-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A4YZqXrUtohIbFJ+21afMeQHmlWbiD7Dct+2RThCdFtutbvUUqc/Ak0cjNTBUS79 IbrsSBVo/SWJ84k6ph8L+w== 0000950134-97-003036.txt : 19970421 0000950134-97-003036.hdr.sgml : 19970421 ACCESSION NUMBER: 0000950134-97-003036 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19970418 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTBRIDGE CAPITAL CORP CENTRAL INDEX KEY: 0000703701 STANDARD INDUSTRIAL CLASSIFICATION: ACCIDENT & HEALTH INSURANCE [6321] IRS NUMBER: 731165000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-24137 FILM NUMBER: 97583658 BUSINESS ADDRESS: STREET 1: 777 MAIN ST STREET 2: STE 900 CITY: FORT WORTH STATE: TX ZIP: 76102 BUSINESS PHONE: 8178783306 MAIL ADDRESS: STREET 1: 777 MAIN ST STE 900 CITY: FORT WORTH STATE: TX ZIP: 76102 S-1/A 1 AMENDMENT NO. 2 TO FORM S-1 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 18, 1997 REGISTRATION NO. 333-24137 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- WESTBRIDGE CAPITAL CORP. (Exact name of Registrant as specified in its charter) DELAWARE 6300 73-1165000 (State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer of incorporation) Classification Code Number) Identification No.)
--------------------- 777 MAIN STREET PATRICK J. MITCHELL FORT WORTH, TEXAS 76102 EXECUTIVE VICE PRESIDENT, CHIEF (817) 878-3300 FINANCIAL OFFICER AND TREASURER (Address, including zip code, and telephone WESTBRIDGE CAPITAL CORP. number, including area code, of Registrant's 777 MAIN STREET principal executive offices) FORT WORTH, TEXAS 76102 (817) 878-3300 (Name, address, including zip code, and telephone number, including area code of agent for service)
--------------------- with copies to: ROBERT S. REDER, ESQ. JAY R. SCHIFFERLI, ESQ. MILBANK, TWEED, HADLEY & MCCLOY KELLEY DRYE & WARREN LLP 1 CHASE MANHATTAN PLAZA 2 STAMFORD PLAZA NEW YORK, NEW YORK 10005 281 TRESSER BLVD. (212) 530-5000 STAMFORD, CONNECTICUT 06901 (203) 324-1400
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] --------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. ================================================================================ 2 This Amendment No. 2 to the Form S-1 Registration Statement under the Securities Act of 1933 filed by the Registrant on March 28, 1997, as amended by Amendment No. 1 to Form S-1 Registration Statement under the Securities Act of 1933 filed by the Registrant on April 8, 1997 (as so amended, the "Registration Statement") is being filed to amend Item 13 of the Registration Statement to include certain expenses related to the issuance and distribution of the Convertible Subordinated Notes being registered thereby and to amend Item 16 of the Registration Statement to file certain exhibits which were not previously filed. 3 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the fees and expenses payable in connection with the sale of the Convertible Subordinated Notes and the Common Stock being registered. The Company will pay all such fees and expenses. All amounts are estimates except for the filing and listing fees. SEC Registration Fee........................................ $ 23,611.00 NASD filing fees............................................ 8,291.74 Blue Sky fees and expenses.................................. 10,000.00 Accounting fees and expenses................................ 100,000.00 Legal fees and expenses..................................... 250,000.00 Printing and engraving fees and expenses.................... 150,000.00 Trustee's fees and expenses................................. 8,000.00 Miscellaneous fees and expenses............................. 10,097.26 ----------- Total............................................. $560,000.00 ===========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 145 of the Delaware General Corporation Law permits ("DGCL") a Delaware corporation to indemnify any of its directors, officers, employees and agents of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against actual and reasonable expenses (including attorneys' fees) incurred by such person in connection with any action, suit or proceeding if (i) he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and (ii) in the case of a criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. Except as ordered by a court, no indemnification shall be made in connection with any proceeding brought by or in the right of the Company where the person involved is adjudged to be liable to the Company. Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145. The Company maintains policies insuring the Company's officers and directors against certain liabilities for actions taken in such capacities, including liabilities under the Securities Act. Article V of the By-Laws of the Company provides for indemnification of the directors and officers of the Company to the full extent permitted by law, as now in effect or later amended. Article V of the Certificate of Incorporation limits under certain circumstances the liability of the Company's directors for a breach of their fiduciary duty as directors. These provisions do not eliminate the liability of a director (i) for a breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL (relating to the declaration of dividends and purchase or redemption of shares in violation of the DGCL), or (iv) for any transaction from which the director derived an improper personal benefit. At present, there is no pending litigation or proceeding involving a director or officer of the Company as to which indemnification is being sought nor is the Company aware of any threatened litigation that may result in claims for indemnification by any officer, director, or employee of the Company. II-1 4 ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES On April 12, 1994, Westbridge issued 20,000 shares of its Series A Cumulative Convertible Exchangeable Redeemable Preferred Stock (the "Series A Preferred Stock") with a liquidation preference of $1,000 per share. Such shares were privately placed by Oppenheimer & Co., Inc., ("Oppenheimer"), as placement agent with "accredited investors" (as defined in Regulation D promulgated under the Securities Act of 1933, as amended) and such sale was, pursuant to the provision of Rule 506, exempt from the registration requirements under the Securities Act of 1933, as amended. Westbridge received approximately $20.0 million in cash from the sale of the Series A Preferred Stock and, from this amount, paid to Oppenheimer a fee of $800,000 and certain other expenses estimated at $197,500. In addition, Westbridge issued to Oppenheimer warrants to purchase 120,000 shares of Common Stock at $8.75 per share, subject to adjustment as described therein. On December 22, 1995 the Company issued a 10% Senior Note due 2002 (the "Senior Note") in the aggregate principal amount of $1.0 million to the Chairman of the Board of Directors. In connection with the Senior Note issuance, the Company also issued a Common Stock Purchase Warrant for 135,501 shares of Common Stock at an exercise price of $7.38 per share. This transaction was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended. Westbridge received $1.0 million in cash from the sale of the Senior Note. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) EXHIBITS. The following exhibits are filed herewith. Exhibits incorporated by reference are indicated in the parentheses following the description. 1.1* -- Form of Underwriting Agreement. 3.1 -- Restated Certificate of Incorporation of Westbridge filed with the Secretary of State of Delaware on July 28, 1994 (incorporated by reference to Exhibit 3.1 to Amendment No. 1 to the Company's Registration Statement No. 33-81380 on Form S-1). 3.2 -- By-Laws of Westbridge, effective as of June 24, 1994 (incorporated by reference to Exhibit 3.2 to Amendment No. 1 to the Company's Registration Statement No. 33-81380 on Form S-1). 4.1* -- Form of Indenture between Westbridge and First Union National Bank, as Trustee relating to the % Convertible Subordinated Notes, including form of Convertible Subordinated Note. 4.2 -- Specimen Certificate for Westbridge Common Stock (incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Company's Registration Statement No. 2-78200 on Form S-1). 4.3 -- Indenture between Westbridge and Liberty Bank & Trust Company of Oklahoma City, National Association, as Trustee, relating to the 11% Senior Subordinated Notes due 2002, including form of Senior Subordinated Note (incorporated by reference to Exhibit 2 to the Company's Form 8-A dated July 19, 1995). 4.4* -- Form of Underwriters' Warrant Agreement 5.1* -- Opinion of Milbank, Tweed, Hadley & McCloy regarding legality of the Notes and the Common Stock. 10.1 -- Westbridge Employee Incentive Stock Option Plan (incorporated by reference to Exhibit 10.1 to Amendment No. 1 to the Company's Registration Statement No. 2-78200 on Form S-1). 10.2 -- Description of Cash Bonus Plan (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988).
II-2 5 10.3 -- Westbridge 1985 Stock Option Plan (incorporated by reference to Exhibit 10.7 to the Company's Registration Statement No. 33-3577 on Form S-1). 10.4 -- Amendment No. 1 to the 1985 Employee Incentive Stock Option Plan of Westbridge (incorporated by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1986). 10.5 -- Amendment No. 2 to the 1985 Employee Incentive Stock Option Plan of Westbridge (incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the year ended December 31, 1987). 10.6 -- Amendment No. 3 to the 1985 Employee Incentive Stock Option Plan of Westbridge (incorporated by reference to Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1988). 10.7 -- Stockholders' Agreement dated April 2, 1988, by and among the Company and the other stockholders of LifeStyles Marketing Group, Inc., named therein, as amended (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988). 10.8 -- Supplement to General Agent's Agreement with Phillip D. Elkins as amended on February 8, 1990 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990). 10.9 -- Assumption Reinsurance Agreement, dated June 20, 1991, by and among National Foundation Life Insurance Company and Bankers Protective Life Insurance Company (incorporated by reference to Exhibit 2 to the Company's Report on Form 8-K dated August 27, 1991). 10.10 -- Assumption Reinsurance Agreement dated September 16, 1992, by and among National Foundation Life Insurance Company and American Integrity Insurance Company (incorporated by reference to Exhibit 2 of the Company's Current Report on Form 8-K dated September 25, 1992). 10.11 -- Westbridge 1992 Stock Option Plan (incorporated by reference to Exhibit 28.4 to the Company's Registration Statement No. 33-55192 on Form S-8). 10.12 -- First Amendment to the 1992 Stock Option Plan (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992). 10.13 -- Second Amendment to the 1992 Stock Option Plan (incorporated by reference to Exhibit 10.21 to Amendment No. 1 to the Company's Registration Statement No. 33-31830 on Form S-1). 10.14 -- Preferred Stock Purchase Agreement dated as of April 1, 1994 by and between Westbridge Capital Corp. and each of the purchasers named on the signature pages thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated April 26, 1994). 10.15 -- Amended and Restated Receivables Purchase and Sale Agreement dated as of November 14, 1996 between National Foundation Life Insurance Company, National Financial Insurance Company, American Insurance Company of Texas, Freedom Life Insurance Company of America and Health Care-One Insurance Agency, Inc., and Westbridge Funding Corporation (incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). II-3 6 10.16 -- Non-Insurance Company Sellers Receivables Purchase and Sale Agreement dated as of November 14, 1996 between Health Care-One Insurance Agency, Inc., Health Care-One Marketing Group, Inc., LSMG, Inc., Senior Benefits of Texas, Inc. and Westbridge Marketing Corporation and Westbridge Funding Corporation (incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10.17 -- Credit Agreement dated as of December 28, 1995 between Westbridge Funding Corporation and Fleet National Bank of Connecticut (incorporated by reference to Exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.18 -- First Amendment and Waiver to the Credit Agreement, dated as of May 17, 1996, between Westbridge Funding Corporation and Fleet National Bank (incorporated by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10.19 -- Second Amendment and Waiver to the Credit Agreement, dated as of November 14, 1996, between Westbridge Funding Corporation and Fleet National Bank (incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10.20 -- Guaranty Agreement dated as of December 28, 1995 by Westbridge Capital Corp. In favor of Fleet National Bank of Connecticut (incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.21 -- First Amendment to the Guaranty Agreement, dated as November 14, 1996, by Westbridge Capital Corp. in favor of Fleet National Bank (incorporated by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10.22 -- Security Agreement dated as of December 28, 1995 by Westbridge Funding Corporation for the benefit of Fleet National Bank of Connecticut (incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.23 -- Westbridge Capital Corp. 10% Senior Note Due 2002 dated December 22, 1995 (incorporated by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.24 -- Warrant to Purchase Common Stock of Westbridge Capital Corp. dated December 22, 1995 (incorporated by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.25 -- Master General Agent's Contract by and between American Insurance Company of Texas and National Farm & Ranch Group, Inc., effective the 1st day of September, 1994 (incorporated by reference to Exhibit 10.25 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996). 10.26 -- Master General Agent's Contract by and between National Financial Insurance Company and National Farm & Ranch Group, Inc., effective as of the 1st day of June, 1995 (incorporated by reference to Exhibit 10.26 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996). II-4 7 10.27 -- Master General Agent's Contract by and between National Foundation Life Insurance Company and National Farm & Ranch Group, Inc., effective as of the 1st day of September, 1994 (incorporated by reference to Exhibit 10.27 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996). 10.28 -- Master General Agent's Contract by and between American Insurance Company of Texas and Cornerstone National Marketing Corporation, effective as of the 19th day of October, 1994 (incorporated by reference to Exhibit 10.28 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996). 10.29 -- Master General Agent's Contract by and between National Financial Insurance Company and Cornerstone National Marketing Corporation, effective as of the 19th day of October, 1994 (incorporated by reference to Exhibit 10.29 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996). 10.30 -- Master General Agent's Contract by and between National Foundation Life Insurance Company and Cornerstone National Marketing Corporation, effective as of the 19th day of October, 1994 (incorporated by reference to Exhibit 10.30 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996). 10.31 -- Master General Agent's Contract by and between Freedom Life Insurance Company of America and John P. Locke, d.b.a. 1ST MILLION, dated the 31st day of May 1996 (incorporated by reference to Exhibit 10.31 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996). 10.32 -- Westbridge Capital Corp. 1996 Restricted Stock Plan (incorporated by reference to the Company's Proxy Statement for the Annual Meeting of Stockholders of the Company held on May 30, 1996). 10.33 -- Form of Pledge Agreement between Westbridge Capital Corp. and Fleet National Bank of Connecticut (incorporated by reference to Exhibit 10.33 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996). 10.34 -- Reinsurance Agreement between National Foundation Life Insurance Company & Freedom Life Insurance Company of America and Reassurance Company of Hannover, effective July 1, 1996 (incorporated by reference to Exhibit 10.34 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996). 12.1** -- Statement of computation of ratios. 21.1 -- List of Subsidiaries of Westbridge Capital Corp. (incorporated by reference to Exhibit 21.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 23.1* -- Consent of Price Waterhouse LLP. 23.2* -- Consent of Milbank, Tweed, Hadley & McCloy (included in Exhibit 5.1). 24.1** -- Powers of Attorney (included on signature pages previously filed). 24.2** -- Power of Attorney from Barry L. Stevens.
