a definitive Note wishes at any time to exchange its
Note for a beneficial interest in any global Note (or vice versa), or to
transfer its definitive Note to a person who wishes to take delivery thereof in
the form of a beneficial interest in a global Note (or vice versa), such Notes
and beneficial interests may be exchanged or transferred for one another only in
accordance with such procedures as are consistent with the provisions of this
Section 2.2(c) (including the certification requirements intended to ensure that
such exchanges or transfers comply with Rule 144, Rule 144A or Regulation S, as
the case may be) and as may be from time to time adopted by the Company with
notice to and the consent of the Trustee. Such Notes shall bear the legends
required by Sections 2.5(c) and (d) as applicable.
Any beneficial interest in one of the global Notes that is transferred
to a person who takes delivery in the form of an interest in the other global
Note shall, upon transfer, cease to be an interest in such global Note and
become an interest in the other global Note and, accordingly, shall thereafter
be subject to all transfer restrictions and other procedures applicable to
beneficial interests in such other global Note for as long as it remains such an
interest.
Any global Note may be endorsed with or have incorporated in the text
thereof such legends or recitals or changes not inconsistent with the provisions
of this Indenture as may be required by the Company with notice thereof to the
Custodian, the Depositary or by the National Association of Securities Dealers,
Inc. in order for the Notes to be tradeable on the PORTAL Market or as may be
required for the Notes to be tradeable on any market developed for trading of
securities pursuant to Rule 144A or required to comply with any applicable law
or any regulation thereunder or with Regulation S or with the rules and
regulations of any securities exchange upon which the Notes may be listed or
traded or to conform with any usage with respect thereto, or to indicate any
special limitations or restrictions to which any particular Notes are subject.
(c) Every Note that bears or is required under this Section 2.5(c) to
bear the legend set forth in this Section
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2.5(c) (together with any Common Stock issued upon conversion of the Notes
and required to bear the legend set forth in Section 2.5(d), collectively,
the "Restricted Securities") shall be subject to the restrictions on transfer
set forth in this Section 2.5(c), unless such restrictions on transfer shall
have been waived by the written consent of the Company or removed in
accordance with the provisions of Section 2.5(e), and the holder of each such
Restricted Security, by such holder's acceptance thereof, agrees to be bound
by such restrictions on transfer. As used in this Section 2.5(c), the term
"transfer" encompasses any sale, pledge, transfer or other disposition of any
Restricted Security.
Until three years after the later of the original issuance date of any
Note and the last date on which the Company or an Affiliate of the Company was
the owner of such Note, any certificate evidencing such Note (and all securities
issued in exchange therefor or substitution thereof, other than Common Stock, if
any, issued upon conversion thereof, which shall bear the legend set forth in
Section 2.5(d), if applicable) shall bear a legend in substantially the
following form, unless otherwise agreed by the Company (with notice thereof to
the Trustee):
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT)
("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES
THAT IT WILL NOT PRIOR TO THE DATE THAT IS THREE YEARS AFTER THE LATER OF
THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY AND THE LAST DATE ON
WHICH PENN TREATY AMERICAN CORPORATION (THE "COMPANY") OR ANY "AFFILIATE"
(AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE
OWNER OF THE NOTE (THE "RESTRICTION TERMINATION DATE") RESELL OR OTHERWISE
TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON
CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144A UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO FIRST UNION NATIONAL BANK, AS
TRUSTEE, A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE
FORM OF WHICH LETTER CAN BE
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OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT;
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE
EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED
HEREBY BEFORE THE RESTRICTION TERMINATION DATE, THE HOLDER MUST CHECK
THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO FIRST UNION
NATIONAL BANK, AS TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO
CLAUSE (C), (D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO FIRST UNION NATIONAL BANK, AS TRUSTEE, SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON
THE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any Note (or security issued in exchange or substitution therefor) as
to which such restrictions on transfer shall have expired in accordance with
their terms may, upon satisfaction of the requirements of Section 2.5(f) and
surrender of such Note for exchange to the Note registrar in accordance with the
provisions of this Section 2.5, be exchanged for a new Note or Notes, of like
tenor and aggregate principal amount, which shall not bear the restrictive
legend required by this Section 2.5(c).
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in this Section 2.5(c)), a global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depository Trust Company to
act as Depositary with respect to the global Notes. Initially, the global Notes
shall be issued to the Depositary, registered in the name of Cede, as the
nominee of the Depositary, and deposited with the Trustee as Custodian for Cede.
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Neither the Company nor the Trustee (or any registrar, paying agent or
conversion agent under this Indenture) shall have responsibility for the
performance by the Depositary and its nominees, Euroclear or Cedel Bank or their
participants or indirect participants of their respective obligations under the
rules and procedures governing their operations. The Depositary will take any
action permitted to be taken by a holder of Notes (including, without
limitation, the presentation of Notes for exchange as described below) only at
the direction of one or more participants to whose account with the Depositary
interests in the global Notes are credited, and only in respect of the principal
amount of the Notes represented by the global Notes as to which such participant
or participants has or have given such direction.
If at any time the Depositary for the global Notes notifies the
Company that it is unwilling or unable to continue as Depositary for such Notes,
the Company may appoint a successor Depositary with respect to such Notes. If a
successor Depositary for the Notes is not appointed by the Company within 90
days after the Company receives such notice, the Company shall execute, and the
Trustee, upon receipt of an Officers' Certificate for the authentication and
delivery of Notes, shall authenticate and make available for delivery, Notes in
definitive form, in an aggregate principal amount equal to the principal amount
of the global Notes in exchange for such global Notes.
Definitive Notes issued in exchange for all or a part of a global Note
pursuant to this Section 2.5(c) shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee. Upon
execution and authentication, the Trustee shall make available for delivery such
definitive Notes to the persons in whose names such definitive Notes are so
registered.
At such time as all interests in global Notes have been redeemed,
converted, repurchased or canceled, such global Notes shall be, upon receipt
thereof, canceled by the Trustee in accordance with standing procedures and
instructions existing between the Depositary and the Custodian. At any time
prior to such cancellation, if any interest in a global Note is exchanged for
definitive Notes, redeemed, repurchased, converted, canceled or transferred to a
transferee who receives definitive Notes therefor or any definitive Note is
exchanged or transferred for part of a global Note, the principal amount of such
global Note shall, in accordance with the standing procedures and instructions
existing between the Depositary and the Custodian, be reduced or increased, as
the case may be, and an endorsement shall be made on such global Note by the
Trustee or the
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Custodian, at the direction of the Trustee, to reflect such reduction or
increase.
The Company and the Trustee may for all purposes, including the making
of payments due on the Notes, deal with the Depositary as the authorized
representative of the Noteholders for the purposes of exercising the rights of
Noteholders hereunder. The rights of the owner of any beneficial interest in a
global Note shall be limited to those established by law and agreements between
such owners and depository participants or Euroclear and Cedel; provided that no
such agreement shall give any rights to any person against the Company or the
Trustee without the written consent of the parties so affected. Multiple
requests and directions from and votes of, the Depositary as holder of notes in
book entry form with respect to any particular matter shall not be deemed
inconsistent to the extent they do not represent an amount of notes in excess of
those held in the name of the Depositary or its nominee.
(d) Until three years after the later of the original issuance date
of any Note (other than any Note represented by the Regulation S Global Note)
and the last date on which the Company or an Affiliate of the Company was the
owner of such Note, any stock certificate representing Common Stock issued upon
conversion of such Note shall bear a legend in substantially the following form,
unless otherwise agreed by the Company (with written notice thereof to the
Trustee and any transfer agent for the Common Stock):
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN
THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT PRIOR TO THE DATE
THAT IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE NOTE
UPON THE CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS ISSUED
AND THE LAST DATE ON WHICH PENN TREATY AMERICAN CORPORATION (THE "COMPANY")
OR ANY "AFFILIATE" (AS DEFINED IN RULE 144 OF THE SECURITIES ACT) OF THE
COMPANY WAS THE OWNER OF THE NOTE UPON THE CONVERSION OF WHICH THE COMMON
STOCK EVIDENCED HEREBY WAS ISSUED OR THE COMMON STOCK EVIDENCED HEREBY (THE
"RESTRICTION TERMINATION DATE"), (1) IT WILL NOT RESELL OR OTHERWISE
TRANSFER THE COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT) THAT PRIOR TO SUCH TRANSFER, FURNISHES TO
THE COMPANY'S
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TRANSFER AGENT FOR ITS COMMON STOCK, A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THE COMMON STOCK EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM SUCH TRANSFER AGENT), (D) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT; (2) PRIOR TO ANY SUCH TRANSFER PURSUANT TO CLAUSE (C),
(D) OR (E) ABOVE, IT WILL FURNISH TO THE COMPANY'S TRANSFER AGENT FOR
COMMON STOCK, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (3)
IT WILL DELIVER TO EACH PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THIS LEGEND WILL BE REMOVED UPON THE SATISFACTION OF THE TRANSFER AGENT
THAT THE COMMON STOCK EVIDENCED HEREBY HAS BEEN OR IS BEING OFFERED AND
SOLD PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE
WITH RULE 144 OR RULE 903 OR RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT. AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.
Any such Common Stock as to which such restrictions on transfer shall
have expired in accordance with their terms may, upon satisfaction of the
requirements of Section 2.5(f) and surrender of the certificates representing
such shares of Common Stock for exchange in accordance with the procedures of
the transfer agent for the Common Stock, be exchanged for a new certificate or
certificates for a like aggregate number of shares of Common Stock, which shall
not bear the restrictive legend required by this Section 2.5(d).
(e) Upon any sale or transfer of any Restricted Security (including
any interest in a global Note) (i) that is effected pursuant to an effective
registration statement under the Securities Act, (ii) that is effected pursuant
to Rule 144 as promulgated under the Securities Act as determined by counsel to
the Company or (iii) in connection with which the Trustee (or transfer agent for
the Common Stock, in the case of shares of Common Stock) receives certificates
and other information (including an opinion of counsel, if requested) reasonably
acceptable to the Company to the effect that such security shall no longer be
subject to the resale restrictions under federal and state securities laws, then
(A) in the case of a Restricted Security in definitive form, the Note registrar
or co-registrar
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(or transfer agent, in the case of Common Stock) shall permit the holder
thereof to exchange such Restricted Security for a security that does not
bear the legends set forth in Section 2.5(c) or 2.5(d), as applicable, and
shall rescind any such restrictions on transfer and (B) in the case of
Restricted Securities represented by a global Note, such Note shall no longer
be subject to the restrictions contained in the legend set forth in Section
2.5(c) (but still subject to the other provisions hereof). In addition, any
Note (or security issued in exchange or substitution therefor) or shares of
Common Stock issued upon conversion of any Note, in either case, as to which
the restrictions on transfer described in the legends set forth in Section
2.5(c) and 2.5(d), respectively, have expired by their terms, may, upon
surrender thereof (in accordance with the terms of this Indenture in the case
of Notes) together with such certifications and other information (including
an opinion of counsel having substantial experience in practice under the
Securities Act and otherwise reasonably acceptable to the Company, addressed
to the Company and the Trustee and in a form acceptable to the Company, to
the effect that the transfer of such Restricted Security has been made in
compliance with Rule 144 or such successor provision) acceptable to the
Company be exchanged for a new Note or Notes of like tenor and aggregate
principal amount (in the case of Notes), or a new certificate or certificates
for a like aggregate number of shares of Common Stock (in the case of Common
Stock), or a new certificate or other instrument of like tenor and amount (in
the case of securities issued in exchange or substitution for Notes), which
shall not bear the restrictive legends set forth in Sections 2.5(c) and
2.5(d).
(f) Each holder or former holder of a Note agrees to indemnify the
Company and the Trustee against any liability that may result from the transfer,
exchange or assignment of such holder's or former holder's Note in violation of
any provision of this Indenture and/or applicable U.S. federal or state
securities law.
Section 2.6 MUTILATED, DESTROYED, LOST OR STOLEN NOTES. In case
any Note shall become mutilated or be destroyed, lost or stolen, the Company
in its discretion may execute, and upon its request, the Trustee or an
authenticating agent appointed by the Trustee shall authenticate and make
available for delivery a new Note bearing a number not contemporaneously
outstanding in exchange and substitution for the mutilated Note or in lieu of
and in substitution for the Note so destroyed, lost or stolen. The Company
may charge such applicant for the expenses of the Company in replacing a
Note. In every case the applicant for a substituted Note shall furnish to
the Company, to the Trustee and, if applicable, to such authenticating agent
such security or indemnity as may be required by them to save each of them
harmless from any loss, liability, cost or expense caused by
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or connected with such substitution, and in every case of destruction, loss
or theft, the applicant shall also furnish to the Company, to the Trustee
and, if applicable, to such authenticating agent evidence to their
satisfaction of the destruction, loss or theft of such Note and of the
ownership thereof.
The Trustee or such authenticating agent may authenticate any such
substituted Note and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Note, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith. In case any Note that has matured or is about to mature or has been
called for redemption or is about to be repurchased or converted into Common
Stock or cash shall become mutilated or be destroyed, lost or stolen, the
Company may, instead of issuing a substitute Note, pay or authorize the payment
of or convert or authorize the conversion of the same (without surrender
thereof, except in the case of a mutilated Note), as the case may be, if the
applicant for such payment or conversion shall furnish to the Company, to the
Trustee and, if applicable, to such authenticating agent such security or
indemnity as may be required by them to save each of them harmless from any
loss, liability, cost or expense caused by or connected with such substitution,
and in case of destruction, loss or theft, evidence satisfactory to the Company,
the Trustee and, if applicable, any paying agent or conversion agent of the
destruction, loss or theft of such Note and of the ownership thereof.
Every substitute Note issued pursuant to the provisions of this
Section 2.6 in lieu of any Note that is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be enforceable by anyone, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment or conversion of mutilated,
destroyed, lost or stolen Notes and shall preclude any and all other rights or
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment or conversion of negotiable
instruments or other securities without their surrender.
Section 2.7 TEMPORARY NOTES. Pending the preparation of definitive
Notes, the Company may execute and the Trustee or
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an authenticating agent appointed by the Trustee shall, upon written request
of the Company, authenticate and make available for delivery temporary Notes
(printed or lithographed). Temporary Notes shall be issuable in any
authorized denomination and shall be substantially in the form of the
definitive Notes but with such omissions, insertions and variations as may be
appropriate for temporary Notes, all as may be determined by the Company.
Every such temporary Note shall be executed by the Company and authenticated
by the Trustee or such authenticating agent upon the same conditions and in
substantially the same manner, and with the same effect, as the definitive
Notes. Without unreasonable delay the Company shall execute and deliver to
the Trustee or such authenticating agent definitive Notes (other than in the
case of Notes in global form) and thereupon any or all temporary Notes (other
than any such global Note) may be surrendered in exchange therefor, at each
office or agency maintained by the Company pursuant to Section 4.2 and the
Trustee or such authenticating agent shall authenticate and make available
for delivery in exchange for such temporary Notes an equal aggregate
principal amount of definitive Notes. Such exchange shall be made by the
Company at its own expense and without any charge therefor. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits and subject to the same limitations under this Indenture as
definitive Notes authenticated and delivered hereunder.
Section 2.8 CANCELLATION OF NOTES PAID, ETC. All Notes surrendered
for the purpose of payment, redemption, repurchase, conversion, exchange or
registration of transfer shall, if surrendered to the Company or any paying
agent or any Note registrar or any conversion agent, be surrendered to the
Trustee and promptly canceled by it or, if surrendered to the Trustee, shall be
promptly canceled by it and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. If required by
the Company, the Trustee shall return canceled Notes to the Company. If the
Company shall acquire any of the Notes, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Notes unless
and until the same are delivered to the Trustee for cancellation.
Section 2.9 CUSIP NUMBERS. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
CUSIP numbers in notices of redemption as a convenience to holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall not
be affected by any defect in or
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omission of such numbers. The Company shall promptly notify the Trustee of
any change in the CUSIP numbers.
ARTICLE III
REDEMPTION AND REPURCHASE OF NOTES
Section 3.1 REDEMPTION PRICES. The Notes are not redeemable at the
option of the Company prior to December 3, 1999. At any time on or after that
date, the Notes may be redeemed at the Company's option, upon notice as set
forth in Section 3.2, in whole at any time or in part from time to time, at the
declining redemption prices set forth below plus accrued and unpaid interest
thereon to the applicable redemption date if redeemed during the twelve-month
period beginning:
REDEMPTION
DATE PRICE
December 3, 1999 103.13%
December 1, 2000 102.08%
December 1, 2001 101.04%
and on or after December 1, 2002 100.00%
Section 3.2 NOTICE OF REDEMPTION; SELECTION OF NOTES. In case the
Company shall desire to exercise the right to redeem all or, as the case may
be, any part of the Notes pursuant to Section 3.1, it shall fix a date for
redemption and, in the case of any redemption pursuant to Section 3.1, it or,
at its written request accompanied by the proposed form of notice of redemption
(which must be received by the Trustee at least ten days prior to the date the
Trustee is requested to give notice as described below, unless a shorter period
is agreed to by the Trustee), the Trustee in the name of and at the expense of
the Company, shall publish a notice in the Wall Street Journal and mail or
cause to be mailed a notice of such redemption at least 30 and not more than 60
days prior to the date fixed for redemption to the holders of Notes so to be
redeemed as a whole or in part at their last addresses as the same appear on
the Note register, provided that subject to the approval of the form of notice
by the Trustee if the Company shall give such notice, it shall also give such
notice, and notice of the Notes to be redeemed, to the Trustee. Such mailing
shall be by first class mail. The notice, if mailed in the manner herein
provided, shall be conclusively presumed to have been duly given, whether or
not the holder receives such notice. In any case, failure to give such notice
by mail or any defect in the notice to the holder of any Note designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Note.
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Each such notice of redemption shall identify the Notes to be redeemed
(including CUSIP numbers), specify the aggregate principal amount of Notes to
be redeemed, the date fixed for redemption, the redemption price at which Notes
are to be redeemed, the place or places of payment, that payment shall be made
upon presentation and surrender of such Notes, that interest accrued to the
date fixed for redemption shall be paid as specified in said notice and that on
and after said date, interest thereon or on the portion thereof to be
redeemed shall cease to accrue. Such notice shall also state the current
Conversion Price and the date on which the right to convert such Notes or
portions thereof into Common Stock shall expire. If fewer than all the Notes
are to be redeemed, the notice of redemption shall identify the Notes to be
redeemed. In case any Note is to be redeemed in part only, the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption,
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion thereof shall be issued.
On or prior to the Business Day prior to the redemption date specified
in the notice of redemption given as provided in this Section 3.2, the Company
shall deposit with the Trustee or with one or more paying agents (or, if the
Company is acting as its own paying agent, set aside, segregate and hold in
trust as provided in Section 4.4) an amount of money sufficient to redeem on
the redemption date all the Notes so called for redemption (other than those
theretofore surrendered for conversion into Common Stock or cash) at the
appropriate redemption price, together with accrued interest to the date fixed
for redemption. If any Note called for redemption is converted pursuant
hereto, any money deposited with the Trustee or any paying agent or so
segregated and held in trust for the redemption of such Note shall be paid to
the Company upon its written request or, if then held by the Company, shall
be discharged from such trust. If fewer than all the Notes are to be redeemed,
the Company shall give the Trustee written notice in the form of an Officers'
Certificate not fewer than 45 days (or such shorter period of time as may be
acceptable to the Trustee) prior to the redemption date as to the aggregate
principal amount of Notes to be redeemed.
If fewer than all the Notes are to be redeemed, the Trustee shall
select the Notes or portions thereof to be redeemed (in principal amounts of
$1,000 or integral multiples thereof), by lot or, in its discretion, on a PRO
RATA basis. If any Note selected for partial redemption is converted in part
after such selection, the converted portion of such Note shall be deemed (so
far as may be) to be the portion to be selected for redemption. The Notes (or
portions thereof) so selected shall be deemed duly
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selected for redemption for all purposes hereof, notwithstanding that any
such Note is converted as a whole or in part before the mailing of the notice
of redemption.
Upon any redemption of less than all Notes, the Company and the
Trustee may treat as outstanding any Notes surrendered for conversion during
the period of 15 days next preceding the mailing of a notice of redemption
and need not treat as outstanding any Note authenticated and delivered during
such period in exchange for the unconverted portion of any Note converted in
part during such period.
Section 3.3 PAYMENT OF NOTES CALLED FOR REDEMPTION. If notice of
redemption has been given as above provided, the Notes or portion of Notes with
respect to which such notice has been given shall, unless converted into Common
Stock pursuant to the terms hereof, become due and payable on the date and at
the place or places stated in such notice at the applicable redemption price,
together with interest thereon accrued to the date fixed for redemption, and on
and after said date (unless the Company shall default in the payment of such
Notes at the redemption price, together with interest thereon accrued to said
date), interest on the Notes or portion of Notes so called for redemption shall
cease to accrue, and such Notes shall cease after the close of business on the
Business Day next preceding the date fixed for redemption to be convertible
into Common Stock or cash and, except as provided in Sections 7.6 and 12.4,
to be entitled to any benefit or security under this Indenture, and the holders
thereof shall have no right in respect of such Notes except the right to
receive the redemption price thereof and unpaid interest thereon to the date
fixed for redemption. On presentation and surrender of such Notes at a place
of payment in said notice specified, the said Notes or the specified portions
thereof shall be paid and redeemed by the Company at the applicable
redemption price, together with interest accrued thereon to the date fixed
for redemption; provided that any semi-annual payment of interest becoming
due on the date fixed for redemption shall be payable to the holders of such
Notes registered as such on the relevant record date subject to the terms and
provisions of Section 2.3 hereof.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and make available for delivery to
the holder thereof, at the expense of the Company, a new Note or Notes, of
authorized denominations, in principal amount equal to the unredeemed portion
of the Notes so presented.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and premium, if any, shall, until paid or
duly provided for, bear interest
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from the date fixed for redemption at the rate borne by the Note and such
Note shall remain convertible into Common Stock until the principal and
premium, if any, shall have been paid or duly provided for.
Section 3.4 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In
connection with any redemption of Notes, with notice to the Trustee, the
Company may arrange for the purchase and conversion of any Notes by an
agreement with one or more investment bankers or other purchasers to purchase
such Notes by paying to the Trustee in trust for the Noteholders, on or prior
to the close of business one Business Day prior to the date fixed for
redemption, an amount not less than the applicable redemption price, together
with interest accrued to the date fixed for redemption, of such Notes.
Notwithstanding anything to the contrary contained in this Article III, the
obligation of the Company to pay the redemption price of such Notes, together
with interest accrued to the date fixed for redemption, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, a copy of which shall be
filed with the Trustee prior to the date fixed for redemption, any Notes not
duly surrendered for conversion by the holders thereof may, at the option of
the Company, be deemed, to the fullest extent permitted by law, acquired by
such purchasers from such holders and (notwithstanding anything to the
contrary contained in Article XIV) surrendered by such purchasers for
conversion, prior to the close of business on the date fixed for redemption
(and the right to convert any such Notes shall be deemed to have been
extended through such time), subject to payment of the above amount as
aforesaid. At the direction of the Company, the Trustee shall hold and
dispose of any such amount paid to it in the same manner as it would monies
deposited with it by the Company for the redemption of Notes. Without the
Trustee's prior written consent, no arrangement between the Company and such
purchasers for the purchase and conversion of any Notes shall increase or
otherwise affect any of the powers, duties, responsibilities or obligations
of the Trustee as set forth in this Indenture, and the Company agrees to
indemnify the Trustee from, and hold it harmless against, any loss, liability
or expense arising out of or in connection with any such arrangement for the
purchase and conversion of any Notes between the Company and such purchasers
including the costs and expenses incurred by the Trustee in the defense of
any claim or liability arising out of or in connection with the exercise or
performance of any of its powers, duties, responsibilities or obligations
under this Indenture.
Section 3.5 REPURCHASE OF NOTES UPON A CHANGE OF CONTROL.
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(a) If a Change of Control shall occur at any time, then each holder
of Notes shall have the right to require that the Company repurchase such
holder's Notes in whole or in part in integral multiples of $1,000 at a
purchase price (the "Change of Control Purchase Price") in cash in an amount
equal to 101% of the principal amount of such Notes, plus accrued and unpaid
interest thereon, if any, to the purchase date (the "Change of Control
Purchase Date") pursuant to the offer described below (the "Change of Control
Offer") and in accordance with the other procedures set forth in this
Indenture.
(b) Within 30 days following any Change of Control, the Company shall
publish a notice in the Wall Street Journal, notify the Trustee thereof and
give written notice of such Change of Control to each holder of Notes, by
first-class mail, postage prepaid, at the Noteholder's address appearing in
the Note register, stating, among other things, (i) that a Change of Control
has occurred, (ii) the Change of Control Purchase Price, (iii) the Change of
Control Purchase Date (which shall be a Business Day no earlier than 30 days
nor later than 60 days from the date such notice is mailed, or such later
date as is necessary to comply with requirements under the Exchange Act),
(iv) that any Note not tendered shall continue to accrue interest and to have
all of the benefits of this Indenture, (v) that, unless the Company defaults
in the payment of the Change of Control Purchase Price, any Notes accepted
for payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Purchase Date, (vi) that Noteholders
electing to have any Notes purchased pursuant to a Change of Control Offer
shall be required to surrender the Notes, with the form entitled "Option of
Noteholder to Elect Purchase" on the reverse of the Notes completed, to the
Company at the address specified in the notice prior to the close of business
on the third Business Day preceding the Change of Control Purchase Date,
(vii) that Noteholders shall be entitled to withdraw their election if the
Company receives, not later than the close of business on the second Business
Day preceding the Change of Control Purchase Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Noteholder,
the principal amount of Notes delivered for purchase, and a statement that
such Noteholder is withdrawing his election to have such Notes purchased, and
(viii) that Noteholders whose Notes are being purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof. The Company shall comply
with the requirements of Rule 13e-4 and 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes in
connection with a Change of Control.
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(c) On the Change of Control Purchase Date, the Company shall, to the
extent lawful, (i) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the Trustee an
amount equal to the Change of Control Purchase Price in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating
the Notes or portions thereof tendered to the Company. The Trustee shall
promptly mail to each Noteholder of Notes so accepted payment in an amount
equal to the purchase price of such Notes, and the Trustee shall promptly
authenticate and mail to each Noteholder a new Note equal in principal amount
to any unpurchased portion of the Notes surrendered, if any; provided that
each such new Note shall be in a principal amount of $1,000 or an integral
multiple thereof. The Company shall publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
(d) The term "Change in Control" shall mean an event or series of
events in which (i) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act) acquires "beneficial ownership" (as
determined in accordance with Rule 13d-3 under the Exchange Act), directly or
indirectly, of more than 50% of the total Voting Stock of the Company at an
Acquisition Price less than the conversion price then in effect with respect to
the Notes and (ii) the holders of the Common Stock receive consideration which
is not all or substantially all common stock that is (or upon consummation of
or immediately following such event or events will be) listed on a United
States national securities exchange or approved for quotation on the Nasdaq
Stock Market or any similar United States system of automated dissemination of
quotations of securities' prices; provided, however, that any such person or
group shall not be deemed to be the beneficial owner of, or to beneficially
own, any Voting Stock tendered in a tender offer until such tendered Voting
Stock is accepted for purchase under the tender offer.
(e) "Voting Stock" means stock of the class or classes pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of a corporation (irrespective whether or not at the time stock of
any other class or classes shall have or might have voting power by reason of
the happening of any contingency).
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ARTICLE IV
PARTICULAR COVENANTS OF THE COMPANY
Section 4.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company
covenants and agrees that it shall duly and punctually pay or cause to be paid
the principal of and premium, if any, and interest on each of the Notes at the
places, at the respective times and in the manner provided herein and in the
Notes. Each installment of interest on the Notes due on any semi-annual
interest payment date may be paid by mailing checks for the interest payable to
or upon the written order of the holders of Notes entitled thereto as they
shall appear on the Note register; provided that, with respect to any holder of
Notes with an aggregate principal amount equal to or in excess of $5,000,000,
at the request (such request to include appropriate wire instructions) of such
holder in writing to the Trustee, interest on such holder's Notes shall be paid
by wire transfer in immediately available funds. An installment of principal
or interest shall be considered paid on the date due if the Trustee or paying
agent (other than the Company, a Subsidiary of the Company or any Affiliate of
any of them) holds on that date money designated for and sufficient to pay the
installment of principal or interest and is not prohibited from paying such
money to the holders of the Notes pursuant to the terms of this Indenture.
Section 4.2 MAINTENANCE OF OFFICE OR AGENCY. The Company shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
where the Notes may be surrendered for registration of transfer or exchange or
for presentation for payment or for conversion, redemption or repurchase and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company shall give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such office or
agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
The City of New York, for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.
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The Company hereby initially designates the Trustee as paying agent,
Note registrar and conversion agent and the office of Corporate Trust
Administration of the Trustee in the Borough of Manhattan, The City of New York
or the office of Corporate Trust Administration of the Trustee located in
Philadelphia, Pennsylvania, as two such offices or agencies of the Company for
the purposes set forth in the first paragraph of this Section 4.2.
So long as the Trustee is the Note registrar, the Trustee agrees to
mail, or cause to be mailed, the notices set forth in Section 7.11(a).
Section 4.3 APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE. The
Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, shall appoint, in the manner provided in Section 7.11, a Trustee, so
that there shall at all times be a Trustee hereunder.
Section 4.4 PROVISIONS AS TO PAYING AGENT.
(a) If the Company shall appoint a paying agent other than the
Trustee, or if the Trustee shall appoint such a paying agent, the Company or
the Trustee, as the case may be, shall cause such paying agent to execute and
deliver to the Trustee an instrument in which such agent shall agree with the
Trustee, subject to the provisions of this Section 4.4:
(1) that it shall hold all sums held by it as such agent for the
payment of the principal of, premium, if any, or interest on the Notes
(whether such sums have been paid to it by the Company or by any other
obligor on the Notes) in trust for the benefit of the holders of the Notes;
(2) that it shall give the Trustee written notice of any failure by
the Company (or by any other obligor on the Notes) to make any payment of
the principal of, premium, if any, or interest on the Notes when the same
shall be due and payable; and
(3) that at any time during the continuance of an Event of Default,
upon request of the Trustee, it shall forthwith pay to the Trustee all sums
so held in trust.
The Company shall, before each due date of the principal of, premium,
if any, or interest on the Notes, deposit with the paying agent a sum
sufficient to pay such principal, premium, if any, or interest, and (unless
such paying agent is the Trustee) the Company shall promptly notify the Trustee
of any failure to take such action.
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(b) If the Company shall act as its own paying agent, it shall, on or
before each due date of the principal of, premium, if any, or interest on the
Notes, set aside, segregate and hold in trust for the benefit of the holders of
the Notes a sum sufficient to pay such principal, premium, if any, or interest
so becoming due and shall notify the Trustee of any failure to take such action
and of any failure by the Company (or any other obligor under the Notes) to
make any payment of the principal of, premium, if any, or interest on the
Notes when the same shall become due and payable.
(c) Anything in this Section 4.4 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid
to the Trustee all sums held in trust by the Company or any paying agent
hereunder as required by this Section 4.4, such sums to be held by the Trustee
upon the trusts herein contained and upon such payment by the Company or any
paying agent to the Trustee, the Company or such paying agent shall be released
from all further liability with respect to such sums.
(d) Anything in this Section 4.4 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 4.4 is subject to
Sections 12.3 and 12.4.
Section 4.5 CORPORATE EXISTENCE. Subject to Article XI, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect (i) its corporate existence, and the corporate, partnership or
other existence of any Subsidiary of the Company, in accordance with the
respective organizational documents (as the same may be amended from time to
time) of the Company or any such Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and its Subsidiaries;
provided that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any
of its Subsidiaries if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and that the loss thereof
is not materially adverse to the holders of the Notes.
