Exhibit 99.1
STANDBY PURCHASE AGREEMENT
This is a STANDBY PURCHASE AGREEMENT (the "Agreement"), dated as of the
date on the signature page between Penn Treaty American Corporation, a
Pennsylvania corporation (the "Company"), and the purchaser named on the
signature page (the "Standby Purchaser").
WHEREAS, the company is implementing a rights offering (the "Rights
Offering") pursuant to which the Company is distributing at no charge to holders
of its common stock and its 6 1/4% convertible subordinated notes due 2003 on
April 20, 2001 (the "Record Date") the right (each a "Right" and collectively
the "Rights") to purchase shares of the Company's common stock (the "Common
Stock") at $2.40 per share;
WHEREAS, each Right will include a basic subscription privilege, pursuant
to which each shareholder will have the right to purchase its pro rata portion
of Common Stock (the "Basic Subscription Privilege") at the subscription price
of $2.40 per share of Common Stock and an oversubscription privilege by which
persons who exercise their Basic Subscription Privilege in full may subscribe to
purchase share of Common Stock not purchased by other holders of Rights, subject
to proration (the "Oversubscription Privilege"); and
WHEREAS, in order to assure the success of the Rights Offering, Standby
Purchaser is willing to, and hereby does, agree to serve as standby purchaser
for a specified number of shares of Common Stock, to the extent available after
exercise of the Basic Subscription Privilege and the Oversubscription Privilege
by the holders of the Rights, and agrees to purchase a minimum number of shares
of Common Stock, as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements set forth herein,
and for other good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged the Company and Standby Purchaser, intending to be
legally bound, do hereby agree as follows:
ARTICLE 1. PURCHASE AND DELIVERY OF SHARES
1.1 Standby Purchaser and the Company hereby acknowledge and agree that the
Company has entered into, or contemplates entering into, one or more additional
standby purchase agreements ("Standby Purchase Agreements") with certain other
parties (collectively with Standby Purchaser, the "Standby Purchasers") on terms
substantially similar to this Agreement, except that they may provide for the
purchase of a different Maximum Standby Purchase Commitment (as defined below).
1.2 Subject to the terms, conditions and limitations of this Agreement and
to the availability of shares of Common Stock after exercise of Rights in the
Rights Offering, if any Standby Purchaser agrees to purchase from the Company,
at the subscription price per share of $2.40 (the "Subscription Price"), up to
the number of shares of Common Stock stated on the signature page of this
Agreement, to the extent necessary to provide for full subscription for all
shares of Common Stock offered by the Company in the Offering (the "Maximum
Standby Purchase Commitment").
1.3 In the event that the number of shares of Common Stock remaining and
not subscribed for after the exercise of Rights in the Rights Offering is less
than the aggregate Maximum Standby Purchase Commitments of Standby Purchasers,
such remaining shares of Common Stock will be allocated pro rata among Standby
Purchasers according to their respective Maximum Standby Purchase Commitments.
Subject to the terms and conditions of this Agreement, Standby Purchaser agrees
to
purchase such number of shares of Common Stock as are allocated to Standby
Purchaser pursuant to this Agreement.
1.4 The rights and obligations of Standby Purchaser and the Company under
the Agreement are subject to any conditions described in the Registration
Statement.
ARTICLE 2. THE CLOSING
As soon as practicable following its determination of the number of shares
of Common Stock subscribed for pursuant to the Rights Offering, the Company
shall notify Standby Purchaser of the number of shares of Common Stock to be
purchased by Standby Purchaser pursuant to Article 1. The shares of Common Stock
shall be delivered, and payment for the shares of Common Stock tendered, in the
manner contemplated by Article 3, simultaneously with the closing of the sale of
shares of Common Stock pursuant to the Rights Offering. The place, date and time
for delivery of payment and shares of Common Stock shall be as provided in the
Prospectus Supplement dated April 25, 2001 (the "Closing Time", the date of the
Closing Time being referred to as the "Closing Date" and the consummation of the
transactions being referred to as the "Closing").
ARTICLE 3. DELIVERY OF SHARES
At the Closing, the shares of Common Stock to be purchased by Standby
Purchaser, registered in the name of Standby Purchaser or its nominee, as
Standby Purchaser may specify to the Company in writing at least four (4)
business days prior to the Closing Date, shall be delivered to Standby
Purchaser, for Standby Purchaser's account within three (3) business days of
Closing. At the Closing, Standby Purchaser shall deliver to the Company the
Subscription Price for each share of Common Stock purchased pursuant hereto by
wire transfer of immediately available funds to an account designated by the
Company to Standby Purchaser in writing prior to the Closing Date.