II-5 8 25.1* -- Statement of Eligibility and Qualification of Trustee under Trust Indenture Act of 1939 (Form T-1) of First Union National Bank. 27.1** -- Financial Data Schedule.
- --------------- * Filed herewith ** Previously filed (b) FINANCIAL STATEMENT SCHEDULES. II. Condensed Financial Information of Registrant (included on page S-1). III. Supplementary Insurance Information (included on page S-4). IV. Reinsurance (included on page S-5). V. Valuation and Qualifying Accounts and Reserves (included on page S-6). ITEM 17. UNDERTAKINGS. 1. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to its Certificate of Incorporation, By-Laws or otherwise, the registrant has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. 2. For the purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as a part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. 3. For the purposes of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 4. The undersigned registrant hereby undertakes to file an application for the purposes of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act of 1939 in accordance with the rules and regulations prescribed by the Securities and Exchange Commission under Section 305(b)(2) of such Act. II-6 9 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Amendment No. 2 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Fort Worth, State of Texas, on April 18, 1997. WESTBRIDGE CAPITAL CORP. By: /s/ MARTIN E. KANTOR ---------------------------------- (Martin E. Kantor, Chairman of the Board and Chief Executive Officer) Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 2 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ MARTIN E. KANTOR Director, Chairman of the Board, April 18, 1997 - ----------------------------------------------------- and Chief Executive Officer (Martin E. Kantor) (Principal Executive Officer) /s/ JAMES W. THIGPEN Director, President and Chief April 18, 1997 - ----------------------------------------------------- Operating Officer (James W. Thigpen) /s/ PATRICK J. MITCHELL Executive Vice President, Chief April 18, 1997 - ----------------------------------------------------- Financial Officer and Treasurer (Patrick J. Mitchell) (Principal Financial and Accounting Officer) * Director April 18, 1997 - ----------------------------------------------------- (Marvin H. Berkeley) * Director April 18, 1997 - ----------------------------------------------------- (Arthur W. Feinberg) * Director April 18, 1997 - ----------------------------------------------------- (George M. Garfunkel) * Director April 18, 1997 - ----------------------------------------------------- (Peter J. Millock) * Director April 18, 1997 - ----------------------------------------------------- (Glenn O. Phillips) * Director April 18, 1997 - ----------------------------------------------------- (Joseph C. Sibigtroth) * Director April 18, 1997 - ----------------------------------------------------- (Barry L. Stevens) * Director April 18, 1997 - ----------------------------------------------------- (Barth P. Walker)
*By: /s/ JAMES W. THIGPEN ------------------------------- James W. Thigpen Attorney-in-Fact II-7 10 SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT WESTBRIDGE CAPITAL CORP. (PARENT COMPANY) STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (IN THOUSANDS)
YEAR ENDED DECEMBER 31, ----------------------------- 1996 1995 1994 ------- ------- ------- Net investment income....................................... $ 62 $ 23 $ 12 Intercompany income derived from: Interest on Surplus Certificates.......................... 78 78 106 Rental of leasehold improvements and equipment............ 1,703.. 1,597 658 Interest on advances to subsidiaries........................ 192 182 170 Other income................................................ 106 120 96 ------- ------- ------- 2,141 2,000 1,042 ------- ------- ------- General and administrative expenses......................... 2,128 2,085 894 Taxes, licenses and fees.................................... 90 97 35 Interest expense............................................ 2,496 2,432 3,228 ------- ------- ------- 4,714 4,614 4,157 ------- ------- ------- Loss before benefit for income taxes and equity in undistributed net earnings of subsidiaries................ (2,573) (2,614) (3,115) Benefit for income taxes.................................. 432 1,427 1,228 ------- ------- ------- (2,141) (1,187) (1,887) Equity in undistributed net earnings of subsidiaries........ 10,402 6,918 8,312 ------- ------- ------- Net income before extraordinary item........................ 8,261 5,731 6,425 Extraordinary loss from early extinguishment of debt, net of income tax benefit of $210................................ -- 407 -- ------- ------- ------- Net income........................................ 8,261 5,324 6,425 Preferred stock dividends................................... 1,650 1,650 1,190 ------- ------- ------- Income applicable to common stockholders.................... 6,611 3,674 5,235 Retained earnings at beginning of year...................... 10,575 6,901 1,666 ------- ------- ------- Retained earnings at end of year............................ $17,186 $10,575 $ 6,901 ======= ======= =======
The condensed financial information should be read in conjunction with the Westbridge Capital Corp. December 31, 1996 consolidated financial statements and notes thereto. S-1 11 SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT WESTBRIDGE CAPITAL CORP. (PARENT COMPANY) BALANCE SHEETS (IN THOUSANDS)
DECEMBER 31, ------------------ 1996 1995 ------- ------- Assets: Cash and other short-term investments........................ $ 1,241 $ 1,446 Investment in consolidated subsidiaries....................... 77,946 70,118 Accrued investment income............. 50 34 Leasehold improvements and equipment, net................................ 1,100 1,387 Other assets.......................... 6,540 7,257 Advances due from subsidiaries........ 2,557 4,797 Receivable from subsidiary on Surplus Certificate........................ 777 777 ------- ------- Total Assets.................. $90,211 $85,816 ======= ======= Liabilities: Senior subordinated notes, net........ $19,350 $19,264 Note payable.......................... 1,038 927 Other liabilities..................... 991 1,130 Payable to subsidiaries............... 929 1,690 ------- ------- Total Liabilities............. 22,308 23,011 ------- ------- Redeemable Preferred Stock.............. 20,000 20,000 ------- ------- Stockholders' Equity: Common stock.......................... 604 599 Capital in excess of par value........ 29,226 29,208 Unrealized appreciation of investments carried at market value............ 1,057 2,593 Retained earnings..................... 17,186 10,575 ------- ------- 48,073 42,975 ------- ------- Less: Aggregate shares held in treasury and investment by affiliate in Parent Company's common stock (28,600 shares at December 31, 1996 and 1995), at cost............................... (170) (170) ------- ------- Total Stockholders' Equity.... 47,903 42,805 ------- ------- Total Liabilities, Redeemable Preferred Stock and Stockholders' Equity......... $90,211 $85,816 ======= =======
The condensed financial information should be read in conjunction with the Westbridge Capital Corp. December 31, 1996 consolidated financial statements and notes thereto. S-2 12 SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT WESTBRIDGE CAPITAL CORP. (PARENT COMPANY) STATEMENT OF CASH FLOWS (IN THOUSANDS)
YEAR ENDED DECEMBER 31, -------------------------------- 1996 1995 1994 -------- -------- -------- Cash Flows From Operating Activities: Net income applicable to common stockholders............. $ 6,611 $ 3,674 $ 5,235 Adjustments to reconcile net income to cash provided by (used for) operating activities: Equity in undistributed net income of subsidiaries.... (10,402) (6,918) (8,312) Accrued investment income............................. (16) (12) 87 Advances due from subsidiaries........................ 1,471 1,383 1,461 Other liabilities..................................... (138) 10 356 Decrease (increase) in deferred income tax benefit.... 356 (1,376) (1,268) (Increase) decrease in deferred expenses.............. 218 (137) (1,726) Other................................................. 546 335 669 -------- -------- -------- Net Cash Used For Operating Activities........... (1,354) (3,041) (3,498) -------- -------- -------- Cash Flows From Investing Activities: Acquisition of NFIC and AICT............................. -- -- (20,178) Proceeds from investments sold and matured............... -- -- 100 Proceeds from surplus certificate........................ -- -- 1,000 Notes receivable from related parties.................... -- -- 1,381 Additions to leasehold improvements and equipment, net of retirements........................................... (165) (703) (911) Decrease in notes receivable............................. 158 -- -- Investment in subsidiaries............................... 1,038 -- 2,000 -------- -------- -------- Net Cash Provided By (Used For) Investing Activities..................................... 1,031 (703) (16,608) -------- -------- -------- Cash Flows From Financing Activities: Issuance of redeemable preferred stock................... -- -- 20,000 Retirement of subordinated debentures, due 1996.......... -- (25,000) -- Issuance of subordinated notes, due 2002................. -- 19,200 -- Issuance of note payable................................. 103 927 -- Issuance of common stock................................. 140 10,108 395 Issuance of common stock warrants........................ -- 74 -- Purchase and cancellation of common stock................ (125) (146) (534) -------- -------- -------- Net Cash Provided By Financing Activities........ 118 5,163 19,861 -------- -------- -------- (Decrease) Increase in Cash and Short-Term Investments During the Year.................... (205) 1,419 (245) Cash and Short-Term Investments at Beginning of Year................................................ 1,446 27 272 -------- -------- -------- Cash and Short-Term Investments at End of Year........ $ 1,241 $ 1,446 $ 27 ======== ======== ========
The condensed financial information should be read in conjunction with the Westbridge Capital Corp. December 31, 1996 consolidated financial statements and notes thereto. S-3 13 SCHEDULE III WESTBRIDGE CAPITAL CORP. SUPPLEMENTARY INSURANCE INFORMATION (IN THOUSANDS)