Section 4.6 RULE 144A INFORMATION REQUIREMENT. During the three-year
period following the original issuance date of any Note and during the
three-year period following the last date on which the Company or an Affiliate
of the Company was the owner of any Note (or shares of Common Stock issued upon
conversion of any Note), if the Company is subject neither to Section 13 nor
Section 15(d) of the Exchange Act, the Company shall at the written request of
any holder or beneficial holder of such Note
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(or shares of Common Stock issued upon conversion of Notes) provide to such
holder or beneficial holder of such Note (or shares of Common Stock issued
upon conversion of Notes) and any prospective transferee designated by such
holder or beneficial holder of such Note (or shares of Common Stock issued
upon conversion of Notes) such information, if any, required by Rule
144A(d)(4) under the Securities Act (so long as such information is required
to permit such transfer under Rule 144A).
Section 4.7 STAY, EXTENSION AND USURY LAWS. The Company covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law that would prohibit or
forgive the Company from paying all or any portion of the principal of or
interest on the Notes as contemplated herein, wherever enacted, now or at any
time hereafter in force, or that may affect the covenants or the performance of
this Indenture; and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it shall not, by resort to any such law, hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
Section 4.8 COMPLIANCE STATEMENT; NOTICE OF DEFAULTS
(a) The Company shall deliver to the Trustee within 120 days after the
end of each fiscal year of the Company an Officers' Certificate stating whether
or not to the best knowledge of the signers thereof the Company is in
compliance (without regard to periods of grace or notice requirements) with
all conditions and covenants under this Indenture, and if the Company shall
not be in compliance, specifying such non-compliance and the nature and
status thereof of which such signer may have knowledge.
(b) The Company shall file with the Trustee written notice of the
occurrence of any default or Event of Default within ten days of its becoming
aware of any such default or Event of Default.
4.9 LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES. The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary to (i) pay dividends or make any other distribution
on its Capital Stock or with respect to any other interest or participation in,
or measured by, its profits, or pay any indebtedness owed to, the Company or a
Subsidiary of the Company,
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(ii) make loans or advances to the Company or any Subsidiary of the Company,
or (iii) transfer any of its properties or assets to the Company.
Section 4.10 TAXES. The Company shall pay or discharge or cause to
be paid or discharged, before the same shall become delinquent, (i) all taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon the Company
or its Subsidiaries or upon the income, profits or property of the Company or
any such Subsidiary and (ii) all lawful claims for labor, materials and
supplies that, if unpaid, might by law become a lien upon the property of the
Company or any such Subsidiary; provided that the Company shall not be required
to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which disputed amounts adequate
reserves have been made.
Section 4.11 INSURANCE. The Company shall provide, or cause to be
provided, for itself and its Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds customarily insured against
by corporations similarly situated and owning like properties, including, but
not limited to, products liability insurance and public liability insurance,
with reputable insurers or with the government of the United States of America
or an agency or instrumentality thereof, in such amounts with such deductibles
and by such methods as shall be determined in good faith by the Board of
Directors to be appropriate.
ARTICLE V
NOTEHOLDERS' LISTS AND REPORTS BY
THE COMPANY
Section 5.1 NOTEHOLDERS' LISTS. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to
it of the names and addresses of holders of Notes, the Company and the Trustee,
and shall otherwise comply with Trust Indenture Act Section 312(a). If the
Trustee is not the Notes registrar, the Company shall furnish to the Trustee on
or before at least seven Business Days preceding each interest payment date and
at such other times as the Trustee may request in writing a list in such form
and as of such date as the Trustee reasonably may require of the names and
addresses of holders of Notes, and the Company shall otherwise comply with
Trust Indenture Act Section 312(a).
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Section 5.2 REPORTS BY COMPANY. The Company shall deliver to the Trustee
within 15 days after it files the same with the Commission, copies of all
reports and information (or copies of such portions of any of the foregoing as
the Commission may by its rules and regulations prescribe), if any, which the
Company is required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act or pursuant to the immediately following sentence. So long
as at least $5,000,000 aggregate principal amount of Notes remain outstanding,
the Company shall file with the Commission such reports as may be required
pursuant to Section 13 of the Exchange Act in respect of a security registered
pursuant to Section 12 of the Exchange Act, regardless of whether the Company is
otherwise required to file such reports. If the Company is not subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act (or otherwise
required to file reports pursuant to the immediately preceding sentence), the
Company shall deliver to the Trustee, within 15 days after it would have been
required to file such information with the Commission were it required to do so,
annual and quarterly financial statements, including any notes thereto (and, in
the case of a fiscal year end, an auditors' report by an independent certified
public accounting firm of established national reputation), and a "Management's
Discussion and Analysis of Financial Condition and Results of Operations," in
each case substantially equivalent to that which it would have been required to
include in such quarterly or annual reports, information, documents or other
reports if it had been subject to the requirements of Section 13 or 15(d) of the
Exchange Act. The Company shall provide copies of the foregoing materials to
the Noteholders to the extent required by the Trust Indenture Act once this
Indenture has been qualified. The Company shall also comply with the other
provisions of the Trust Indenture Act Section 314(a).
If the Company is not required to file the reports and information
described above with the Commission, and the Company's Common Stock is still
publicly held, the Company shall deliver an annual financial report for the
Common Stock (as required by the Commission) to the Trustee no later than 120
days from the end of its fiscal year and quarterly financial reports for the
Common Stock (as required by the Commission) no later than 30 days after the
end of each quarter; provided, however, that if the Company's Common Stock is no
longer publicly held, the Company shall deliver annual and quarterly reports to
the Trustee at the same times as described in this paragraph, but the Company
shall not have to include management's discussion and analysis of financial
conditions and results of operations or description of the business sections in
such reports.
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Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 EVENTS OF DEFAULT. In case one or more of the following
Events of Default (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) shall have occurred and be
continuing:
(a) default in the payment of the principal of or premium, if any, on
the Notes when due at maturity, upon redemption or otherwise, including
failure by the Company to purchase the Notes when required under
Section 3.5 (whether or not such payment shall be prohibited by Article XV
of this Indenture); or
(b) default in the payment of any installment of interest on the Notes
as and when the same shall become due and payable (whether or not such
payment shall be prohibited by Article XV of this Indenture), and
continuance of such default for a period of 30 days; or
(c) a failure on the part of the Company to duly observe or perform any
other covenants or agreements on the part of the Company in this Indenture
(other than a default in the performance or breach of a covenant or
agreement that is specifically dealt with elsewhere in this Section 6.1)
that continues for a period of 90 days after the date on which written
notice of such failure, requiring the Company to remedy the same, shall
have been given to the Company by the Trustee, or to the Company and a
Responsible Officer of the Trustee, by the holders of at least 25% in
aggregate principal amount of the Notes at the time outstanding determined
in accordance with Section 8.4; or
(d) an event of default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured
or evidenced any indebtedness
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for money borrowed by the Company or any of its Subsidiaries (or the
payment of which is guaranteed by the Company or any of its Subsidiaries),
whether such indebtedness or guarantee now exists or shall be created after
the date hereof, which default (i) is caused by a failure to pay principal
or interest on such indebtedness prior to the expiration of the grace
period provided in such indebtedness (a "Payment Default") or (ii) results
in the acceleration of such indebtedness prior to its expressed maturity
and, in each case, the principal amount of such indebtedness, together
with the principal amount of any other such indebtedness under which there
has been a Payment Default or the maturity of which has been so
accelerated, aggregates $10 million or more;
(e) final judgments or decrees shall be entered by a court of competent
jurisdiction against the Company or any Subsidiary involving liabilities of
$10 million or more (singly or in the aggregate) (after deducting the
portion of such liabilities accepted by a reputable insurance company) and
such final judgments or decrees shall not have been vacated, discharged,
satisfied or stayed pending appeal within 60 days from the entry thereof;
(f) the Company shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect, or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it or shall make a general
assignment for the benefit of creditors or shall fail generally to pay its
debts as they become due; or
(g) an involuntary case or other proceeding shall be commenced
against the Company seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 6.1(f) or (g)), unless the principal of all of the Notes shall have
already become due and payable,
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either the Trustee or the holders of not less than 25% in aggregate principal
amount of the Notes then outstanding hereunder determined in accordance with
Section 8.4, by notice in writing to the Company (and to the Trustee if given
by Noteholders), may declare the principal of, premium, if any, on the Notes and
the interest accrued thereon to be due and payable immediately, and upon any
such declaration the same shall become and shall be immediately due and payable,
anything in this Indenture or in the Notes contained to the contrary
notwithstanding. If an Event of Default specified in Section 6.1(f) or
(g) occurs and is continuing, the principal of all the Notes and the interest
accrued thereon shall be immediately due and payable. The foregoing provision
is subject to the conditions that if, at any time after the principal of the
Notes shall have been so declared due and payable, and before any judgment or
decree for the payment of the monies due shall have been obtained or entered as
hereinafter provided, the Company shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all Notes and
the principal of and premium, if any, on any and all Notes that shall have
become due otherwise than by acceleration (with interest on overdue installments
of interest (to the extent that payment of such interest is enforceable under
applicable law) and on such principal and premium, if any, at the rate borne by
the Notes, to the date of such payment or deposit) and amounts due to the
Trustee pursuant to Section 7.7, and if any and all defaults under this
Indenture, other than the nonpayment of principal of, premium, if any, and
accrued interest on Notes that shall have become due by acceleration, shall
have been cured or waived pursuant to Section 6.7, then and in every such case
the holders of a majority in aggregate principal amount of the Notes then
outstanding, by written notice to the Company and to the Trustee, may waive all
defaults or Events of Default and rescind and annul such declaration and its
consequences; but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or Event of Default, or shall impair any
right consequent thereto. The Company shall notify a Responsible Officer of the
Trustee, promptly upon becoming aware thereof, of any Event of Default.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned
because of such waiver or rescission and annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company, the holders of Notes and the Trustee shall be restored respectively
to their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the holders of Notes and the Trustee shall continue as
though no such proceeding had been taken.
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Section 6.2 PAYMENTS OF NOTES ON DEFAULT; SUIT THEREFOR. The Company
covenants that (a) in case a default shall be made in the payment of any
installment of interest upon any of the Notes as and when the same shall become
due and payable, and such default shall have continued for a period of 30 days,
or (b) in case default shall be made in the payment of the principal of or
premium, if any, on any of the Notes as and when the same shall have become due
and payable, whether at maturity of the Notes or in connection with any
redemption or repurchase, by declaration or otherwise, then, upon demand of the
Trustee, the Company shall pay to the Trustee, for the benefit of the holders of
the Notes, the whole amount that then shall have become due and payable on all
such Notes for principal of, premium, if any, or interest, or both, as the case
may be, with interest upon the overdue principal, premium, if any, and (to the
extent that payment of such interest is enforceable under applicable law) upon
the overdue installments of interest at the rate borne by the Notes; and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including reasonable compensation to the Trustee,
its agents, attorneys and counsel, and any expenses or liabilities incurred by
the Trustee hereunder other than through its negligence or bad faith. Until
such demand by the Trustee, the Company may pay the principal of and premium, if
any, and interest on the Notes to the registered holders, whether or not the
Notes are overdue.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Company or any other obligor on the Notes under Title 11
of the United States Code or any other applicable law, or in case a receiver,
assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or
similar official shall have been appointed for or taken possession of the
Company or such other obligor, the property of the Company or such other
obligor, or in the case of any other judicial proceedings relative to the
Company or such other obligor upon the Notes, or to the creditors or property of
the Company or such other obligor, the Trustee, irrespective of whether the
principal of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and
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irrespective of whether the Trustee shall have made any demand pursuant to the
provisions of this Section 6.2, shall be entitled and empowered, by intervention
in such proceedings or otherwise, to file and prove a claim or claims for the
whole amount of principal, premium, if any, and interest owing and unpaid in
respect of the Notes and, in case of any judicial proceedings, to file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and of the Noteholders allowed in
such judicial proceedings relative to the Company or any other obligor on the
Notes, its or their creditors, or its or their property and to collect and
receive any monies or other property payable or deliverable on any such claims
and to distribute the same after the deduction of any amounts due the Trustee
under Section 7.7; and any receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, custodian or similar official is hereby authorized
by each of the Noteholders to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly
to the Noteholders, to pay to the Trustee any amount due it for reasonable
compensation, expenses, advances and disbursements, including counsel fees
incurred by it up to the date of such distribution. To the extent that such
payment of reasonable compensation, expenses, advances and disbursements out of
the estate in any such proceedings shall be denied for any reason, payment of
the same shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, monies, securities and other property that the holders
of the Notes may be entitled to receive in such proceedings, whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or adopt on behalf of any Noteholder any plan of
reorganization or arrangement affecting the Notes or the rights of any
Noteholder, or to authorize the Trustee to vote in respect of the claim of any
Noteholder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or under
any of the Notes, may be enforced by the Trustee without the possession of any
of the Notes or the production thereof on any trial or other proceeding relative
thereto, and any such suit or proceeding instituted by the Trustee shall be
rought in its own name as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the holders of the Notes.
In any proceedings brought by the Trustee pursuant to this Indenture or any
supplement hereto (and in any proceedings
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involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
holders of the Notes, and it shall not be necessary to make any holders of the
Notes parties to any such proceedings.
Section 6.3 APPLICATION OF MONIES COLLECTED BY TRUSTEE. Any monies
collected by the Trustee pursuant to this Article VI shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes and stamping thereon the
payment, if only partially paid, and upon surrender thereof, if fully paid:
First: To the payment of all amounts due the Trustee under Section
7.7;
Second: Subject to the provisions of Article XV, in case the principal
of the outstanding Notes shall not have become due and be unpaid, to the
payment of interest on the Notes in default in the order of the maturity of
the installments of such interest, with interest (to the extent that such
interest has been collected by the Trustee) upon the overdue installments
of interest at the rate borne by the Notes, such payments to be made
ratably to the persons entitled thereto; and
Third: Subject to the provisions of Article XV, in case the principal
of the outstanding Notes shall have become due, by declaration or
otherwise, and be unpaid, to the payment of the whole amount then holding
and unpaid upon the Notes for principal, premium, if any, and interest,
with interest on the overdue principal and premium, if any, and (to the
extent that such interest has been collected by the Trustee) upon overdue
installments of interest at the rate borne by the Notes; and in case such
monies shall be insufficient to pay in full the whole amounts so due and
unpaid upon the Notes, then to the payment of such principal, premium, if
any, and interest without preference or priority of principal and premium,
if any, over interest, or of interest over principal and premium, if any,
or of any installment of interest over any other installment of interest,
or of any Note over any other Note, ratably to the aggregate of such
principal and premium, if any, and accrued and unpaid interest.
Section 6.4 PROCEEDINGS BY NOTEHOLDER. No holder of any Note shall
have any right by virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture, or for the appointment of a receiver, trustee,
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liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than 25% in aggregate
principal amount of the Notes then outstanding shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding, and no direction inconsistent
with such written request shall have been given to the Trustee pursuant to
Section 6.7; it being understood and intended, and being expressly covenanted by
the taker and holder of every Note with every other taker and holder and the
Trustee, that no one or more holders of Notes shall have any right in any manner
whatever by virtue of or by availing of any provision of this Indenture to
affect, disturb or prejudice the rights of any other holder of Notes, to obtain
or seek to obtain priority over or preference to any other such holder or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal, ratable and common benefit of all holders of Notes (except as
otherwise provided herein). For the protection and enforcement of this Section
6.4, each and every Noteholder and the Trustee shall be entitled to such relief
as can be given either at law or in equity.
Notwithstanding any other provision of this Indenture and any provision of
any Note, the right of any holder of any Note to receive payment of the
principal of, premium, if any, and interest on such Note, on or after the
respective due dates expressed in such Note, or to institute suit for the
enforcement of any such payment on or after such respective dates against the
Company shall not be impaired or affected without the consent of such holder
except as otherwise set forth herein.
Anything in this Indenture or the Notes to the contrary notwithstanding,
the holder of any Note, without the consent of either the Trustee or the holder
of any other Note, in his own behalf and for his own benefit, may enforce, and
may institute and maintain any proceeding suitable to enforce, his rights of
conversion as provided herein.
Section 6.5 PROCEEDINGS BY TRUSTEE. In case of an Event of Default
and subject to the provisions of Section 7.7 hereof, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either by
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suit in equity or by action at law or by proceeding in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
Section 6.6 REMEDIES CUMULATIVE AND CONTINUING. Except as provided in
Section 2.6, all powers and remedies given by this Article VI to the Trustee
or to the Noteholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of such powers and remedies or of any other powers
and remedies available to the Trustee or the holders of the Notes, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture, and no delay or omission
of the Trustee or of any holder of any of the Notes to exercise any right or
power accruing upon any default or Event of Default occurring and continuing as
aforesaid shall impair any such right or power or shall be construed to be a
waiver of any such default or any acquiescence therein; and, subject to the
provisions of Section 6.4, every power and remedy given by this Article VI or by
law to the Trustee or to the Noteholders may be exercised from time to time, and
as often as shall be deemed expedient, by the Trustee or by the Noteholders.
Section 6.7 DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY MAJORITY
OF NOTEHOLDERS. The holders of a majority in aggregate principal amount of the
Notes at the time outstanding (determined in accordance with Section 8.4) shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee; provided that (a) such direction shall not be in
conflict with any rule of law or with this Indenture and (b) the Trustee may
take any other action deemed proper by the Trustee that is not inconsistent
with such direction. The holders of a majority in aggregate principal amount
of the Notes at the time outstanding (determined in accordance with Section 8.4)
may on behalf of the holders of all of the Notes waive any past default or
Event of Default hereunder and its consequences except (i) a default in the
payment of interest or premium, if any, on, or the principal of, the Notes,
(ii) a failure by the Company to convert any Notes into Common Stock or cash,
as the case may be, or (iii) a default in respect of a covenant or provisions
hereof that under Article X cannot be modified or amended without the consent
of the holders of all Notes then outstanding. Whenever any default or Event of
Default hereunder shall have been waived as permitted by this Section 6.7,
said default or Event of Default shall for all purposes of the Notes and this
Indenture be deemed to have been cured and to be not continuing and the Company,
the Trustee and the holders of
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the Notes shall as reasonably possible be restored to their former positions and
rights hereunder; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
Section 6.8 NOTICE OF DEFAULTS. The Trustee shall, within 90 days after
the occurrence of a default, mail to all Noteholders, as the names and addresses
of such holders appear upon the Note register, notice of all defaults of which
a Responsible Officer has actual knowledge, unless such defaults shall have
been cured or waived before the giving of such notice; provided that, except
in the case of default in the payment of the principal of, premium, if any, or
interest on any of the Notes, the Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the Trustee in good faith
determine that the withholding of such notice is in the interests of the
Noteholders.
Section 6.9 UNDERTAKING TO PAY COSTS. All parties to this Indenture agree,
and each holder of any Note by his acceptance thereof shall be deemed to have
agreed, that any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; provided that the provisions of this Section 6.9
shall not apply to any suit instituted by the Trustee, to any suit instituted by
any Noteholder or group of Noteholders holding in the aggregate more than 10% in
principal amount of the Notes at the time outstanding determined in accordance
with Section 8.4 or to any suit instituted by any Noteholder for the enforcement
of the payment of the principal of, premium, if any, or interest on any Note on
or after the due date expressed in such Note or to any suit for the enforcement
of the right to convert any Note in accordance with the provisions of Article
XIV.
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.1 DUTIES AND RESPONSIBILITIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers
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vested in it by this Indenture and use the same degree of care and skill in
its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture; provided that in the case of any such certificates
or opinions that by any provision hereof are specifically required to
be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Indenture (but need not confirm or investigate
the accuracy of mathematical calculations or other facts stated
therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph (c) does not limit the effect of paragraph
(b) of this Section 7.1;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer of the Trustee unless it
is proved that the Trustee was negligent in ascertaining the pertinent
facts reasonably available to the Trustee; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.7.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.1.
(e) The Trustee may refuse to perform any duty or exercise any right
or power or extend or risk its own funds or
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otherwise incur any financial liability unless it receives indemnity
satisfactory to it against any loss, liability or expense.
Section 7.2 REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each
May 15 commencing with the May 15 following the date of this Indenture, the
Trustee shall, if required by the Trust Indenture Act, mail to each Noteholder a
brief report dated as of such May 15 that complies with Trust Indenture Act
Section 313(a). The Trustee also shall comply with Trust Indenture Act Sections
313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the Notes
become listed or delisted on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Noteholders shall
be mailed to the Company and, to the extent required by Section 5.2 hereof and
of the Trust Indenture Act Section 313(d), filed with the Commission and each
stock exchange, if any, on which the Notes are listed.
Section 7.3 RELIANCE ON DOCUMENTS, OPINIONS, ETC. Except as
otherwise provided in Section 7.1:
(a) The Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, coupon or other paper or document
believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties;
(b) Any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless
other evidence in respect thereof be herein specifically prescribed or
required by the Trust Indenture Act); and any resolution of the Board of
Directors may be evidenced to the Trustee by a copy thereof certified by
the Secretary or an Assistant Secretary of the Company;
(c) The Trustee may consult with counsel of its selection and any
advice or opinion of counsel shall be full and complete authorization and
protection in respect of any action taken or omitted by it hereunder in
good faith and in accordance with such advice or opinion of counsel;
(d) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys, and the Trustee shall not be responsible for any misconduct or
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negligence on the part of any agent or attorney appointed by it with due
care hereunder; no Depositary, Custodian or paying agent who is not the
Trustee shall be deemed an agent of the Trustee, and the Trustee (in its
capacity as Trustee) shall not be responsible for any act or omission by
any such Depositary, Custodian or paying agent;
(e) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by the Indenture at the request or direction
of any of the holders pursuant to this Indenture unless such holders have
offered the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that would be incurred by it in compliance with
such request or direction.
(f) Subject to the provisions of Section 7.1(c), the Trustee shall
not be liable for any action it takes or omits to take in good faith that
it believes to be authorized or within its rights or powers;
(g) In connection with any request to transfer or exchange any Note,
the Trustee may request a direction (in the form of an Officers'
Certificate) from the Company and an Opinion of Counsel with respect to
compliance with any restrictions on transfer or exchange imposed by this
Indenture, the Securities Act, other applicable law or the rules and
regulations of any exchange on which the Notes or the capital stock may be
traded, and the Trustee may rely and shall be protected in acting upon such
direction and in accordance with such Officers' Certificate and Opinion of
Counsel;
(h) The Trustee may rely and shall be fully protected in acting upon
the determination and notice by the Company of the Conversion Price; and
(i) The Trustee shall not be deemed to have knowledge of any Event of
Default or other fact or event upon the occurrence of which it may be
required to take action hereunder unless one of its Responsible Officers
has actual knowledge thereof obtained by a written statement.
Section 7.4 NO RESPONSIBILITY FOR RECITALS, ETC. The recitals
contained herein and in the Notes (except in the Trustee's certificate of
authentication) shall be taken as the statements of the Company, and the Trustee
assumes no responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any
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Notes or the proceeds of any Notes authenticated and delivered by the Trustee
in conformity with the provisions of this Indenture.
Section 7.5 TRUSTEE, PAYING AGENTS, CONVERSION AGENTS OR REGISTRAR
MAY OWN NOTES. The Trustee, any paying agent, any conversion agent or any Note
registrar, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights it would have if it were not Trustee,
paying agent, conversion agent or Note registrar.
Section 7.6 MONIES TO BE HELD IN TRUST. Subject to the provisions of
Section 12.4, all monies received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received.
Money held by the Trustee in trust hereunder need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as may be
agreed to in writing from time to time by the Company and the Trustee.
Section 7.7 COMPENSATION AND EXPENSES OF TRUSTEE. The Company
covenants and agrees to pay to the Trustee from time to time, and the Trustee
shall be entitled to, such compensation as the Company and the Trustee shall
from time to time agree in writing, for all services rendered by it hereunder in
any capacity (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust), and the Company shall pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or advance as may
arise from its negligence or bad faith. The Company also covenants to indemnify
each of the Trustee or any predecessor Trustee in any capacity under this
Indenture and its agents and any authenticating agent for, and to hold them
harmless against, any and all loss, liability, damage, claim or expense,
including taxes (other than taxes based on the income of the Trustee) incurred
without negligence or bad faith on the part of the Trustee or such agent or
authenticating agent, as the case may be, and arising out of or in connection
with the acceptance or administration of this trust or in any other capacity
hereunder, including the costs and expenses of defending themselves against any
claim of liability in the premises. The obligations of the Company under this
Section 7.7 to compensate or indemnify the Trustee and to pay or reimburse the
Trustee for expenses, disbursements and advances shall be secured by a lien
prior to that of the Notes upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the benefit of the holders of
particular Notes. The obligation
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of the Company under this Section shall survive the satisfaction and
discharge of this Indenture.
Section 7.8 OFFICERS' CERTIFICATE AS EVIDENCE. Except as otherwise
provided in Section 7.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Trustee, and such Officers' Certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken or omitted by it under the
provisions of this Indenture upon the faith thereof.
Section 7.9 CONFLICTING INTERESTS OF TRUSTEE. In the event that the
Trust Indenture Act is applicable hereto, and if the Trustee has or shall
acquire a conflicting interest within the meaning of Trust Indenture Act Section
310(b) and there exists an Event of Default hereunder (exclusive of any period
of grace or requirement of notice), the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
Section 7.10 ELIGIBILITY OF TRUSTEE. There shall at all times be a
Trustee hereunder that shall be a person that satisfies the requirements of
Trust Indenture Act Section 310(a)(1) and Section 310(a)(5) and that has a
combined capital and surplus of at least $50,000,000. If such person publishes
reports of condition at least annually, pursuant to law or to the requirements
of any supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such person shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article VII.
Section 7.11 RESIGNATION OR REMOVAL OF TRUSTEE.
(a) The Trustee may at any time resign by giving written notice of
such resignation to the Company; and the Company shall mail, or cause to be
mailed, notice thereof to the holders of Notes at their addresses as they shall
appear on the Note register. Upon receiving such notice of resignation, the
Company shall promptly appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of
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Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with Section 7.9 after written
request therefor by the Company or by any Noteholder who has been a BONA
FIDE holder of a Note or Notes for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with the
provisions of Section 7.10 and shall fail to resign after written request
therefor by the Company or by any such Noteholder; or
(iii) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or any Noteholder who
has been a BONA FIDE holder of a Note or Notes for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.
(c) The holders of a majority in aggregate principal amount of the
Notes at the time outstanding may at any time remove the Trustee and nominate a
successor trustee, which shall be deemed appointed as successor trustee unless
within ten days after notice to the Company of such nomination the Company
objects thereto, in which case the Trustee so removed or any Noteholder, upon
the terms and conditions and otherwise as provided in the next paragraph, may
petition any court of competent jurisdiction for an appointment of a successor
trustee.
If no successor trustee shall have been so appointed and have accepted
appointment within 60 days after removal or the mailing of such notice of
resignation to the Noteholders, the Trustee resigning or being removed may
petition any court of competent jurisdiction for the appointment of a successor
trust-
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ee, or, in the case of either resignation or removal, any Noteholder who has
been a BONA FIDE holder of a Note or Notes for at least six months may, on
behalf of himself and all others similarly situated, petition any such court
for the appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 7.11 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 7.12.
Section 7.12 ACCEPTANCE BY SUCCESSOR TRUSTEE. Any successor trustee
appointed as provided in Section 7.11 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon, the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but on the written request of the Company
or of the successor trustee, the Trustee ceasing to act shall, upon payment of
any amounts then due it pursuant to the provisions of Section 7.7, execute and
deliver an instrument transferring to such successor trustee all the rights and
powers of the Trustee so ceasing to act. Upon request of any such successor
trustee, the Company shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all such
rights and powers. Any Trustee ceasing to act shall, nevertheless, retain a
lien upon all property and funds held or collected by such trustee as such,
except for funds held in trust for the benefit of holders of particular Notes,
to secure any amounts then due it pursuant to the provisions of Section 7.7.
No successor trustee shall accept appointment as provided in this
Section 7.12 unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 7.9 and eligible under the
provisions of Section 7.10.
Upon acceptance of appointment by a successor trustee as provided in
this Section 7.12, the Company shall mail or cause to be mailed notice of the
succession of such Trustee hereunder to the holders of Notes at their addresses
as they shall appear on the Note register. If the Company fails to mail such
notice within ten days after acceptance of appointment by the successor
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trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Company.
Section 7.13 SUCCESSOR, BY MERGER, ETC. Any corporation into which
the Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor to the Trustee hereunder, provided such corporation shall be qualified
under the provisions of Section 7.9 and eligible under the provisions of Section
7.10 without the execution or filing of any paper or any further act on the part
of any of the parties hereto.
Section 7.14 LIMITATION ON RIGHTS OF TRUSTEE AS CREDITOR. If and
when the Trustee shall be or become a creditor of the Company (or any other
obligor upon the Notes) and the Trust Indenture Act is applicable hereto, the
Trustee shall be subject to the provisions of Trust Indenture Act Section 311(a)
or, if applicable, Trust Indenture Act Section 311(b) regarding the collection
of the claims against the Company (or any such other obligor).
ARTICLE VIII
CONCERNING THE NOTEHOLDERS
Section 8.1 ACTION BY NOTEHOLDERS. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by Noteholders
in person or by agent or proxy appointed in writing, (b) by the record of the
holders of Notes voting in favor thereof at any meeting of Noteholders duly
called and held in accordance with the provisions of Article IX or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders. Whenever the Company or the Trustee solicits the taking
of any action by the holders of the Notes, the Company or the Trustee may fix in
advance of such solicitation, a date as the record date for determining holders
entitled to take such action. The record date shall be not more than 15 days
prior to the date of commencement of solicitation of such action.
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Section 8.2 PROOF OF EXECUTION BY NOTEHOLDERS. Subject to the
provisions of Sections 7.1, 7.2 and 9.5, proof of the execution of any
instrument by a Noteholder or by agent or proxy shall be sufficient if made in
accordance with Section 7.3 hereof. The holding of Notes shall be proved by the
Note register or by a certificate of the Note registrar.
The record of any Noteholders' meeting shall be proved in the manner
provided in Section 9.5.
Section 8.3 WHO ARE DEEMED ABSOLUTE OWNERS. The Company, the
Trustee, any paying agent, any conversion agent and any Note registrar may deem
the person in whose name such Note shall be registered upon the books of the
Company to be, and may treat such person as, the absolute owner of such Note
(whether or not such Note shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of, premium, if any, and interest on such Note, for
conversion of such Note and for all other purposes; and neither the Company nor
the Trustee nor any paying agent nor any conversion agent nor any Note registrar
shall be affected by any notice to the contrary. All such payments so made to
any holder for the time being, or upon order of such holder, shall be valid and,
to the extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for monies payable upon any such Note.
The Depositary shall be deemed to be the owner of any global Note for
all purposes, including receipt of notices to Noteholders and payment of
principal of, premium, if any, and interest on the Notes. None of the Company,
the Trustee (in its capacity as Trustee), any paying agent or the Note registrar
(or co-registrar) shall have any responsibility for any aspect of the records
relating to or payments made on account of beneficial interests of a global Note
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Section 8.4 COMPANY-OWNED NOTES DISREGARDED. In determining whether
the holders of the requisite aggregate principal amount of Notes have concurred
in any direction, consent, waiver or other action under this Indenture, Notes
that are owned by the Company or any other obligor on the Notes or by any person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any other obligor on the Notes shall be
disregarded and deemed not to be outstanding for the purpose of any such
determination; provided that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, consent, waiver or other
action, only Notes that a Responsible Officer of the Trustee actually knows are
so owned shall be so disregarded.
