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, XXXXXXX & CO. INC.
ADVEST, INC.
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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.
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, Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, 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),
XXXXXX XXXXXXX 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 XXXXXX XXXXXXX 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 & Xxxxxx 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
15
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
16
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
17
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 Xxxxxxx 0, xxxx 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, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxxx,
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, Xxxxxxx & Co.
Inc. as aforesaid,
and
(iii) if to the Company:
Penn Treaty American Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
General Counsel
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with a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, 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/ Xxxxxx Xxxxx
----------------------------------
Name: Xxxxxx Xxxxx
Title: President and
Chief Executive Officer
BEAR, XXXXXXX & CO. INC.
ADVEST, INC.
By: BEAR, XXXXXXX & CO. INC.
As Representative,
By: /s/ Xxxxxxx Parish
-----------------------------
Name: Xxxxxxx Parish
Title: Senior Managing Director
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