Other Policy Deferred Claims Benefits Amortization Policy Future and Net and of Policy Acquisition Policy Benefits Premium Investment Claims Acquisition Segment Costs Benefits Payable Revenue Income Expense Costs ------- ----------- -------- -------- -------- ---------- -------- ------------ YEAR ENDED DECEMBER 31, 1996: Insurance operations...................... $83,871 $54,204 $39,186 $156,780 $6,514 $94,187 $22,907 Fee and service income activities......... -- -- -- -- 1,784 -- -- Corporate (parent company)................ -- -- -- -- 438 -- -- ------- ------- ------- -------- ------ ------- ------- Total........................... $83,871 $54,204 $39,186 $156,780 $8,736 $94,187 $22,907 ======= ======= ======= ======== ====== ======= ======= YEAR ENDED DECEMBER 31, 1995: Insurance operations...................... $56,977 $46,620 $39,063 $120,093 $7,095 $70,465 $11,553 Fee and service income activities......... -- -- -- -- -- -- -- Corporate (parent company)................ -- -- -- -- 326 -- -- ------- ------- ------- -------- ------ ------- ------- Total........................... $56,977 $46,620 $39,063 $120,093 $7,421 $70,465 $11,553 ======= ======= ======= ======== ====== ======= ======= YEAR ENDED DECEMBER 31, 1994: Insurance operations...................... $58,654 $62,862 $41,349 $ 98,703 $5,487 $53,623 $ 9,711 Fee and service income activities......... -- -- -- -- -- -- -- Corporate (parent company)................ -- -- -- -- 277 -- -- ------- ------- ------- -------- ------ ------- ------- Total........................... $58,654 $62,862 $41,349 $ 98,703 $5,764 $53,623 $ 9,711 ======= ======= ======= ======== ====== ======= ======= Other Operating Premiums Segment Expenses Written* ------- --------- -------- YEAR ENDED DECEMBER 31, 1996: Insurance operations...................... $16,385 $107,149 ======== Fee and service income activities......... 24,433 Corporate (parent company)................ 4,637 ------- Total........................... $45,455 ======= YEAR ENDED DECEMBER 31, 1995: Insurance operations...................... $23,533 $ 98,996 ======== Fee and service income activities......... 11,670 Corporate (parent company)................ 4,615 ------- Total........................... $39,818 ======= YEAR ENDED DECEMBER 31, 1994: Insurance operations...................... $22,688 $ 34,732 ======== Fee and service income activities......... 7,704 Corporate (parent company)................ 3,976 ------- Total........................... $34,368 =======
- --------------- * Premiums Written -- Amounts do not apply to life insurance. S-4 14 WESTBRIDGE CAPITAL CORP. SCHEDULE IV REINSURANCE (IN THOUSANDS, EXCEPT PERCENTAGES)
Percentage Assumed of Ceded to From Amount Gross Other Other Net Assumed Amount Companies Companies Amount to Net -------- --------- --------- -------- ---------- YEAR ENDED DECEMBER 31, 1996: Life insurance in force.................. $ 86,978 $ -- $ -- $ 86,978 -- ======== ====== ====== ======== Premiums: Life................................... $ 889 $ -- $ -- $ 889 -- Accident and health.................... 155,952 4,063 4,002 155,891 2.57% -------- ------ ------ -------- Total premiums................. $156,841 $4,063 $4,002 $156,780 2.55% ======== ====== ====== ======== YEAR ENDED DECEMBER 31, 1995: Life insurance in force.................. $ 43,441 $ -- $ -- $ 43,441 -- ======== ====== ====== ======== Premiums: Life................................... $ 549 $ -- $ -- $ 549 -- Accident and health.................... 112,444 2,811 9,911 119,544 8.29% -------- ------ ------ -------- Total premiums................. $112,993 $2,811 $9,911 $120,093 8.25% ======== ====== ====== ======== YEAR ENDED DECEMBER 31, 1994: Life insurance in force.................. $ 21,814 $ -- $ -- $ 21,814 -- ======== ====== ====== ======== Premiums: Life................................... $ 444 $ (1) $ -- $ 445 -- Accident and health.................... 92,192 1,781 7,847 98,258 7.99% -------- ------ ------ -------- Total premiums................. $ 92,636 $1,780 $7,847 $ 98,703 7.95% ======== ====== ====== ========
S-5 15 SCHEDULE V WESTBRIDGE CAPITAL CORP. VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (IN THOUSANDS)
Additions Balance at Charged to Balance at Beginning Costs and Deductions End of of Period Expenses (Charge Offs) Period ---------- ---------- ------------- ---------- YEAR ENDED DECEMBER 31, 1996: Allowance for doubtful agents' balances.......... $1,187 $1,462 $(920) $1,729 ====== ====== ===== ====== YEAR ENDED DECEMBER 31, 1995: Allowance for doubtful agents' balances.......... $1,137 $ 50 $ -- $1,187 ====== ====== ===== ====== YEAR ENDED DECEMBER 31, 1994: Allowance for doubtful agents' balances.......... $1,133 $ 4 $ -- $1,137 ====== ====== ===== ======
S-6 16 INDEX TO EXHIBITS The following exhibits are filed herewith. Exhibits incorporated by reference are indicated in the parentheses following the description.
EXHIBIT NUMBER EXHIBIT ------- ------- 1.1* -- Form of Underwriting Agreement. 3.1 -- Restated Certificate of Incorporation of Westbridge filed with the Secretary of State of Delaware on July 28, 1994 (incorporated by reference to Exhibit 3.1 to Amendment No. 1 to the Company's Registration Statement No. 33-81380 on Form S-1). 3.2 -- By-Laws of Westbridge, effective as of June 24, 1994 (incorporated by reference to Exhibit 3.2 to Amendment No. 1 to the Company's Registration Statement No. 33-81380 on Form S-1). 4.1* -- Form of Indenture between Westbridge and First Union National Bank, as Trustee, relating to the % Convertible Subordinated Notes, including form of Convertible Subordinated Note. 4.2 -- Specimen Certificate for Westbridge Common Stock (incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Company's Registration Statement No. 2-78200 on Form S-1). 4.3 -- Indenture between Westbridge and Liberty Bank and Trust Company of Oklahoma City, National Association, as Trustee, relating to the 11% Senior Subordinated Notes due 2002, including form of Senior Subordinated Note (incorporated by reference to Exhibit 2 to the Company's Form 8-A dated July 19, 1995). 4.4* -- Form of Underwriters' Warrant Agreement 5.1* -- Opinion of Milbank, Tweed, Hadley & McCloy regarding legality of the Notes and the Common Stock. 10.1 -- Westbridge Employee Incentive Stock Option Plan (incorporated by reference to Exhibit 10.1 to Amendment No. 1 to the Company's Registration Statement No. 2-78200 on Form S-1). 10.2 -- Description of Cash Bonus Plan (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988). 10.3 -- Westbridge 1985 Stock Option Plan (incorporated by reference to Exhibit 10.7 to the Company's Registration Statement No. 33-3577 on Form S-1). 10.4 -- Amendment No. 1 to the 1985 Employee Incentive Stock Option Plan of Westbridge (incorporated by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1986). 10.5 -- Amendment No. 2 to the 1985 Employee Incentive Stock Option Plan of Westbridge (incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the year ended December 31, 1987). 10.6 -- Amendment No. 3 to the 1985 Employee Incentive Stock Option Plan of Westbridge (incorporated by reference to Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1988). 10.7 -- Stockholders' Agreement dated April 2, 1988, by and among the Company and the other stockholders of LifeStyles Marketing Group, Inc., named therein, as amended (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988).
17
EXHIBIT NUMBER EXHIBIT ------- ------- 10.8 -- Supplement to General Agent's Agreement with Phillip D. Elkins as amended on February 8, 1990 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990). 10.9 -- Assumption Reinsurance Agreement, dated June 20, 1991, by and among National Foundation Life Insurance Company and Bankers Protective Life Insurance Company (incorporated by reference to Exhibit 2 to the Company's Report on Form 8-K dated August 27, 1991). 10.10 -- Assumption Reinsurance Agreement dated September 16, 1992, by and among National Foundation Life Insurance Company and American Integrity Insurance Company (incorporated by reference to Exhibit 2 of the Company's Current Report on Form 8-K dated September 25, 1992). 10.11 -- Westbridge 1992 Stock Option Plan (incorporated by reference to Exhibit 28.4 to the Company's Registration Statement No. 33-55192 on Form S-8). 10.12 -- First Amendment to the 1992 Stock Option Plan (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992). 10.13 -- Second Amendment to the 1992 Stock Option Plan (incorporated by reference to Exhibit 10.21 to Amendment No. 1 to the Company's Registration Statement No. 33-31830 on Form S-1). 10.14 -- Preferred Stock Purchase Agreement dated as of April 1, 1994 by and between Westbridge Capital Corp. and each of the purchasers named on the signature pages thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated April 26, 1994). 10.15 -- Amended and Restated Receivables Purchase and Sale Agreement dated as of November 14, 1996 between National Foundation Life Insurance Company, National Financial Insurance Company, American Insurance Company of Texas, Freedom Life Insurance Company of America and Health Care-One Insurance Agency, Inc., and Westbridge Funding Corporation (incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10.16 -- Non-Insurance Company Sellers Receivables Purchase and Sale Agreement dated as of November 14, 1996 between Health Care-One Insurance Agency, Inc., Health Care-One Marketing Group, Inc., LSMG, Inc., Senior Benefits of Texas, Inc. and Westbridge Marketing Corporation and Westbridge Funding Corporation (incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10.17 -- Credit Agreement dated as of December 28, 1995 between Westbridge Funding Corporation and Fleet National Bank of Connecticut (incorporated by reference to Exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.18 -- First Amendment and Waiver to the Credit Agreement, dated as of May 17, 1996, between Westbridge Funding Corporation and Fleet National Bank (incorporated by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10.19 -- Second Amendment and Waiver to the Credit Agreement, dated as of November 14, 1996, between Westbridge Funding Corporation and Fleet National Bank (incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996).
18
EXHIBIT NUMBER EXHIBIT ------- ------- 10.20 -- Guaranty Agreement dated as of December 28, 1995 by Westbridge Capital Corp. In favor of Fleet National Bank of Connecticut (incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.21 -- First Amendment to the Guaranty Agreement, dated as November 14, 1996, by Westbridge Capital Corp. in favor of Fleet National Bank (incorporated by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10.22 -- Security Agreement dated as of December 28, 1995 by Westbridge Funding Corporation for the benefit of Fleet National Bank of Connecticut (incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.23 -- Westbridge Capital Corp. 10% Senior Note Due 2002 dated December 22, 1995 (incorporated by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.24 -- Warrant to Purchase Common Stock of Westbridge Capital Corp. dated December 22, 1995 (incorporated by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). 10.25 -- Master General Agent's Contract by and between American Insurance Company of Texas and National Farm & Ranch Group, Inc., effective the 1st day of September, 1994 (incorporated by reference to Exhibit 10.25 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996). 10.26 -- Master General Agent's Contract by and between National Financial Insurance Company and National Farm & Ranch Group, Inc., effective as of the 1st day of June, 1995 (incorporated by reference to Exhibit 10.26 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996). 10.27 -- Master General Agent's Contract by and between National Foundation Life Insurance Company and National Farm & Ranch Group, Inc., effective as of the 1st day of September, 1994 (incorporated by reference to Exhibit 10.27 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996). 10.28 -- Master General Agent's Contract by and between American Insurance Company of Texas and Cornerstone National Marketing Corporation, effective as of the 19th day of October, 1994 (incorporated by reference to Exhibit 10.28 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996). 10.29 -- Master General Agent's Contract by and between National Financial Insurance Company and Cornerstone National Marketing Corporation, effective as of the 19th day of October, 1994 (incorporated by reference to Exhibit 10.29 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996). 10.30 -- Master General Agent's Contract by and between National Foundation Life Insurance Company and Cornerstone National Marketing Corporation, effective as of the 19th day of October, 1994 (incorporated by reference to Exhibit 10.30 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996).