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Notes so owned that have been pledged in good faith may be regarded as
outstanding for the purposes of this Section 8.4 if the pledgee shall
establish to the satisfaction of the Trustee the pledger's right to vote such
Notes and that the pledgee is not the Company, any other obligor on the Notes
or a person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any such other obligor.
In the case of a dispute as to such right, any decision by the Trustee taken
upon the advice of counsel shall be full protection to the Trustee. Upon
request of the Trustee, the Company shall furnish to the Trustee promptly an
Officers' Certificate listing and identifying all Notes, if any, known by the
Company to be owned or held by or for the account of any of the above
described persons; and subject to Section 7.1, the Trustee shall be entitled
to accept such Officers' Certificate as conclusive evidence of the facts
therein set forth and of the fact that all Notes not listed therein are
outstanding for the purpose of any such determination.
Section 8.5 REVOCATION OF CONSENTS, FUTURE HOLDERS BOUND. At any
time prior to (but not after) the evidencing to the Trustee, as provided in
Section 8.1, of the taking of any action by the holders of the percentage in
aggregate principal amount of the Notes specified in this Indenture in
connection with such action, any holder of a Note that is shown by the evidence
to be included in the Notes the holders of which have consented to such action
may, by filing written notice with the Trustee at its Corporate Trust Office and
upon proof of holding as provided in Section 8.2, revoke such action so far as
concerns such Note. Except as aforesaid, any such action taken by the holder of
any Note shall be conclusive and binding upon such holder and upon all future
holders and owners of such Note and of any Notes issued in exchange or
substitution therefor, irrespective of whether any notation in regard thereto is
made upon such Note or any Note issued in exchange or substitution therefor.
ARTICLE IX
NOTEHOLDERS' MEETINGS
Section 9.1 PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting of
Noteholders may be called at any time and from time to time pursuant to the
provisions of this Article IX for any of the following purposes:
(i) to give any notice to the Company or to the Trustee, or to give
any directions to the Trustee, or to consent to the waiving of any default
hereunder and its consequenc-
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es, or to take any other action authorized to be taken by Noteholders
pursuant to any of the provisions of Article VI;
(ii) to remove the Trustee and appoint a successor trustee pursuant to
the provisions of Article VII;
(iii) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 10.2; or
(iv) to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of the Notes
under any other provisions of this Indenture or under applicable law.
Section 9.2 MANNER OF CALLING MEETINGS; RECORD DATE. The Trustee may
at any time call a meeting of Noteholders to take any action specified in
Section 9.1, to be held at such time and at such place in the City of New York,
State of New York, as the Trustee shall determine. Notice of every meeting of
the Noteholders, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be mailed
not less than 30 nor more than 60 days prior to the date fixed for the meeting
to such Noteholders at their addresses as such addresses appear in the Note
register. For the purpose of determining Noteholders entitled to notice of any
meeting of Noteholders, the Company, upon written notice to the Trustee, shall
fix in advance a date as the record date for such determination, such date to be
a business day not more than ten days prior to the date of the mailing of such
notice as hereinabove provided. Only persons in whose name any Note shall be
registered in the Note register at the close of business on a record date fixed
by the Trustee as aforesaid, or by the Company or the Noteholders as provided in
Section 9.3, shall be entitled to notice of the meeting of Noteholders with
respect to which such record date was so fixed.
Section 9.3 CALL OF MEETING BY COMPANY OR NOTEHOLDERS. In case at
any time the Company, pursuant to a resolution of its Board of Directors or
the holders of at least 10% in aggregate principal amount of the Notes then
outstanding shall have requested the Trustee to call a meeting of Noteholders to
take any action authorized in Section 9.1 by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed notice of such meeting within 20 days after
receipt of such request, then the Company or the holders of Notes in the amount
above specified, as the case may be, may fix the record date with respect to,
and determine the time and the place for, such meeting and may call such meeting
to take any action authorized in Section 9.1, by mailing notice thereof as
provided in Section 9.2. The record
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date fixed as provided in the preceding sentence shall be set forth in a
written notice to the Trustee and shall be a business day not less than 15
nor more than 20 days after the date on which the original request is sent to
the Trustee.
Section 9.4 WHO MAY ATTEND AND VOTE AT MEETINGS. Only persons
entitled to receive notice of a meeting of Noteholders and their respective
proxies duly appointed by an instrument in writing shall be entitled to vote at
such meeting. The only persons who shall be entitled to be present or to speak
at any meeting of Noteholders shall be the persons entitled to vote at such
meeting and their counsel and any representatives of the Trustee and its counsel
and any representatives of the Company and its counsel. When a determination of
Noteholders entitled to vote at any meeting of Noteholders has been made as
provided in this Section, such determination shall apply to any adjournments
thereof.
Section 9.5 MANNER OF VOTING AT MEETINGS AND RECORD TO BE KEPT. The
vote upon any resolution submitted to any meeting of Noteholders shall be by
written ballots on each of which shall be subscribed the signature of the
Noteholder or proxy casting such ballot and the identifying number or numbers of
the Notes held or represented in respect of which such ballot is cast. The
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Noteholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 9.2. The record shall show the identifying numbers of the Notes voting
in favor of or against any resolution. Each counterpart of such record shall be
signed and verified by the affidavits of the chairman and secretary of the
meeting and one of the counterparts shall be delivered to the Company and the
other to the Trustee to be preserved by the Trustee.
Any counterpart record so signed and verified shall be conclusive
evidence of the matters therein stated and shall be the record referred to in
clause (b) of Section 8.1.
Section 9.6 EXERCISE OF RIGHTS OF TRUSTEE AND NOTEHOLDERS NOT TO BE
HINDERED OR DELAYED. Nothing in this Article IX contained shall be deemed or
construed to authorize or permit, by reason of any call of a meeting of
Noteholders or any rights expressly or impliedly conferred hereunder to make
such
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call, any hinderance or delay in the exercise of any right or rights
conferred upon or reserved to the Trustee or to the Noteholders under any of the
provisions of this Indenture or of the Notes.
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 10.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
The Company, when authorized by a Board Resolution, and the Trustee may from
time to time and at any time enter into an indenture or indentures supplemental
hereto for one or more of the following purposes:
(a) to make provision with respect to the conversion rights of the
holders of Notes pursuant to the requirements of Section 14.6;
(b) subject to Article XV, to convey, transfer, assign, mortgage or
pledge to the Trustee as security for the Notes, any property or assets;
(c) to evidence the succession of another person to the Company, or
successive successions, and the assumption by the Successor Company of the
covenants, agreements and obligations of the Company pursuant to Article
XI;
(d) to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors and the Trustee shall
consider to be for the benefit of the holders of Notes and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided that in respect of
any such additional covenant, restriction or condition, such supplemental
indenture may provide for a particular period of grace after default (which
period may be shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default;
(e) to provide for the issuance under this Indenture of Notes in
coupon form (including Notes registrable as to principal only) and to
provide for exchangeability of such Notes with the Notes issued hereunder
in fully registered form and to make all appropriate changes for such
purpose;
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(f) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture that may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to
matters or questions arising under this Indenture that shall not adversely
affect the interests of the holders of the Notes;
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or
(h) to modify, eliminate or add to the provisions of this Indenture
to such extent necessary to effect the qualification of this Indenture
under the Trust Indenture Act (if applicable), or under any similar federal
statute hereafter enacted (if applicable).
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations that may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to, but may in its discretion, enter into any
supplemental indenture that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section 10.1 may be executed by the Company and the Trustee without the consent
of the holders of any of the Notes at the time outstanding, notwithstanding any
of the provisions of Section 10.2.
Section 10.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS.
With the consent (evidenced as provided in Article VIII) of the holders of not
less than a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, when authorized by a Board Resolution and the Trustee,
may from time to time and at any time enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or any
supplemental indenture or of modifying in any manner the rights of the holders
of the Notes; provided that no such supplemental indenture shall (i) without the
consent of the holders of each Note so affected, extend the fixed maturity of
any Note, or reduce the rate or extend the time of payment of interest thereon,
or reduce the principal amount thereof or premium, if any, thereon or reduce any
amount payable on redemption or repurchase thereof, alter the obligation of the
Company to repurchase the Notes at the option of the holder upon
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the occurrence of a Change of Control or impair or affect the right of any
Noteholder to institute suit for the payment thereof or make the principal
thereof or interest or premium, if any, thereon payable in any coin or
currency other than that provided in the Notes, modify the subordination
provisions in a manner adverse to the holders of the Notes, or impair the
right to convert the Notes into Common Stock or cash subject to the terms set
forth herein or (ii) without the consent of the holders of all the Notes then
outstanding, reduce the aforesaid percentage of Notes, the holders of which
are required to consent to any such supplemental indenture.
Upon the request of the Company, accompanied by a copy of a Board
Resolution certified by its Secretary or Assistant Secretary authorizing the
execution of any such supplemental indenture, and upon the filing with the
Trustee of evidence of the consent of Noteholders as aforesaid, the Trustee
shall join with the Company in the execution of such supplemental indenture
unless such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Noteholders under
this Section 10.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 10.3 EFFECT OF SUPPLEMENTAL INDENTURES. Any supplemental
indenture executed pursuant to the provisions of this Article X shall comply
with the Trust Indenture Act, as then in effect, if such supplemental indenture
is then required to so comply. Upon the execution of any supplemental indenture
pursuant to the provisions of this Article X, this Indenture shall be and be
deemed to be modified and amended in accordance therewith and the respective
rights, limitation of rights, obligations, duties and immunities under this
Indenture of the Trustee, the Company and the holders of Notes shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
Section 10.4 NOTATION ON NOTES. Notes authenticated and delivered
after the execution of any supplemental indenture pursuant to the provisions of
this Article X may bear a notation in form approved by the Company as to any
matter provided for in such supplemental indenture, but they need not do so.
After notice to the Trustee, if the Company shall determine to add such a
notation, new Notes so modified as to conform, in the opinion
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of the Board of Directors, to any modification of this Indenture contained in
any such supplemental indenture may, at the Company's expense, be prepared
and executed by the Company, authenticated by the Trustee (or an
authenticating agent duly appointed by the Trustee pursuant to Section 16.14)
and delivered in exchange for the Notes then outstanding, upon surrender of
such Notes then outstanding.
Section 10.5 EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE
FURNISHED TO THE TRUSTEE. The Trustee shall be furnished with and, subject to
the provisions of Sections 7.1 and 7.2, may rely conclusively upon an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant hereto complies with the requirements
of this Article X.
ARTICLE XI
CONSOLIDATION, MERGER, SALE, CONVEYANCE,
TRANSFER AND LEASE
Section 11.1 COMPANY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. The
Company shall not consolidate with or merge with or into, or convey, transfer or
lease all or substantially all of its assets (determined on a consolidated
basis) to any person unless: (i) either the Company is the resulting, surviving
or transferee person (the "Successor Company") or the Successor Company is a
person organized and existing under the laws of the United States or any State
thereof or the District of Columbia, and the Successor Company (if not the
Company) expressly assumes by a supplemental indenture, executed and delivered
to the Trustee, in form satisfactory to the Trustee, all the obligations of the
Company under this Indenture and the Notes, including the rights pursuant to
Article XIV hereof, (ii) immediately after giving effect to such transaction, no
Event of Default has happened and is continuing and (iii) the Company delivers
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture.
Section 11.2 SUCCESSOR COMPANY TO BE SUBSTITUTED. In case of any
such consolidation, merger, sale, conveyance, transfer or lease and upon the
assumption by the Successor Company, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due and
punctual payment of the principal of, premium, if any, and interest on all of
the Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, such Successor
Company shall succeed to and be substituted for the Company, with the same
effect as if it
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had been named herein as the party hereto. When a Successor Company duly
assumes all the obligations of the Company pursuant to this Indenture and the
Notes, the predecessor shall be released from all such obligations.
Section 11.3 OPINION OF COUNSEL TO BE GIVEN TO TRUSTEE. The Trustee,
subject to Sections 7.1 and 7.2, shall receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance, transfer or lease and any such assumption complies with the
provisions of this Article XI.
ARTICLE XII
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 12.1 LEGAL DEFEASANCE AND COVENANT DEFEASANCE OF THE NOTES.
(a) The Company may, at its option by Board Resolution, at any time,
with respect to the Notes, elect to have either paragraph (b) or paragraph (c)
below be applied to the outstanding Notes upon compliance with the conditions
set forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company shall be deemed to have been
released and discharged from its obligations with respect to the outstanding
Notes on the date the conditions set forth in paragraph (d) below are satisfied
(hereinafter, "legal defeasance"). For this purpose, such legal defeasance
means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of the Sections of and matters
under this Indenture referred to in clauses (i) and (ii) below and to have
satisfied all its other obligations under such Notes and this Indenture insofar
as such Notes are concerned, except for the following, which shall survive until
otherwise terminated or discharged hereunder: (i) the rights of holders of
outstanding Notes to receive solely from the trust fund described in paragraph
(d) below and as more fully set forth in such paragraph, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due and (ii) obligations listed in Section 12.3.
(c) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company shall be
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released and discharged from its obligations under any covenant contained in
Article XI and Section 3.5 with respect to the outstanding Notes on and after
the date the conditions set forth in paragraph (d) are satisfied
(hereinafter, "covenant defeasance"), and the Notes shall thereafter be
deemed to be not "outstanding" for the purpose of any direction, waiver,
consent or declaration or act of holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder. For this purpose, such
covenant defeasance means that, with respect to the outstanding Notes, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document, and such omission to comply shall
not constitute a Default or an Event of Default under Section 6.1, but,
except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby.
(d) The following shall be the conditions to application of either
paragraph (b) or paragraph (c) above to the outstanding Notes:
(i) The Company shall have irrevocably deposited in trust with
the Trustee, pursuant to an irrevocable trust and security agreement in
form and substance satisfactory to the Trustee, cash or non-callable U.S.
Government Obligations maturing as to principal and interest at such times,
or a combination thereof, in such amounts as are sufficient, without
consideration of the reinvestment of such interest and after payment of all
federal, state and local taxes or other charges or assessments in respect
thereof payable by the Trustee, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof (in form and substance reasonably satisfactory to the Trustee)
delivered to the Trustee, to pay the principal of, premium, if any, and
interest on the outstanding Notes on the dates on which any such payments
are due and payable in accordance with the terms of this Indenture and of
the Notes as well as all other sums payable hereunder by the Company;
(ii) (A) No Event of Default shall have occurred or be
continuing on the date of such deposit, and (B) no Default or Event of
Default under Section 6.1(f) or 6.1(g) shall occur on or before the 123rd
day after the date of such deposit;
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(iii) Such deposit shall not result in a Default under this
Indenture or a breach or violation of, or constitute a default under, any
other instrument or agreement to which the Company is a party or by which
it or its property is bound;
(iv) In the case of a legal defeasance under paragraph (b) above,
the Company has delivered to the Trustee an Opinion of Counsel in form and
substance reasonably satisfactory to the Trustee stating that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling applicable to such a defeasance or (B) since the
date of this Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
opinion shall confirm that, the holders of the Notes shall not recognize
income, gain or loss for federal income tax purposes as a result of such
deposit, defeasance and discharge and shall be subject to federal income
tax on the same amounts and in the same manner and at the same times as
would have been the case if such deposit, defeasance and discharge had not
occurred; and, in the case of a covenant defeasance under paragraph (c)
above, the Company shall deliver to the Trustee an Officers' Certificate
and an Opinion of Counsel, in form and substance reasonably satisfactory to
the Trustee, to the effect that holders of the Notes shall not recognize
income, gain or loss for federal income tax purposes as a result of such
deposit and defeasance and shall be subject to federal income tax on the
same amounts and in the same manner and at the same times as would have
been the case if such deposit and defeasance had not occurred;
(v) The holders shall have a perfected security interest under
applicable law in the cash or U.S. Government Obligations deposited
pursuant to Section 12.1(d)(i) above;
(vi) The Company shall have delivered to the Trustee an Opinion
of Counsel, in form and substance reasonably satisfactory to the Trustee,
to the effect that, after the passage of 123 days following the deposit,
the trust funds shall not be subject to any applicable bankruptcy,
insolvency, reorganization or similar law affecting creditors' rights
generally;
(vii) Such defeasance shall not cause the Trustee to have a
conflicting interest with respect to any securities of the Company; and
(viii) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in form
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and substance reasonably satisfactory to the Trustee, each stating that all
conditions precedent specified herein relating to the defeasance
contemplated by this Section 12.1 have been complied with;
provided, that no deposit under clause (i) shall be effective to terminate
the obligations of the Company under the Notes or this Indenture prior to the
passage of 123 days following such deposit.
Section 12.2 TERMINATION OF OBLIGATIONS UPON CANCELLATION OF THE
NOTES. In addition to the Company's rights under Section 12.1, the Company may
terminate all of its obligations under this Indenture (subject to Section 12.3)
when:
(a) (i) all Notes theretofore authenticated and delivered (other than
Notes that have been destroyed, lost or stolen and that have been replaced,
converted or paid as provided in Section 2.6) have been delivered to the
Trustee for cancellation; and
(ii) the Company has paid or caused to be paid all other sums
payable hereunder and under the Notes by the Company; or
(b) (i) the Notes not previously delivered to the Trustee for
cancellation shall have become due and payable or are by their terms to
become due and payable within one year or are to be called for redemption
under arrangements satisfactory to the Trustee upon delivery of notice,
(ii) the Company shall have irrevocably deposited with the Trustee, as
trust funds, cash, in an amount sufficient to pay principal of premium, if
any, and interest on the outstanding Notes, to maturity or redemption, as
the case may be, (iii) such deposit shall not result in a breach or
violation of, or constitute a default under, any agreement or instrument
pursuant to which the Company is a party or by which it or its property is
bound and (iv) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee, each stating that all conditions related to
such defeasance have been complied with.
Section 12.3 SURVIVAL OF CERTAIN OBLIGATIONS. Notwithstanding the
satisfaction and discharge of this Indenture and of the Notes referred to in
Section 12.1 or 12.2, the respective obligations of the Company and the Trustee
under Sections 2.3, 2.4, 2.5, 2.6, 3.1, 4.2, 5.1, 6.4, 6.9, 7.6, 7.11, 12.5,
12.6, 12.7, Articles XIV and XV shall survive until the Notes are no longer
outstanding, and thereafter, the obligations of the
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Company and the Trustee under Sections 6.9, 7.6, 12.5, 12.6 and 12.7 shall
survive. Nothing contained in this Article XII shall abrogate any of the
rights, obligations or duties of the Trustee under this Indenture.
Section 12.4 ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE. Subject to
Section 12.7, after (i) the conditions of Section 12.1 or 12.2 have been
satisfied, (ii) the Company has paid or caused to be paid all other sums
payable hereunder by the Company and (iii) the Company has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent referred to in clause (i) above relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon written request shall acknowledge in writing the discharge of
the Company's obligations under this Indenture except for those surviving
obligations specified in Section 12.3.
Section 12.5 APPLICATION OF TRUST ASSETS. The Trustee shall hold
any cash or U.S. Government Obligations deposited with it in the irrevocable
trust established pursuant to Section 12.1 or 12.2, as the case may be. The
Trustee shall apply the deposited cash or the U.S. Government Obligations,
together with earnings thereon in accordance with this Indenture and the
terms of the irrevocable trust agreement established pursuant to Section 12.1
or 12.2, as the case may be, to the payment of principal of, premium, if any,
and interest on the Notes. The cash or U.S. Government Obligations so held
in trust and deposited with the Trustee in compliance with Section 12.1 or
12.2, as the case may be, shall not be part of the trust estate under this
Indenture, but shall constitute a separate trust fund for the benefit of all
holders entitled thereto. Except as specifically provided herein, the
Trustee shall not be requested to invest any amounts held by it for the
benefit of the holders or pay interest on uninvested amounts to any holder.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 12.1 hereof or Section 12.2 hereof
or the principal and interest received in respect thereof other than any such
tax, fee or other charge which by law is for the account of the holders of
outstanding Notes.
Section 12.6 REPAYMENT TO THE COMPANY; UNCLAIMED MONEY. Subject to
applicable laws governing escheat of such property, and upon termination of the
trust established pursuant to Section 12.1 hereof or 12.2 hereof, as the case
may be, the Trustee shall promptly pay to the Company upon written request any
excess cash or U.S. Government Obligations held by them. Additionally, if
amounts for the payment of principal, premium,
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if any, or interest remains unclaimed for two years, the Trustee shall, upon
written request, pay such amounts back to the Company forthwith. Thereafter,
all liability of the Trustee with respect to such amounts shall cease. After
payment to the Company, holders entitled to such payment must look to the
Company for such payment as general creditors unless an applicable abandoned
property law designates another person.
Section 12.7 REINSTATEMENT. If the Trustee is unable to apply any
cash or U.S. Government Obligations in accordance with Section 12.1 or 12.2 by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 12.1 or 12.2 until such time as the Trustee is permitted to apply all
such cash or U.S. Government Obligations in accordance with Section 12.1 or
12.2, as the case may be; provided that if the Company makes any payment of
principal of, premium, if any, or interest on any Notes following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the holders of such Notes to receive such payment from the amounts held by
the Trustee.
ARTICLE XIII
IMMUNITY OF INCORPORATORS, SHAREHOLDERS,
OFFICERS AND DIRECTORS
Section 13.1 INDENTURE AND NOTES SOLELY CORPORATE OBLIGATIONS. No
recourse for the payment of the principal of, or premium, if any, or interest on
any Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, shareholder, officer or director, as such, past, present or
future, of the Company or of any successor entity, either directly or through
the Company or any successor entity, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that all such liability is hereby
expressly waived and released as a condition of, and as a consideration for, the
execution of this Indenture and the issuance of the Notes.
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ARTICLE XIV
CONVERSION OF NOTES
Section 14.1 RIGHT TO CONVERT.
(a) Subject to and upon compliance with the provisions of this
Indenture, the holder of any Note shall have the right, at the option of such
holder, at any time after 90 days following the latest date of original
issuance of the Notes and prior to the close of business on November 28, 2003
(except that, with respect to any Note or portion of a Note that shall be
called for redemption or delivered for repurchase, such right shall terminate
at the close of business one Business Day immediately preceding the date
fixed for redemption or repurchase of such Note or portion of a Note unless
the Company shall default in payment due upon redemption thereof) to convert
the principal amount of any such Note, or any portion of such principal
amount that is $1,000 or an integral multiple thereof, into that number of
fully paid and nonassessable shares of Common Stock (as such shares shall
then be constituted) obtained by dividing the aggregate principal amount of
the Notes or portion thereof surrendered for conversion by the Conversion
Price in effect at such time rounded to the nearest 1/100,000th of a share
(with 0.000005 being rolled upward) as such amount shall be certified by the
Company as provided in an Officers' Certificate, by surrender of the Note so
to be converted in whole or in part in the manner provided in Section 14.2.
A Note (or portion thereof) in respect of which a holder is exercising its
option to require repurchase upon a change of control pursuant to Section 3.5
of this Indenture, may only be converted if such holder withdraws its
election to exercise said redemption option in accordance with the terms of
this Indenture. A holder of Notes is not entitled to any rights of a holder
of Common Stock until such holder has converted such holder's Notes to Common
Stock and only to the extent such Notes are deemed to have been converted to
Common Stock under this Article XIV.
(b) In the event a holder desires to convert all, or any
portion, of its Notes into shares of Common Stock (or other securities into
which the Notes are then convertible) and the Company does not have authorized a
sufficient number of shares of Common Stock (or other securities into which the
Notes are then convertible) for such conversion, then in lieu of delivering
shares of Common Stock (or other securities into which the Notes are then
convertible) upon conversion pursuant to 14.1(a) of that portion of such
holder's Notes for which there is an insufficient number of shares of Common
Stock (or other securities into which the Notes are then convertible) (the "Cash
Equivalent Notes"), the Company shall pay to the holder
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converting the Cash Equivalent Notes who properly exercises the conversion
privilege, as set forth in Section 14.2, an amount, as calculated by the
Company and certified to the Trustee in an Officers' Certificate of the
Company, in cash equal to the Market Cash Conversion Price of the shares of
Common Stock into which such Cash Equivalent Notes are then convertible.
(c) In the event that the Company directs the Trustee to pay
cash upon any conversion in lieu of delivering shares of Common Stock or any
other securities, as the case may be, the Company shall deliver to the
Trustee written notice of such election not later than the close of business
on the first Trading Day after the date of receipt by the Trustee of the
notice of conversion delivered by such holder pursuant to Section 14.2, and
the Trustee shall notify by facsimile the contact person specified in the
holder's Conversion Notice of such election by the Company to such holder.
In such event, notwithstanding any other provisions in this Article XIV, in
lieu of delivering Common Stock upon conversion of such Notes surrendered in
accordance with Section 14.2, the Company shall pay or direct the Trustee to
pay the holder surrendering such securities an amount in cash equal to the
Market Cash Conversion Price of the shares of Common Stock, plus any cash and
other property theretofore apportioned to such shares of Common Stock in
accordance with Section 14.2. Prior to or concurrently with such cash
payment, the Company will provide the Trustee with an Officers' Certificate
setting forth the Market Cash Conversion Price and will deposit with the
paying agent the cash so payable. The Trustee shall have no obligation or
liability with respect to the calculation of the Market Cash Conversion Price.
Section 14.2 EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON
STOCK ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS. In order to
exercise the conversion privilege with respect to any Note in definitive
form, the holder of any such Note to be converted in whole or in part shall
surrender such Note, duly endorsed, at an office or agency maintained by the
Company pursuant to Section 4.2, accompanied by the funds, if any, required
by the penultimate paragraph of this Section 14.2, and shall give written
notice of conversion in the form provided on the form of Note (or such other
notice that is acceptable to the Company) to the office or agency that the
holder elects to convert such Note or the portion thereof specified in said
notice. Such notice shall state the name, telephone number and facsimile
number of the contact person for the Conversion Notice and shall also state
the name or names (with address) in which the certificate or certificates for
shares of Common Stock that shall be issuable on such conversion shall be
issued and shall be accompanied by transfer taxes, if required pursuant to
Section 14.7. Each such Note surrendered for conversion shall, unless the
shares issuable on conversion
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are to be issued in the name of the holder of such Note as it appears on the
Note register, be duly endorsed by, or be accompanied by instruments of
transfer in form satisfactory to the Company duly executed by, the holder or
his duly authorized attorney.
In order to exercise the conversion privilege with respect to any
interest in a global Note, the beneficial holder must complete the appropriate
instruction form for conversion pursuant to the Depositary's book-entry
conversion program and follow the other procedures set forth in such program.
As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to Section 14.1(b) and in compliance with
any restrictions on transfer if shares issuable on conversion are to be issued
in a name other than that of the Noteholder (as if such transfer were a transfer
of the Note or Notes (or portion thereof) so converted), the Company shall issue
and shall deliver to such holder at the office or agency maintained by the
Company for such purpose pursuant to Section 4.2, a certificate or certificates
for the number of full shares issuable upon the conversion of such Note or
portion thereof in accordance with the provisions of this Article XIV and a
check or cash in respect of any fractional interest in respect of a share of
Common Stock arising upon such conversion, as provided in Section 14.3. In case
any Note of a denomination greater than $1,000 shall be surrendered for partial
conversion, and subject to Section 2.3, the Company shall execute and the
Trustee shall authenticate and make available for delivery to the holder of the
Note so surrendered, without charge to him, a new Note or Notes in authorized
denominations in an aggregate principal amount equal to the unconverted portion
of the surrendered Note.
Each conversion shall be deemed to have been effected as to any such
Note (or portion thereof) on the date on which the requirements set forth above
in this Section 14.2 have been satisfied as to such Note (or portion thereof),
and, subject to Section 14.1(b), the person in whose name any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become on said date the holder of record of the shares
represented thereby; provided that any such surrender on any date when the stock
transfer books of the Company shall be closed shall constitute the person in
whose name the certificates are to be issued as the record holder thereof for
all purposes on the next succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Price in effect on the date
upon which such Note shall have been surrendered.
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Any Note or portion thereof surrendered for conversion during the
period from the close of business on the record date for any interest payment
date to the opening of business on the next succeeding interest payment date
shall (unless such Note or portion thereof being converted shall have been
called for redemption on a redemption date during the period from the close of
business on or after any record date for the payment of interest to the close of
business on the business day following the corresponding interest payment date)
be accompanied by payment, in funds acceptable to the Company, of an amount
equal to the interest payable on such succeeding interest payment date on the
principal amount being converted; provided that no such payment need be made if
there shall exist at the time of conversion a default in the payment of interest
on the Notes. An amount equal to such payment shall be paid by the Company on
the corresponding interest payment date to the holder of such Note at the close
of business on such record date; provided that if the Company shall default in
the payment of interest on such interest payment date, such amount shall be paid
to the person who made such required payment. The interest payment with respect
to a Note called for redemption on a date between the close of business on any
record date for the payment of interest to the close of business on the business
day following the corresponding interest payment date and surrendered for
conversion during that period shall be payable on the corresponding interest
payment date to the registered holder at the close of business on that record
date (notwithstanding the conversion of such Note before the corresponding
interest payment date) and a holder who elects to convert during that period
need not include funds equal to the interest paid. Except as provided above in
this Section 14.2, no adjustment shall be made for interest accrued on any Note
converted or for dividends on any shares issued upon the conversion of such Note
as provided in this Article XIV.
Upon the conversion of an interest in a global Note, the Trustee, or
the Custodian at the direction of the Trustee, shall make a notation on such
global Note as to the reduction in the principal amount represented thereby.
Section 14.3 CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES. No
fractional shares of Common Stock or scrip representing fractional shares shall
be issued upon conversion of Notes. Subject to Section 14.1(b), (i) if more
than one Note shall be surrendered for conversion at one time by the same
holder, the number of fully paid and nonassessable shares of Common Stock
issuable upon conversion of a Note shall be determined by dividing the aggregate
principal amount of such Notes or portion thereof surrendered for conversion by
the Conversion Price in effect at such time and (ii) the aggregate number of
shares of Common Stock issuable upon conversion shall be rounded to the nearest
1/100,000th of a share (with .0000005
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being rolled upward). If any fractional share of stock would be issuable
upon the conversion of any Note or Notes, the Company shall make an
adjustment therefor in cash at the current market value thereof. The current
market value of a share of Common Stock shall be determined by multiplying
the fractional share by the Closing Price on the Trading Day immediately
preceding the date on which the Notes (or specified portions thereof) are
deemed to have been converted.
Section 14.4 CONVERSION PRICE. The Conversion Price shall be as
specified in the forms of Notes (herein called the "Conversion Price") attached
as Exhibits A, B and C hereto, subject to adjustment as provided in this Article
XIV.
Section 14.5 ADJUSTMENT OF CONVERSION PRICE. The Conversion Price
shall be adjusted from time to time by the Company as follows:
(a) In case the Company shall (i) pay a dividend or make a
distribution on its outstanding Common Stock in shares of its Common Stock,
(ii) subdivide or split its outstanding Common Stock into a greater number
of shares, (iii) combine its outstanding Common Stock into a smaller number
of shares or (iv) issue any shares of capital stock by reclassification of
its Common Stock, the conversion price in effect immediately prior thereto
shall be adjusted so that the holder of any Notes thereafter surrendered
for conversion shall be entitled to receive the number of shares of Common
Stock of the Company which such holder would have owned or have been
entitled to receive after the occurrence of any of the events described
above had such Notes been surrendered for conversion immediately prior to
the occurrence of such event or the record date therefor, whichever is
earlier. An adjustment made pursuant to this subsection (a) shall become
effective immediately after the close of business on the record date for
determination of shareholders entitled to receive such dividend or
distribution in the case of a dividend or distribution (except as provided
in Section 14.5(j)) and shall become effective immediately after the close
of business on the effective date in the case of a subdivision, split,
combination or reclassification. Any shares of Common Stock issuable in
payment of a dividend shall be deemed to have been issued immediately prior
to the close of business on the record date for such dividend for purposes
of calculating the number of outstanding shares of Common Stock under
Sections 14.5(b) and (c).