ARTICLE 4. AGREEMENTS AND CONSENTS OF PURCHASER
The Standby Purchaser agrees with the Company that:
4.1 The Company may, in its sole discretion, decline to issue any of
the shares of Common Stock to the Standby Purchaser if, in the reasonable
opinion of the Company, Standby Purchaser is required to obtain prior
clearance or approval of such transaction from any governmental authority
and satisfactory evidence such approval or clearance has not been presented
to the Company by the Closing Date.
4.2 The Company may rely upon and disclose the terms of this
Agreement. Standby Purchaser consents to disclosures concerning Standby
Purchaser in the Prospectus Supplement and the Registration Statement, or
in any amendment or supplement thereto, and in any related filing or
disclosures of the Company.
ARTICLE 5. REPRESENTATION AND WARRANTIES
5.1 The Company represents and warrants to Standby Purchaser that:
(a) The Company has filed the Registration Statement with the
Commission with respect to the shares of Common Stock and the Registration
Statement has been declared effective by the Commission.
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(b) The Company has been duly incorporated and is a validly existing
corporation under the laws of the Commonwealth of Pennsylvania, with the
corporate power and authority to perform its obligations under this
Agreement.
(c) The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action of the Company. This Agreement, when duly executed and
delivered by Standby Purchaser, will constitute a valid and legally binding
agreement of the Company enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(d) The shares of Common Stock, when issued and delivered by the
Company after payment therefor as contemplated hereby, will be validly
issued, fully paid and nonassessable.
(e) The execution and delivery of this Agreement, the consummation by
the Company of the transactions contemplated hereby and the compliance by
the Company with the terms of this Agreement do not violate the Articles of
Incorporation or Bylaws of the Company, or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company is a party or by which the Company is
bound, except as would not have a material adverse effect on the financial
condition of the Company, or any applicable statute or any order, judgment,
decree, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its properties or assets. No
consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required for the
valid authorization, execution, delivery and performance by the Company of
this Agreement, the issuance of the shares of Common Stock, or the
consummation by the Company of the other transactions contemplated by this
Agreement, except such as may be required and have been obtained from the
Pennsylvania Insurance Department and under the Securities Act of 1933, as
amended. [Such consents, approvals, authorizations, registrations or
qualifications as have been obtained under federal and state securities or
"blue sky" laws; subject, for the purposes of this Section 5.1(e), to the
satisfaction or fulfillment by the Company of any conditions precedent to
the validity, grant or effectiveness of any such consents, approvals,
authorizations, orders, registrations or qualifications.]
5.2 Standby Purchaser represents and warrants to the Company that:
(a) As of the date of this Agreement, Standby Purchaser beneficially
owns the number of shares of Common Stock set forth on the signature page.
(b) If an entity, Standby Purchaser is the type of entity described on
the signature page, was duly formed and is validly existing and in good
standing under the laws of its state of formation, with the power and
authority to perform its obligations under this Agreement.
(c) The execution, delivery and performance of this Agreement by
Standby Purchaser and the consummation by Standby Purchaser of the
transactions contemplated hereby have been duly authorized by all necessary
action of Standby Purchaser. This Agreement, when duly executed and
delivered by the Company, will constitute a valid and legally binding
instrument, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability now or hereinafter in effect relating
to or affecting creditors' rights and to general equity principles.
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(d) Standby Purchaser is not insolvent and has sufficient cash funds
on hand to purchase the shares of Common Stock on the terms and conditions
contained in this Agreement and will have such funds on the Closing Date.
Standby Purchaser has, simultaneous with or prior to the execution and
delivery of this Agreement, provided the Company with evidence or
substantiated that Standby Purchaser has the financial means to satisfy its
financial obligations under this Agreement. The foregoing evidence and
substantiation is a true and accurate representation of such means.
(e) The execution and delivery of this Agreement, the consummation by
Standby Purchaser of the transactions contemplated hereby and the
compliance by Standby Purchaser, with the terms of hereof, do not violate
the constituent documents of Standby Purchaser or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which Standby Purchaser is a party or by which
Standby Purchaser is bound, except as would not have a material adverse
affect on the financial condition of Standby Purchaser or its right or
ability to perform this Agreement, or any applicable law or any order,
judgment, decree, rule or regulation of any court or governmental agency or
body, having jurisdiction over Standby Purchaser or any of its properties
or assets. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body, is
required for the valid authorization, execution, and delivery by Standby
Purchaser of this Agreement or the consummation by Standby Purchaser of the
transactions contemplated by this Agreement.