19 10.31 -- Master General Agent's Contract by and between Freedom Life Insurance Company of America and John P. Locke, d.b.a. 1ST MILLION, dated the 31st day of May 1996 (incorporated by reference to Exhibit 10.31 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996). 10.32 -- Westbridge Capital Corp. 1996 Restricted Stock Plan (incorporated by reference to the Company's Proxy Statement for the Annual Meeting of Stockholders of the Company held on May 30, 1996). 10.33 -- Form of Pledge Agreement between Westbridge Capital Corp. and Fleet National Bank of Connecticut (incorporated by reference to Exhibit 10.33 to Amendment No. 2 to the Company's Registration Statement No. 33-81380 on Form S-1, as filed on August 9, 1996). 10.34 -- Reinsurance Agreement between National Foundation Life Insurance Company & Freedom Life Insurance Company of America and Reassurance Company of Hannover, effective July 1, 1996 (incorporated by reference to Exhibit 10.34 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996). 12.1** -- Statement of computation of ratios. 21.1 -- List of Subsidiaries of Westbridge Capital Corp. (incorporated by reference to Exhibit 21.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 23.1* -- Consent of Price Waterhouse LLP. 23.2* -- Consent of Milbank, Tweed, Hadley & McCloy (included in Exhibit 5.1). 24.1** -- Powers of Attorney (included on signature pages previously filed). 24.2** -- Power of Attorney from Barry L. Stevens. 25.1* -- Statement of Eligibility and Qualification of Trustee under Trust Indenture Act of 1939 (Form T-1) of First Union National Bank. 27.1** -- Financial Data Schedule.
- --------------- * Filed herewith ** Previously filed EX-1.1 2 UNDERWRITING AGREEMENT 1 KDW DRAFT 4/17/97 $65,000,000 [ %] CONVERTIBLE SUBORDINATED NOTES DUE 2007 WESTBRIDGE CAPITAL CORP. UNDERWRITING AGREEMENT EXECUTION COPY New York, New York April [ ], 1997 FORUM CAPITAL MARKETS L.P. RAYMOND JAMES & ASSOCIATES, INC. c/o Forum Capital Markets L.P. 53 Forest Avenue Old Greenwich, Connecticut 06870 Ladies and Gentlemen: Westbridge Capital Corp., a Delaware corporation (the "Company"), confirms its agreement with Forum Capital Markets L.P. and Raymond James & Associates, Inc. (the "Underwriters," which term shall also include any underwriter substituted as hereinafter provided in Section 11 hereof), with respect to the sale by the Company and the purchase by the Underwriters, acting severally and not jointly, of $65,000,000 aggregate principal amount of the Company's [ %] Convertible Subordinated Notes due 2007 (the "Notes") to be issued pursuant to the provisions of an indenture dated as of the date hereof (the "Indenture") between the Company and First Union National Bank, as trustee (the "Trustee") in substantially the form filed as an exhibit to the Registration Statement (as defined below). Such $65,000,000 aggregate principal amount of Notes are hereafter referred to as the "Firm Notes." Upon the request of the Underwriters, as provided in Section 2(b) hereof, the Company shall also issue and sell to the Underwriters, acting severally and not jointly, up to an additional $9,750,000 aggregate principal amount of Notes for the purpose of covering over-allotments, if any. Such $9,750,000 aggregate principal amount of Notes are hereinafter referred to as the "Option Notes," and together with the Firm Notes are hereinafter referred to as the "Notes." The shares of the Company's common stock, par value $.10 per share (the "Common Stock"), issuable upon conversion of the Notes are hereinafter referred to as the "Underlying Stock." The Company also proposes to sell to the Underwriters, for nominal consideration, warrants (the "Warrants") pursuant to a warrant agreement (the "Warrant Agreement") for the purchase, during a period commencing one year after the date hereof and expiring on the fifth anniversary of the date hereof, of an aggregate of up to _____ shares of Common Stock (the "Warrant Shares") at an exercise price per share of $______, subject to adjustment as provided in the Warrant Agreement. The Notes, the Underlying Stock, the Warrants and the Warrant Shares are collectively referred to herein as the "Securities." The Company hereby confirms its agreement with the Underwriters with respect to the sale by the Company and the purchase by the Underwriters of the Notes and Warrants, as set forth herein. 1. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, the Underwriters as of the date hereof, and as of the Closing Date (as defined in Section 2(c) hereof) and each Option Closing Date (as defined in Section 2(b) hereof), if any, as follows: (a) The Company has prepared and filed with the Securities and Exchange Commission (the "Commission") a registration statement, and an amendment or amendments thereto, on Form S-1, No. 333-24137, including the related preliminary prospectus dated April 7, 1997 and any subsequent preliminary prospectus 2 ("Preliminary Prospectus"), for the registration of the Securities under the Securities Act of 1933, as amended (the "Securities Act"), which registration statement and amendment or amendments have been prepared by the Company in conformity with the requirements of the Securities Act, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and the rules and regulations of the Commission under the Securities Act (the "Regulations") and the rules and regulations under the Trust Indenture Act. The Company has complied with the conditions for the use of Form S-1. Except as the context may otherwise require, said registration statement, as amended, on file with the Commission at the time said registration statement becomes effective (including the prospectus, financial statements, schedules, exhibits and all other documents filed as a part thereof or incorporated therein (including, but not limited to those documents or information incorporated by reference therein) and all information deemed to be a part thereof as of such time pursuant to paragraph (b) of Rule 430(A) of the Regulations) is hereinafter called the "Registration Statement," and the form of prospectus in the form first filed with the Commission pursuant to Rule 424(b) of the Regulations or, if no filing pursuant to Rule 424(b) is made, such form of prospectus included in the Registration Statement, together with any documents thereafter incorporated by reference therein, is hereinafter called the "Prospectus." If the Company files an abbreviated registration statement to register additional Securities and relies upon Rule 462(b) under the Securities Act for such registration statement to become effective upon filing with the Commission (the "Rule 462 Registration Statement"), then any reference herein to the term "Registration Statement" shall be deemed to refer to both the registration statement referred to above and the Rule 462 Registration Statement. For purposes hereof, "Rules and Regulations" means the rules and regulations adopted by the Commission under the Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act") or the Trust Indenture Act, as applicable. (b) Neither the Commission nor any state regulatory authority has issued any order preventing or suspending the use of any Preliminary Prospectus, the Registration Statement or the Prospectus or any part of any thereof or the qualification of the Trustee, and no proceedings for a stop order suspending the effectiveness of the Registration Statement, any of the Company's securities or the qualification of the Trustee have been instituted or are pending or, to the knowledge of the Company, threatened. Each of any Preliminary Prospectus, the Registration Statement and the Prospectus at the time of filing thereof with the Commission, conformed with the requirements of the Securities Act, the Trust Indenture Act and the Rules and Regulations in all material respects, none of any Preliminary Prospectus (provided, that, (i) with respect to any Preliminary Prospectus, the Company's responsibility under this Section 1(b) shall be limited to indemnification pursuant to Section 7(a) hereof and (ii) no representation or warranty is made with respect to any statement or omission in the Preliminary Prospectus included in the Registration Statement as originally filed), the Registration Statement or the Prospectus at the time of filing thereof contained an untrue statement of a material fact or omitted 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, except that this representation and warranty does not apply to statements made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Underwriters expressly for use in the Preliminary Prospectus, Registration Statement or Prospectus (the "Underwriters Information"). When the Registration Statement or any amendment thereto was or is declared effective, the Closing Date and each Option Closing Date, if any, the Registration Statement and the Prospectus will conform to the requirements of the Securities Act, the Trust Indenture Act and the Rules and Regulations. At all times subsequent to the effective date of the Registration Statement through the last to occur of the Closing Date, the last Option Closing Date, if any, or the last date the Prospectus may be required to be delivered in connection with sales by the Underwriters or a dealer, the Registration Statement and the Prospectus will conform to the requirements of the Securities Act, the Trust Indenture Act and the Rules and Regulations. Neither the Registration Statement nor the Prospectus, nor any amendment or supplement thereto, as of such respective dates, with respect to the Registration Statement, or during such respective periods, with respect to the Prospectus, will contain any 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 (with respect to the Prospectus, in light of the circumstances under which they were made) not misleading; provided, however, that this representation and warranty does not apply to statements made in reliance upon and in conformity with the Underwriters Information. The Company acknowledges that the Underwriters Information shall be only such written information that is contained under the caption "Underwriting" in Preliminary Prospectus, the Prospectus and the Registration Statement and the stabilization legend set forth in the forepart of the Preliminary Prospectus, Prospectus and the Registration Statement. -2- 3 (c) The Company is subject to Section 13 or 15(d) of the Exchange Act. All documents filed with the Commission by the Company since January 1, 1994, when they were filed with the Commission (or, if any amendment with respect to any such document was filed, when such amendment was filed), complied, and all document or amendments thereto hereafter filed with the Commission will at the time of such filing comply, in all material respects with the requirements of the Exchange Act and the Rules and Regulations, as applicable. Any documents filed with the Commission subsequent to the date of the Prospectus shall, when filed with the Commission, conform in all material respects to the requirements of the Exchange Act and the Rules and Regulations, as applicable. (d) All the Company's subsidiaries (collectively, the "Subsidiaries") are listed on Annex A hereto. The Company and each of the Subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation. The Company and each of the Subsidiaries is duly qualified and licensed and in good standing as a foreign corporation in each jurisdiction in which its ownership or leasing of any properties or the character of its operations require such qualification or licensing which jurisdictions are identified on Annex A hereto, and except where the failure to be so qualified or licensed would not have a material adverse effect on the condition, financial or otherwise, results of operations, business or prospects of the Company and the Subsidiaries, taken as a whole (a "Material Adverse Effect"). The Company does not control, directly or indirectly, or own in excess of 10% of the issued and outstanding capital stock or other equity interests or securities convertible or exchangeable for in excess of 10% of the capital stock or other equity interests, of any corporation, partnership, limited liability company, association or other entity other than the Subsidiaries. Except as set forth on Annex A, none of the Subsidiaries controls, directly or indirectly, or owns in excess of 10% of the issued and outstanding capital stock or other equity interests or securities convertible or exchangeable for in excess of 10% of the capital stock or other equity interests, of any corporation, partnership, limited liability company, association or other entity. The Company owns, either directly or through other Subsidiaries, the percentage of the outstanding capital stock of each Subsidiary set forth on Annex A attached hereto free and clear of all liens, charges, claims, encumbrances, pledges, security interests, defects or other restrictions or equities of any kind whatsoever (collectively, the "Liens") except for the pledge by the Company of all of the issued and outstanding shares of capital stock of each of National Foundation Life Insurance Company ("NFLIC"), Freedom Life Insurance Company of America ("FLICA"), National Financial Insurance Company ("NFIC") and Westbridge Funding Corporation ("WFC") to secure the obligations of the Company arising pursuant to a Guaranty Agreement dated as of December 28, 1995 by the Company in favor of Fleet National Bank (formerly, Fleet National Bank of Connecticut). Each of the Company and the Subsidiaries has all requisite power and authority (corporate and other), and has obtained any and all necessary authorizations, approvals, orders, licenses, certificates, franchises and permits (collectively "Approvals") of and from all governmental or regulatory officials and bodies (including, without limitation, insurance regulatory officials), to own or lease its properties and conduct its business as described in the Prospectus except for Approvals which if not so obtained would not have a Material Adverse Effect; each of the Company and the Subsidiaries is and has been doing business in compliance with all such Approvals and all federal, foreign, state and local laws, rules and regulations, except for such failures to comply as would not have a Material Adverse Effect; and neither the Company nor any of the Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Approval. (e) The Company has an authorized, issued and outstanding capitalization as set forth in the Prospectus under the caption "Capitalization," and will have the adjusted capitalization set forth therein on the Closing Date and each Option Closing Date, if any, based upon the assumptions set forth therein (except as a result of the issuance of shares of Common Stock identified in the footnotes to such table as reserved for issuance upon the conversion of the Company's Series A Cumulative Convertible Redeemable Exchangeable Preferred Stock (the "Series A Preferred Stock") and pursuant to the plans, options or warrants described therein). Neither the Company nor any of the Subsidiaries is a party to or bound by any instrument, agreement or other arrangement, including, but not limited to, any voting trust agreement, stockholders' agreement or other agreement or instrument, affecting the securities or rights or obligations of securityholders of the Company or any of the Subsidiaries or providing for any of them to issue, sell, transfer