(b) In case the Company shall issue rights, options or warrants to
all holders of its outstanding shares of Common Stock entitling them to
subscribe for or purchase shares of
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Common Stock at a price per share less than the Current Market Price
(as defined in Section 14.5(g)) on the Record Date fixed for determination
of shareholders entitled to receive such rights, options or warrants, the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect at the opening of
business on the date after the Record Date by a fraction the numerator of
which shall be the number of shares of Common Stock outstanding at the close
of business on the Record Date plus the number of shares that the aggregate
offering price of the total number of shares so offered would purchase at
such Current Market Price, and the denominator of which shall be the number
of shares of Common Stock outstanding on the close of business on the Record
Date plus the total number of additional shares of Common Stock so offered
for subscription or purchase. Such adjustment shall become effective
immediately after the opening of business on the day following the Record
Date fixed for determination of shareholders entitled to receive such
rights, options or warrants. To the extent that shares of Common Stock are
not delivered after the expiration or termination of such rights, options
or warrants, the Conversion Price shall be readjusted to the Conversion
Price that would then be in effect had the adjustments made upon the
issuance of such rights, options or warrants been made on the basis of
delivery of only the number of shares of Common Stock actually delivered.
In the event that such rights, options or warrants are not so issued, the
Conversion Price shall again be adjusted to be the Conversion Price that
would then be in effect if such date fixed for the determination of
shareholders entitled to receive such rights, options or warrants had not
been fixed. In determining whether any rights, options or warrants entitle
the holders to subscribe for or purchase shares of Common Stock at less than
such Current Market Price, and in determining the aggregate offering price
of such shares of Common Stock, there shall be taken into account any
consideration received for such rights, options or warrants, the value of
such consideration, if other than cash, to be determined by the Board of
Directors.
(c) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately reduced, and
conversely, in case outstanding shares of Common Stock shall be combined
into a smaller number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day upon
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which such combination becomes effective shall be proportionately increased,
such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(d) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock shares of any class of capital stock of
the Company (other than any dividends or distributions to which Section
14.5(a) applies) or evidences of its indebtedness or assets (including
securities, but excluding any rights, options or warrants referred to in
Section 14.5(b), and excluding any dividend or distribution (x) in
connection with the liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary, (y) exclusively in cash or (z) referred
to in Section 14.5(a) (any of the foregoing hereinafter in this Section
14.5(d) called the "Securities")), then, in each such case, the Conversion
Price shall be reduced so that the same shall be equal to the price
determined by multiplying the Conversion Price in effect immediately prior
to the close of business on the Record Date (as defined in Section 14.5(g))
with respect to such distribution by a fraction of which the numerator
shall be the Current Market Price (determined as provided in Section
14.5(g)) on such date less the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive and described
in a Board Resolution) on such date of the portion of the Securities so
distributed applicable to one share of Common Stock and the denominator
shall be such Current Market Price, such reduction to become effective
immediately prior to the opening of business on the day following the
Record Date; provided that in the event the then fair market value (as so
determined) of the portion of the Securities so distributed applicable to
one share of Common Stock is equal to or greater than the Current Market
Price on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Noteholder shall have the right to
receive upon conversion the amount of Securities such holder would have
received had such holder converted each Note on such date. In the event
that such dividend or distribution is not so paid or made, the Conversion
Price shall again be adjusted to be the Conversion Price that would then be
in effect if such dividend or distribution had not been declared. If the
Board of Directors determines the fair market value of any distribution for
purposes of this Section 14.5(d) by reference to the actual or when issued
trading market for any securities comprising all or part of such
distribution, it must in doing so consider the prices in such market over
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the same period used in computing the Current Market Price pursuant to
Section 14.5(g) to the extent possible.
Notwithstanding the foregoing provisions of this Section 14.5(d), no
adjustment shall be made hereunder for any distribution of Securities if
the Company makes proper provision so that each Noteholder who converts a
Note (or any portion thereof) after the date fixed for determination of
shareholders entitled to receive such distribution shall be entitled to
receive upon such conversion, in addition to the shares of Common Stock
issuable upon such conversion, the amount and kind of Securities that such
holder would have been entitled to receive if such holder had, immediately
prior to such determination date, converted such Note into Common Stock;
provided that, with respect to any Securities that are convertible,
exchangeable or exercisable, the foregoing provision shall only apply to
the extent (and so long as) the Securities receivable upon conversion of
such Note would be convertible, exchangeable or exercisable, as applicable,
without any loss of rights or privileges for a period of at least 60 days
following conversion of such Note.
Rights, options or warrants distributed by the Company to all holders
of Common Stock entitling the holders thereof to purchase shares of the
Company's capital stock (either initially or under certain circumstances),
which rights, options or warrants, until the occurrence of a specified
event or events (the "Trigger Event") (i) are deemed to be transferred with
such shares of Common Stock, (ii) are not exercisable and (iii) are also
issued in respect of future issuances of Common Stock, shall not be deemed
distributed for purposes of this Section 14.5(d) (and no adjustment to the
Conversion Price under Section 14.5(d) shall be required) until the
occurrence of the earliest Trigger Event. In addition, in the event of any
distribution of rights, options or warrants, or any Trigger Event with
respect thereto, that shall have resulted in an adjustment to the
Conversion Price under this Section 14.5(d), (1) in the case of any such
rights, options or warrants that shall all have been redeemed or
repurchased without exercise by any holders thereof, the Conversion Price
shall be readjusted upon such final redemption or repurchase to give effect
to such distribution or Trigger Event, as the case may be, as though it
were a cash distribution, equal to the per share redemption or repurchase
price received by a holder of Common Stock with respect to such rights,
options or warrants (assuming such holder had retained such rights, options
or warrants), made to all holders of Common Stock as of the date of such
redemption or repurchase, and (2) in the case of such rights, options or
warrants all of which shall
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have expired or been terminated without exercise by any holder
thereof, the Conversion Price shall be readjusted as if such issuance
had not occurred.
For purposes of this Section 14.5(d) and Sections 14.5(a) and (b), any
dividend or distribution to which this Section 14.5(d) is applicable that
also includes shares of Common Stock, or rights, options or warrants to
subscribe for or purchase shares of Common Stock (or both), shall be deemed
instead to be (1) a dividend or distribution of the evidences of
indebtedness, assets or shares of capital stock other than such shares of
Common Stock or rights, options or warrants (and any Conversion Price
reduction required by this Section 14.5(d) with respect to such dividend or
distribution shall then be made) immediately followed by (2) a dividend or
distribution of such shares of Common Stock or such rights, options or
warrants (and any further Conversion Price reduction required by Sections
14.5(a) and (b) with respect to such dividend or distribution shall then be
made) except (A) the Record Date of such dividend or distribution shall be
substituted as "the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution" and "the date
fixed for such determination" within the meaning of Sections 14.5(a) and
(b) and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on
the date fixed for such determination" within the meaning of Section
14.5(a).
(e) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock cash (excluding any cash that is
distributed upon a merger or consolidation to which Section 14.6 applies or
as part of a distribution referred to in Section 14.5(d) for which an
adjustment to the Conversion Price is provided therein) in an aggregate
amount that, combined together with (1) the aggregate amount of any other
such distributions to all holders of its Common Stock made exclusively in
cash within the 12 months preceding the date of payment of such
distribution, and in respect of which no adjustment pursuant to this
Section 14.5(e) has been made, and (2) the aggregate of any cash plus the
fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) of
consideration payable in respect of any tender offer, by the Company or any
of its Subsidiaries for all or any portion of the Common Stock concluded
within the 12 months preceding the date of payment of such distribution,
and in respect of which no adjustment pursuant to Section 14.5(f) has been
made, exceeds 20.0% of the product of the Current Market Price (determined
as provided in Section 14.5(g)) on the Record
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Date with respect to such distribution times the number of shares of Common
Stock outstanding on such date, then, and in each such case, immediately
after the close of business on such date, unless the Company elects to
reserve such cash for distribution to the holders of the Notes upon the
conversion of the Notes so that any such holder converting Notes shall
receive upon such conversion, in addition to the shares of Common Stock
to that such holder is entitled, the amount of cash which such holder
would have received if such holder had, immediately prior to the Record
Date for such distribution of cash, converted its Notes into Common
Stock, the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in
effect immediately prior to the close of business on such date by a
fraction (i) the numerator of which shall be equal to the Current
Market Price on the Record Date less an amount equal to the quotient
of (x) the excess of such combined amount over such 20.0% and (y)
the number of shares of Common Stock outstanding on the Record Date and
(ii) the denominator of which shall be equal to the Current Market Price on
such date; provided that in the event the portion of the cash so
distributed applicable to one share of Common Stock is equal to or greater
than the Current Market Price of the Common Stock on the Record Date, in
lieu of the foregoing adjustment, adequate provision shall be made so that
each Noteholder shall have the right to receive upon conversion the amount
of cash such holder would have received had such holder converted each Note
on the Record Date. In the event that such dividend or distribution is not
so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price that would then be in effect if such dividend or
distribution had not been declared.
(f) In case a tender offer made by the Company or any of its
Subsidiaries for all or any portion of the Common Stock shall expire and
such tender offer (as amended upon the expiration thereof) shall require
the payment to shareholders (based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased Shares (as defined
below)) of an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) that combined together with
(1) the aggregate of the cash plus the fair market value (as determined by
the Board of Directors, whose determination shall be conclusive and
described in a Board Resolution), as of the expiration of such tender
offer, of consideration payable in respect of any other tender offer, by
the Company or any of its Subsidiaries for all or any portion of the Common
Stock expiring within the 12 months preceding the
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expiration of such tender offer, and in respect of which no adjustment
pursuant to Section 14.5(f) has been made, and (2) the aggregate
amount of any distributions to all holders of the Company's
Common Stock made exclusively in cash within 12 months preceding
the expiration of such tender offer, and in respect of which
no adjustment pursuant to Section 14.5 (e) has been made, exceeds
20.0% of the product of the Current Market Price (determined as provided in
Section 14.5(g)) as of the last time (the "Expiration Time") tenders could
have been made pursuant to such tender offer (as it may be amended) times
the number of shares of Common Stock outstanding (including any tendered
shares) on the Expiration Time, then, and in each such case, immediately
prior to the opening of business on the day after the date of the
Expiration Time, the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to close of business on the date of the Expiration
Time by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding (including any tendered shares) on the Expiration
Time multiplied by the Current Market Price of the Common Stock on the
Trading Day next succeeding the Expiration Time and the denominator shall
be the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to shareholders based on the acceptance (up
to any maximum specified in the terms of the tender offer) of all shares
validly tendered and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the
"Purchased Shares") and (y) the product of the number of shares of Common
Stock outstanding (less any Purchased Shares) on the Expiration Time and
the Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following the
Expiration Time. In the event that the Company is obligated to purchase
shares pursuant to any such tender offer, but the Company is permanently
prevented by applicable law from effecting any such purchases or all such
purchases are rescinded, the Conversion Price shall again be adjusted to be
the Conversion Price that would then be in effect if such tender offer had
not been made.
(g) For purposes of this Section 14.5, the following terms shall have
the meaning indicated:
(i) "Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case
no such sale takes place on such day, the average of the reported
closing
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bid and asked prices, regular way, in each case on the New
York Stock Exchange, or, if such security is not listed or admitted to
trading on such Exchange, on the principal national security exchange
or quotation system on which such security is quoted or listed or
admitted to trading, or, if not quoted or listed or admitted to
trading on any national securities exchange or quotation system, the
average of the closing bid and asked prices of such security on the
over-the-counter market on the day in question as reported by the
National Quotation Bureau Incorporated, or a similar generally
accepted reporting service, or if not so available, in such manner as
furnished by any New York Stock Exchange member firm selected from
time to time by the Board of Directors for that purpose, or a price
determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution.
(ii) "Current Market Price" shall mean the average of the daily
Closing Prices per share of Common Stock for the ten consecutive
Trading Days immediately prior to the date in question; provided that
(1) if the "ex" date (as hereinafter defined) for any event (other
than the issuance or distribution or Change of Control requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to Section 14.5(a), (b), (c), (d), (e) or (f) occurs during
such ten consecutive Trading Days, the Closing Price for each Trading
Day prior to the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the same fraction by which the
Conversion Price is so required to be adjusted as a result of such
other event, (2) if the "ex" date for any event (other than the
issuance, distribution or Change of Control requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to Section 14.5(a), (b), (c), (d), (e) or (f) occurs on or
after the "ex" date for the issuance or distribution requiring such
computation and prior to the day in question, the Closing Price for
each Trading Day on and after the "ex" date for such other event shall
be adjusted by multiplying such Closing Price by the reciprocal of the
fraction by which the Conversion Price is so required to be adjusted
as a result of such other event and (3) if the "ex" date for the
issuance, distribution or Change of Control requiring such computation
is prior to the day in question, after taking into account any
adjustment required pursuant to clause (1) or (2) of this proviso, the
Closing Price for each Trading Day on or after such "ex" date shall be
adjusted by adding
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thereto the amount of any cash and the fair market value (as
determined by the Board of Directors in a manner consistent
with any determination of such value for purposes of Section 14.5(d)
or (f), whose determination shall be conclusive and described in a
Board Resolution) of the evidences of indebtedness, shares of capital
stock or assets being distributed applicable to one share of Common
Stock as of the close of business on the day before such "ex" date.
For purposes of any computation under Section 14.5(f), the Current
Market Price of the Common Stock on any date shall be deemed to be the
average of the daily Closing Prices per share of Common Stock for such
day and the next two succeeding Trading Days; provided that if the
"ex" date for any event (other than the tender or exchange offer
requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 14.5(a), (b), (c), (d), (e) or
(f) occurs on or after the Expiration Time for the tender or exchange
offer requiring such computation and prior to the day in question, the
Closing Price for each Trading Day on and after the "ex" date for such
other event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the Conversion Price is so
required to be adjusted as a result of such other event. For purposes
of this paragraph, the term "ex" date, (1) when used with respect to
any issuance or distribution, means the first date on which the Common
Stock trades regular way on the relevant exchange or in the relevant
market from which the Closing Price was obtained without the right to
receive such issuance or distribution, (2) when used with respect to
any subdivision or combination of shares of Common Stock, means the
first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective and (3) when used with respect to any
tender or exchange offer means the first date on which the Common
Stock trades regular way on such exchange or in such market after the
expiration of such offer. Notwithstanding the foregoing, whenever
successive adjustments to the Conversion Price are called for pursuant
to this Section 14.5, such adjustments shall be made to the Current
Market Price as may be necessary or appropriate to effectuate the
intent of this Section 14.5 and to avoid unjust or inequitable results
as determined in good faith by the Board of Directors.
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(iii) "fair market value" shall mean the amount that a
willing buyer would pay a willing seller in an arm's-length
transaction.
(iv) "Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or other
property or in which the Common Stock (or other applicable security)
is exchanged for or converted into any combination of cash, securities
or other property, the date fixed for determination of shareholders
entitled to receive such cash, securities or other property (whether
such date is fixed by the Board of Directors or by statute, contract
or otherwise).
(h) The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 14.5(a), (b), (c), (d), (e) and (f),
as the Board of Directors considers to be advisable to avoid or diminish
any income tax to holders of Common Stock or rights to purchase Common
Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time to time
may reduce the Conversion Price by any amount for any period of time if the
period is at least 20 days, the reduction is irrevocable during the period
and the Board of Directors shall have made a determination that such
reduction would be in the best interests of the Company, which
determination shall be conclusive and described in a Board Resolution.
Whenever the Conversion Price is reduced pursuant to the preceding
sentence, the Company shall mail to all holders of record of the Notes a
notice of the reduction at least 15 days prior to the date the reduced
Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period it shall be in effect.
(i) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in
such price; provided that any adjustments that by reason of this Section
14.5(i) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article
XIV shall be made by the Company and shall be made to the nearest 1/100,000
(with 0.0000005 being rolled upward).
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No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value, or to or
from no par value, of the Common Stock.
To the extent the Notes become convertible into cash, assets, property
or securities (other than Common Stock of the Company), no adjustment need
be made thereafter as to the cash, assets, property or such securities
(except as such securities may otherwise by their terms provide), and
interest shall not accrue on such cash.
(j) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly file with the Trustee and any conversion agent other
than the Trustee an Officers' Certificate setting forth the Conversion
Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment. Promptly after delivery of such
certificate, the Company shall prepare a notice of such adjustment of the
Conversion Price setting forth the adjusted Conversion Price and the date
on which each adjustment becomes effective and shall mail such notice of
such adjustment of the Conversion Price to the holder of each Note at his
last address appearing on the Note register provided for in Section 2.5,
within 20 days after execution thereof. Failure to deliver such notice
shall not effect the legality or validity of any such adjustment.
(k) In any case in which this Section 14.5 provides that an
adjustment shall become effective immediately after a Record Date for an
event, the Company may defer until the occurrence of such event (i) issuing
to the holder of any Note converted after such Record Date and before the
occurrence of such event the additional shares of Common Stock issuable
upon such conversion by reason of the adjustment required by such event
over and above the Common Stock issuable upon such conversion before giving
effect to such adjustment and (ii) paying to such holder any amount in cash
in lieu of any fraction pursuant to Section 14.3.
Section 14.6 EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. If any of the following events occur, namely (i) any reclassification or
change of outstanding shares of Common Stock (other than a change in par value,
or to or from no par value, as a result of a subdivision or combination), (ii)
any consolidation, merger or combination of the Company with another corporation
as a result of which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to or in
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exchange for such Common Stock or (iii) any sale or conveyance of the properties
and assets of the Company as, or substantially as, an entirety (determined on a
consolidated basis) to any other corporation as a result of which holders of
Common Stock shall be entitled to receive stock, securities or other property or
assets (including cash) with respect to or in exchange for such Common Stock,
then the Company or the successor or purchasing corporation, as the case may be,
shall execute with the Trustee a supplemental indenture (which shall comply with
the Trust Indenture Act as in force at the date of execution of such
supplemental indenture if such supplemental indenture is then required to so
comply) providing that the Notes shall be convertible into the kind and amount
of shares of stock and other securities or property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon conversion of such Notes (assuming, for such purposes, a
sufficient number of authorized shares of Common Stock available to convert all
such Notes) immediately prior to such reclassification, change, consolidation,
merger, combination, sale or conveyance, assuming such holder of Common Stock
did not exercise his rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance (provided that,
if the kind or amount of securities, cash or other property receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
is not the same for each share of Common Stock in respect of which such rights
of election shall not have been exercised ("non-electing share"), then for the
purposes of this Section 14.6 the kind and amount of securities, cash or other
property receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance for each non-electing share shall be deemed to
be the kind and amount so receivable per share by a plurality of the
non-electing shares). Such supplemental indenture shall provide for adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article XIV.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at his address appearing on the
Note register provided for in Section 2.5, within 20 days after execution
thereof. Failure to deliver such notice shall not affect the legality or
validity of such supplemental indenture.
The above provisions of this Section 14.6 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
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Section 14.7 TAXES ON SHARES ISSUED. The issuance of stock
certificates on conversions of Notes shall be made without charge to the
converting Noteholder for any transfer or similar tax in respect of the issue
thereof. The Company shall not, however, be required to pay any tax that may be
payable in respect of any transfer involved in the issue and delivery of stock
in any name other than that of the holder of any Note converted, and the Company
shall not be required to issue or deliver any such stock certificate unless and
until the person or persons requesting the issuance thereof shall have paid to
the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid.
Section 14.8 RESERVATION OF SHARES; SHARES TO BE FULLY PAID; LISTING
OF COMMON STOCK. Subject to Section 14.1(b) the Company shall provide, free
from preemptive rights, out of its authorized but unissued shares or shares held
in treasury, sufficient shares to provide for the conversion of the Notes from
time to time as such Notes are presented for conversion.
Before taking any action that would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Notes, the Company shall take all corporate
action that may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.
The Company covenants that all shares of Common Stock that may be
issued upon conversion of Notes shall, upon issuance, be fully paid and
nonassessable by the Company and free from all taxes, liens and charges with
respect to the issuance thereof.
The Company further covenants that it shall, if permitted by the rules
of the Nasdaq Stock Market, list and keep listed, so long as the Common Stock
shall be so listed on such exchange, all Common Stock issuable upon conversion
of the Notes.
Section 14.9 RESPONSIBILITY OF TRUSTEE. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine whether any facts exist that may require any
adjustment of the Conversion Price or notice thereof, or with respect to the
nature, accuracy or extent or calculation of any such adjustment when made, or
with respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. The Trustee and any other
conversion agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock, or of any securities or
property, that may at any time be issued or delivered upon the conversion of any
Note; and the Trustee and any other conversion
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agent make no representations with respect thereto or actions or omissions by
the Company in connection with this Article XIV. Subject to the provisions
of Section 7.1, neither the Trustee nor any conversion agent shall be
responsible for any failure of the Company to issue, transfer or deliver any
shares of Common Stock or stock certificates or other securities or property
or cash upon the surrender of any Note for the purpose of conversion or to
comply with any of the duties, responsibilities or covenants of the Company
contained in this Article XIV. Without limiting the generality of the
foregoing, neither the Trustee nor any conversion agent shall be under any
responsibility to determine whether a supplemental indenture under Section
14.6 hereof need to be entered into or the correctness of any provisions
contained in any supplemental indenture entered into pursuant to Section 14.6
relating either to the kind or amount of shares of stock or securities or
property (including cash) receivable by Noteholders upon the conversion of
their Notes after any event referred to in such Section 14.6 or to any
adjustment to be made with respect thereto, and may accept as conclusive
evidence of the correctness of any such provisions, and shall be protected in
relying upon, the Officers' Certificate (which the Company shall be obligated
to file with the Trustee prior to the execution of any such supplemental
indenture) with respect thereto.
Section 14.10 NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS. In case:
(a) the Company makes any distribution or dividend that would require
an adjustment in the Conversion Price pursuant to Section 14.5; or
(b) the Company takes any action that would require a supplemental
indenture pursuant to Section 14.6; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register, as promptly as
possible but in any event at least 15 days prior to the applicable date
hereinafter specified, a notice stating (x) the date on which a record date is
to be taken for the purpose of such dividend, distribution, rights, options or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution, rights,
options or warrants are to be determined or (y) the date on which such
reclassification, change, consolidation, merger, sale, conveyance, transfer,
dissolution, liquidation or winding-up is expected to become effective or occur
and the date as of which it is expected that holders of record of Common Stock
shall be entitled to exchange
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their Common Stock for securities or other property deliverable upon such
reclassification, change, consolidation, merger, sale, conveyance, transfer,
dissolution, liquidation or winding-up. Neither the failure to give such
notice nor any defect therein shall affect the legality or validity of the
proceedings referenced in clauses (a) through (c) of this Section 14.10.
ARTICLE XV
SUBORDINATION
Section 15.1 AGREEMENT TO SUBORDINATE. The Company agrees, and each
Noteholder by accepting a Note agrees, that the indebtedness evidenced by the
Notes is subordinated in right of payment, to the extent and in the manner
provided in this Article XV, to the prior payment in full of all Senior
Indebtedness and that the subordination is for the benefit of the holders of
Senior Indebtedness.
Section 15.2 CERTAIN DEFINITIONS. For purposes of this Article XV,
the following terms shall have the meaning indicated:
(1) "Representative" shall mean a duly authorized indenture trustee
or other trustee, agent or representative for any Senior Indebtedness.
(2) "Senior Indebtedness" with respect to the Notes means the
principal of, premium, if any, and interest on, and any fees, costs,
expenses and any other amounts (including indemnity payments) related to
the following, whether outstanding on the date hereof or hereafter incurred
or created: (a) indebtedness, matured or unmatured, whether or not
contingent, of the Company for money borrowed evidenced by notes or other
written obligations, (b) any interest rate contract, interest rate swap
agreement or other similar agreement or arrangement designed to protect the
Company or any of its Subsidiaries against fluctuations in interest rates,
(c) indebtedness, matured or unmatured, whether or not contingent, of the
Company evidenced by notes, debentures, bonds or similar instruments or
letters of credit (or reimbursement agreements in respect thereof), (d)
obligations of the Company as lessee under capitalized leases and under
leases of property made as part of any sale and leaseback transactions, (e)
indebtedness of others of any of the kinds described in the preceding
clauses (a) through (d) assumed or guaranteed by the Company and (f)
renewals, extensions, modifications, amendments, and refundings of, and
indebtedness and obligations of a
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successor person issued in exchange for or in replacement of, indebtedness
or obligations of the kinds described in the preceding clauses (a) through
(f), unless the agreement pursuant to which any such indebtedness described
in clauses (a) through (f) is created, issued, assumed or guaranteed
expressly provides that such indebtedness is not senior or superior in
right of payment to the Notes; provided that the following shall not
constitute Senior Indebtedness: (i) any indebtedness or obligation of the
Company in respect of the Notes, (ii) any indebtedness of the Company to
any of its Subsidiaries or other Affiliates; (iii) any indebtedness that is
subordinated or junior in any respect to any other indebtedness of the
Company other than Senior Indebtedness; and (iv) any indebtedness incurred
for the purchase of goods or materials in the ordinary course of business.
For the purposes of this Indenture, Senior Indebtedness shall not be
deemed to have been paid in full until the holders of the Senior Indebtedness
shall have indefeasibly received payment in full in cash of all Senior
Indebtedness; provided that if any holder of Senior Indebtedness agrees to
accept payment in full of such Senior Indebtedness for consideration other than
cash, such holder shall be deemed to have indefeasibly received payment in full
of such Senior Indebtedness. The provisions of this Article XV shall continue
to be effective or be reinstated, as the case may be, if at any time any
payment of any of the Senior Indebtedness is rescinded or must otherwise be
returned by any holder of Senior Indebtedness upon the insolvency, bankruptcy
or organization of the Company or otherwise, all as though such payment had not
been made.
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
Section 15.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any
distribution to creditors of the Company in a liquidation or dissolution of the
Company or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property, in an assignment for the
benefit of creditors or any marshalling of the Company's assets and
liabilities, (a) holders of all Senior Indebtedness shall first be entitled to
receive payment in full of all amounts due or to become due thereon before
Noteholders shall be entitled to receive any payment with respect to the
principal of, premium, if any, or interest on the Notes (except that
Noteholders may receive securities that are subordinated to at least the same
extent as the Notes to Senior Indebtedness and any securities issued in
exchange for Senior Indebtedness) and (b) until all Senior Indebtedness (as
provided in clause (a) above) is paid in full, any distribution to which
Noteholders would be entitled but for this Article shall be made to holders
of Senior Indebtedness
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(except that Noteholders may receive securities that are subordinated to at
least the same extent as the Notes to (x) Senior Indebtedness and (y) any
securities issued in exchange for Senior Indebtedness), as their interests
may appear.
Section 15.4 DEFAULT ON SENIOR INDEBTEDNESS. The Company may not
make any payment upon or in respect of the Notes (except in such subordinated
securities) and may not acquire from the Trustee or any Noteholder any Note for
cash or property (other than securities that are subordinated to at least the
same extent as the Note to (i) Senior Indebtedness and (ii) any securities
issued in exchange for Senior Indebtedness) until all Senior Indebtedness has
been paid in full if:
(a) a default in the payment of the principal of, premium, if
any, or interest on Senior Indebtedness occurs and is continuing
beyond any applicable period of grace (a "Payment Default"); or
(b) a default, other than a Payment Default on Senior
Indebtedness occurs and is continuing that permits holders of the
Senior Indebtedness as to which such default relates to accelerate its
maturity (a "Nonpayment Default") and the Trustee receives a notice of
the default (a "Payment Blockage Notice") from the Representative or
Representatives of holders of at least a majority in principal amount
of Senior Indebtedness then outstanding. No Nonpayment Default that
existed or was continuing on the date of delivery of any such Payment
Blockage Notice to the Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice unless such default shall have been
cured or waived for a period of not less than 180 days. No new period
of payment blockage may be commenced within 360 days after the receipt
by the Trustee of any prior Payment Blockage Notice.
The Company, with notice and evidence of the occurrence of (c) or (d)
provided to the Trustee, may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(c) in the case of a Payment Default, upon the date on which the
default is cured or waived, or
(d) in the case of a default other than a NonPayment Default: 179
days after the date on which the applicable Payment Blockage Notice is
received, unless the maturity of such Senior Indebtedness has been
accelerated,
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if this Article XV otherwise permits the payment, distribution or acquisition
at the time of such payment or acquisition.
Section 15.5 WHEN DISTRIBUTION MUST BE PAID OVER. In the event that
the Trustee (or paying agent if other than the Trustee) or any Noteholder
receives any payment of principal or interest with respect to the Notes at a
time when such payment is prohibited by Section 15.3 or 15.4 hereof, such
payment shall be held by the Trustee (or paying agent if other than the
Trustee) or such Noteholder, in trust for the benefit of, and immediately
shall be paid over and delivered, upon written request, to, the holders of
Senior Indebtedness as their interests may appear or their Representative
under the indenture or other agreement (if any) pursuant to which Senior
Indebtedness may have been issued, as their respective interests may appear,
for application to the payment of all Senior Indebtedness remaining unpaid
to the extent necessary to pay all Senior Indebtedness in full in accordance
with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article XV, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness and shall not
be liable to any such holders if the Trustee shall pay over or distribute to
or on behalf of Noteholders or the Company or any other person money or
assets to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article XV, except if such payment is made as a result of the
willful misconduct or gross negligence of the Trustee.
Section 15.6 NOTICE BY COMPANY. The Company shall promptly notify
the Trustee and the paying agent in writing of any facts known to the Company
that would cause a payment of any principal or interest with respect to the
Notes to violate this Article XV, but failure to give such notice shall not
affect the subordination of the Notes to the Senior Indebtedness as provided in
this Article XV.
Section 15.7 SUBROGATION. Until all Senior Indebtedness is paid in
full and until the Notes are paid in full, Noteholders shall be subrogated
(equally and ratably with all other indebtedness pari passu with the Notes) to
the rights of holders of Senior Indebtedness to receive distributions
applicable to Senior Indebtedness to the extent that distributions otherwise
payable to the Noteholders have been applied to the payment of Senior
Indebtedness. A distribution made under this Article XV to holders of
Senior Indebtedness that
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otherwise would have been made to Noteholders is not, as between the Company
and Noteholders, a payment by the Company on the Notes.
Section 15.8 RELATIVE RIGHTS. This Article XV defines the relative
rights of Noteholders and holders of Senior Indebtedness. Nothing in this
Indenture shall:
(a) impair, as between the Company and the Noteholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of, premium, if any, and interest on the Notes in accordance with
their terms;
(b) affect the relative rights of Noteholders and creditors of the
Company other than their rights in relation to holders of Senior
Indebtedness; or
(c) prevent the Trustee or any Noteholder from exercising its
available remedies upon a default or Event of Default, subject to the
rights of holders and owners of Senior Indebtedness to receive
distributions and payments otherwise payable to Noteholders.
If the Company fails because of this Article XV to pay principal of,
premium, if any, or interest on a Note on the due date, the failure is still a
default or Event of Default.
Section 15.9 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No right
of any holder of Senior Indebtedness to enforce the subordination of the
indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Company or any holder of Notes or by the failure of the Company or
any holder of Notes to comply with this Indenture.
Section 15.10 DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative.
Upon any payment or distribution of assets of the Company referred to
in this Article XV, the Trustee and the Noteholders shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon
any certificate of such Representative or of the liquidating trustee or agent
or other person making any distribution to the Trustee or to the Noteholders
for the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or
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distributed thereon and all other facts pertinent thereto or to this Article
XV.