(f) Standby Purchaser has not entered into any contracts,
arrangements, understandings or relationships (legal or otherwise) with any
other person or persons with respect to the securities of the Company,
including, but not limited to transfer or voting any of the securities,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
ARTICLE 6. CLOSING CONDITIONS
The respective obligations of Standby Purchaser and the Company to
consummate the purchase and sale of the shares of Common Stock shall be subject,
in the discretion of the Company or Standby Purchaser, as the case may be, to
the condition that (i) all representations and warranties and other statements
of the other party are, at and as of the Closing Time, true and correct in all
material respects, (ii) the other party shall have performed all of its
obligations hereunder theretofore to be performed in all material respects, and
(iii) no stop order suspending the effectiveness of the Registration Statement
or any amendment or supplement thereto shall have been issued and no proceeding
for that purpose shall have been initiated or threatened by the Commission.
ARTICLE 7. TERMINATION
7.1 This Agreement shall terminate upon mutual consent of the parties
hereto. In addition, the Company may terminate this Agreement if it is not in
material breach of its obligations under this Agreement and there has been a
material breach of any representation, warranty, covenant or agreement contained
in this Agreement on the part of Standby Purchaser. Standby Purchaser may
terminate this Agreement if it is not in material breach of its obligations
under this Agreement and there has been a material breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of the
Company. Either of the parties may terminate this Agreement (i) if the
transactions contemplated hereby are not consummated by July 31, 2001, unless
such nonconsummation is a result of a breach of this Agreement by the party
seeking to terminate; or (ii) in the event the Company is unable to obtain
required federal or state approvals, if any, for the transactions contemplated
hereby on conditions reasonably satisfactory to it despite its reasonable
efforts to obtain such approvals.
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7.2 The Company and Standby Purchaser hereby agree that any termination of
this Agreement pursuant to Section 7.1 (other than, in either case, termination
in the event of a breach of this Agreement by Standby Purchaser or Company or
misrepresentation of any of the statements made herein by Standby Purchaser or
the Company) shall be without liability to the Company or Standby Purchaser.
ARTICLE 8. FUTURE ACQUISITION AND DISPOSITION OF SHARES
Standby Purchaser agrees with the Company that during the period beginning
on the date of this Agreement and continuing until the Closing Date, it will not
offer, sell, contract to sell or otherwise dispose of, or bid for, purchase,
contract to purchase or otherwise acquire, any shares of common stock of the
Company, except pursuant to the terms of this Agreement and to any rights it is
granted as a shareholder in the Rights Offering, without the prior written
consent of the Company.
ARTICLE 9. NOTICES
All communications hereunder will be in writing and, if to the Company,
will be mailed, delivered or telecopied and confirmed to it, at the offices of
the Company: Xxxxxxx X. Xxxxx, Chief Financial Officer, Facsimile 000.000.0000,
and if to Standby Purchaser, will be mailed, delivered or telecopied and
confirmed to it at the address on the signature page.
ARTICLE 10. BINDING EFFECT
This Agreement shall be binding upon, and shall inure solely to the benefit
of, each of the parties hereto, and each of their respective heirs, executors,
administrators, successors and permitted assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No party may
assign any of its rights or obligations hereunder to any other person or entity
without the prior written consent of the other party.
ARTICLE 11. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with, the
laws of the Commonwealth of Pennsylvania (excluding principles of conflicts of
laws) in effect at the time of the execution hereof.
ARTICLE 12. EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
counterparts when so executed shall be deemed to be an original, but all such
respective counterparts shall together constitute but one and the same
instrument.
ARTICLE 13. ENTIRE AGREEMENT
This Agreement represents the entire understanding of the parties with
respect to the matters addressed in this Agreement and supersedes all prior
written and oral understanding concerning the subject matter of this Agreement.
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SIGNATURE PAGE
Standby Purchaser and the Company have executed this Agreement as of the
day and year first above written.
STANDBY PURCHASER INFORMATION
(must be completed)
1. Name of Standby Purchaser _______________________________________
2. Standby Purchaser's Address: _____________________________________
_____________________________________
Facsimile number_______________________
3. [Number of shares of Common Stock beneficially owned by Standby Purchaser as
of the date of this Agreement (See section 5.2(a))]
Shares___________________
4. [Maximum Standby Purchase Commitment]
(See section 1.2) Shares___________________
5. If Standby Purchaser is an entity, specify type of entity and state of
formation
------------------------
[entity type]
------------------------
[state of formation]
"Standby Purchaser"
----------------------------
By:__________________________
Name:
Title:
Date: _______________ , 2001
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