or acquire any capital stock, rights, warrants, options or other securities of the Company or any of the Subsidiaries, except for this Agreement, the Indenture and the Warrant Agreement and as set forth in the Registration Statement. The Securities and all other securities issued or issuable pursuant to existing -3- 4 plans, agreements or arrangements relating to the issuance of securities or pursuant or currently outstanding options, warrants, rights or other securities by the Company and the Subsidiaries conform, or, when issued and paid for, will conform in all material respects to all statements with respect thereto contained in the Prospectus. All issued and outstanding securities of the Company and the Subsidiaries have been duly authorized and validly issued and are fully paid and non-assessable; the holders thereof have no rights of rescission with respect thereto and are not subject to personal liability by reason of being such holders; and none of such securities were issued in violation of the preemptive rights of any securityholder of the Company or any of the Subsidiaries or similar contractual rights granted by the Company or any of the Subsidiaries. The Notes will be issued pursuant to the terms and conditions of the Indenture, and the Indenture will conform in all material respects to the description thereof contained in the Registration Statement. At the Closing Date, the Indenture will conform to the requirements of the Trust Indenture Act and the Rules and Regulations applicable to an indenture which is qualified thereunder. The Notes have been duly authorized and, when validly authenticated, issued, delivered and paid for in the manner contemplated by the Indenture, will be duly authorized, validly issued and outstanding obligations of the Company entitled to the benefits of the Indenture. The Warrants have been duly authorized and when validly issued, delivered and paid for in the manner contemplated by the Warrant Agreement, will be duly authorized, validly issued and outstanding obligations of the Company entitled to the benefits of the Warrant Agreement. The Underlying Stock issuable upon conversion of the Notes and the Warrant Shares issuable upon exercise of the Warrants will, assuming in the case of the Warrant Shares, payment therefor as set forth in the Warrant Agreement, upon such issuance, be duly authorized, validly issued, fully paid and non-assessable, and the Company has duly authorized and reserved for issuance the Underlying Stock issuable upon such conversion of the Notes and the Warrant Shares issuable upon exercise of the Warrants. The Securities are not and will not be subject to any preemptive or other similar rights of any securityholder of the Company or any of the Subsidiaries; all corporate action required to be taken for the authorization, issue and sale of the Securities has been duly and validly taken; and the certificates representing the Securities will be in due and proper form. Except for current holders of certain warrants issued to Oppenheimer & Co., Inc. in connection with the private placement of the Series A Preferred Stock and certain warrants issued to Martin E. Kantor in December 1995, no holder of any securities of the Company has any right to require registration of shares of Common Stock or other securities of the Company because of the filing of the Registration Statement or the consummation of the transactions contemplated hereby. Upon the issuance and delivery pursuant to the terms of this Agreement, the Indenture and the Warrant Agreement, of the Notes and the Warrants to be sold by the Company hereunder and thereunder, the Underwriters will acquire good and valid title thereto free and clear of any Liens, except for Liens created or permitted to exist by the Underwriters. (f) The consolidated financial statements of the Company and the Subsidiaries together with the related notes thereto set forth in the Registration Statement, the Preliminary Prospectus and the Prospectus fairly present in accordance with generally accepted accounting principles the financial position, changes in stockholders' equity, cash flow and results of operations of the Company and the Subsidiaries at the respective dates and for the respective periods to which they apply, and such historical financial statements have been prepared in conformity with generally accepted accounting principles and the Rules and Regulations, consistently applied throughout the periods involved; there has been no material adverse change or development involving a material prospective change in the condition, financial or otherwise, or in the earnings, business, prospects or results of operations of the Company and the Subsidiaries taken as a whole, whether or not arising in the ordinary course of business, since the date of the consolidated financial statements included in the Registration Statement, the Preliminary Prospectus and the Prospectus, and the outstanding debt, the property, both tangible and intangible, and the businesses of each of the Company and the Subsidiaries conform in all material respects to the descriptions thereof contained in the Registration Statement, the Preliminary Prospectus and the Prospectus. Financial information set forth in the Preliminary Prospectus and the Prospectus under the headings "Summary Financial and Operating Data," "Selected Financial and Operating Data," "Capitalization" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" fairly presents, in all respects, on the basis stated in the Preliminary Prospectus and the Prospectus, the information set forth therein and has been derived from or compiled on a basis consistent with that of the audited financial statements included in the Preliminary Prospectus and the Prospectus. (g) Each of the Company and the Subsidiaries has filed all material tax returns required to be filed by it in any jurisdiction, other than those filings being contested in good faith, and has paid all federal, state, local -4- 5 and foreign taxes shown to be due on such returns or claimed to be due from such entities, other than those (i) currently payable without penalty or interest or (ii) being contested in good faith; and the Company has established adequate reserves in its financial statements (in accordance with generally accepted accounting principles) for such taxes which are not due and payable and (iii) does not have any tax deficiency or claims outstanding, proposed or assessed against it. (h) No transfer tax, stamp duty or other similar tax is payable by or on behalf of the Underwriters in connection with (i) the issuance by the Company of the Securities, (ii) the purchase by the Underwriters of the Notes or the Warrants from the Company or (iii) the consummation by the Company of any of its obligations under this Agreement, the Indenture or the Warrant Agreement. (i) The Company and each Subsidiary which constitutes a "significant subsidiary" under Rule 405 promulgated under the Securities Act maintains liability, casualty and other insurance (subject to customary deductions and retentions) with responsible insurance companies against such risks generally insured against by companies engaged in similar businesses as the Company and the Subsidiaries. Neither the Company nor any of the Subsidiaries (A) has failed to give notice or present any material insurance claim with respect to any matter, including, but not limited to, the Company's or any of the Subsidiaries' businesses, property or professional staff, under any insurance policy or surety bond in a due and timely manner, (B) has any disputes or claims against any underwriter of such insurance policies or surety bonds or has failed to pay any premiums due and payable thereunder or (C) has failed to comply with all conditions contained in such insurance policy and surety bonds wherein such failure would have a Material Adverse Effect. There are no facts or circumstances known to the Company which would have the effect under any such insurance policy or surety bond of relieving any insurer of its obligation to satisfy in all material respects any valid claim of the Company or any of the Subsidiaries. (j) There is no action, suit, proceeding, arbitration, litigation or governmental proceeding pending or, to the knowledge of the Company, threatened against (or circumstances that are reasonably likely to give rise to the same), or involving the properties or businesses of, the Company or any of the Subsidiaries which (i) questions the validity of the capital stock of the Company or any of the Subsidiaries or this Agreement or the Indenture or of any action taken or to be taken by the Company or any of the Subsidiaries pursuant to or in connection with this Agreement or the Indenture, or (ii) could reasonably be expected to have a Material Adverse Effect which is not disclosed in the Registration Statement or the Prospectus. (k) The Company has full corporate right, power and authority to authorize, issue, deliver and sell the Securities, to enter into this Agreement, the Indenture and the Warrant Agreement and to consummate the transactions provided for in such agreements. This Agreement has been duly and properly authorized, executed and delivered by the Company. This Agreement constitutes, and when the Company has duly executed and delivered the Indenture and the Warrant Agreement, the Indenture (assuming the due execution and delivery thereof by the Trustee) and the Warrant Agreement (assuming the due execution and delivery thereof by the Underwriters) will constitute, a legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity) and except to the extent that rights to indemnification and contribution may be limited by federal or state securities laws or public policy relating thereto. None of the Company's issue and sale of the Securities, the execution or delivery of this Agreement, the Indenture or the Warrant Agreement, its performance hereunder and thereunder, its consummation of the transactions contemplated herein and therein or the conduct by it and the Subsidiaries of their businesses as described in the Registration Statement or any amendments or supplements thereto conflicts or will conflict with or results or will result in any breach or violation of any of the terms or provisions of, or constitutes or will constitute a default under, or results or will result in the creation or imposition of any Lien upon any property or assets of the Company or any of the Subsidiaries pursuant to the terms of, (i) the certificate of incorporation or by-laws of the Company or any of the Subsidiaries, (ii) any license, contract, indenture, mortgage, deed of trust, voting trust agreement, stockholders' agreement, note, loan or credit agreement or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which it is or may be bound or to -5- 6 which its properties or assets is or may be subject, or any indebtedness, or (iii) any statute, judgment, decree, order, rule or regulation applicable to the Company or any of the Subsidiaries of any arbitrator, court, regulatory body or administrative agency or other governmental agency or body, having jurisdiction over the Company or any of the Subsidiaries or any of their respective activities or properties except, in the case of clauses (ii) and (iii), such conflict, breaches, defaults, creations, impositions and violations that would not have a Material Adverse Effect. (l) No consent, approval, authorization or order of, and no filing with, any court, arbitrator, regulatory body, government agency or other body, domestic or foreign, is required for the execution, delivery or performance by the Company of this Agreement, the Indenture or the Warrant Agreement or the transactions contemplated hereby or thereby, except such as have been or may be obtained under the Securities Act or the Exchange Act or may be required under state securities or Blue Sky laws or the rules of the National Association of Securities Dealers, Inc. (the "NASD") or with respect to the listing of the Notes on the New York Stock Exchange in connection with the Underwriters' purchase and distribution of the Notes or state insurance laws. (m) Subsequent to the respective dates as of which information is set forth in the Prospectus and except as may otherwise be indicated or contemplated herein or therein, unless the Company has notified the Underwriters in writing otherwise, neither the Company nor any of the Subsidiaries has (i) issued any securities or incurred any material liability or obligation, direct or contingent, for borrowed money not in the ordinary course of business, (ii) entered into any material transaction other than in the ordinary course of business or (iii) declared or paid any dividend or made any other distribution on or in respect of its capital stock of any class other than regular quarterly cash dividends paid on the issued and outstanding shares of the Series A Preferred Stock, and there has not been any material adverse change in or affecting the general affairs, management, financial operations, stockholders' equity or results of operation of the Company or any Subsidiary which constitutes a "significant subsidiary" under Rule 405 promulgated under the Securities Act taken as a whole. (n) Neither the Company nor any of its Subsidiaries (i) is in violation of its certificate of incorporation or by-laws, as applicable, (ii) is in default in the performance of any obligation, agreement or condition contained in any license, contract, indenture, mortgage, lease, deed of trust, voting trust agreement, stockholders' agreement, note, loan or credit agreement, agreement or instrument evidencing an obligation for borrowed money or other material agreement or instrument to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries may be bound or to which the property or assets of the Company or any of the Subsidiaries is subject or affected or (iii) is in violation in any respect of any law, ordinance, governmental rule, regulation or court decree to which it or its property or assets may be subject, except any violation or default under the foregoing clause (ii) or (iii) as would not have a Material Adverse Effect. (o) The Company is in compliance with all federal, state, local and foreign laws and regulations respecting employment and employment practices, terms and conditions of employment and wages and hours, except for such failures to comply as would not have a Material Adverse Effect. The Company has no knowledge of any pending investigations involving the Company or any of the Subsidiaries by the U.S. Department of Labor or any such investigations by any other governmental agency responsible for the enforcement of such federal, state, local or foreign laws and regulations. There is no unfair labor practice charge or complaint against the Company or any of the Subsidiaries pending before the National Labor Relations Board or any strike, picketing, boycott, dispute, slowdown or stoppage pending or threatened against or involving the Company or any of the Subsidiaries. No representation question exists respecting the employees of the Company or any of the Subsidiaries, and no collective bargaining agreement or modification thereof is currently being negotiated by the Company or any of the Subsidiaries. No grievance or arbitration proceeding is pending or threatened under any expired or existing collective bargaining agreements of the Company or any of the Subsidiaries. No