Section 15.11 RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding
the provisions of this Article XV or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment or distribution by the Trustee, and
the Trustee and the paying agent may continue to make payments on the Notes,
unless the Trustee shall have received at its Corporate Trust Office at least
three Business Days prior to the date of such payment written notice of facts
that would cause the payment of any principal, premium, if any, and interest
with respect to the Notes to violate this Article XV. Only the Company or a
Representative may give the notice. Nothing in this Article XV shall impair
the claims of, or payments to, the Trustee under or pursuant to Section 7.6
hereof.
The Trustee shall be entitled to rely on the delivery to it of a
written notice by a person representing such person to be a holder of Senior
Indebtedness (or a trustee or agent on behalf of such holder) to establish that
such notice has been given by a holder of Senior Indebtedness (or a trustee or
agent on behalf of any such holder). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of
any person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article XV, the Trustee may request such person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such person, the extent to which such
person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such person under this Article XV, and if such
evidence is not furnished, the Trustee may defer any payment which it may be
required to make for the benefit of such person pursuant to the terms of this
Indenture pending judicial determination as to the rights of such person to
receive such payment.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
paying agent, any authenticating agent, any conversion agent, any Note
registrar and their successors may do the same with like rights.
Section 15.12 AUTHORIZATION TO EFFECT SUBORDINATION. Each holder of
a Note by the holder's acceptance thereof authorizes and directs the Trustee on
the holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article XV and appoints the
Trustee to act as the holder's attorney-in-fact for any and all such purposes.
Without limiting the foregoing, each
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Representative is hereby irrevocably authorized and empowered (in its own
name or in the name of the Noteholders or the Trustee or otherwise), but
shall have no obligation, to demand, sue for, collect and receive every
payment or distribution referred to in Section 15.3 above and give
acquittance therefor and to file claims and proofs of claim and take such
other action as it may deem necessary or advisable for the exercise or
enforcement of any of the rights or interests of the holders or owners of
the Senior Indebtedness hereunder; provided that for purposes of this Section
15.12 holders or owners of Senior Indebtedness may act only through such
Representative.
Section 15.13 CONVERSIONS NOT DEEMED PAYMENT. For the purposes of
this Article XV only, the issuance and delivery of Common Stock upon conversion
of the Notes in accordance with Article XIV shall not be deemed to constitute a
payment or distribution on account of the principal of or interest on the Notes
or on account of the purchase or other acquisition of Notes. Nothing contained
in this Article or elsewhere in this Indenture or in the Notes is intended to
or shall impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the holders, the right, which is absolute and
unconditional, of the holder of any Note to convert such Note in accordance
with Article XIV.
Section 15.14 AMENDMENTS. The provisions of this Article XV shall
not be amended or modified without the written consent of the holders of Senior
Indebtedness.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1 POOLING OF INTERESTS. The Company desires to preserve
its ability to account for acquisition and other business combination
transactions using the pooling-of-interests method where appropriate, and the
provisions of this Indenture shall be interpreted accordingly.
Section 16.2 PROVISIONS BINDING ON COMPANY'S SUCCESSORS. All the
covenants, stipulations, promises and agreements in this Indenture made by the
Company shall bind its successors and assigns whether so expressed or not.
Section 16.3 OFFICIAL ACTS BY SUCCESSOR COMPANY. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board (including the Board of Directors), committee or
officer of the Company shall and may be done and performed with like force and
effect by the
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like board, committee or officer of any corporation that shall at the time
be the lawful sole successor of the Company.
Section 16.4 ADDRESSES FOR NOTICES, ETC. Any notice or demand that
by any provision of this Indenture is required or permitted to be given or
served by the Trustee or by the holders of Notes on the Company shall be deemed
to have been sufficiently given or made, for all purposes if given or served by
being sent by prepaid overnight delivery or being deposited postage prepaid by
registered or certified mail in a post office letter box addressed (until
another address is filed by the Company with the Trustee) to Penn Treaty
American Corporation, 5440 Lehigh Street, Allentown, Pennsylvania 18103,
Attention: General Counsel with a copy to Justin P. Klein, Ballard Spahr
Andrews & Ingersoll, 1735 Market Street, Philadelphia, Pennsylvania 19103. Any
notice, direction, request or demand hereunder to or upon the Trustee shall be
deemed to have been sufficiently given or made, for all purposes, if given or
served by being sent by prepaid overnight delivery or being deposited postage
prepaid by registered or certified mail in a post office letter box addressed
to the Corporate Trust Office of the Trustee, which office is, at the date as
of which this Indenture is dated, located at 40 Broad Street, New York, New
York 10004, Attention: Corporate Trust Administration.
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be mailed to
him by first class mail, postage prepaid, at the address of such Noteholder as
it appears on the Note register and shall be sufficiently given to such
Noteholder if so mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other
Noteholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
Section 16.5 COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Noteholders may communicate pursuant to Trust Indenture Act Section 312(b) with
other Noteholders with respect to their rights under this Indenture or the
Notes. The Company, the Trustee, the Note registrar and any other person shall
have the protection of Trust Indenture Act Section 312(c).
Section 16.6 GOVERNING LAW. This Indenture shall be deemed to be a
contract made under the substantive laws of New York and for all purposes shall
be construed in accordance with
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the substantive laws of New York without regard to conflicts of laws principles
thereof.
Section 16.7 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT;
CERTIFICATES TO TRUSTEE. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture,
including those actions set forth in Trust Indenture Act Section 314(c), the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating
that, in the opinion of such counsel, all such conditions precedent have been
complied with.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture shall include: (1) a statement that
the person making such certificate or opinion has read such covenant or
condition, (2) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion contained
in such certificate or opinion is based, (3) a statement that, in the
opinion of such person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with and (4) a statement as to
whether or not, in the opinion of such person, such condition or covenant
has been complied with.
Section 16.8 LEGAL HOLIDAYS. In any case where any interest payment
date, date fixed for redemption, stated maturity or Change of Control Purchase
Date of any Note or the last date on which a holder has the right to convert
his Notes shall not be a Business Day, then (notwithstanding any other
provision of this Indenture or of the Notes) payment of interest or
principal (and premium, if any) or conversion of the Notes need not be made
on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the Interest Payment Date, date fixed
for redemption, Change of Control Purchase Date, or at the stated maturity,
or on such last day for conversion, provided that no interest shall accrue
for the period from and after such interest payment date, date fixed for
redemption, Change of Control Purchase Date or stated maturity, as the case may
be.
Section 16.9 NO SECURITY INTEREST CREATED. Nothing in this Indenture
or in the Notes, expressed or implied, shall be construed to constitute a
security interest under the Uniform Commercial Code or similar legislation, as
now or hereafter enacted and in effect, in any jurisdiction where property of
the Company or its Subsidiaries is located.
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Section 16.10 TRUST INDENTURE ACT. This Indenture is hereby made
subject to, and shall be governed by, the provisions of the Trust Indenture Act
required to be part of and to govern indentures qualified under the Trust
Indenture Act.
Section 16.11 TRUST INDENTURE ACT CONTROLS. If any provision of this
Indenture limits, qualifies, or conflicts with the duties imposed by operation
of the Trust Indenture Act, the imposed duties, upon qualification of this
Indenture under the Trust Indenture Act, shall control.
Section 16.12 BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Notes, expressed or implied, shall give to any person, other than the
parties hereto, any paying agent, any authenticating agent, any conversion
agent, any Note registrar and their successors hereunder and the holders of
Notes, any benefit or any legal or equitable right, remedy or claim under this
Indenture.
Section 16.13 TABLE OF CONTENTS, HEADINGS ETC. The table of contents
and the titles and headings of the articles and sections of this Indenture have
been inserted for convenience of reference only, are not to be considered a
part hereof, and shall in no way modify or restrict any of the terms or
provisions hereof.
Section 16.14 AUTHENTICATING AGENT. The Trustee may appoint an
authenticating agent that shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.4, 2.5, 2.6, 2.7 and 3.3, as fully to all intents
and purposes as though the authenticating agent had been expressly authorized
by this Indenture and those Sections to authenticate and deliver Notes. For
all purposes of this Indenture, the authentication and delivery of Notes by the
authenticating agent shall be deemed to be authentication and delivery of such
Notes "by the Trustee" and a certificate of authentication executed on behalf
of the Trustee by an authenticating agent shall be deemed to satisfy any
requirement hereunder or in the Notes for the Trustee's certificate of
authentication. Such authenticating agent shall at all times be a person
eligible to serve as Trustee hereunder pursuant to Section 7.10.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the
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authenticating agent hereunder, if such successor company is otherwise
eligible under this Section, without the execution or filing of any paper or
any further act on the part of the parties hereto or the authenticating
agent or such successor company.
Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at
any time terminate the agency of any authenticating agent by giving written
notice of termination to such authenticating agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case
at any time any authenticating agent shall cease to be eligible under this
Section, the Trustee shall promptly appoint a successor authenticating agent
(which may be the Trustee), shall give written notice of such appointment to
the Company and shall mail notice of such appointment to all holders of Notes
as the names and addresses of such holders appear on the Note register.
The Company agrees to pay to the authenticating agent from time to
time reasonable compensation for its services.
The provisions of Sections 7.3, 7.4, 7.5, 8.3 and this Section 16.14
shall be applicable to any authenticating agent.
Section 16.15 EXECUTION IN COUNTERPARTS. This Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
101
<PAGE>
First Union National Bank hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly signed and attested, all as of the date first written above.
PENN TREATY AMERICAN CORPORATION
By: /s/ Irving Levit
________________________________________
Name: Irving Levit
Title: President and
Chief Executive Officer
Attest:
/s/ Domenic P. Stangherlin
____________________________________
FIRST UNION NATIONAL BANK, as
Trustee
By: /s/ George J. Rayzis
________________________________________
Name: George J. Rayzis
Title: Vice President
Attest:
/s/ Alan G. Finn
____________________________________
<PAGE>
EXHIBIT A - FORM OF DEFINITIVE NOTE
[FORM OF FACE OF NOTE]
No. A-
$___________________________________
CUSIP 707874AB9
PENN TREATY AMERICAN CORPORATION
6-1/4% Convertible Subordinated Notes Due 2003
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A) (1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE NOTE
EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL
NOT PRIOR TO THE DATE THAT IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY AND THE LAST DATE ON
WHICH PENN TREATY AMERICAN CORPORATION (THE "COMPANY") OR ANY
"AFFILIATE" (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE
COMPANY WAS THE OWNER OF THE NOTE (THE "RESTRICTION TERMINATION DATE")
RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON
STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY
OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO FIRST UNION NATIONAL BANK, AS TRUSTEE, A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH RULE 903 OR RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT; AND (3) AGREES THAT
A-1
<PAGE>
IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY BEFORE THE
RESTRICTION TERMINATION DATE, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO FIRST UNION NATIONAL BANK, AS
TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE (C), (D) OR
(E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO FIRST
UNION NATIONAL BANK, AS TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE RESTRICTION
TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
PENN TREATY AMERICAN CORPORATION, a corporation duly organized and
validly existing under the laws of the Commonwealth of Pennsylvania (the
"Company"), which term includes any Successor Company under the Indenture
referred to on the reverse hereof, for value received hereby promises to pay to
___________ ________________, or registered assigns, the principal sum of
______________________________________ Dollars on December 1, 2003 at the office
or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York, or, at the option of the holder of this Note,
at the Corporate Trust Office of the Trustee, in such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts, and to pay interest, semi-annually on
June 1 and December 1 of each year (each an "Interest Payment Date"), commencing
June 1, 1997, on said principal sum at said office or agency, in like coin or
currency, at the rate per annum specified in the title of this Note, from
November 26, 1996 or the most recent Interest Payment Date, as the case may be,
next preceding the date of this Note to which interest has been paid or duly
provided for, unless the date hereof is a date to which interest has been paid
or duly provided for, in which case from the date of this Note, or unless no
interest has been paid or duly provided for on the Notes, in which case from
November 26, 1996, until payment of said principal sum has been made or duly
provided for. Any interest on any Note that is payable, but is not punctually
paid or duly provided for on said June 1 or December 1 (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Noteholder on the relevant
record date by virtue of his having been such Noteholder; and such Defaulted
Interest shall be paid
A-2
<PAGE>
by the Company, at its election in each case, either (i) by notifying the
Trustee of a special record date, the amount of interest to be paid on such
special record date and the date of payment (not more than 25 days after
receipt by the Trustee of such interest, unless the Trustee shall consent to
an earlier date) and depositing with the Trustee an amount of money equal to
the aggregate amount to be paid in respect of such Defaulted Interest on
making arrangements satisfactory to the Trustee for such deposit or (ii) in
any lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed and upon notice requested by such
exchange, if, after notice to the Trustee, the Trustee deems such manner of
payment to be practicable. The interest so payable on any June 1 or December
1 will be paid to the person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the record date,
which shall be the May 15 or November 15 (whether or not a Business Day) next
preceding such June 1 or December 1, respectively; provided that any such
interest not punctually paid or duly provided for shall be payable as
provided in the Indenture. Interest shall be paid by check mailed to the
registered holder at the registered address of such person unless other
arrangements are made in accordance with the provisions of the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, including, without limitation, provisions giving the holder
of this Note the right to convert this Note into Common Stock of the Company
(or, under certain circumstances specified in the Indenture, into an amount of
cash as set forth in the Indenture) on the terms and subject to the limitations
referred to on the reverse hereof and as more fully specified in the Indenture.
Such further provisions shall for all purposes have the same effect as though
fully set forth at this place.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by the Trustee, or a duly authorized authenticating agent under the Indenture.
A-3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
PENN TREATY AMERICAN CORPORATION
By: _______________________________________________
Name:
Title:
Attest:
___________________________
Secretary
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Notes described in the within-named Indenture.
FIRST UNION NATIONAL BANK, as Trustee
By: ___________________________________________________
Authorized Signatory
A-4
<PAGE>
[FORM OF REVERSE OF NOTE]
PENN TREATY AMERICAN CORPORATION
6-1/4% Convertible Subordinated Notes Due 2003
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 6-1/4% Convertible Subordinated Notes Due 2003 (herein called
the "Notes"), limited to the aggregate principal amount of $74,750,000 all
issued or to be issued under and pursuant to an Indenture dated as of November
26, 1996 (the "Indenture"), between the Company and First Union National Bank,
as trustee (the "Trustee"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a complete description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Notes. Each Note is subject to, and
qualified by, all such terms as set forth in the Indenture certain of which are
summarized hereon and each holder of a Note is referred to the corresponding
provisions of the Indenture for a complete statement of such terms. To the
extent that there is any inconsistency between the summary provisions set forth
in the Notes and the Indenture, the provisions of the Indenture shall govern.
Capitalized terms used but not defined in this Note shall have the meanings
ascribed to them in the Indenture.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest on all Notes may be declared, and upon said declaration shall become,
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The payment of principal of, premium, if any, and interest on the
Notes will, to the extent set forth in the Indenture, be subordinated in right
of payment to the prior payment in full of all Senior Indebtedness (as defined
in the Indenture). Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding related to the Company or its
property, in an assignment for the benefit of creditors or any marshalling of
the Company's assets and liabilities, the holders of all Senior Indebtedness
will first be entitled to receive payment in full of all amounts due or to
become due thereon before the holders of the Notes will be entitled to receive
any payment in respect of the principal of, premium, if any, or interest on the
Notes (except that holders of Notes may receive securities that are subordinated
at least to the same extent as the Notes to Senior Indebtedness and any
securities issued in exchange for Senior Indebtedness).
A-5
<PAGE>
The Company also may not make any payment upon or in respect of the
Notes (except in such subordinated securities) and may not acquire from the
Trustee or the holder of any Note for cash or property (other than securities
subordinated to at least the same extent as the Note to (i) all Senior
Indebtedness and (ii) any securities issued in exchange for Senior Indebtedness)
until all Senior Indebtedness has been paid in full if (a) a default in the
payment of the principal of, premium, if any, or interest on Senior Indebtedness
occurs and is continuing beyond any applicable period of grace or (b) any other
default occurs and is continuing with respect to Senior Indebtedness that
permits holders of the Senior Indebtedness as to which such default relates to
accelerate its maturity and the Trustee receives a notice of such default (a
"Payment Blockage Notice") from the representative or representatives of holders
of at least a majority in principal amount of Senior Indebtedness then
outstanding. Payments on the Notes may and shall be resumed (i) in the case of
a Payment Default, upon the date on which such default is cured or waived, or
(ii) in the case of a Nonpayment Default, 179 days after the date on which the
applicable Payment Blockage Notice is received, unless the maturity of any
Senior Indebtedness has been accelerated. No new period of payment blockage may
be commenced within 360 days after the receipt by the Trustee of any prior
Payment Blockage Notice. No default, other than a Nonpayment Default, that
existed or was continuing on the date of delivery of any Payment Blockage Notice
to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice unless such default shall have been cured or waived for a period of not
less than 180 days.
In the event that the Trustee (or paying agent if other than the
Trustee) or any holder of the Notes receives any payment of principal or
interest with respect to the Notes at a time when such payment is prohibited
under the Indenture, such payment shall be held in trust for the benefit of, and
immediately shall be paid over and delivered to, the holders of Senior
Indebtedness or their representative as their respective interests may appear.
After all Senior Indebtedness is paid in full and until the Notes are paid in
full, the holders of the Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to the holders of the Notes have
been applied to the payment of Senior Indebtedness.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, evidenced as in
the Indenture provided, to execute supplemental indentures adding any provisions
to or changing in any manner or eliminating any of the provisions of
A-6
<PAGE>
the Indenture or of any supplemental indenture or modifying in any manner the
rights of the holders of the Notes; provided that no such supplemental
indenture shall (i) extend the fixed maturity of any Note, or reduce the rate
or extend the time of payment of interest thereon, or reduce the principal
amount thereof or premium, if any, thereon, or reduce any amount payable on
redemption thereof, alter the obligation of the Company to repurchase the
Notes at the option of the holders upon the occurrence of a Change of
Control, or impair or affect the right of any Noteholder to institute suit
for the payment thereof, or make the principal thereof or interest or
premium, if any, thereon payable in any coin or currency other than that
provided in the Notes, modify the subordination provisions in a manner
adverse to the holders of the Notes, or impair the right to convert the Notes
into Common Stock subject to the terms set forth in the Indenture without the
consent of the holder of each Note so affected or (ii) reduce the aforesaid
percentage of Notes, the holders of which are required to consent to any such
supplemental indenture, without the consent of the holders of all Notes then
outstanding. The Company and the Trustee may amend or supplement the
Indenture without notice to or consent of any holder of Notes in certain
events specified in the Indenture. It is also provided in the Indenture
that, prior to any declaration accelerating the maturity of the Notes, the
holders of a majority in aggregate principal amount of the Notes at the time
outstanding may on behalf of the holders of all of the Notes waive any past
default or Event of Default under the Indenture and its consequences except a
default in the payment of interest or any premium on or the principal of any
of the Notes, a failure by the Company to convert any Notes into Common Stock
of the Company, unless otherwise excused pursuant to the terms of the
Indenture, or a default in respect of a covenant or provision of the
Indenture that under Article X thereof cannot be modified or amended without
the consent of the holders of all Notes then outstanding. Any such consent
or waiver by the holder of this Note (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all
future holders and owners of this Note and any Notes that may be issued in
exchange or substitution hereof, irrespective of whether or not any notation
thereof is made upon this Note or such other Notes.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the place, at the respective times, at the rate and in the coin
or currency herein prescribed.
A-7
<PAGE>
Interest on the Notes shall be computed on the basis of a 360-day year
composed of twelve 30-day months.
The Notes are issuable in registered form without coupons in
denominations of $1,000 principal amount and integral multiples thereof. At the
office or agency of the Company referred to on the face hereof, and in the
manner and subject to the limitations provided in the Indenture, without payment
of any service charge but with payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any
registration or exchange of Notes, Notes may be exchanged for a like aggregate
principal amount of Notes of other authorized denominations.
The Notes are not redeemable at the option of the Company prior to
December 3, 1999. At any time on or after that date, the Notes may be redeemed
at the Company's option, upon notice as set forth in the Indenture, in whole at
any time or in part from time to time, at the following prices (expressed in
percentages of the principal amount), together with accrued interest to the date
fixed for redemption if redeemed during the 12-month period beginning:
DATE REDEMPTION PRICE
---- ----------------
December 3, 1999 103.13%
December 1, 2000 102.08%
December 1, 2001 101.04%
and 100% on or after December 1, 2002; provided that if the date fixed for
redemption is a date on or after the record date and on or before the next
following Interest Payment Date, then the interest payable on such date shall be
paid to the holder of record on the next preceding May 15 or November 15,
respectively.
If a Change of Control (as defined in the Indenture) shall occur at
any time, then each holder of Notes shall have the right to require that the
Company repurchase such holder's Notes in whole or in part in integral multiples
of $1,000, at a purchase price in cash in an amount equal to 101% of the
principal amount of such Notes, plus accrued and unpaid interest, if any, to the
repurchase date pursuant to an offer to be made by the Company and in accordance
with the procedures set forth in the Indenture.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time after 90 days following the latest date of
original issuance of the Notes and prior to the close of business on November
28, 2003, subject to prior redemption or repurchase, or, as to all or any
portion hereof called for redemption, prior to the close of business one
A-8
<PAGE>
business day before the date fixed for redemption (unless the Company shall
default in payment due upon redemption thereof), to convert the principal hereof
or any portion of such principal that is $1,000 or an integral multiple thereof,
into that number of fully paid and non-assessable shares of the Company's Common
Stock, as said shares shall be constituted at the date of conversion, obtained
by dividing the principal amount of this Note or portion thereof to be converted
by the conversion price of $28.44 per share or such conversion price as adjusted
from time to time as provided in the Indenture, upon surrender of this Note,
together with a conversion notice as provided in the Indenture, to the Company
at the office or agency of the Company maintained for that purpose in the
Borough of Manhattan, The City of New York, or at the option of such holder, the
Corporate Trust Office of the Trustee, and, unless the shares issuable on
conversion are to be issued in the same name as this Note, duly endorsed by, or
accompanied by instruments of transfer in form satisfactory to the Company duly
executed by, the holder or by his duly authorized attorney.
Except as described in the Indenture, no adjustment will be made on
conversion of any Notes for interest accrued thereon or for dividends paid on
any Common Stock issued. A Holder of Notes at the close of business on a record
date will be entitled to receive the interest payable on such Notes on the
corresponding interest payment date. However, Notes surrendered for conversion
during the period from the close of business on a record date to the opening of
business on the next succeeding interest payment date must be accompanied by
funds equal to the interest payable on such succeeding interest payment date on
the principal amount so converted (unless such Note or portion thereof being
converted is called for redemption on a redemption date during the period from
the close of business on or after any record date to the close of business on
the business day following the corresponding interest payment date). The
interest payment with respect to a Note called for redemption on a date between
the close of business on any record date for the payment of interest to the
close of business on the business day following the corresponding interest
payment date and surrendered for conversion during that period will be payable
on the corresponding interest payment date to the registered Holder at the close
of business on that record date (notwithstanding the conversion of such Note
before the corresponding interest payment date). A Holder of Notes who elects
to convert during that period need not include funds equal to the interest paid.
The Company is not required to issue fractional shares of Common Stock upon
conversion of Notes and, in lieu thereof, will pay a cash adjustment based upon
the closing price of the Common Stock on the last business day prior to the date
of conversion.
A-9
<PAGE>
In the event a holder desires to convert all or any portion of its
Notes into shares of Common Stock and the Company does not have authorized a
sufficient number of shares of Common Stock for such conversion, in lieu of
delivering shares of Common Stock (or other securities into which the Notes are
then convertible) upon conversion of that portion of such holder's Notes for
which there is an insufficient number of shares of Common Stock (the "Cash
Equivalent Notes") pursuant to the provisions of the Indenture, the Company will
pay to the holder converting the Cash Equivalent Notes who properly exercises
the conversion privilege, as set forth in the Indenture, an amount in cash equal
to the Market Cash Conversion Price (as defined in the Indenture) of the shares
of Common Stock into which such Cash Equivalent Notes are then convertible.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, or at the option of the holder of this Note, at the Corporate Trust Office
of the Trustee, a new Note or Notes of authorized denominations for an equal
aggregate principal amount will be issued to the transferee in exchange thereof,
subject to the conditions and limitations provided in the Indenture, without
charge except for any tax or other governmental charge imposed in connection
therewith.
The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Note registrar may deem and treat the registered
holder hereof as the absolute owner of this Note (whether or not this Note shall
be overdue and notwithstanding any notation of ownership or other writing hereon
made by anyone other than the Company or any Note registrar), for the purpose of
receiving payment hereof, or on account hereof, for the conversion hereof and
for all other purposes, and neither the Company nor the Trustee nor any other
authenticating agent nor any paying agent nor any other conversion agent nor any
Note registrar shall be affected by any notice to the contrary. All payments
made to or upon the order of such registered holder shall, to the extent of the
sum or sums paid, satisfy and discharge liability for monies payable on this
Note.
No recourse for the payment of the principal of or any premium or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, shareholder, officer or director, as such,
past, present or future, of the Company or of any Successor Company, either
directly or through the Company or any Successor Company, whether by virtue of
any constitution, statute or rule of law or by the enforcement of any assessment
or penalty
A-10
<PAGE>
or otherwise, all such liability being, by the acceptance hereof and as part
of the consideration for the issue hereof, expressly waived and released.
A-11
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the
face of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the ________________ Custodian
entireties (Cust)
JT TEN - as joint tenants with ________________ under
right of survivorship (Minor)
and not as tenants in
common Uniform Gifts to
Minors Act ___________________
(State)
Additional abbreviations may also be used
though not in the above list.
A-12
<PAGE>
[FORM OF CONVERSION NOTICE]
CONVERSION NOTICE
To: Penn Treaty American Corporation
The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion hereof (which is
$1,000 principal amount or an integral multiple thereof) below designated,
into shares of Common Stock, par value $.10 per share, of the Company in
accordance with the terms of the Indenture referred to in this Note, and
directs that the shares issuable and deliverable upon such conversion,
together with any check in payment for fractional shares and any Notes
representing any unconverted principal amount hereof, be issued and delivered
to the registered holder hereof unless a different name has been indicated
below. If shares or any portion of this Note not converted are to be issued
in the name of a person other than the undersigned, the undersigned will
check the appropriate box below and pay all transfer taxes payable with
respect thereto. Any amount required to be paid to the undersigned on
account of interest accompanies this Note.
Dated:_______________________ Contact Person: ____________________
Fax Number:_________________________
_____________________________ Telephone Number:___________________
_____________________________
Signature(s)
Signature(s) must be guaranteed by an
eligible Guarantor Institution (banks,
stock brokers, savings and loan associations
and credit unions) with membership in an
approved signature guarantee medallion
program pursuant to Securities and Exchange
Commission Rule 17Ad-15 if shares of Common
Stock are to be issued, or Notes to be delivered,
other than to and in the name of the registered
holder.
______________________________________
Signature Guarantee
A-13
<PAGE>
Fill in for registration of shares if to
be issued, and Notes if to be delivered,
other than to and in the name of the
registered holder:
______________________________________
(Name)
______________________________________
(Street Address)
______________________________________
(City, State and Zip Code)
Please print name and address
Principal amount to be converted
(if less than all) $ __________________
_______________________________________
Social Security or Other Taxpayer
Identification Number
A-14
<PAGE>
[FORM OF OPTION TO ELECT REPAYMENT
UPON A CHANGE OF CONTROL]
To: Penn Treaty American Corporation
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from Penn Treaty American Corporation (the
"Company") as to the occurrence of a Change of Control with respect to the
Company and requests and instructs the Company to repay the entire principal
amount of this Note, or the portion thereof (which is $1,000 principal amount
or an integral multiple thereof) below designated, in accordance with the
terms of the Indenture referred to in this Note, together with accrued
interest to such date, to the registered holder hereof.
Dated: _______________________________
__________________________________
__________________________________
Signature(s)
__________________________________
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid (if
less than all) $ ________________
A-15
<PAGE>
[FORM OF ASSIGNMENT]
For value received _____________________________ hereby sell(s),
assign(s) and transfer(s) unto _________________________ (Please insert
social security or other identifying number of assignee) the within Note, and
hereby irrevocably constitutes and appoints ________________________________
attorney to transfer the said Note on the books of the Company, with full
power of substitution in the premises.
In connection with any transfer of the within Note occurring prior
to the third anniversary of the date of original issuance of such Note, the
undersigned confirms that such Note is being transferred:
[ ] To Penn Treaty American Corporation or a subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144A under the Securities Act of
1933, as amended; or
[ ] To an institutional accredited investor pursuant to and in compliance with
the Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Regulation S under the Securities Act of
1933, as amended; or
[ ] Pursuant to and in compliance with Rule 144 under the Securities Act of
1933, as amended.
Unless one of the boxes above is checked, the Trustee will refuse to
register any of the within Notes in the name of any person other than the
registered holder thereof (or hereof); provided, however, that the Trustee
may, in its sole discretion, register the transfer of such Notes if it has
received such certifications, legal opinions and/or other information as the
Company has reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, as amended.
In addition, if the transferee is an institutional accredited
investor or a purchaser who is not a U.S. person, the holder must furnish to
the Trustee (i) in the case of an institutional accredited investor, a signed
letter containing certain representations and agreements relating to the
restrictions on transfer of the security evidenced hereby in substantially
the form of Exhibit D to the Indenture and (ii) such other certifications,
legal opinions or other information as it may reasonably require to confirm
that such transfer is being made
A-17
<PAGE>
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, as amended.
Dated: __________________
_________________________
_________________________
Signature(s)
Signature(s) must be guaranteed by an
eligible Guarantor Institution (banks,
stock brokers, savings and loan associations
and credit unions) with membership in an
approved signature guarantee medallion program
pursuant to Securities and Exchange Commission
Rule 17Ad-15.
_________________________________________________
Signature Guarantee
NOTICE: The signature on the conversion notice, the option to elect
payment upon a Change of Control or the assignment must correspond
with the name as written upon the face of the Note in every particular
without alteration or enlargement or any change whatever.
A-18
<PAGE>
EXHIBIT B - FORM OF RESTRICTED GLOBAL NOTE
[FORM OF FACE OF NOTE]
No. B- $ _______________
CUSIP 707874AA1
PENN TREATY AMERICAN CORPORATION
6-1/4% Convertible Subordinated Notes Due 2003
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS RESTRICTED GLOBAL NOTE MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR
BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF
THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
RESTRICTED GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE NOTE
EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL
NOT PRIOR TO THE DATE THAT IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY AND THE LAST DATE ON
WHICH PENN TREATY AMERICAN CORPORATION (THE "COMPANY") OR ANY
"AFFILIATE"
B-1
<PAGE>
(AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE
COMPANY WAS THE OWNER OF THE NOTE (THE "RESTRICTION TERMINATION DATE")
RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON
STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY
OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO FIRST UNION NATIONAL BANK, AS TRUSTEE, A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH RULE 903 OR RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY BEFORE THE
RESTRICTION TERMINATION DATE, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO FIRST UNION NATIONAL BANK, AS
TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE (C), (D) OR
(E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO FIRST
UNION NATIONAL BANK, AS TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE RESTRICTION
TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
PENN TREATY AMERICAN CORPORATION, a corporation duly organized and
validly existing under the laws of the Commonwealth of Pennsylvania (the
"Company"), which term includes any Successor Company under the Indenture
referred to on the reverse hereof, for value received hereby promises to pay to
_______________________________, or registered assigns, the principal sum of
_________________________________Dollars (subject to adjustment as set forth in
the next paragraph hereof) on December 1, 2003, at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of New
York, or, at
B-2
<PAGE>
the option of the holder of this Restricted Global Note, at the Corporate
Trust Office of the Trustee, in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest, semi-annually on June 1 and
December 1 of each year (each an "Interest Payment Date"), commencing June 1,
1997, on said principal sum at said office or agency, in like coin or
currency, at the rate per annum specified in the title of this Restricted
Global Note, from November 26, 1996 or the most recent Interest Payment Date,
as the case may be, next preceding the date of this Restricted Global Note to
which interest has been paid or duly provided for, unless the date hereof is
a date to which interest has been paid or duly provided for, in which case
from the date of this Restricted Global Note, or unless no interest has been
paid or duly provided for on the Notes, in which case from November 26, 1996,
until payment of said principal sum has been made or duly provided for. Any
interest on any Note that is payable, but is not punctually paid or duly
provided for on said June 1 or December 1 (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Noteholder on the
relevant record date by virtue of his having been such Noteholder; and such
Defaulted Interest shall be paid by the Company, at its election in each
case, either (i) by notifying the Trustee of a special record date, the
amount of interest to be paid on such special record date and the date of
payment (not more than 25 days after receipt by the Trustee of such interest,
unless the Trustee shall consent to an earlier date) and depositing with the
Trustee an amount of money equal to the aggregate amount to be paid in
respect of such Defaulted Interest on making arrangements satisfactory to the
Trustee for such deposit or (ii) in any lawful manner not inconsistent with
the requirements of any securities exchange on which the Notes may be listed
and upon notice requested by such exchange, if, after notice to the Trustee,
the Trustee deems such manner of payment to be practicable. The interest so
payable on any June 1 or December 1 will be paid to the person in whose name
this Restricted Global Note (or one or more Predecessor Notes) is registered
at the close of business on the record date, which shall be the May 15 or
November 15 (whether or not a Business Day) next preceding such June 1 or
December 1, respectively; provided that any such interest not punctually paid
or duly provided for shall be payable as provided in the Indenture. Interest
shall be paid by check mailed to the registered holder at the registered
address of such person unless other arrangements are made in accordance with
the provisions of the Indenture.
The aggregate principal amount of this Restricted Global Note
represented hereby may from time to time be reduced or increased to reflect
exchanges of a part of this Restricted Global Note for interests in the
Regulation S Global Note or
B-3
<PAGE>
definitive Notes or exchanges of interests in the Regulation S Global Note or
definitive Notes for a part of this Restricted Global Note or conversions,
redemptions or repurchases of a part of this Restricted Global Note or
cancellations of a part of this Restricted Global Note or transfers of
interests in the Regulation S Global Note or definitive Notes in return for a
part of this Restricted Global Note or transfers of a part of this Restricted
Global Note effected by delivery of interests in the Regulation S Global Note
or definitive Notes, in each case, and in any such case, by means of
notations on the Schedule of Exchanges, Conversions, Redemptions,
Repurchases, Cancellations and Transfers on the last page hereof.
Notwithstanding any provision of this Restricted Global Note to the contrary,
(i) exchanges of a part of this Restricted Global Note for interests in the
Regulation S Global Note or definitive Notes, (ii) exchanges of interests in
the Regulation S Global Note or definitive Notes for a part of this
Restricted Global Note, (iii) conversions, redemptions or repurchases of a
part of this Restricted Global Note, (iv) cancellations of a part of this
Restricted Global Note, (v) transfers of interests in the Regulation S Global
Note or definitive Notes in return for a part of this Restricted Global Note
and (vi) transfers of a part of this Restricted Global Note effected by
delivery of interests in the Regulation S Global Note or definitive Notes may
be effected without the surrendering of this Restricted Global Note, provided
that appropriate notations on the Schedule of Exchanges, Conversions,
Redemptions, Repurchases, Cancellations and Transfers are made by the
Trustee, or the Custodian at the direction of the Trustee, to reflect the
appropriate reduction or increase, as the case may be, in the aggregate
principal amount of this Restricted Global Note resulting therefrom or as a
consequence thereof.
Reference is made to the further provisions of this Restricted
Global Note set forth on the reverse hereof, including, without limitation,
provisions giving the holder of this Restricted Global Note the right to
convert this Restricted Global Note into Common Stock of the Company (or,
under certain circumstances specified in the Indenture, into an amount of
cash as set forth in the Indenture) on the terms and subject to the
limitations referred to on the reveres hereof and as more fully specified in
the Indenture. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Restricted Global Note shall not be valid or become obligatory
for any purpose until the certificate of authentication hereon shall have
been manually signed by the Trustee or a duly authorized authenticating agent
under the Indenture.
B-4
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Restricted Global Note
to be duly executed under its corporate seal.
PENN TREATY AMERICAN CORPORATION
By: ______________________________
Name:
Title:
Attest:
___________________________
Secretary
B-5
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Notes described in the within-named Indenture.
FIRST UNION NATIONAL BANK, as Trustee
By: _________________________________
Authorized Signatory
B-6
<PAGE>
[FORM OF REVERSE OF RESTRICTED GLOBAL NOTE]
PENN TREATY AMERICAN CORPORATION
6-1/4% Convertible Subordinated Notes Due 2003
This Restricted Global Note is one of a duly authorized issue of
Notes of the Company, designated as its 6-1/4% Convertible Subordinated Notes
Due 2003 (herein called the "Notes"), limited to the aggregate principal
amount of $65,000,000 (up to $74,750,000 aggregate principal amount assuming
the full exercise of the over-allotment option granted to the initial
purchasers of the Notes) all issued or to be issued under and pursuant to an
Indenture dated as of November 26, 1996 (the "Indenture"), between the
Company and First Union National Bank, as trustee (the "Trustee"), to which
Indenture and all indentures supplemental thereto reference is hereby made
for a complete description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the holders
of the Notes. Each Note is subject to, and qualified by, all such terms as
set forth in the Indenture certain of which are summarized hereon and each
holder of a Note is referred to the corresponding provisions of the Indenture
for a complete statement of such terms. To the extent that there is any
inconsistency between the summary provisions set forth in the Notes and the
Indenture, the provisions of the Indenture shall govern. Capitalized terms
used but not defined in this Restricted Global Note shall have the meanings
ascribed to them in the Indenture.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest on all Notes may be declared, and upon said declaration shall
become, due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
The payment of principal of, premium, if any, and interest on the
Notes will, to the extent set forth in the Indenture, be subordinated in
right of payment to the prior payment in full of all Senior Indebtedness (as
defined in the Indenture). Upon any distribution to creditors of the Company
in a liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding related to the
Company or its property, in an assignment for the benefit of creditors or any
marshalling of the Company's assets and liabilities, the holders of all
Senior Indebtedness will first be entitled to receive payment in full of all
amounts due or to become due thereon before the holders of the Notes will be
entitled to receive any payment in respect of the principal of,
B-7
<PAGE>
premium, if any, or interest on the Notes (except that holders of Notes may
receive securities that are subordinated at least to the same extent as the
Notes to Senior Indebtedness and any securities issued in exchange for Senior
Indebtedness).
The Company also may not make any payment upon or in respect of the
Notes (except in such subordinated securities) and may not acquire from the
Trustee or the holder of any Note for cash or property (other than securities
subordinated to at least the same extent as the Note to (i) Senior
Indebtedness and (ii) any securities issued in exchange for Senior
Indebtedness) until all Senior Indebtedness has been paid in full if (a) a
default in the payment of the principal of, premium, if any, or interest on
Senior Indebtedness occurs and is continuing beyond any applicable period of
grace or (b) any other default occurs and is continuing with respect to
Senior Indebtedness that permits holders of the Senior Indebtedness as to
which such default relates to accelerate its maturity and the Trustee
receives a notice of such default (a "Payment Blockage Notice") from the
representative or representatives of holders of at least a majority in
principal amount of Senior Indebtedness then outstanding. Payments on the
Notes may and shall be resumed (i) in the case of a Payment Default, upon the
date on which such default is cured or waived, or (ii) in the case of a
Nonpayment Default, 179 days after the date on which the applicable Payment
Blockage Notice is received, unless the maturity of any Senior Indebtedness
has been accelerated. No new period of payment blockage may be commenced
within 360 days after the receipt by the Trustee of any prior Payment
Blockage Notice. No default, other than a Nonpayment Default, that existed
or was continuing on the date of delivery of any Payment Blockage Notice to
the Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice unless such default shall have been cured or waived for a period of
not less than 180 days.
In the event that the Trustee (or paying agent if other than the
Trustee) or any holder of the Notes receives any payment of principal or
interest with respect to the Notes at a time when such payment is prohibited
under the Indenture, such payment shall be held in trust for the benefit of,
and immediately shall be paid over and delivered to, the holders of Senior
Indebtedness or their representative as their respective interests may
appear. After all Senior Indebtedness is paid in full and until the Notes are
paid in full, the holders of the Notes shall be subrogated (equally and
ratably with all other Indebtedness pari passu with the Notes) to the rights
of holders of Senior Indebtedness to receive distributions applicable to
Senior Indebtedness to the extent that distributions otherwise payable to the
holders of the Notes have been applied to the payment of Senior Indebtedness.
B-8
<PAGE>
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, evidenced as
in the Indenture provided, to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of any supplemental indenture or modifying in any manner
the rights of the holders of the Notes; provided that no such supplemental
indenture shall (i) extend the fixed maturity of any Note, or reduce the rate
or extend the time of payment of interest thereon, or reduce the principal
amount thereof or premium, if any, thereon, or reduce any amount payable on
redemption thereof, alter the obligation of the Company to repurchase the
Notes at the option of the holders upon the occurrence of a Change of
Control, or impair or affect the right of any Noteholder to institute suit
for the payment thereof, or make the principal thereof or interest or
premium, if any, thereon payable in any coin or currency other than that
provided in the Notes, modify the subordination provisions in a manner
adverse to the holders of the Notes, or impair the right to convert the Notes
into Common Stock subject to the terms set forth in the Indenture without the
consent of the holder of each Note so affected or (ii) reduce the aforesaid
percentage of Notes, the holders of which are required to consent to any such
supplemental indenture, without the consent of the holders of all Notes then
outstanding. The Company and the Trustee may amend or supplement the
Indenture without notice to or consent of any holder of Notes in certain
events specified in the Indenture. It is also provided in the Indenture
that, prior to any declaration accelerating the maturity of the Notes, the
holders of a majority in aggregate principal amount of the Notes at the time
outstanding may on behalf of the holders of all of the Notes waive any past
default or Event of Default under the Indenture and its consequences except a
default in the payment of interest or any premium on or the principal of any
of the Notes, a failure by the Company to convert any Notes into Common Stock
of the Company, unless otherwise excused pursuant to the terms of the
Indenture, or a default in respect of a covenant or provision of the
Indenture that under Article X thereof cannot be modified or amended without
the consent of the holders of all Notes then outstanding. Any such consent
or waiver by the holder of this Restricted Global Note (unless revoked as
provided in the Indenture) shall be conclusive and binding upon such holder
and upon all future holders and owners of this Restricted Global Note and any
Notes that may be issued in exchange or substitution hereof, irrespective of
whether or not any notation thereof is made upon this Restricted Global Note
or such other Notes.
No reference herein to the Indenture and no provision of this
Restricted Global Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and
B-9
<PAGE>
unconditional, to pay the principal of and any premium and interest on this
Restricted Global Note at the place, at the respective times, at the rate and
in the coin or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a 360-day
year composed of twelve 30-day months.
The Notes are issuable in registered form without coupons in
denominations of $1,000 principal amount and integral multiples thereof. At
the office or agency of the Company referred to on the face hereof, and in
the manner and subject to the limitations provided in the Indenture, without
payment of any service charge but with payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with
any registration or exchange of Notes, Notes may be exchanged for a like
aggregate principal amount of Notes of other authorized denominations.
The Notes are not redeemable at the option of the Company prior to
December 3, 1999. At any time on or after that date, the Notes may be
redeemed at the Company's option, upon notice as set forth in the Indenture,
in whole at any time or in part from time to time, at the following prices
(expressed in percentages of the principal amount), together with accrued
interest to the date fixed for redemption if redeemed during the 12-month
period beginning:
Date Redemption Price
---- ----------------
December 3, 1999 103.13%
December 1, 2000 102.08%
December 1, 2001 101.04%
and 100% on or after December 1, 2002; provided that if the date fixed for
redemption is a date on or after the record date and on or before the next
following Interest Payment Date, then the interest payable on such date shall
be paid to the holder of record on the next preceding May 15 or November 15,
respectively.
If a Change of Control (as defined in the Indenture) shall occur at
any time, then each holder of Notes shall have the right to require that the
Company repurchase such holder's Notes in whole or in part in integral
multiples of $1,000, at a purchase price in cash in an amount equal to 101%
of the principal amount of such Notes, plus accrued and unpaid interest, if
any, to the repurchase date pursuant to an offer to be made by the Company
and in accordance with the procedures set forth in the Indenture.
B-10
<PAGE>
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time after 90 days following the latest date of
original issuance of the Notes and prior to the close of business on
November 28, 2003, subject to prior redemption or repurchase, or, as to all or
any portion hereof called for redemption, prior to the close of business one
business day before the date fixed for redemption (unless the Company shall
default in payment due upon redemption thereof), to convert the principal hereof
or any portion of such principal that is $1,000 or an integral multiple thereof,
into that number of fully paid and non-assessable shares of the Company's Common
Stock, as said shares shall be constituted at the date of conversion, obtained
by dividing the principal amount of this Restricted Global Note or portion
thereof to be converted by the conversion price of $28.44 per share or such
conversion price as adjusted from time to time as provided in the Indenture,
upon surrender of this Restricted Global Note, together with a conversion notice
as provided in the Indenture, to the Company at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of New
York, or at the option of such holder, the Corporate Trust Office of the
Trustee, and, unless the shares issuable on conversion are to be issued in the
same name as this Restricted Global Note, duly endorsed by, or accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the holder or by his duly authorized attorney.
Except as described in the Indenture, no adjustment will be made on
conversion of any Notes for interest accrued thereon or for dividends paid on
any Common Stock issued. A Holder of Notes at the close of business on a record
date will be entitled to receive the interest payable on such Notes on the
corresponding interest payment date. However, Notes surrendered for conversion
during the period from the close of business on a record date to the opening of
business on the next succeeding interest payment date must be accompanied by
funds equal to the interest payable on such succeeding interest payment date on
the principal amount so converted (unless such Note or portion thereof being
converted is called for redemption on a redemption date during the period from
the close of business on or after any record date to the close of business on
the business day following the corresponding interest payment date). The
interest payment with respect to a Note called for redemption on a date between
the close of business on any record date for the payment of interest to the
close of business on the business day following the corresponding interest
payment date and surrendered for conversion during that period will be payable
on the corresponding interest payment date to the registered Holder at the close
of business on that record date (notwithstanding the conversion of such Note
before the corresponding interest payment date). A Holder of Notes who elects
to convert during that
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<PAGE>
period need not include funds equal to the interest paid. The Company is not
required to issue fractional shares of Common Stock upon conversion of Notes
and, in lieu thereof, will pay a cash adjustment based upon the closing price
of the Common Stock on the last business day prior to the date of conversion.
In the event a holder desires to convert all or any portion of its
Notes into shares of Common Stock and the Company does not have authorized a
sufficient number of shares of Common Stock for such conversion, in lieu of
delivering shares of Common Stock (or other securities into which the Notes are
then convertible) upon conversion of that portion of such holder's Notes for
which there is an insufficient number of shares of Common Stock (the "Cash
Equivalent Notes") pursuant to the provisions of the Indenture, the Company will
pay to the holder converting the Cash Equivalent Notes who properly exercises
the conversion privilege, as set forth in the Indenture, an amount in cash equal
to the Market Cash Conversion Price (as defined in the Indenture) of the shares
of Common Stock into which such Cash Equivalent Notes are then convertible.
Upon due presentment for registration of transfer of this Restricted
Global Note at the office or agency of the Company in the Borough of Manhattan,
The City of New York, or at the option of the holder of this Restricted Global
Note, at the Corporate Trust Office of the Trustee, a new Note or Notes of
authorized denominations for an equal aggregate principal amount will be issued
to the transferee in exchange thereof, subject to the conditions and limitations
provided in the Indenture, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Note registrar may deem and treat the registered
holder hereof as the absolute owner of this Restricted Global Note (whether or
not this Restricted Global Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon made by anyone other than the
Company or any Note registrar), for the purpose of receiving payment hereof, or
on account hereof, for the conversion hereof and for all other purposes, and
neither the Company nor the Trustee nor any other authenticating agent nor any
paying agent nor any other conversion agent nor any Note registrar shall be
affected by any notice to the contrary. All payments made to or upon the order
of such registered holder shall, to the extent of the sum or sums paid, satisfy
and discharge liability for monies payable on this Restricted Global Note.
No recourse for the payment of the principal of or any premium or
interest on this Restricted Global Note, or for any claim based hereon or
otherwise in respect hereof, and no
B-12
<PAGE>
recourse under or upon any obligation, covenant or agreement of the Company
in the Indenture or any indenture supplemental thereto or in any Note, or
because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, shareholder, officer or director, as such, past,
present or future, of the Company or of any Successor Company, either
directly or through the Company or any Successor Company, whether by virtue
of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
B-13
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face
of this Restricted Global Note, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the ________________ Custodian
entireties (Cust)
JT TEN - as joint tenants with ________________ under
right of survivorship (Minor)
and not as tenants in
common
Uniform Gifts to
Minors Act
___________________
(State)
Additional abbreviations may also be used
though not in the above list.
B-14
<PAGE>
[FORM OF CONVERSION NOTICE]
CONVERSION NOTICE
To: Penn Treaty American Corporation
The undersigned registered owner of this Restricted Global Note hereby
irrevocably exercises the option to convert this Restricted Global Note, or
the portion hereof (which is $1,000 principal amount or an integral
multiple thereof) below designated, into shares of Common Stock, par value
$.10 per share of the Company, in accordance with the terms of the
Indenture referred to in this Restricted Global Note, and directs that the
shares issuable and deliverable upon such conversion, together with any
check in payment for fractional shares and any Notes representing any
unconverted principal amount hereof, be issued and delivered to the
registered holder hereof unless a different name has been indicated below.
If shares or any portion of this Restricted Global Note not converted are
to be issued in the name of a person other than the undersigned, the
undersigned will check the appropriate box below and pay all transfer taxes
payable with respect thereto. Any amount required to be paid to the
undersigned on account of interest accompanies this Restricted Global Note.
Dated:____________________________ Contact Person: ________________________
Fax Number:_____________________________
__________________________________ Telephone Number:_______________________
__________________________________
Signature(s)
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers,
savings and loan associations and credit
unions) with membership in an approved
signature guarantee medallion program pursuant
to Securities and Exchange Commission Rule
17Ad-15 if shares of Common Stock are to be
issued, or Notes to be delivered, other than to
and in the name of the registered holder.
________________________________________
Signature Guarantee
B-15
<PAGE>
Fill in for registration of shares if to be
issued, and Notes if to be delivered, other
than to and in the name of the registered
holder:
_______________________________________
(Name)
_______________________________________
(Street Address)
_______________________________________
(City, State and Zip Code)
Please print name and address
Principal amount to be converted
(if less than all)
$____________________
________________________________
Social Security or Other Taxpayer
Identification Number
B-16
<PAGE>
[FORM OF OPTION TO ELECT REPAYMENT
UPON A CHANGE OF CONTROL]
To: Penn Treaty American Corporation
The undersigned registered owner of this Restricted Global Note hereby
irrevocably acknowledges receipt of a notice from Penn Treaty American
Corporation (the "Company") as to the occurrence of a Change of Control with
respect to the Company and requests and instructs the Company to repay the
entire principal amount of this Restricted Global Note, or the portion thereof
(which is $1,000 principal amount or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Restricted Global Note, together with accrued interest to such date, to the
registered holder hereof.
Dated:__________________
______________________________________________
______________________________________________
Signature(s)
______________________________________________
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid (if less than
all): $__________________
B-17
<PAGE>
[FORM OF ASSIGNMENT]
For value received _______________________________ hereby sell(s),
assign(s) and transfer(s) unto _________________ (please insert social security
or other identifying number of assignee) the within Note, and hereby irrevocably
constitutes and appoints ____________________________ attorney to transfer the
said Note on the books of the Company, with full power of substitution in the
premises.
In connection with any transfer of the within Note occurring prior to
the third anniversary of the date of original issuance of such Note, the
undersigned confirms that such Note is being transferred:
[ ] To Penn Treaty American Corporation or a subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; or
[ ] To an institutional accredited investor pursuant to and in compliance
with the Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Regulation S under the Securities
Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Rule 144 under the Securities Act
of 1933, as amended.
Unless one of the boxes above is checked, the Trustee will refuse to
register any of the within Notes in the name of any person other than the
registered holder thereof (or hereof); provided, however, that the Trustee may,
in its sole discretion, register the transfer of such Notes if it has received
such certifications, legal opinions and/or other information as the Company has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
In addition, if the transferee is an institutional accredited investor
or a purchaser who is not a U.S. person, the holder must furnish to the Trustee
(i) in the case of an institutional accredited investor, a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of the security evidenced hereby in substantially the form of
Exhibit D to the Indenture, and (ii) such other certifications, legal opinions
or other information as
B-18
<PAGE>
it may reasonably require to confirm that such transfer is being made pursuant
to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
Dated:__________________________
________________________________
________________________________
Signature(s)
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers,
savings and loan associations and credit unions)
with membership in an approved signature
guarantee medallion program pursuant to
Securities and Exchange Commission Rule 17Ad-15.
______________________________________
Signature Guarantee
NOTICE: The signature on the conversion notice, the option to elect payment
upon a Change of Control or the assignment must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.
B-19
<PAGE>
SCHEDULE A
SCHEDULE OF EXCHANGES, CONVERSIONS,
REDEMPTIONS, REPURCHASES, CANCELLATIONS AND TRANSFERS
The initial principal amount of this Restricted Global Note is U.S.
$_____________. The following additions to principal, redemptions, repurchases,
exchanges of a part of this Restricted Global Note for an interest in the
Regulation S Global Note, definitive Notes and conversions into Common Stock or
cash have been made:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Principal
Amount Re-
deemed,
Repurchased
Principal Exchanged for
Amount Added Interest in
on the Regula-
Date of Addi- Exchange of tion S Remaining
tion to Prin- Interest in Global Note Principal
cipal, Re- the Regula- or Definitive Amount Out-
demption, tion S Global Notes or Con- standing Notation
Repurchase, Note or De- verted into Following Made by or
Exchange or finitive Common Stock such Transac- on behalf of
Conversion Notes or Cash tion the Trustee
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
B-20
<PAGE>
EXHIBIT C - FORM OF REGULATION S GLOBAL NOTE
[FORM OF FACE OF NOTE]
No. C- $_________________
CUSIP U70888AA7
PENN TREATY AMERICAN CORPORATION
6-1/4% Convertible Subordinated Notes Due 2003
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS REGULATION S GLOBAL NOTE MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR
BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF
THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
REGULATION S GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A) (1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE NOTE
EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL
NOT PRIOR TO THE DATE THAT IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY AND THE LAST DATE ON
WHICH PENN TREATY
C-1
<PAGE>
AMERICAN CORPORATION (THE "COMPANY") OR ANY "AFFILIATE" (AS DEFINED
IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE
OWNER OF THE NOTE (THE "RESTRICTION TERMINATION DATE") RESELL
OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON
STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY
OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO FIRST UNION NATIONAL BANK, AS TRUSTEE, A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH RULE 903 OR RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY BEFORE THE
RESTRICTION TERMINATION DATE, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO FIRST UNION NATIONAL BANK, AS
TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE (C), (D) OR
(E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO FIRST
UNION NATIONAL BANK, AS TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE RESTRICTION
TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
PENN TREATY AMERICAN CORPORATION, a corporation duly organized and
validly existing under the laws of the Commonwealth of Pennsylvania (the
"Company"), which term includes any Successor Company under the Indenture
referred to on the reverse hereof, for value received hereby promises to pay to
_________________________________________
_________________________________________, or its registered assigns, the
principal sum of _______________________________ Dollars (subject to adjustment
as set forth in the next paragraph
C-2
<PAGE>
hereof) on December 1, 2003, at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New
York, or, at the option of the holder of this Regulation S Global Note, at
the Corporate Trust Office of the Trustee, in such coin or currency of the
United States of America as at the time of payment shall be legal tender for
the payment of public and private debts, and to pay interest, semi-annually
on June 1 and December 1 of each year (each an "Interest Payment Date"),
commencing June 1, 1997, on said principal sum at said office or agency, in
like coin or currency, at the rate per annum specified in the title of this
Regulation S Global Note, from November 26, 1996 or the most recent Interest
Payment Date, as the case may be, next preceding the date of this Regulation
S Global Note to which interest has been paid or duly provided for, unless
the date hereof is a date to which interest has been paid or duly provided
for, in which case from the date of this Regulation S Global Note, or unless
no interest has been paid or duly provided for on the Notes, in which case
from November 26, 1996, until payment of said principal sum has been made or
duly provided for. Any interest on any Note that is payable, but is not
punctually paid or duly provided for on said June 1 or December 1 (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
Noteholder on the relevant record date by virtue of his having been such
Noteholder; and such Defaulted Interest shall be paid by the Company, at its
election in each case, either (i) by notifying the Trustee of a special
record date, the amount of interest to be paid on such special record date
and the date of payment (not more than 25 days after receipt by the Trustee
of such interest, unless the Trustee shall consent to an earlier date) and
depositing with the Trustee an amount of money equal to the aggregate amount
to be paid in respect of such Defaulted Interest on making arrangements
satisfactory to the Trustee for such deposit or (ii) in any lawful manner not
inconsistent with the requirements of any securities exchange on which the
Notes may be listed and upon notice requested by such exchange, if, after
notice to the Trustee, the Trustee deems such manner of payment to be
practicable. The interest so payable on any June 1 or December 1 will be
paid to the person in whose name this Regulation S Global Note (or one or
more Predecessor Notes) is registered at the close of business on the record
date, which shall be the May 15 or November 15 (whether or not a Business
Day) next preceding such June 1 or December 1, respectively; provided that
any such interest not punctually paid or duly provided for shall be payable
as provided in the Indenture. Interest shall be paid by check mailed to the
registered holder at the registered address of such person unless other
arrangements are made in accordance with the provisions of the Indenture.
The aggregate principal amount of this Regulation S Global Note
represented hereby may from time to time be reduced
C-3
<PAGE>
or increased to reflect exchanges of a part of this Regulation S Global Note
for interests in the Restricted Global Note or definitive Notes or exchanges
of interests in the Restricted Global Note or definitive Notes for a part of
this Regulation S Global Note or conversions, redemptions or repurchases of a
part of this Regulation S Global Note or cancellations of a part of this
Regulation S Global Note or transfers of interests in the Restricted Global
Note or definitive Notes in return for a part of this Regulation S Global
Note or transfers of a part of this Regulation S Global Note effected by
delivery of interests in the Restricted Global Note or definitive Notes, in
each case, and in any such case, by means of notations on the Schedule of
Exchanges, Conversions, Redemptions, Repurchases, Cancellations and Transfers
on the last page hereof. Notwithstanding any provision of this Regulation S
Global Note to the contrary, (i) exchanges of a part of this Regulation S
Global Note for interests in the Restricted Global Note or definitive Notes,
(ii) exchanges of interests in the Restricted Global Note or definitive Notes
for a part of this Regulation S Global Note, (iii) conversions, redemptions
or repurchases of a part of this Regulation S Global Note, (iv) cancellations
of a part of this Regulation S Global Note, (v) transfers of interests in the
Restricted Global Note or definitive Notes in return for a part of this
Regulation S Global Note and (vi) transfers of a part of this Regulation S
Global Note effected by delivery of interests in the Restricted Global Note
or definitive Notes may be effected without the surrendering of this
Regulation S Global Note, provided that appropriate notations on the Schedule
of Exchanges, Conversions, Redemptions, Repurchases, Cancellations and
Transfers are made by the Trustee, or the Custodian at the direction of the
Trustee, to reflect the appropriate reduction or increase, as the case may
be, in the aggregate principal amount of this Regulation S Global Note
resulting therefrom or as a consequence thereof.
Reference is made to the further provisions of this Regulation S
Global Note set forth on the reverse hereof, including, without limitation,
provisions giving the holder of this Regulation S Global Note the right to
convert this Regulation S Global Note into Common Stock of the Company (or,
under certain circumstances specified in the Indenture, into an amount of cash
as set forth in the Indenture) on the terms and subject to the limitations
referred to on the reverse hereof and as more fully specified in the Indenture.
Such further provisions shall for all purposes have the same effect as though
fully set forth at this place.
This Regulation S Global Note shall not be valid or become obligatory
for any purpose until the certificate of authentication hereon shall have been
manually signed by the
C-4
<PAGE>
Trustee or a duly authorized authenticating agent under the Indenture.
C-5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Regulation S Global
Note to be duly executed under its corporate seal.
PENN TREATY AMERICAN CORPORATION
By: _____________________________
Name:
Title:
Attest:
________________________
Secretary
C-6
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Notes described in the within-named Indenture.
FIRST UNION NATIONAL BANK, as Trustee
By: _____________________________
Authorized Signatory
C-7
<PAGE>
[FORM OF REVERSE OF REGULATION S GLOBAL NOTE]
PENN TREATY AMERICAN CORPORATION
6-1/4% Convertible Subordinated Notes Due 2003
This Regulation S Global Note is one of a duly authorized issue of
Notes of the Company, designated as its 6-1/4% Convertible Subordinated Notes
Due 2003 (herein called the "Notes"), limited to the aggregate principal amount
of $65,000,000 (up to $74,750,000 aggregate principal amount assuming the full
exercise of the over-allotment option granted to the initial purchasers of the
Notes) all issued or to be issued under and pursuant to an Indenture dated as of
November 26, 1996 (the "Indenture"), between the Company and First Union
National Bank, as trustee (the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a complete description of the
rights, limitations of rights, obligations, duties and immunities thereunder of
the Trustee, the Company and the holders of the Notes. Each Note is subject to,
and qualified by, all such terms as set forth in the Indenture certain of which
are summarized hereon and each holder of a Note is referred to the corresponding
provisions of the Indenture for a complete statement of such terms. To the
extent that there is any inconsistency between the summary provisions set forth
in the Notes and the Indenture, the provisions of the Indenture shall govern.
Capitalized terms used but not defined in this Regulation S Global Note shall
have the meanings ascribed to them in the Indenture.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest on all Notes may be declared, and upon said declaration shall become,
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The payment of principal of, premium, if any, and interest on the
Notes will, to the extent set forth in the Indenture, be subordinated in right
of payment to the prior payment in full of all Senior Indebtedness (as defined
in the Indenture). Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding related to the Company or its
property, in an assignment for the benefit of creditors or any marshalling of
the Company's assets and liabilities, the holders of all Senior Indebtedness
will first be entitled to receive payment in full of all amounts due or to
become due thereon before the holders of the Notes will be entitled to receive
any payment in respect of the principal of,
C-8
<PAGE>
premium, if any, or interest on the Notes (except that holders of Notes may
receive securities that are subordinated at least to the same extent as the
Notes to Senior Indebtedness and any securities issued in exchange for Senior
Indebtedness).
The Company also may not make any payment upon or in respect of the
Notes (except in such subordinated securities) and may not acquire from the
Trustee or the holder of any Note for cash or property (other than securities
subordinated to at least the same extent as the Note to (i) Senior Indebtedness
and (ii) any securities issued in exchange for Senior Indebtedness) until all
Senior Indebtedness has been paid in full if (a) a default in the payment of the
principal of, premium, if any, or interest on Senior Indebtedness occurs and is
continuing beyond any applicable period of grace or (b) any other default occurs
and is continuing with respect to Senior Indebtedness that permits holders of
the Senior Indebtedness as to which such default relates to accelerate its
maturity and the Trustee receives a notice of such default (a "Payment Blockage
Notice") from the representative or representatives of holders of at least a
majority in principal amount of Senior Indebtedness then outstanding. Payments
on the Notes may and shall be resumed (i) in the case of a Payment Default, upon
the date on which such default is cured or waived, or (ii) in the case of a
Nonpayment Default, 179 days after the date on which the applicable Payment
Blockage Notice is received, unless the maturity of any Senior Indebtedness has
been accelerated. No new period of payment blockage may be commenced within 360
days after the receipt by the Trustee of any prior Payment Blockage Notice. No
default, other than a Nonpayment Default, that existed or was continuing on the
date of delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice unless such default
shall have been cured or waived for a period of not less than 180 days.