material labor dispute with the employees of the Company or any of the Subsidiaries exists or, to the best of the Company's knowledge, is imminent. (p) No "employee pension benefit plan," "employee welfare benefit plan" or "multi-employer plan" ("ERISA Plans") as such terms are defined in Sections 3(2), 3(1) and 3(37), respectively, of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), maintained or sponsored by the Company or any -6- 7 of the Subsidiaries (or any trust created thereunder) has engaged in a "prohibited transaction" within the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), which could subject the Company or any of the Subsidiaries to any tax penalty or civil penalty on prohibited transactions which has not been adequately corrected. No "accumulated funding deficiency" (as defined in Section 302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA (other than events with respect to which the 30-day notice under Section 4043 of ERISA has been waived) has occurred with respect to any employee benefit plan which might reasonably be expected to have a Material Adverse Effect. Each ERISA Plan is in compliance in all material respects with all reporting, disclosure and other requirements of the Code and ERISA as they relate to such ERISA Plan. Determination letters have been received from the Internal Revenue Service with respect to each ERISA Plan which is intended to comply with Code Section 401(a) stating that such ERISA Plan and the attendant trust are qualified thereunder. Neither the Company nor any of the Subsidiaries has ever completely or partially withdrawn from a "multi-employer plan" as so defined. (q) Neither the Company or any of the Subsidiaries, nor any affiliates of the Company has taken or will take, directly or indirectly, any action designed to or which has constituted or which might reasonably be expected to cause or result in, under the Exchange Act or otherwise, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities or otherwise. (r) Each of the Company and the Subsidiaries owns or has the right to use, free and clear of all Liens (other than Liens permitted to exist by the Underwriters), all patents, trademarks, service marks, trade names, copyrights, technology, and all licenses and rights with respect to the foregoing, used in the conduct of its business as now conducted or proposed to be conducted without. The Company is not aware of any infringement of or conflict with asserted rights of others with respect to any of the foregoing which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect. (s) Each of the Company and the Subsidiaries has good and marketable title to, or valid and enforceable leasehold estates in, all items of real and personal property which are material to its business, in each case, except as disclosed in the Prospectus, free and clear of all Liens that would have a Material Adverse Effect. (t) Price Waterhouse LLP are independent certified public accountants of the Company as required by the Securities Act and the Rules and Regulations. (u) The Notes have been approved for listing on the New York Stock Exchange, subject to official notice of issuance. The Common Stock is listed on the New York Stock Exchange. (v) Neither the Company or any of the Subsidiaries nor any of their respective officers, directors, stockholders, employees or agents nor any other person acting on behalf of the Company or any of the Subsidiaries has, directly or indirectly, since June 1, 1991 given or agreed to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course of business) to any customer, supplier, employee or agent of a customer or supplier, or any official or employee of any governmental agency (domestic or foreign), or any instrumentality of any government (domestic or foreign), or any political party or candidate for office (domestic or foreign), or any other person who was, is or may be in a position to help or hinder the businesses of the Company or any of the Subsidiaries (or assist the Company or any of the Subsidiaries in connection with any actual or proposed transaction) which would be reasonably likely to subject the Company or any of the Subsidiaries, or any of such others to any damage or penalty in any civil, criminal or governmental litigation or proceeding (domestic or foreign). Each of the Company's and the Subsidiaries' internal accounting controls are sufficient to cause the Company and the Subsidiaries to comply with the Foreign Corrupt Practices Securities Act of 1977, as amended. (w) The minute books of the Company and each of the Subsidiaries have been made available to the Underwriters, contain a complete summary of all meetings and actions of the directors and stockholders of each of the Company and the Subsidiaries since the time of their respective incorporation and reflect all transactions referred to in such minutes accurately in all material respects. -7- 8 (x) Neither the Company nor any of the Subsidiaries has been notified or is otherwise aware that it is potentially liable, or is considered potentially liable, under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or any similar law ("Environmental Laws"). To the Company's knowledge, the Company and the Subsidiaries are in compliance with all applicable existing Environmental Laws, except for such instances of non-compliance which would not have a Material Adverse Effect. The term "Hazardous Material" means (i) any "hazardous substance" as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, (ii) any "hazardous waste" as defined by the Resource Conservation and Recovery Act, as amended, (iii) any petroleum or petroleum product, (iv) any polychlorinated biphenyl and (v) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material, waste or substance regulation under or within the meaning of any other Environmental Law. To the Company's knowledge, no disposal, release or discharge of Hazardous Material has occurred on, in, at or about any of the facilities or properties of the Company or any of the Subsidiaries, except for those instances which are in compliance with Environmental Laws or in the aggregate would not have a Material Adverse Effect. Except as described in the Prospectus, to the Company's knowledge: (i) there has been no storage, disposal, generation, transportation, handling or treatment of Hazardous Material by the Company or any of the Subsidiaries (or to the knowledge of the Company, any of its predecessors in interest) at, upon or from any of the property now or previously owned or leased by the Company or any of the Subsidiaries in violation of any applicable law, ordinance, rule, regulation, order, judgment, decree or permit or which would require remedial action which has not been taken, under any applicable law, ordinance, rule, regulation, order, judgment, decree or permit, except for such violations and failures to take remedial action which would not result in, singularly or in the aggregate, a Material Adverse Effect; and (ii) there has been no material spill, discharge, leak, emission, injection, escape, dumping or release of any kind onto such property or into the environment surrounding such property by the Company or any of the Subsidiaries of any Hazardous Materials, except for such spills, discharges, leaks, emissions, injections, escapes, dumping or releases which are in compliance with Environmental Laws or would not result in, singularly or in the aggregate, a Material Adverse Effect. (y) The Company is not an "investment company," a company controlled by an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended. (z) None of the proceeds of the sale of the Notes or Warrants will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Notes or Warrants to be considered a "purpose credit" within the meanings of Regulation G, T, U or X of the Board of Governors of the Federal Reserve Board. (aa) The Company and the Subsidiaries have complied and will comply with all the provisions of Florida H.B. 1771, codified as Section 517.075 of the Florida Statutes, and all regulations promulgated thereunder relating to issuers doing business with Cuba. (bb) Except as set forth in this Agreement and the Warrant Agreement, there are no claims, payouts, issuances, arrangements or understandings, whether oral or written, for services in the nature of a finder's or origination fee with respect to the sale of the Notes hereunder or any other arrangement, agreement, understanding, payment or issuance with respect to the Company, any of the Subsidiaries or any of their respective officers, directors or affiliates that would constitute underwriters' compensation as determined by the NASD. For these purposes, underwriters' compensation means total expenses payable by the Company to or on behalf of the Underwriters which normally would be paid by the Underwriters, fees and expenses of Underwriters' Counsel (as defined herein), finders fees, financial consulting and advisory fees or other items of value accruing to the Underwriters and related persons, which items of value include, but are not necessarily limited to, stock, options, warrants and convertible and other debt securities if the same are deemed to have been received in connection with or in relation to the offering contemplated by this Agreement and when given by or acquired from the Company or related parties of the Company or persons in control of or under common control with the Company or related parties of the Company. -8- 9 (cc) The Indenture has been duly qualified under the Trust Indenture Act, and all fees required to be paid with respect to the execution of the Indenture and the issuance of the Notes have been paid or will be paid when due. (dd) Except as disclosed in the Prospectus, the authority of each Subsidiary engaged in the insurance business to write the classes and lines of insurance authorized by such licenses, certificates, permits and other authorizations which are material to the Company and the Subsidiaries taken as a whole is unrestricted and except as described in the Prospectus, neither the Company nor any of the Subsidiaries is a party to any agreement, formal or informal, with any regulatory official or other person limiting the ability of any Subsidiary engaged in the insurance business from making full use of the licenses, certificates, permits and other authorizations issued to it or requiring the Company or any of the Subsidiaries to comply with regulatory standards or procedures or requirements different from those applicable to companies with comparable or similar licenses, certificates, permits and other authorizations, expect where such restriction, limitation or requirement would not have a Material Adverse Effect. 2. Purchase by the Underwriters; Delivery and Payment. (a) On the basis of the representations, warranties and agreements contained herein, and subject to the terms and conditions set forth herein, the Company agrees to issue and sell to the Underwriters, and the Underwriters agree, severally and not jointly, to purchase from the Company, the aggregate principal amount of Firm Notes set forth opposite the name of such Underwriter in Schedule I attached hereto at a purchase price equal to _____% of the principal amount thereof, plus any additional amount of Firm Notes which each underwriter may become obligated to purchase pursuant to Section 11 hereof. (b) In addition, on the basis of the representations, warranties and agreements contained herein, and subject to the terms and conditions set forth herein, the Company hereby grants an option to the Underwriters to purchase, severally and not jointly, any or all of the Option Notes at a price equal to _____% of the principal amount thereof plus accrued interest from the Closing Date to the applicable Option Closing Date. Such option will expire at 5:00 p.m. New York time 45 days after the date hereof, and may be exercised in whole or in part from time to time only for the purpose of covering over-allotments which may be made in connection with the offering and distribution of the Firm Notes upon notice by the Underwriters to the Company setting forth the aggregate principal amount of Option Notes as to which the Underwriters are then exercising the option and the time and date of delivery and payment therefor. Any such time and date of delivery and payment (an "Option Closing Date") shall be determined by the Underwriters, but shall not be later than five full business days after the exercise of such option unless otherwise agreed by the Company and the Underwriters. (c) Delivery of, and payment for, the Firm Notes shall be made at 10:00 a.m., New York City time, on April __, 1997, or at such other date or time as shall be agreed by the Underwriters and the Company (such date and time being referred to herein as the "Closing Date"). Delivery of, and payment for, the Firm Notes and the Option Notes shall be made at the offices of Kelley Drye & Warren LLP ("Underwriters' Counsel"), New York, New York, or any such other place as shall be agreed by the Underwriters and the Company. On the Closing Date, the Company shall deliver or cause to be delivered to the Underwriters certificates for the Firm Notes against payment to or upon the order of the Company of the purchase price by certified or official bank check, or if the Company so elects, by wire or book-entry transfer, in each case in immediately available funds. On each Option Closing Date, the Company shall deliver or cause to be delivered to the Underwriters certificates for the Option Notes purchased thereat against payment to or upon the order of the Company of the purchase price by certified or official bank check, or if the Company so elects, by wire or book-entry transfer, in each case in immediately available funds. Upon delivery, the Notes shall be in such denominations and registered in such names as the Underwriters shall have requested in writing not less than one full business day prior to the Closing Date. The Company shall make the certificates for the Notes available for inspection by the Underwriters in New York, New York, not later than one full business day prior to the Closing Date. -9- 10 (d) On the Closing Date, the Company shall in consideration of the payment to it by the Underwriters of $.0001 per Warrant, issue to the Underwriters the Warrants pursuant to the Warrant Agreement. 3. Public Offering of the Notes. As soon after the Registration Statement becomes effective as the Underwriters deem advisable, the Underwriters shall make a public offering of the Notes (other than to residents of any jurisdiction in which the qualification of the Notes is required and has not become effective) at the price and upon the other terms set forth in the Prospectus. The Underwriters may from time to time increase or decrease the public offering price after the distribution of the Notes has been completed to such extent as the Underwriters in their sole discretion deem advisable. The Underwriters may enter into one or more agreements as the Underwriters, in each of their sole discretion, deem advisable with one or more broker-dealers who shall act as dealers in connection with such public offering. 