In the event that the Trustee (or paying agent if other than the
Trustee) or any holder of the Notes receives any payment of principal or
interest with respect to the Notes at a time when such payment is prohibited
under the Indenture, such payment shall be held in trust for the benefit of, and
immediately shall be paid over and delivered to, the holders of Senior
Indebtedness or their representative as their respective interests may appear.
After all Senior Indebtedness is paid in full and until the Notes are paid in
full, the holders of the Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to the holders of the Notes have
been applied to the payment of Senior Indebtedness.
C-9
<PAGE>
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, evidenced as in
the Indenture provided, to execute supplemental indentures adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Indenture or of any supplemental indenture or modifying in any manner the rights
of the holders of the Notes; provided that no such supplemental indenture shall
(i) extend the fixed maturity of any Note, or reduce the rate or extend the time
of payment of interest thereon, or reduce the principal amount thereof or
premium, if any, thereon, or reduce any amount payable on redemption thereof,
alter the obligation of the Company to repurchase the Notes at the option of the
holders upon the occurrence of a Change of Control, or impair or affect the
right of any Noteholder to institute suit for the payment thereof, or make the
principal thereof or interest or premium, if any, thereon payable in any coin or
currency other than that provided in the Notes, modify the subordination
provisions in a manner adverse to the holders of the Notes, or impair the right
to convert the Notes into Common Stock subject to the terms set forth in the
Indenture without the consent of the holder of each Note so affected or (ii)
reduce the aforesaid percentage of Notes, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of all Notes then outstanding. The Company and the Trustee may amend or
supplement the Indenture without notice to or consent of any holder of Notes in
certain events specified in the Indenture. It is also provided in the Indenture
that, prior to any declaration accelerating the maturity of the Notes, the
holders of a majority in aggregate principal amount of the Notes at the time
outstanding may on behalf of the holders of all of the Notes waive any past
default or Event of Default under the Indenture and its consequences except a
default in the payment of interest or any premium on or the principal of any of
the Notes, a failure by the Company to convert any Notes into Common Stock of
the Company, unless otherwise excused pursuant to the terms of the Indenture, or
a default in respect of a covenant or provision of the Indenture that under
Article X thereof cannot be modified or amended without the consent of the
holders of all Notes then outstanding. Any such consent or waiver by the holder
of this Regulation S Global Note (unless revoked as provided in the Indenture)
shall be conclusive and binding upon such holder and upon all future holders and
owners of this Regulation S Global Note and any Notes that may be issued in
exchange or substitution hereof, irrespective of whether or not any notation
thereof is made upon this Regulation S Global Note or such other Notes.
No reference herein to the Indenture and no provision of this
Regulation S Global Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and
C-10
<PAGE>
unconditional, to pay the principal of and any premium and interest on this
Regulation S Global Note at the place, at the respective times, at the rate and
in the coin or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a 360-day year
composed of twelve 30-day months.
The Notes are issuable in registered form without coupons in
denominations of $1,000 principal amount and integral multiples thereof. At the
office or agency of the Company referred to on the face hereof, and in the
manner and subject to the limitations provided in the Indenture, without payment
of any service charge but with payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any
registration or exchange of Notes, Notes may be exchanged for a like aggregate
principal amount of Notes of other authorized denominations.
The Notes are not redeemable at the option of the Company prior to
December 3, 1999. At any time on or after that date, the Notes may be redeemed
at the Company's option, upon notice as set forth in the Indenture, in whole at
any time or in part from time to time, at the following prices (expressed in
percentages of the principal amount), together with accrued interest to the date
fixed for redemption if redeemed during the 12-month period beginning:
Date Redemption Price
---- ----------------
December 3, 1999 103.13%
December 1, 2000 102.08%
December 1, 2001 101.04%
and 100% on or after December 1, 2002; provided that if the date fixed for
redemption is a date on or after the record date and on or before the next
following Interest Payment Date, then the interest payable on such date shall be
paid to the holder of record on the next preceding May 15 or November 15,
respectively.
If a Change of Control (as defined in the Indenture) shall occur at
any time, then each holder of Notes shall have the right to require that the
Company repurchase such holder's Notes in whole or in part in integral multiples
of $1,000, at a purchase price in cash in an amount equal to 101% of the
principal amount of such Notes, plus accrued and unpaid interest, if any, to the
repurchase date pursuant to an offer to be made by the Company and in accordance
with the procedures set forth in the Indenture.
C-11
<PAGE>
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time after 90 days following the latest date of
original issuance of the Notes and prior to the close of business on November
28, 2003, subject to prior redemption or repurchase, or, as to all or any
portion hereof called for redemption, prior to the close of business one
business day before the date fixed for redemption (unless the Company shall
default in payment due upon redemption thereof), to convert the principal hereof
or any portion of such principal that is $1,000 or an integral multiple thereof,
into that number of fully paid and non-assessable shares of the Company's Common
Stock, as said shares shall be constituted at the date of conversion, obtained
by dividing the principal amount of this Regulation S Global Note or portion
thereof to be converted by the conversion price of $28.44 per share or such
conversion price as adjusted from time to time as provided in the Indenture,
upon surrender of this Regulation S Global Note, together with a conversion
notice as provided in the Indenture, to the Company at the office or agency of
the Company maintained for that purpose in the Borough of Manhattan, The City of
New York, or at the option of such holder, the Corporate Trust Office of the
Trustee, and, unless the shares issuable on conversion are to be issued in the
same name as this Regulation S Global Note, duly endorsed by, or accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the holder or by his duly authorized attorney.
Except as described in the Indenture, no adjustment will be made on
conversion of any Notes for interest accrued thereon or for dividends paid on
any Common Stock issued. A Holder of Notes at the close of business on a record
date will be entitled to receive the interest payable on such Notes on the
corresponding interest payment date. However, Notes surrendered for conversion
during the period from the close of business on a record date to the opening of
business on the next succeeding interest payment date must be accompanied by
funds equal to the interest payable on such succeeding interest payment date on
the principal amount so converted (unless such Note or portion thereof being
converted is called for redemption on a redemption date during the period from
the close of business on or after any record date to the close of business on
the business day following the corresponding interest payment date). The
interest payment with respect to a Note called for redemption on a date between
the close of business on any record date for the payment of interest to the
close of business on the business day following the corresponding interest
payment date and surrendered for conversion during that period will be payable
on the corresponding interest payment date to the registered Holder at the close
of business on that record date (notwithstanding the conversion of such Note
before the corresponding interest payment date). A Holder of Notes who elects
to convert during that
C-12
<PAGE>
period need not include funds equal to the interest paid. The Company is not
required to issue fractional shares of Common Stock upon conversion of Notes
and, in lieu thereof, will pay a cash adjustment based upon the closing price
of the Common Stock on the last business day prior to the date of conversion.
In the event a holder desires to convert all or any portion of its
Notes into shares of Common Stock and the Company does not have authorized a
sufficient number of shares of Common Stock for such conversion, in lieu of
delivering shares of Common Stock (or other securities into which the Notes are
then convertible) upon conversion of that portion of such holder's Notes for
which there is an insufficient number of shares of Common Stock (the "Cash
Equivalent Notes") pursuant to the provisions of the Indenture, the Company will
pay to the holder converting the Cash Equivalent Notes who properly exercises
the conversion privilege, as set forth in the Indenture, an amount in cash equal
to the Market Cash Conversion Price (as defined in the Indenture) of the shares
of Common Stock into which such Cash Equivalent Notes are then convertible.
Upon due presentment for registration of transfer of this Regulation S
Global Note at the office or agency of the Company in the Borough of Manhattan,
The City of New York, or at the option of the holder of this Regulation S Global
Note, at the Corporate Trust Office of the Trustee, a new Note or Notes of
authorized denominations for an equal aggregate principal amount will be issued
to the transferee in exchange thereof, subject to the conditions and limitations
provided in the Indenture, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Note registrar may deem and treat the registered
holder hereof as the absolute owner of this Regulation S Global Note (whether or
not this Regulation S Global Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon made by anyone other than the
Company or any Note registrar), for the purpose of receiving payment hereof, or
on account hereof, for the conversion hereof and for all other purposes, and
neither the Company nor the Trustee nor any other authenticating agent nor any
paying agent nor any other conversion agent nor any Note registrar shall be
affected by any notice to the contrary. All payments made to or upon the order
of such registered holder shall, to the extent of the sum or sums paid, satisfy
and discharge liability for monies payable on this Regulation S Global Note.
No recourse for the payment of the principal of or any premium or
interest on this Regulation S Global Note, or for any claim based hereon or
otherwise in respect hereof, and no
C-13
<PAGE>
recourse under or upon any obligation, covenant or agreement of the Company in
the Indenture or any indenture supplemental thereto or in any Note, or because
of the creation of any indebtedness represented thereby, shall be had against
any incorporator, shareholder, officer or director, as such, past, present or
future, of the Company or of any Successor Company, either directly or through
the Company or any Successor Company, whether by virtue of any constitution,
statute or rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of
the consideration for the issue hereof, expressly waived and released.
C-14
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face
of this Regulation S Global Note, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the __________________ Custodian
entireties (Cust)
JT TEN - as joint tenants with __________________ under
right of survivorship (Minor)
and not as tenants in
common
Uniform Gifts to
Minors Act
___________________
(State)
Additional abbreviations may also be used
though not in the above list.
C-15
<PAGE>
[FORM OF CONVERSION NOTICE]
CONVERSION NOTICE
To: Penn Treaty American Corporation
The undersigned registered owner of this Regulation S Global Note
hereby irrevocably exercises the option to convert this Regulation S Global
Note, or the portion hereof (which is $1,000 principal amount or an integral
multiple thereof) below designated, into shares of Common Stock, par value $.10
per share of the Company, in accordance with the terms of the Indenture referred
to in this Regulation S Global Note, and directs that the shares issuable and
deliverable upon such conversion, together with any check in payment for
fractional shares and any Notes representing any unconverted principal amount
hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares or any portion of this
Regulation S Global Note not converted are to be issued in the name of a person
other than the undersigned, the undersigned will check the appropriate box below
and pay all transfer taxes payable with respect thereto. Any amount required to
be paid to the undersigned on account of interest accompanies this Regulation S
Global Note.
Dated:_______________________ Contact Person: ______________________
Fax Number:___________________________
_____________________________ Telephone Number:_____________________
_____________________________
Signature(s)
Signature(s) must be guaranteed by an eligible Guarantor Institution (banks,
stock brokers, savings and loan associations and credit unions) with membership
in an approved signature guarantee medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or
Notes to be delivered, other than to and in the name of the registered holder.
_______________________________________
Signature Guarantee
C-16
<PAGE>
Fill in for registration of shares if to
be issued, and Notes if to be delivered,
other than to and in the name of the
registered holder:
_______________________________________
(Name)
_______________________________________
(Street Address)
_______________________________________
(City, State and Zip Code)
Please print name and address
Principal amount to be converted
(if less than all) $
_________________________________
Social Security or Other Taxpayer
Identification Number
C-17
<PAGE>
[FORM OF OPTION TO ELECT REPAYMENT
UPON A CHANGE OF CONTROL]
To: Penn Treaty American Corporation
The undersigned registered owner of this Regulation S Global Note
hereby irrevocably acknowledges receipt of a notice from Penn Treaty American
Corporation (the "Company") as to the occurrence of a Change of Control with
respect to the Company and requests and instructs the Company to repay the
entire principal amount of this Regulation S Global Note, or the portion thereof
(which is $1,000 principal amount or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Regulation S Global Note, together with accrued interest to such date, to the
registered holder hereof.
Dated:_______________
_______________________________________
_______________________________________
Signature(s)
_______________________________________
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid (if
less than all): $_____________________
C-18
<PAGE>
[FORM OF ASSIGNMENT]
For value received __________________________________ hereby sell(s),
assign(s) and transfer(s) unto _______________________ (please insert social
security or other identifying number of assignee) the within Note, and hereby
irrevocably constitutes and appoints ______________________________ attorney to
transfer the said Note on the books of the Company, with full power of
substitution in the premises.
In connection with any transfer of the within Note occurring prior to
the third anniversary of the date of original issuance of such Note, the
undersigned confirms that such Note is being transferred:
[ ] To Penn Treaty American Corporation or a subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; or
[ ] To an institutional accredited investor pursuant to and in compliance
with the Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Regulation S under the Securities
Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Rule 144 under the Securities Act
of 1933, as amended.
Unless one of the boxes above is checked, the Trustee will refuse to
register any of the within Notes in the name of any person other than the
registered holder thereof (or hereof); provided, however, that the Trustee may,
in its sole discretion, register the transfer of such Notes if it has received
such certifications, legal opinions and/or other information as the Company has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
In addition, if the transferee is an institutional accredited investor
or a purchaser who is not a U.S. person, the holder must furnish to the Trustee
(i) in the case of an institutional accredited investor, a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of the security evidenced hereby in substantially the form of
Exhibit D to the Indenture, and (ii) such other certifications, legal opinions
or other information as
C-19
<PAGE>
it may reasonably require to confirm that such transfer is being made pursuant
to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
Dated: ___________________________
__________________________________
__________________________________
Signature(s)
Signature(s) must be guaranteed by an
eligible Guarantor Institution (banks,
stock brokers, savings and loan
associations and credit unions) with
membership in an approved signature
guarantee medallion program pursuant
to Securities and Exchange Commission
Rule 17Ad-15.
__________________________________
Signature Guarantee
NOTICE: The signature on the conversion notice, the option to elect payment
upon a Change of Control or the assignment must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.
C-20
<PAGE>
SCHEDULE A
SCHEDULE OF EXCHANGES, CONVERSIONS,
REDEMPTIONS, REPURCHASES, CANCELLATIONS AND TRANSFERS
The initial principal amount of this Regulation S Global Note is
U.S. $ _____________. The following additions to principal, redemptions,
repurchases, exchanges of a part of this Regulation S Global Note for an
interest in the Restricted Global Note, definitive Notes and conversions into
Common Stock or cash have been made:
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Principal
Amount
Redeemed,
Repurchased,
Principal Exchanged for
Amount Added Interest in
on the
Date of Exchange of Restricted Remaining
Addition to Interest in Global Note Principal
Principal, the or Definitive Amount
Redemption, Restricted Notes or Outstanding Notation
Repurchase, Global Note Converted Following Made by or
Exchange or or Definitive into Common such on behalf of
Conversion Note Stock or Cash Transaction the Trustee
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
C-21
<PAGE>
EXHIBIT D - FORM OF TRANSFEREE CERTIFICATE FOR NOTES
TO BE ISSUED TO ACCREDITED INVESTORS
First Union National Bank,
as Trustee
40 Broad Street
New York, New York 10004
Attention: Corporate Trust Administration
Re: Penn Treaty American Corporation
6-1/4% Convertible Subordinated
Notes Due 2003 (the "Notes")
--------------------------------
Reference is hereby made to the Indenture dated as of November 26,
1996 (as supplemented from time to time, the "Indenture") between Penn Treaty
American Corporation and First Union National Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
The undersigned is delivering this letter in connection with the
transfer of Notes to the undersigned, which Notes are to be held by the
undersigned in definitive registered form.
The undersigned hereby confirms that:
(i) the undersigned is an "accredited investor" within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended
(the "Securities Act"), or an entity in which all of the equity owners are
accredited investors within the meaning of Rule 501(a)(1), (2), (3) or (7) under
the Securities Act (an "Institutional Accredited Investor");
(ii) (A) any purchase of Notes by the undersigned will be for the
undersigned's own account or for the account of one or more other Institutional
Accredited Investors or as fiduciary for the account of one or more trusts, each
of which is an "accredited investor" within the meaning of Rule 501(a)(7) under
the Securities Act and for each of which we exercise sole investment discretion
or (B) we are a "bank," within the meaning of Section 3(a)(2) of the Securities
Act, or a "savings and loan association" or other institution described in
Section 3(a)(5)(A) of the Securities Act that is acquiring Notes as fiduciary
for the account of one or more institutions for which we exercise sole
investment discretion;
(iii) the undersigned has such knowledge and experience in financial
and business matters that the undersigned
D-1
<PAGE>
is capable of evaluating the merits and risks of purchasing Notes;
(iv) the undersigned is not acquiring Notes with a view to
distribution thereof or with any present intention of offering or selling Notes
or the Common Stock issuable upon conversion thereof, except as permitted below;
provided that the disposition of the undersigned's property and property of any
accounts for which the undersigned is acting as fiduciary shall remain at all
times within the undersigned's control; and
(v) the undersigned acknowledges that it has had access to such
financial and other information as the undersigned deems necessary in connection
with the undersigned's decision to purchase Notes.
The undersigned understands that the Notes have been issued in a
transaction not involving any public offering within the United States within
the meaning of the Securities Act and that the Notes and the shares of Common
Stock issuable upon conversion thereof (collectively, the "Securities") have not
been registered under the Securities Act or any applicable state securities
laws, and the undersigned agrees, on the undersigned's own behalf and on behalf
of each account for which the undersigned acquires any Securities, that if in
the future the undersigned decides to resell or otherwise transfer such
Securities, such Securities may be resold or otherwise transferred only (a) to
the Company or any subsidiary thereof, (b) to a person who is a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of Rule 144A, (c) to an Institutional
Accredited Investor that, prior to such transfer, furnishes to the trustee (or
transfer agent, as the case may be) for such Securities a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of such Securities (the form of which letter can be obtained from
such trustee, or transfer agent, as the case may be), (d) outside the United
States in a transaction meeting the requirements of Regulation S under the
Securities Act, (e) pursuant to the exemption from registration provided by
Rule 144 under the Securities Act (if applicable) or (f) pursuant to a
registration statement which has been declared effective under the Securities
Act. The undersigned agrees that any such transfer of Securities referred to
in this paragraph shall be in accordance with applicable securities laws of any
State of the United States or any other applicable jurisdiction and in
accordance with the legends set forth on the Securities. The undersigned
further agrees to provide any person purchasing any of the Securities from the
undersigned a notice advising such purchaser that resales of such Securities are
restricted as stated herein. The undersigned understands that the registrar and
transfer agent for
D-2
<PAGE>
the Securities will not be required to accept for registration or transfer
any Securities, except upon presentation of evidence satisfactory to the
Company that the foregoing restrictions on transfer have been complied with.
The undersigned further understands that any Securities will be in the form
of definitive physical certificates and that such certificates will bear a
legend (unless the sale of the Securities has been registered under the
Securities Act) reflecting the substance of this paragraph.
The undersigned acknowledges that the Transferor, others and you will
rely upon the undersigned's confirmation, acknowledgments and agreements set
forth herein, and the undersigned agrees to notify you promptly in writing if
any of the undersigned's representations or warranties herein ceases to be
accurate and complete.
Dated:
--------------, -----
-------------------------------------
(Name of Transferor)
By:
----------------------------------
Name:
Title:
Address:
D-3
<PAGE>
EXHIBIT E - FORM OF TRANSFER CERTIFICATE
FOR TRANSFER FROM DEFINITIVE REGISTERED
FORM TO RESTRICTED GLOBAL NOTE
First Union National Bank
as Trustee
40 Broad Street
New York, New York 10004
Attention: Corporate Trust Administration
Re: Penn Treaty American Corporation
6-1/4% Convertible Subordinated
Notes Due 2003 (the "Notes")
--------------------------------
Reference is hereby made to the Indenture dated as of November 26,
1996 (as supplemented from time to time, the "Indenture") between Penn Treaty
American Corporation and First Union National Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given them in the
Indenture.
This letter relates to U.S.$__________ (being U.S.$1,000 and any
integral multiple of U.S.$1,000 in excess thereof) principal amount of Notes
held of record in definitive registered form through Note No. _______ (the
"Definitive Note") in the name of _______________ (the "Transferor"). The
Transferor hereby requests that on __________ such beneficial interest
represented by the Definitive Note be transferred or exchanged for an interest
in the Restricted Global Note (CUSIP No. 707874AA1) in the same principal
denomination and transferred to ______________ (the Depositary account
no. ________). If this is a partial transfer, a minimum of U.S.$1,000 and any
integral multiple of U.S.$1,000 in excess thereof of the Definitive Note will
remain outstanding.
In connection with such request, and in respect of such Notes, the
Transferor does hereby certify that such Notes are being transferred in
accordance with Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"), to a transferee that the Transferor reasonably believes is
purchasing the Notes for its own account or an account with respect to which the
transferee exercises sole investment discretion and the transferee and any such
account is a "qualified institutional buyer" within the meaning of Rule 144A, in
each case in a transaction meeting the requirements of Rule 144A and in
accordance with any applicable securities laws of any state of the United States
or any other jurisdiction. The Transferor does hereby certify that it has
notified the transferee that it has relied on Rule 144A under the Securities Act
on a basis for the
E-1
<PAGE>
exemption from the registration requirements of the Securities Act used in
connection with such transfer.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
Dated: ,
------------- -----
[Name of Transferor]
By:
--------------------
Name:
Title:
Telephone No.:
Signatures must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the transfer agent, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the transfer agent in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
- -------------------------
Signature Guarantee
Please print name and address (including zip code number)
cc: Penn Treaty American Corporation
E-2
<PAGE>
EXHIBIT F - FORM OF TRANSFER CERTIFICATE
FOR TRANSFER FROM DEFINITIVE REGISTERED
FORM TO REGULATION S GLOBAL NOTE
First Union National Bank,
as Trustee
40 Broad Street
New York, New York 10004
Attention: Corporate Trust Administration
Re: Penn Treaty American Corporation
6-1/4% Convertible Subordinated
Notes Due 2003 (the "Notes")
--------------------------------
Reference is hereby made to the Indenture dated as of November 26,
1996 (as supplemented from time to time, the "Indenture") between Penn Treaty
American Corporation and First Union National Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given them in the
Indenture.
This letter relates to U.S.$_________ (being U.S.$1,000 and any
integral multiple of U.S.$1,000 in excess thereof) principal amount of Notes
held of record in definitive registered form through Note No. _________ (the
"Definitive Note") in the name of ________ (the "Transferor"). The Transferor
hereby requests that on __________ such beneficial interest represented by the
Definitive Note be transferred or exchanged for an interest in the Regulation S
Global Note (CUSIP No. U70888AA7) in the same principal denomination and
transfer to (account no. ________). If this is a partial transfer, a minimum
amount of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess thereof
of the Definitive Note will remain outstanding.
In connection with such request and in respect of such Notes, the
Transferor does hereby certify that such transfer has been effected in
accordance with the transfer restrictions set forth in the Indenture and the
Notes and pursuant to and in accordance with Rule 903 or 904 of Regulation S
under the Securities Act of 1933, as amended (the "Securities Act"), and
accordingly, the Transferor further certifies that:
(A) (1) the offer of the Notes was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
F-1
<PAGE>
facilities of a designated offshore securities market and neither the
Transferor nor any person acting on our behalf knows that the transaction
was prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in contravention
of the requirements of Rule 903(b) or 904(b) of Regulation S, as
applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
OR
(B) Such transfer is being made in accordance with Rule 144A under
the Securities Act to a transferee that the Transferor reasonably believes
is purchasing the Notes for its own account or an account with respect to
which the transferee exercises sole investment discretion and the
transferee and any such account is a "qualified institutional buyer" within
the meaning of Rule 144A, in each case in a transaction meeting the
requirements of Rule 144A and in accordance with any applicable securities
laws of any state of the United States or any other jurisdiction. The
Transferor does hereby certify that it has notified the transferee that it
has relied on Rule 144A under the Securities Act as a basis for the
exemption from the registration requirements of the Securities Act used in
connection with such transfer.
F-2
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company. Terms used in this certificate and
not otherwise defined in the Indenture have the meaning set forth in
Regulation S under the Securities Act.
Dated:
---------- , -----
[Name of Transferor]
By:
-------------------------
Name:
Title:
Telephone No.:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the transfer
agent, which requirements include membership or participation
in STAMP or such other "signature guarantee program" as may be
determined by the transfer agent in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
- -------------------------
Signature Guarantee
Please print name and address (including zip code number)
cc: Penn Treaty American Corporation
F-3
<PAGE>
EXHIBIT G - FORM OF TRANSFER CERTIFICATE
FOR TRANSFER FROM RESTRICTED GLOBAL
NOTE TO REGULATION S GLOBAL NOTE
(Transfers pursuant to Section 2.5(c)
of the Indenture)
First Union National Bank,
as Trustee
40 Broad Street
New York, New York 10004
Attention: Corporate Trust Administration
Re: Penn Treaty American Corporation
6-1/4% Convertible Subordinated
Notes Due 2003 (the "Notes")
--------------------------------
Reference is hereby made to the Indenture dated as of November 26,
1996 (as supplemented from time to time, the "Indenture") between Penn Treaty
American Corporation and First Union National Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given them in the
Indenture.
This letter relates to U.S. $_________ (being U.S. $1,000 and any
integral multiple of U.S. $1,000 in excess thereof) principal amount of Notes
beneficially held through interests in the Restricted Global Note (CUSIP No.
707874AA1) in the name of ________ (the "Transferor") account no. _________. The
Transferor hereby requests that on __________ such beneficial interest in the
Restricted Global Note be transferred or exchanged for an interest in the
Regulation S Global Note (CUSIP No. U70888AA7) in the same principal
denomination and transfer to (account no. ________). If this is a partial
transfer, a minimum amount of U.S. $1,000 and any integral multiple of U.S.
$1,000 in excess thereof of the Restricted Global Note will remain outstanding.
In connection with such request and in respect of such Notes, the
Transferor does hereby certify that such transfer has been effected in
accordance with the transfer restrictions set forth in the Indenture and the
Notes and pursuant to and in accordance with Rule 903 or 904 of Regulation S
under the Securities Act of 1933, as amended (the "Securities Act"), and
accordingly, the Transferor further certifies that:
(A) (1) the offer of the Notes was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or
G-1
<PAGE>
we and any person acting on our behalf reasonably believed that the
transferee was outside the United States or (b) the transaction was executed
in, on or through the facilities of a designated offshore securities market
and neither the Transferor nor any person acting on our behalf knows that
the transaction was prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in contravention
of the requirements of Rule 903(b) or 904(b) of Regulation S, as
applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
OR
(B) Such transfer is being made in accordance with Rule 144A under
the Securities Act to a transferee that the Transferor reasonably believes
is purchasing the Notes for its own account or an account with respect to
which the transferee exercises sole investment discretion and the
transferee and any such account is a "qualified institutional buyer" within
the meaning of Rule 144A, in each case in a transaction meeting the
requirements of Rule 144A and in accordance with any applicable securities
laws of any state of the United States or any other jurisdiction. The
Transferor does hereby certify that it has notified the transferee that it
has relied on Rule 144A under the Securities Act as a basis for the
exemption from the registration requirements of the Securities Act used in
connection with such transfer.
G-2
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company. Terms used in this certificate and
not otherwise defined in the Indenture have the meaning set forth in
Regulation S under the Securities Act.
Dated:
---------- , -----
[Name of Transferor]
By:
---------------------
Name:
Title:
Telephone No.:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the transfer
agent, which requirements include membership or participation
in STAMP or such other "signature guarantee program" as may be
determined by the transfer agent in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
- -------------------------
Signature Guarantee
Please print name and address (including zip code number)
cc: Penn Treaty American Corporation
G-3
<PAGE>
EXHIBIT H - FORM OF TRANSFER CERTIFICATE
FOR TRANSFER FROM REGULATION S GLOBAL
NOTE TO RESTRICTED GLOBAL NOTE
PRIOR TO EXPIRATION OF RESTRICTED PERIOD
(Transfers pursuant to Section 2.5(c)
of the Indenture)
First Union National Bank,
as Trustee
40 Broad Street
New York, New York 10004
Attention: Corporate Trust Administration
Re: Penn Treaty American Corporation
6-1/4% Convertible Subordinated
Notes Due 2003 (the "Notes")
--------------------------------
Reference is hereby made to the Indenture dated as of November 26,
1996 (as supplemented from time to time, the "Indenture") between Penn Treaty
American Corporation and First Union National Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given them in the
Indenture.
This letter relates to U.S.$_________ (being U.S.$1,000 and any
integral multiple of U.S.$1,000 in excess thereof) principal amount of Notes
beneficially held through interests in the Restricted Global Note (CUSIP No.
707874AA1) in the name of ________ (the "Transferor") account no. _________.
The Transferor hereby requests that on __________ such beneficial interest in
the Restricted Global Note be transferred or exchanged for an interest in the
Regulation S Global Note (CUSIP No. U70888AA7) in the same principal
denomination and transfer to __________ (account no. ________). If this is a
partial transfer, a minimum amount of U.S.$1,000 and any integral multiple of
U.S.$1,000 in excess thereof of the Restricted Global Note will remain
outstanding.
In connection with such request, and in respect of such Notes, the
Transferor does hereby certify that such Notes are being transferred in
accordance with Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"), to a transferee that the Transferor reasonably believes is
purchasing the Notes for its own account or an amount with respect to which the
transferee exercises sole investment discretion and the transferee and any such
account is a "qualified institutional buyer" within the meaning of Rule 144A, in
each case in a transaction meeting the requirements of Rule 144A and in
accordance with any applicable securities laws of any state of the United States
or any other jurisdiction. The Transferor does
H-1
<PAGE>
hereby certify that it has notified the transferee that it has relied on Rule
144A under the Securities Act as a basis for the exemption from the
registration requirements of the Securities Act used in connection with such
transfer.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company. Terms used in this certificate and not
otherwise defined in the Indenture have the meaning set forth in Regulation S
under the Securities Act.
Dated:
---------- , -----
[Name of Transferor]
By:
-------------------------
Name:
Title:
Telephone No.:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the transfer
agent, which requirements include membership or participation
in STAMP or such other "signature guarantee program" as may be
determined by the transfer agent in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
- -------------------------
Signature Guarantee
Please print name and address (including zip code number)
cc: Penn Treaty American Corporation
H-2
<PAGE>
Exhibit 4.2
$65,000,000
PENN TREATY AMERICAN CORPORATION
6-1/4% Convertible Subordinated Notes due 2003
REGISTRATION RIGHTS AGREEMENT
November 26, 1996
BEAR, STEARNS & CO. INC.
ADVEST, INC.
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Dear Sirs:
Penn Treaty American Corporation, a Pennsylvania corporation (the
"COMPANY"), has entered into a Purchase Agreement with you (the "PURCHASERS"),
dated November 20, 1996 (the "PURCHASE AGREEMENT"), providing for the issuance
and sale by the Company to you of $65,000,000 aggregate principal amount (and up
to an additional $9,750,000 aggregate principal amount) of the Company's 6-1/4%
Convertible Subordinated Notes due 2003 (the "NOTES"). As contemplated by the
provisions of the Purchase Agreement, and as an inducement to you to consummate
the transactions contemplated thereby, the Company hereby agrees with you as
follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
AGREEMENT: As defined in the preamble hereto.
BROKER-DEALER: Any broker or dealer registered under the Exchange
Act.
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BUSINESS DAY: A day other than a Saturday, a Sunday, a day on which
the banking institutions in the State and City of New York are
authorized or obligated by law or executive order to close or a day
that is declared a national or New York state holiday.
CLOSING DATE: The date of this Agreement.
COMMISSION: Securities and Exchange Commission.