4. Covenants and Agreements of the Company. The Company covenants and agrees with the Underwriters as follows: (a) The Company shall use its best efforts to cause the Registration Statement and any amendments thereto to become effective as promptly as practicable and will not at any time, whether before or after the effective date of the Registration Statement, file any amendment to the Registration Statement or supplement to the Prospectus or file any document under the Securities Act or Exchange Act during any time that a prospectus relating to the Securities is required to be delivered under the Securities Act of which the Underwriters and Underwriters' Counsel shall not previously have been advised and furnished with a copy, or to which the Underwriters or Underwriters' Counsel shall have reasonably objected, or which is not in compliance with the Securities Act, the Exchange Act, the Trust Indenture Act or the Rules and Regulations. (b) As soon as the Company is advised or obtains knowledge thereof, the Company will advise the Underwriters and if requested confirm in writing, (i) when the Registration Statement, as amended, becomes effective and, if the provisions of Rule 430A promulgated under the Securities Act will be relied upon, when the Prospectus has been filed in accordance with said Rule 430A and when any post-effective amendment to the Registration Statement becomes effective, (ii) of the issuance by the Commission of any stop order or of the initiation, or the threatening, of any proceeding suspending the effectiveness of the Registration Statement or the qualification of the Trustee or any order preventing or suspending the use of the Preliminary Prospectus or the Prospectus, or any amendment or supplement thereto, or the institution of proceedings for that purpose, (iii) of the issuance by the Commission or by any state securities commission of any proceedings for the suspension of the qualification of any of the Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose, (iv) of the receipt of any comments from the Commission; and (v) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information. If the Commission or any state securities commission shall enter a stop order or suspend such qualification at any time, the Company will make every reasonable effort to obtain promptly the lifting of such order or suspension at the earliest possible time. (c) The Company shall file the Prospectus or transmit the Prospectus by a means reasonably calculated to result in filing with the Commission pursuant to Rule 424(b)(1) (or, if applicable and if consented to by the Underwriters, pursuant to Rule 424(b)(4)) on or before the date it is required to be filed under the Securities Act and the Rules and Regulations. (d) The Company will give the Underwriters notice of its intention to file or prepare any amendment to the Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectus (including any revised prospectus which the Company proposes for use by the Underwriters in connection with the offering of the Securities which differs from the corresponding prospectus on file at the Commission at the time the Registration Statement becomes effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) of the Rules and Regulations), and will furnish the Underwriters with copies of any such amendment or supplement a reasonable amount of time prior to such proposed filing or use, as -10- 11 the case may be, and will not file any such prospectus to which the Underwriters or Underwriters' Counsel shall reasonably object. (e) The Company will furnish to the Underwriters and Underwriters' Counsel, without charge, one photocopy of the manually executed Registration Statement (including exhibits thereto) and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Securities Act, as many copies of each Preliminary Prospectus and Prospectus and any supplement thereto as the Underwriters may reasonably request. (f) The Company shall endeavor in good faith, in cooperation with the Underwriters at or prior to the time the Registration Statement becomes effective, to qualify the Securities for offering and sale under the securities laws of such jurisdictions as the Underwriters may designate to permit the continuance of sales and dealings therein for as long as may be necessary to complete the distribution contemplated hereby but in any event not longer than 90 days from the date hereof, and shall make such applications, file such documents and furnish such information as may be required for such purpose; provided, however, the Company shall not be required to qualify as a foreign corporation, subject itself to taxation or file a general consent to service of process in any such jurisdiction. In each jurisdiction where such qualification shall be effected, the Company will, unless the Underwriters agree that such action is not at the time necessary or advisable, use all reasonable efforts to file and make such statements or reports at such times as are or may reasonably be required by the laws of such jurisdiction to continue such qualification for so long as may be necessary to complete the distribution contemplated hereby but in any event not longer than 90 days from the date hereof. (g) During the time when a prospectus is required to be delivered under the Securities Act, the Company shall comply with all requirements imposed upon it by the Securities Act and the Exchange Act, as now and hereafter amended and by the Rules and Regulations, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Securities in accordance with the provisions hereof and the Prospectus, or any amendments or supplements thereto. If at any time when a prospectus relating to the Securities is required to be delivered under the Securities Act, any event shall have occurred as a result of which, in the opinion of counsel for the Company or Underwriters' Counsel, the Prospectus, as then amended or supplemented, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or if it is necessary at any time to amend the Prospectus to comply with the Securities Act, the Company will notify the Underwriters promptly and prepare and file with the Commission an appropriate amendment or supplement in accordance with Section 10 of the Securities Act, each such amendment or supplement to be reasonably satisfactory to Underwriters' Counsel, and the Company will furnish to the Underwriters copies of such amendment or supplement as soon as available and in such quantities as the Underwriters may reasonably request. (h) As soon as practicable, but in any event not later than 45 days after the end of the 12-month period beginning on the day after the end of the fiscal quarter of the Company during which the effective date of the Registration Statement occurs (90 days in the event that the end of such fiscal quarter is the end of the Company's fiscal year), the Company shall make generally available to its securityholders, in the manner specified in Rule 158(b) of the Rules and Regulations, and to the Underwriters an earnings statement which will be in the detail required by, and will otherwise comply with, the provisions of Section 11(a) of the Securities Act and Rule 158(a) of the Rules and Regulations, which statement need not be audited unless required by the Securities Act, covering a period of at least 12 consecutive months after the effective date of the Registration Statement. (i) For so long as the Company is a reporting company under either Section 13 or 15(d) of the Exchange Act, the Company will deliver to the Underwriters during the period ending at the earlier of the fifth anniversary of the date hereof or the date no Notes remain outstanding: i) concurrently with furnishing such annual reports to its securityholders, a balance sheet of the Company as at the end of the preceding fiscal year, together with statements of operations, stockholders' equity and cash flows of the Company for such fiscal year, accompanied by a copy of the report thereon of independent certified public accountants; -11- 12 ii) copies of the Quarterly Report on Form 10-Q; iii) as soon as they are available, copies of all reports (financial or other) mailed to stockholders generally; iv) as soon as they are available, copies of all reports and financial statements filed with the Commission, any state securities commission, the NASD, the New York Stock Exchange or any other securities exchange; v) every press release containing a material news item which was released by or on behalf of the Company or any of the Subsidiaries; and vi) any additional information of a public nature concerning the Company or any of the Subsidiaries (and any future subsidiaries) or their respective businesses which the Underwriters may reasonably request. The foregoing financial statements will be on a consolidated basis to the extent that the accounts of the Company and its Subsidiaries are consolidated, and will be accompanied by similar financial statements for any Subsidiary which is not so consolidated. (j) For a period of four years after the Closing Date, the Company shall timely file all such reports, forms or other documents as may be required (including, but not limited to, a Form SR as may be required pursuant to Rule 463 under the Securities Act) from time to time under the Securities Act, the Exchange Act and the Rules and Regulations, and all such reports, forms and documents filed will comply as to form and substance with the applicable requirements under the Securities Act, the Exchange Act and the Rules and Regulations. (k) The Company shall furnish to the Underwriters as early as practicable prior to each of the date hereof, the Closing Date and each Option Closing Date, if any, but no later than two full business days prior thereto, a copy of the latest available unaudited interim consolidated statements of operations and balance sheets of the Company and the Subsidiaries (which in no event shall be as of a date more than 30 days prior to the date of the Registration Statement) which have been read by the Company's independent public accountants as stated in their letters to be furnished pursuant to Section 7(j) hereof. (l) The Company shall for a period of not less than seven years after the date hereof, use its best efforts to maintain the New York Stock Exchange listing of the Notes, to the extent outstanding, and shares of the Common Stock. (m) Until the earlier of the completion of the distribution of the Notes or 90 days from the date hereof, neither the Company nor any of the Subsidiaries shall, without the prior written consent of the Underwriters and Underwriters' Counsel (which consent shall not be unreasonably withheld), issue, directly or indirectly, any press release or other communication or hold any press conference with respect to the Company, any of the Subsidiaries, their respective activities or the offering contemplated hereby, other than trade releases issued in the ordinary course of the Company's business consistent with past practices with respect to the Company's operations and except as required by applicable law. (n) For a period ending on the earlier of (i) four years from the date hereof and (ii) the issuance of all of the Underlying Stock, the Company will not take any action or actions which may cause the exemption from registration provided by Section 3(a)(9) of the Securities Act (or any successor provision) to be unavailable for the conversion into Common Stock. (o) For a period of four years after the effective date of the Registration Statement, the Company shall use reasonable efforts to provide to the Underwriters, at the Underwriters' request and at the Company's sole expense, with a report on Blue Sky qualifications relating to secondary sales of the Company's securities prepared -12- 13 by counsel to the Company; provided, however that the Underwriters shall not make any such request unless the Common Stock or the Notes are not listed on Nasdaq, the Nasdaq Stock Market or a national securities exchange at the time of such request. (p) To use the proceeds from the sale of the Notes in the manner described in the Prospectus under the caption "Use of Proceeds." (q) To use its reasonable efforts to do and perform all things required to be done and performed under this Agreement by it that are within its control prior to or after the Closing Date and to use reasonable efforts to satisfy all conditions precedent on its part to the delivery of the Notes. (r) To not, so long as the Notes are outstanding, be or become, or be or become owned by, an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act, and will not be or become, or be or become owned by, a closed-end investment company required to be registered, but not registered thereunder. (s) In connection with the offering, until the Underwriters shall have notified the Company of the completion of the resale of the Notes, to not, and to use its reasonable best efforts to not permit any affiliated purchasers (as defined in Regulation M under the Exchange Act), either alone or with one or more other persons to, bid for or purchase, for any account in which it or any of its affiliated purchasers has a beneficial interest, any Notes, or attempt to induce any person to purchase any Notes; and to not, and to use its reasonable best efforts to not permit any of its affiliated purchasers to, make bids or purchases for the purpose of creating actual, or apparent, active trading in or of raising the price of the Notes. (t) To not take any action prior to the execution and delivery of the Indenture which, if taken after such execution and delivery, would have violated any of the covenants contained in the Indenture. 5. Payment of Expenses. (a) The Company will pay all expenses incident to the performance of the obligations of the Company under this Agreement and the Indenture, including, without limitation: (i) the fees and expenses of accountants and counsel for the Company, (ii) all costs and expenses incurred in connection with the preparation, duplication, printing (including mailing and handling charges), filing, delivery and mailing (including the payment of postage with respect thereto) of each Preliminary Prospectus and the Prospectus and any amendments and supplements thereto, in quantities as hereinabove stated, (iii) the printing and filing of the Registration Statement and each amendment thereto and any registration under the Securities Act; (iv) the printing, engraving, issuance and delivery of the Notes, (v) the qualification of the Notes and the Underlying Stock under state or foreign securities or "Blue Sky" laws and determination of the status of such securities under legal investment laws, including the costs of printing and mailing the "Preliminary Blue Sky Memorandum" and, the "Supplemental Blue Sky Memorandum," and reasonable disbursements and fees of counsel for the Underwriters in connection therewith, (vi) costs and expenses of travel, food and lodging of Company personnel in connection with the "road show," information meetings and presentations, (vii) fees and expenses of the transfer agent and registrar, (viii) fees and expenses of the Trustee, including the Trustee's counsel, in connection with the Indenture and the Notes, (ix) fees incurred in connection with the rating, if any, of the Notes, (x) any transfer tax, stamp duty or similar tax payable by the Underwriters in connection with the purchase by the Underwriters of the Notes or Warrants, (xi) the fees payable to the NASD incurred in connection with its review of the underwriting terms of the offering of the Securities, (xii) the fees payable to the New York Stock Exchange incurred in connection with the listing of the Notes and the Underlying Stock for trading on the New York Stock Exchange, (xiii) all costs of placing tombstone advertisements in The New York Times, The Wall Street Journal and the Investment Dealers Digest not to exceed an aggregate of $75,000 and (xiv) all other costs and expenses incident to the performance of its obligations hereunder which are not specifically otherwise provided for in this Section. -13- 14 (b) If this Agreement is terminated for any reason other than as a result of a breach of this Agreement by the Underwriters or in accordance with Section 10(a) hereof, the Company shall reimburse and indemnify the Underwriters for all of their reasonable out-of-pocket expenses, including the reasonable fees and expenses of Underwriters' Counsel. In addition, the Company shall remain liable for all Blue Sky counsel fees and expenses and Blue Sky filing fees as described above. 