COMMON STOCK: Common Stock of the Company, par value $.10 per share,
issuable upon conversion of the Notes.
COMPANY: As defined in the preamble hereto.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon (i) the filing and effectiveness under
the Securities Act of the Exchange Offer Registration Statement
relating to the New Notes to be issued in the Exchange Offer, (ii)
the maintenance of such Exchange Offer Registration Statement
continuously effective and the keeping of the Exchange Offer open
for a period of not less than the minimum period required under
applicable federal and state securities laws to consummate the
Exchange Offer, and (iii) the delivery by the Company to the
registrar under the Indenture of New Notes in the same aggregate
principal amount as the aggregate principal amount of Notes that were
tendered by Holders thereof pursuant to the Exchange Offer.
EFFECTIVENESS TARGET DATE: As defined in Section 3(a) hereof.
EXCHANGE ACT: Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
EXCHANGE OFFER: The registration by the Company under the Securities
Act of the New Notes pursuant to the Exchange Offer Registration
Statement through which the Company offers the Holders of all
outstanding Transfer Restricted Securities the opportunity to exchange
all such outstanding Transfer Restricted Securities held by such
Holders for New Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities
tendered in such exchange offer by such Holders.
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EXCHANGE OFFER REGISTRATION STATEMENT: As defined in Section 3(b).
HOLDER: As defined in Section 2(b) hereof.
INDEMNIFIED PERSON: As defined in Section 6(a) hereof.
INDENTURE: The Indenture, dated as of November 26, 1996, by and
between the Company and First Union National Bank, as trustee (the
"TRUSTEE"), pursuant to which the Notes are to be issued, as such Indenture
is amended, modified or supplemented from time to time in accordance with
the terms thereof.
NASD: National Association of Securities Dealers, Inc.
NEW NOTES: As defined in Section 3(b) hereof.
NOTES: As defined in the preamble hereto.
PERSON: A corporation, an association, a partnership, an individual,
a joint venture, a joint stock company, a trust, an unincorporated
organization or a government or an agency or political subdivision thereof.
PROSPECTUS: The prospectus included in any Registration Statement, as
amended or supplemented including without limitation by any post-effective
amendments thereto, and all material incorporated by reference into such
prospectus.
PURCHASE AGREEMENT: As defined in the preamble hereto.
PURCHASERS: As defined in the preamble hereto.
REGISTRATION STATEMENT: The Shelf Registration Statement or the
Exchange Offer Registration Statement of the Company that is filed pursuant
to the provisions of Section 3 hereof, including the Prospectus included
therein, all amendments and supplements thereto (including any post-
effective amendments) and all exhibits and material incorporated by
reference therein.
SECURITIES ACT: Securities Act of 1933, as amended.
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SELLER: As defined in Section 2(c) hereof.
SHELF FILING DEADLINE: As defined in Section 3(a) hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 3(a) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb),
as amended and in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Note and any Common Stock issued
upon conversion of such Note, until the earliest to occur of (i) the date
on which such Note or Common Stock, as the case may be, has been
effectively registered under the Securities Act and disposed of in
accordance with an effective Shelf Registration Statement, (ii) the date on
which such Note is exchanged for a New Note in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying
with the prospectus delivery requirements of the Securities Act and (iii)
the date on which such Note or Common Stock, as the case may be, is
distributed to the public pursuant to Rule 144 under the Securities Act or
by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by
the Exchange Offer Registration Statement (including delivery of the
Prospectus contained therein).
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration in
which securities of the Company are sold to an underwriter for reoffering
to the public.
2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) TRANSFER RESTRICTED SECURITIES. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) HOLDERS OF TRANSFER RESTRICTED SECURITIES. A Person is deemed to
be a holder of Transfer Restricted Securities (each, a "HOLDER") whenever such
Person, or a nominee of such Person, owns such Transfer Restricted Securities of
record.
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(c) SELLER OF TRANSFER RESTRICTED SECURITIES. A Person is deemed to
be a seller of Transfer Restricted Securities (hereafter, a "Seller") whenever
such Person is deemed to be a selling security holder for purposes of Item 507
of Regulation S-K under the Securities Act.
3. REGISTRATION
(a) SHELF REGISTRATION. The Company hereby agrees to:
(i) use its best efforts to file or cause to be filed a
continuous registration statement pursuant to Rule 415 under the
Securities Act (together with the Prospectus included therein, all
amendments and supplements thereto (including post-effective
amendments) and all exhibits and materials incorporated by reference
therein, the "SHELF REGISTRATION STATEMENT") on or prior to the 90th
day after the Closing Date (the "SHELF FILING DEADLINE"), which Shelf
Registration Statement shall provide for resales of all Transfer
Restricted Securities, PROVIDED that the Sellers thereof shall have
provided in a timely manner the information required pursuant to
Section 3(b) hereof; and
(ii) use all reasonable efforts to cause the Shelf Registration
Statement to be declared effective by the Commission as promptly as
practicable after the Closing Date (the "EFFECTIVENESS TARGET DATE").
Subject to any notice by the Company in accordance with Section 4(b) hereof of
the existence of any fact or event of the kind described in Section 4(b)(iii)(D)
hereof, the Company shall use all reasonable efforts to keep the Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 4(a) and (b) hereof to the extent
necessary to ensure that it is available for resales of Transfer Restricted
Securities by the Sellers entitled to the benefit of this Section 3(a) and to
ensure that the Shelf Registration Statement conforms to the requirements of
this Agreement, the Securities Act and the policies, rules and regulations of
the Commission as announced from time to time thereunder for a period of at
least three years following the Closing Date, PROVIDED that the Company shall
not be obligated to keep the Shelf Registration Statement effective, if it has
received an opinion from its counsel, Ballard Spahr Andrews & Ingersoll, or
other counsel designated by the Company and reasonably acceptable to the
Purchasers ("COMPANY
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COUNSEL"), to the effect that the Transfer Restricted
Securities can be freely offered and sold without the continued effectiveness of
the Shelf Registration Statement.
(b) CERTIFIED SECURITIES; PROVISION BY SELLERS OF CERTAIN INFORMATION
IN CONNECTION WITH THE SHELF REGISTRATION STATEMENT. No Seller of Transfer
Restricted Securities may include any of its Transfer Restricted Securities in
any Shelf Registration Statement pursuant to this Agreement unless such Seller
furnishes to the Company in writing, within 20 business days after receipt of a
request therefor, such information as the Company may reasonably request for use
in connection with the Shelf Registration Statement or any Prospectus or
preliminary Prospectus included therein. After the first such request for
information by the Company, it shall be the sole responsibility of each Seller
to (i) notify the Company of any change of address or change of ownership of
Transfer Restricted Securities of such Seller and (ii) supply the Company with
such information that the Company reasonably needs in order to list such Seller
as a selling security holder in the Shelf Registration Statement or any
Prospectus or preliminary Prospectus included therein. In connection with all
such requests for information from Sellers of Transfer Restricted Securities,
the Company shall use all reasonable efforts to notify such Sellers of the
requirements set forth in the preceding sentence. Each Seller as to which any
Shelf Registration Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in such Shelf Registration
Statement in order to make the information previously furnished to the Company
by such Seller for inclusion therein not materially misleading.
(c) REGISTERED EXCHANGE OFFER. If, based upon a written opinion of
Company Counsel addressed and delivered to the Holders, the Company determines
that it is permissible under applicable law and Commission policy to Consummate
an Exchange Offer, the Company may at its election Consummate an Exchange Offer
in lieu of filing and maintaining the Shelf Registration Statement described
herein. If the Company elects to Consummate an Exchange Offer in accordance
with the provisions hereof, the Company shall (i) cause to be filed with the
Commission no later than the Shelf Filing Deadline (or later if the Company has
filed and maintained a Shelf Registration Statement pursuant to this Agreement),
a Registration Statement (the "EXCHANGE OFFER REGISTRATION STATEMENT") under the
Securities Act relating to (A) a new issue of notes identical in all material
respects to the Notes except as to transfer restrictions (the "NEW NOTES") and
(B) the shares of Common Stock issuable upon conversion of such New Notes, (ii)
use all reasonable efforts to cause such Registration Statement to become
effective no later than the Effectiveness Target Date, (iii) in connection with
the foregoing, file (A) all pre-effective amendments to such Registration
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Statement as may be necessary in order to cause such Registration Statement to
become effective, (B) if applicable, a post-effective amendment to such
Registration Statement pursuant to Rule 430A under the Securities Act and (C)
cause all necessary filings in connection with the registration and
qualification of the New Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer and
(iv) upon the effectiveness of the Registration Statement, commence the Exchange
Offer. The Company shall cause the Exchange Offer to comply with all applicable
federal and state securities laws. No securities other than the New Notes (and
the shares of Common Stock issuable upon conversion of such New Notes) shall be
included in the Exchange Offer Registration Statement. The Company shall use
all reasonable efforts to cause the Exchange Offer to be Consummated on the
earliest practicable date after the Exchange Offer Registration Statement has
become effective, but in no event later than 30 Business Days after such
effectiveness. The Exchange Offer shall be on the appropriate form permitting
registration of the New Notes to be offered in exchange for the Notes and to
permit resales of New Notes and shares of Common Stock received by Broker-
Dealers in the Exchange Offer by delivering the Prospectus contained in the
Exchange Offer Registration Statement. The "Plan of Distribution" section in
the Prospectus contained in the Exchange Offer Registration Statement shall not
name any such Broker-Dealer or disclose the amount of Notes held by any such
Broker-Dealer except to the extent required by Commission policy. The Company
shall use its best efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented and amended to the extent necessary to
ensure that it is available for resales of New Notes acquired by Broker-Dealers
for their own accounts as a result of market-making activities or other trading
activities, and to ensure that it conforms with the requirements of this
Agreement, the Securities Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of one year from the
date on which the Exchange Offer Registration Statement is declared effective.
The Company shall provide sufficient copies of the latest version of such
Prospectus to Broker-Dealers promptly upon request at any time during such
one-year period in order to facilitate such resales. Notwithstanding anything
herein to the contrary, despite the Consummation of an Exchange Offer, the
Company shall be required to file the Shelf Registration Statement in accordance
with Section 3(a) hereof if any Holder of Transfer Restricted Securities shall
notify the Company within 20 Business Days of the Consummation of the Exchange
Offer (x) that such Holder is prohibited by applicable law or Commission policy
from participating in the Exchange Offer or (y) that such Holder may not resell
the New Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder or
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(z) that such Holder is a Broker-Dealer and holds Notes acquired
directly from the Company or one of its affiliates.
4. REGISTRATION PROCEDURES
(a) In connection with any Shelf Registration Statement, the Company
shall comply with all the provisions of Section 4(b) below and, subject to the
provisions of this Agreement, shall use all reasonable efforts to effect such
registration to permit the resale of the Transfer Restricted Securities being
sold in accordance with the intended method or methods of distribution thereof
as set forth in the Shelf Registration Statement. The parties hereto agree that
the Transfer Restricted Securities shall not be sold in any Underwritten
Offering and the Company shall in no event be required to cooperate with or pay
for any Underwritten Offering.
(b) In connection with any Registration Statement and any Prospectus
required by this Agreement:
(i) subject to any notice by the Company in accordance with this
Section 4(b) of the existence of any fact or event of the kind
described in Section 4(b)(iii)(D) hereof, the Company shall use all
reasonable efforts to cause the Registration Statement to become
effective and, subject to the provisions of Section 4(d) hereof, keep
such Registration Statement continuously effective and provide all
requisite financial statements for the period specified in Section 3
of this Agreement; upon the occurrence of any event that would cause
such Registration Statement or the Prospectus contained therein (A) to
contain a material misstatement or omission or (B) not to be effective
and usable for resales of Transfer Restricted Securities during the
period required by this Agreement, the Company shall file promptly an
appropriate amendment to such Registration Statement correcting any
such misstatement or omission, and, in the case of either clause (A)
or (B), except as set forth in Section 4(b)(xv) below, use all
reasonable efforts to cause such amendment to be declared effective
and such Registration Statement and the related Prospectus to become
usable for their intended purpose(s) as soon as practicable
thereafter;
(ii) subject to the provisions of Section 4(d) hereof, the
Company shall prepare and file with the Commission such amendments
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and post-effective amendments to such Registration Statement as may be
necessary to keep such Registration Statement effective for the
applicable period set forth in Section 3 hereof, or such shorter
period as shall terminate when all Transfer Restricted Securities
covered by such Registration Statement have been sold; subject to the
provisions of Section 4(d) hereof, the Company shall cause the
Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented, cause the Prospectus to be filed pursuant to
Rule 424 under the Securities Act and to comply fully with the
applicable provisions of Rules 424 and 430A under the Securities Act
in a timely manner; and comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with
the intended method or methods of distribution by the Sellers set
forth in such Registration Statement;
(iii) the Company shall use all reasonable efforts to advise
the Sellers promptly and, if requested by such Persons, to confirm
such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment to any Registration Statement
in which the Sellers are listed as such has been filed, and, with
respect to any Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments
or supplements to the Prospectus in which the Sellers are listed as
such or for additional information relating thereto, (C) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement in which the Sellers are
listed as such under the Securities Act or of the suspension by any
state securities commission of the qualification of the Transfer
Restricted Securities for offering or sale in any jurisdiction or of
the initiation of any proceeding for any of the preceding purposes or
(D) of the existence of any fact or the happening of any event
(including without limitation pending negotiations relating to, or the
consummation of, a transaction or the occurrence of any event that
would require additional disclosure of material, non-public
information by the Company in the Registration Statement as to which
the Company has a BONA FIDE business purpose for preserving
confidentiality or that renders the Company unable to comply with
Commission requirements) that makes untrue any statement of a material
fact made in
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the Registration Statement, the Prospectus, any amendment or
supplement thereto in which the Sellers are listed as such or any
document incorporated by reference therein, or that requires the
making of any additions to or changes in the Registration Statement or
the Prospectus in order to make the statements therein not misleading
(it being understood, however, that the Company need merely advise the
Sellers of the existence of such fact or event but shall not be
obligated to describe the same, either generically or specifically).
If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption from qualification of
the Transfer Restricted Securities under state securities or Blue Sky
laws, the Company shall use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(iv) the Company shall furnish to each Purchaser, and to each
Seller who may have requested the same in writing, before filing with
the Commission, copies of any Registration Statement or any Prospectus
included therein and any amendments or supplements thereto (including
all documents incorporated by reference prior to the effectiveness of
such Registration Statement), which documents, other than documents
incorporated by reference, shall be subject to the review by the
Purchasers for a period of at least five Business Days, and the
Company shall not file any such Registration Statement or Prospectus
or any amendment or supplement to any such Registration Statement or
Prospectus to which the Purchasers shall reasonably object within five
Business Days after the receipt thereof;
(v) if practicable, promptly prior to the filing of any document
that is to be incorporated by reference into a Registration Statement
or Prospectus subsequent to the effectiveness thereof, and in any
event no later than the date such document is filed with the
Commission, the Company shall provide copies of such document to each
of the Purchasers, and to each Seller who may have requested the same
in writing, make representatives of the Company available in person or
by conference call with the Purchasers for discussion of such document
and other customary due diligence matters, and include such
information in
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such document prior to the filing thereof as the Purchasers reasonably
may request;
(vi) subject to Section 4(d) hereof, if so requested in writing
by any Seller, the Company shall promptly incorporate in any
Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such Seller
may reasonably request in writing to have included therein, the
purchase price being paid therefor and any other terms of the offering
of the Transfer Restricted Securities or New Notes to be sold in such
offering; and, subject to Section 4(d) hereof, make all required
filings of any such Prospectus supplement or post-effective amendment
as soon as practicable after the Company is notified of the matters to
be incorporated in such Prospectus supplement or post-effective
amendment;
(vii) upon the written request of a Seller, the Company shall
furnish to such Seller without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of
each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits incorporated
therein by reference);
(viii) the Company shall deliver to each Seller without
charge, as many copies of the Prospectus (including each preliminary
prospectus intended for public distribution) and any amendment or
supplement thereto as such Seller reasonably may request; subject to
any notice by the Company in accordance with this Section 4(b) of the
existence of any fact or event of the kind described in Section
4(b)(iii)(D) hereof, the Company hereby consents to the use of the
Prospectus and any amendment or supplement thereto by each Seller
named therein in connection with the offering and the sale of the
Transfer Restricted Securities or New Notes covered by the Prospectus
or any amendment or supplement thereto, PROVIDED that such use of the
Prospectus, and such offering and sale, conforms to the Plan of
Distribution set forth in the Prospectus and complies with all
applicable laws;
(ix) the Company shall cooperate with the Sellers to facilitate
the timely preparation and delivery of certificates representing
Transfer Restricted Securities to be sold and not bearing any
restrictive legends
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and, subject to the terms of the Indenture, enable such certificates
to be in such denominations and registered in such names as the
Sellers may request in writing at least two Business Days prior to
any sale of Transfer Restricted Securities;
(x) as soon as reasonably practicable after the occurrence of
any fact or event of the kind described in Section 4(b)(iii)(D) above,
the Company shall prepare a supplement or post-effective amendment to
the Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus shall not contain an untrue
statement of a material fact or omit to state any material fact
necessary, in light of the circumstances in which it was made, to make
the statements therein not misleading, PROVIDED that notwithstanding
anything to the contrary herein, the Company shall not be required to
prepare and file such a supplement or post-effective amendment or
document if the fact no longer exists; and PROVIDED, FURTHER, that, in
the event of a material business transaction (including without
limitation pending negotiations relating to such a transaction) that,
based upon the advice of the Company Counsel, would require disclosure
by the Company in the Registration Statement of material, nonpublic
information that the Company has a BONA FIDE business purpose for not
disclosing, then for so long as such circumstances and such business
purpose continue to exist, the Company shall not be required to
prepare and file a supplement or post-effective amendment hereunder;
(xi) the Company shall provide a CUSIP number for all Transfer
Restricted Securities not later than the effective date of the
Registration Statement and provide the Trustee under the Indenture
with certificates for the Notes or New Notes, as the case may be, that
are in a form eligible for deposit with The Depository Trust Company;
(xii) the Company shall otherwise use its best efforts to
comply with all applicable rules and regulations of the Commission,
and make generally available to its security holders, in a regular
filing on Form 10-Q or Form 10-K, a consolidated earnings statement
that covers a period of at least twelve consecutive calendar months
commencing after the ef-
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fective date of the Registration Statement and satisfies the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder;
(xiii) the Company shall cause the Indenture to be qualified
under the TIA not later than the effective date of the first
Registration Statement required to be filed by this Agreement, and, in
connection therewith, cooperate with the Trustee and the Holders of
Notes to effect such changes, if any, to the Indenture as may be
required for such Indenture to be so qualified in accordance with the
terms of the TIA, and execute, and use all reasonable efforts to cause
the Trustee to execute, all documents that may be required to effect
such changes and all other forms and documents required to be filed
with the Commission to enable such Indenture to be so qualified in a
timely manner;
(xiv) the Company shall cause the shares of Common Stock
covered by the Registration Statement to be listed on such securities
exchange or automated quotation system on which the Company's Common
Stock is then listed; and
(xv) the Company shall provide promptly to each Holder upon
request any document filed with the Commission pursuant to the
requirements of Section 13 and Section 15 of the Exchange Act.
Each Seller, by its acquisition of a Transfer Restricted Security,
shall be deemed to have agreed that, upon receipt of any notice from the Company
of the existence of any fact or event of the kind described in Section
4(b)(iii)(D) hereof, such Seller shall: (i) keep the fact of such notice
confidential and (ii) forthwith discontinue disposition of Transfer Restricted
Securities pursuant to the applicable Registration Statement until such Seller's
receipt of the copies of a supplemented or amended Prospectus as contemplated by
Section 4(b)(xv) hereof, or until it receives advice in writing (the "ADVICE")
from the Company that the use of the Prospectus may be resumed, and has received
copies of any additional or supplemental filings that are incorporated by
reference in the Prospectus. If so directed by the Company, each Seller shall
deliver to the Company (at the expense of the Company) all copies, other than
permanent file copies then in such Seller's possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of such notice. In the event the Company shall give any such notice,
the time period regarding the effectiveness of such Registration Statement set
forth in Section 3 hereof shall be extended by the number of days during the
period from and including the date of the
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giving of such notice pursuant to Section 4(b)(iii)(D) hereof to and
including the date when each Seller named in such Registration Statement
shall have received the copies of the supplemented or amended prospectus
contemplated by Section 4(b)(xv) hereof or shall have received the Advice,
PROVIDED that the time period regarding the effectiveness of such
Registration Statement set forth in Section 3 hereof shall not be extended,
if the Company has received an opinion from Company Counsel to the effect
that the Restricted Transfer Securities can be freely tradable without the
continued effectiveness of the Shelf Registration Statement.
(c) In connection with the Exchange Offer, the Company shall comply with
all of the provisions of Section 4(b) (other than those that are not
applicable) and shall use its best efforts to effect such exchange to permit
the sale of Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof. In addition, prior to
effectiveness of the Exchange Offer Registration Statement, the Company shall
provide a supplemental letter to the Commission (i) stating that they are
registering the Exchange Offer in reliance on the position of the Commission
enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988),
MORGAN STANLEY AND CO., INC. (available June 5, 1991) and, if applicable, any
no-action letter obtained by the Company and (ii) including a representation
that the Company has not entered into any arrangement or understanding with
any Person to distribute the New Notes to be received in the Exchange Offer
and that, to the best of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the New Notes in its
ordinary course of business and has no arrangement or understanding with any
Person to participate in the distribution of the New Notes received in the
Exchange Offer. As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation thereof, a written representation to the Company (which may be
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an affiliate of the
Company, (B) it is not engaged in and does not intend to engage in and has no
arrangement or understanding with any person to participate in, a
distribution of the New Notes to be issued in the Exchange Offer and (C) it
is acquiring the New Notes in its ordinary course of business. In addition,
all such Holders of Transfer Restricted Securities shall otherwise cooperate
in the Company's preparations for the Exchange Offer. Each Purchaser, for
itself and on behalf of the Holders, hereby acknowledges and agrees, and each
Holder by its purchase of Transfer Restricted Securities shall be deemed to
have acknowledged and agreed, that any Broker-Dealer and any Holder using the
Exchange Offer to participate in a distribution of the securities to be
acquired in the Exchange Offer (1)
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could not under Commission policy as in effect on the date of this Agreement
rely on the position of the Commission enunciated in MORGAN STANLEY AND CO.,
INC. (available June 5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION
(available May 13, 1988), as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and similar no-action letters and (2)
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction and that
such a secondary resale transaction should be covered by an effective
registration statement containing the selling security holder information
required by Item 507 or 508, as applicable, of Regulation S-K under the
Securities Act if the resales are of New Notes obtained by such Holder in
exchange for Notes acquired by such Holder directly from the Company.
(d) Notwithstanding anything to the contrary contained herein, the
Company shall be obligated to amend the Registration Statement or amend or
supplement the Prospectus no more often than quarterly if the sole reason for
such amendment or supplement is the furnishing of new or amended information
from one or more Sellers and until any such amendment or supplement is filed,
such Seller or Sellers, as the case may be, shall not sell any securities
pursuant to the then current Registration Statement and Prospectus.
5. REGISTRATION EXPENSES
The following expenses incident to the Company's performance of or
compliance with this Agreement shall be borne by the Company regardless of
whether a Registration Statement becomes effective, including, without
limitation: (i) all registration and filing fees and expenses (including
filings made by any Purchaser or Seller with the NASD); (ii) the reasonable fees
and expenses of Weil, Gotshal & Manges LLP or such other single firm of counsel
as may be chosen by holders of a majority in principal amount of the Transfer
Restricted Securities included within the coverage of such Registration
Statement for the services of such firm in connection with the registration of
such Sellers' Transfer Restricted Securities under cover thereof; (iii) all
expenses of printing or copying (including printing of any certificates
evidencing the Notes and printing or copying of Prospectuses), messenger and
delivery services and telephone; (iv) all fees and disbursements of counsel for
the Company; (v) all application and filing fees in connection with listing of
the Common Stock on a national securities exchange or automated quotation system
pursuant to the provisions of Section 4(b)(xiv) hereof; and (vi) all fees and
disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort
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letters required by or incident to such performance). The Company shall, in
any event, bear its own internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and
expenses of any Person, including special experts, retained by the Company.
The Company shall not be responsible for any other expenses or costs,
including, but not limited to, commissions, fees and discounts of brokers,
dealers and agents.
6. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each Seller
and (ii) each person, if any, who controls (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) any Seller (any of the
persons referred to in this clause (ii) being hereinafter referred to as a
"controlling person") and (iii) the respective officers, directors, partners,
employees, representatives and agents of any Seller or any controlling person
(any person referred to in clause (i), (ii) or (iii) may hereinafter be referred
to as an "INDEMNIFIED PERSON"), to the fullest extent lawful, from and against
any and all losses, claims, damages, liabilities, judgments, costs and expenses
("LOSSES") (including, without limitation and as incurred, reimbursement of all
costs of investigating, preparing, pursuing or defending any claim or action, or
any investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Person) directly or indirectly caused by, related to, based upon,
arising out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus (or any amendment or supplement thereto) or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except (as to any Seller) insofar as
such Losses are caused by an untrue statement or omission or alleged untrue
statement or omission that is made in reliance upon and in conformity with
information relating to such Seller furnished in writing to the Company by such
Seller for use therein. The Company shall notify the Sellers promptly of the
institution, threat or assertion of any claim, proceeding (including any
governmental investigation) or litigation in connection with the matters
addressed by this Agreement that involves the Company or any Indemnified Person.
(b) In case any action or proceeding (including, without limitation,
any governmental or regulatory investigation or proceeding) shall be brought or
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asserted against any of the Indemnified Persons with respect to which indemnity
may be sought against the Company, such Indemnified Person shall promptly notify
the Company in writing (PROVIDED that the failure to give such notice shall not
relieve the Company of its obligations pursuant to this Agreement). Any
Indemnified Person shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person, PROVIDED that the
fees and expenses of such counsel shall be at the expense of the Company if (i)
the Company has failed to assume the defense and employ counsel reasonably
satisfactory to the Sellers or (ii) the named parties to any such action
(including any impleaded parties) include such Indemnified Person and the
Company and such Indemnified Person shall have reasonably concluded that there
may be one or more legal defenses available to it that are different from or in
addition to those available to the Company; PROVIDED, FURTHER, that the Company
shall not in such event be responsible hereunder for the fees and expenses of
more than one firm of separate counsel, which firm shall be designated by the
Sellers and shall be subject to the Company's approval, not to be unreasonably
withheld, in connection with any one such action or separate but similar related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, in addition to any local counsel. The Company shall not be
liable for any settlement of any such action or proceeding effected without its
prior written consent, which consent shall not be unreasonably withheld or
delayed, and the Company agrees to indemnify and hold harmless any Indemnified
Person from and against any Loss by reason of any settlement of any action
effected with its written consent. The Company shall not, without the prior
written consent of each Indemnified Person, settle or compromise or consent to
the entry of a judgment in or otherwise seek to terminate any pending or
threatened action, claim, litigation or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not any
Indemnified Person is a party thereto), unless such settlement, compromise,
consent or termination includes a release of each Indemnified Person from all
liability arising out of such action, claim, litigation or proceeding.
(c) Each Seller, by including its Transfer Restricted Securities
within the coverage of a Registration Statement hereunder, shall be deemed to
have agreed, severally and not jointly, to indemnify and hold harmless the
Company, its directors, its officers, and any person controlling (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
the Company, and the respective officers, directors, partners, employees,
representatives and agents of each such person, to the same extent as the
foregoing indemnity from the Company to each of the Indemnified Persons, but
only with respect to claims and actions based on information relating to
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such Seller furnished in writing by such Seller for use in any Registration
Statement or Prospectus. In case any action or proceeding shall be brought
against the Company or any of its directors or officers or any such
controlling person in respect of which indemnity may be sought against a
Seller, such Seller shall have the rights and duties given the Company, and
each of the Company or its directors or officers of such controlling person
shall have the rights and duties given to each Indemnified Person by the
proceeding paragraph. In no event shall the liability of any Seller
hereunder be greater in amount than the dollar amount of the proceeds
received by such Seller upon the sale of the securities registered for the
account of such Seller pursuant to provisions hereof.
(d) If the indemnification provided for in this Section 6 is
unavailable to a party entitled to indemnification in respect of any Losses
referred to herein, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Sellers on the other hand from their sale of Transfer Restricted
Securities or (ii) if such allocation is not permitted by applicable law, the
relative fault of the Company on the one hand and of the Indemnified Person on
the other in connection with the statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of the Company on the one hand and of the Indemnified Person on the other
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 by
the Indemnified Person and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The indemnity and contribution obligations of each indemnifying party set forth
herein shall be in addition to any liability or obligation such indemnifying
party may otherwise have to any indemnified party, including under this
Agreement.
The Company and each Purchaser, for itself and on behalf of the
Sellers, agree that it would not be just and equitable if contribution pursuant
to this Section 6(d) were determined by PRO RATA allocation (even if the Sellers
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the Losses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
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indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 6, none of
the Sellers (and their related Indemnified Persons) shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total proceeds received by such Seller with respect to the Notes exceeds the
amount of any damages which such Seller has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Sellers' obligations to contribute pursuant to this
Section 6(d) are several, in proportion to the respective principal amount of
Notes held by each Seller, and not joint.
7. RULE 144A
The Company hereby agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding, to make available to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchase of such Transfer Restricted
Securities from such Holder or beneficial owner, any information required to be
supplied to a Holder by Rule 144A(d)(4) under the Securities Act in order to
permit offers and sales of such Transfer Restricted Securities pursuant to Rule
144A.
8. MISCELLANEOUS
(a) REMEDIES. Each party agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by such party
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company shall not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to or for the benefit of
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
The rights granted to the Holders hereunder are not inconsistent with the rights
granted to the holders of the Company's securities under any agreement in effect
on the date hereof.
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(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given, unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities.
(d) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return-receipt requested), telecopier or courier
guaranteeing overnight delivery;
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under
the Indenture;
with a copy to:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Telecopier: (212) 272-3613
Attention: David K. Blume,
Vice President
(ii) if to a Seller, to the address of such Seller set forth in
the latest written communication from such Seller to the Company, with
copies to the Registrar under the Indenture and to Bear, Stearns & Co.
Inc. as aforesaid,
and
(iii) if to the Company:
Penn Treaty American Corporation
3440 Lehigh Street
Allentown, Pennsylvania 18103
Telecopier: (610) 967-1098
Attention: Jane M. Bagley, Esq.
General Counsel
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with a copy to:
Ballard Spahr Andrews & Ingersoll
1735 Market Street
Philadelphia, Pennsylvania 19103
Telecopier: (215) 864-8999
Attention: Justin P. Klein, Esq.
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to a courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders and Sellers of Transfer Restricted Securities;
PROVIDED that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder or Seller unless and to the extent such
successor or assign acquired Transfer Restricted Securities from such Holder or
Seller.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
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(i) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and the remaining
provisions contained herein shall not be affected or impaired thereby.
(j) ENTIRE AGREEMENT. This Agreement, together with the other
Transaction Agreements (as defined in the Purchase Agreement), is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
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If the foregoing correctly sets forth our mutual understanding and
agreement, please countersign and return the enclosed counterpart hereof,
whereupon this letter, together with all counterparts hereof, shall be deemed a
binding agreement between the Company and the Purchasers in accordance with its
terms.
PENN TREATY AMERICAN CORPORATION
By: /s/ Irving Levit
----------------------------------
Name: Irving Levit
Title: President and
Chief Executive Officer
BEAR, STEARNS & CO. INC.
ADVEST, INC.
By: BEAR, STEARNS & CO. INC.
As Representative,
By: /s/ Stephen Parish
-----------------------------
Name: Stephen Parish
Title: Senior Managing Director
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