6. Conditions of the Underwriters' Obligations. The obligations of the Underwriters hereunder shall be subject to the continuing accuracy of the representations and warranties of the Company herein as of the date hereof and as of the Closing Date and each Option Closing Date, if any, as if they had been made on and as of the Closing Date or each Option Closing Date, as the case may be; and the performance by the Company on and as of the Closing Date and each Option Closing Date, if any, of its covenants and obligations hereunder and to the following further conditions: (a) The Registration Statement (including the Statement of Eligibility and Qualification of the Trustee on Form T-1 (the "Form T-1")), shall have become effective not later than 5:30 p.m. New York City time on the date hereof or at such later time and date as may have been approved by the Underwriters and no stop order suspending the effectiveness of the Registration Statement (including the Form T-1) shall have been issued and no proceedings for that purpose shall have been instituted or shall be pending or, to the knowledge of the Company or the Underwriters, threatened by the Commission, and any request on the part of the Commission for additional information shall have been complied with to the reasonable satisfaction of Underwriters' Counsel. If the Company has elected to rely upon Rule 430A of the Rules and Regulations, the price of the Securities and any price-related information previously omitted from the effective Registration Statement pursuant to such Rule 430A shall have been transmitted to the Commission for filing pursuant to Rule 424(b) of the Rules and Regulations within the prescribed time period, and prior to the Closing Date the Company shall have provided evidence satisfactory to the Underwriters of such timely filing, or a post-effective amendment providing such information shall have been promptly filed and declared effective in accordance with the requirements of Rule 430A of the Rules and Regulations. (b) The Underwriters shall not have advised the Company that the Registration Statement, or any supplement or amendment thereto, contains an untrue statement of fact which, in the Underwriters' reasonable opinion after consultation with the Company, is material or omits to state a fact which, in the Underwriters' reasonable opinion after consultation with the Company, is material and is required to be stated therein or is necessary to make the statements therein not misleading, or that the Prospectus or any supplement thereto, contains an untrue statement of fact which, in the Underwriters' reasonable opinion after consultation with Company, is material or omits to state a fact which, in the Underwriters' reasonable opinion after consultation with the Company is material and is required to be stated therein or is necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. No order suspending the sale of the Securities in any jurisdiction shall have been issued on either the Closing Date or the relevant Option Closing Date, if any, and no proceedings for that purpose shall have been instituted or shall, to the knowledge of the Underwriters, be threatened. (c) On or prior to the Closing Date and each Option Closing Date, if any, the Underwriters shall have received from Underwriters' Counsel such opinion or opinions with respect to the organization of the Company, the validity of the Notes, the Underlying Stock, the Warrants, the Warrant Shares, the Registration Statement and other related matters as the Underwriters may request and Underwriters' Counsel shall have received such papers and information as they request to enable it to pass upon such matters. (d) On the Closing Date, the Underwriters shall have received the opinion of Milbank, Tweed, Hadley & McCloy, special counsel to the Company, dated the Closing Date, addressed to the Underwriters and in form and substance reasonably satisfactory to the Underwriters and Underwriters' Counsel to the effect that: i) the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware. The Company is registered and qualified -14- 15 to do business as a foreign corporation and is in good standing in each of the states listed on Annex A attached to such opinion; ii) the Company has all requisite corporate power and authority and all necessary governmental authorizations, approvals, orders, licenses, certificates, franchises and permits of and from all governmental regulatory officials and bodies (except where the failure to so have any such authorizations, approvals, orders, licenses, certificates, franchises or permits, individually or in the aggregate, would not have a Material Adverse Effect) to own or lease its properties and to conduct its businesses, as to the knowledge of such counsel, it is now being conducted; iii) the Company has a duly authorized and outstanding capitalization as set forth in the Prospectus under the caption "Capitalization" in the Prospectus. The Company owns directly or through one or more of the Subsidiaries, the percentage of the outstanding capital stock of each Subsidiary as described in Annex B to such opinion in each case, to such counsel's knowledge, free and clear of any Liens, except for the issued and outstanding shares of capital stock of each of NFLIC, FLICA, NFIC and WFC which have been pledged by the Company to secure its obligations arising pursuant to a Guaranty Agreement dated as of December 28, 1995 by the Company in favor of Fleet National Bank; iv) except for the Indenture, the Warrant Agreement and this Agreement and as disclosed in the Registration Statement, such counsel does not know of: (a) any outstanding option, warrant or other right calling for the issuance of, and such counsel does not know of any instrument, agreement, commitment, plan or arrangement to issue, any share of capital stock of the Company or any security convertible into or exchangeable or exercisable for capital stock of the Company; and (b) except for current holders of certain warrants issued to Oppenheimer & Co., Inc. in connection with the private placement of the Series A Preferred Stock and certain warrants issued to Martin E. Kantor in December 1995, any holder of any securities of the Company or any other person who has the right, contractual or otherwise, to cause the Company to sell or otherwise issue to them, or to permit them to underwrite the sale of, any of the Notes or the right to have any Common Stock or other securities of the Company included in the Registration Statement or the right, as a result of the filing of the Registration Statement, to require registration under the Securities Act of any shares of Common Stock or other securities of the Company; v) the Securities and all other securities issued or issuable by the Company pursuant to existing plans, agreement or arrangements relating to the issuance of securities or pursuant to currently outstanding options, warrants, rights or other securities of the Company conform, or when issued and paid for, will conform in all material respects to all statements with respect thereto contained in the Registration Statement and the Prospectus; the Warrant Agreement and the Indenture conform in all material respects to the description thereof set forth in the Registration Statement and the Prospectus; the statements under the captions "Description of the Notes" and "Description of Capital Stock" contained in the Prospectus, insofar as such statements constitute a summary of documents referred to therein or matters of law, are accurate summaries and fairly and accurately present, in all material respects, the information called for with respect to such documents and matters; all issued and outstanding equity securities (including capital stock and options and rights with respect thereto) of the Company have been duly authorized and validly issued and are fully paid and non-assessable; the holders thereof are not subject to personal liability by reason of being such holders (except as they may be liable by reason of their own conduct or acts); to such counsel's knowledge, none of such securities were issued in violation of the preemptive rights of any securityholder of the Company or similar contractual rights granted by the Company or applicable securities laws; the Notes have been duly authorized and, when validly authenticated, issued, delivered and paid for in the manner contemplated by the Indenture and this Agreement, will be duly authorized, validly issued and outstanding obligations of the Company entitled to the benefits of the Indenture (except as such benefits may be limited by -15- 16 applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application relating to or effecting creditors' rights and the application of equitable principles in any action, legal or equitable); the Warrants have been duly authorized and when validly issued, delivered and paid for in the manner contemplated by the Warrant Agreement, will be validly issued and outstanding obligations of the Company entitled to the benefits of the Warrant Agreement; the Underlying Shares will, upon issuance in accordance with the Indenture, be duly authorized, validly issued, fully paid and non-assessable; the Warrant Shares will, upon exercise and payment therefor in accordance with the Warrant Agreement, be duly authorized validly issued, fully paid and non-assessable; the Company has duly authorized and reserved for issuance upon conversion of the Notes and exercise of the Warrants the Underlying Shares and Warrant Shares, respectively; to such counsel's knowledge, the Securities to be sold by the Company hereunder and under the Indenture and Warrant Agreement are not and will not be subject to any preemptive or other similar rights of any securityholder of the Company or any of the Subsidiaries; the holders thereof will not be subject to any liability solely as such holders (except as they may be liable by reason of their own conduct or acts); all corporate action required to be taken for the authorization, issue and sale of the Securities has been duly and validly taken; the certificates representing the Securities are in due and proper form; and upon the issuance and delivery pursuant to this Agreement, the Indenture and the Warrant Agreement of the Notes and Warrants to be sold by the Company hereunder, and when the Underwriters take delivery of the certificates representing the Notes and Warrants, and assuming the Underwriters are acquiring the Notes and Warrants in good faith without notice of any adverse claim (within the meaning of the Uniform Commercial Code as in effect in the State of New York) the Underwriters will acquire good and valid title thereto free and clear of any Liens (except for Liens created or permitted to exist by the Underwriters). vi) the Registration Statement (including the Form T-1) is effective under the Securities Act; a Prospectus containing the information permitted to be omitted under Rule 430A has been filed in accordance with Rule 424(b); and to such counsel's knowledge after due inquiry, no stop order suspending the effectiveness of the Registration Statement or the qualification of the Trustee is in effect and no proceedings for that purpose have been instituted or are threatened by the Commission (in rendering the opinion required by this paragraph (vii), such counsel may rely solely on the oral advice of the staff of the Commission to the extent written confirmation from the Commission has not been received); vii) the Registration Statement and the Prospectus, and any amendments or supplements thereto (other than the financial statements and notes thereto and other financial, statistical and accounting data included therein or omitted therefrom and the Form T-1, as to which no opinion need be rendered) comply as to form in all material respects with the requirements of the Securities Act, the Trust Indenture Act and the Rules and Regulations; and each of the Incorporated Documents (except for the financial statements and the notes thereto and the schedules and other financial and statistical data included therein, as to which such counsel need not express any opinion) complies as to form in all material respects with the Exchange Act and the rules and regulations of the Commission thereunder; viii) the Indenture has been qualified under the Trust Indenture Act; ix) the descriptions in the Registration Statement and the Prospectus of agreements and documents to which the Company or any of the Subsidiaries is a party or by which any of them or their respective properties are bound, including any agreement or document incorporated by reference into the Registration Statement and the Prospectus or of any statutes, are accurate in all material respects and fairly present the subject matter thereof; to such counsel's knowledge there is no action, arbitration, suit or other proceeding against the Company or any of the Subsidiaries, or involving the properties or business of the Company or any of the Subsidiaries, which (x) -16- 17 questions the validity of the capital stock of the Company or any of the Subsidiaries or of this Agreement, the Indenture, the Warrant Agreement or of any action taken or to be taken by the Company or any of the Subsidiaries pursuant to or in connection with any of the foregoing or (y) except as disclosed in the Prospectus, could reasonably be expected to have a Material Adverse Effect; x) the Company has full legal right, corporate power and authority to execute, deliver and perform each of this Agreement, the Indenture and the Warrant Agreement and to consummate the transactions provided for herein and therein; the execution, delivery and performance of each of this Agreement, the Indenture and the Warrant Agreement has been duly authorized by all necessary corporate action on the part of the Company, each of this Agreement, the Indenture and the Warrant Agreement has been duly executed and delivered by the Company, and, assuming due authorization, execution and delivery by each other party thereto, constitutes a legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms (except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application relating to or affecting enforcement of creditors' rights and the application of equitable principles in any action, legal or equitable, and except as rights to indemnity or contribution may be limited by applicable law); xi) the execution or delivery by the Company of this Agreement, the Indenture and the Warrant Agreement, its performance hereunder or thereunder, its consummation of the transactions contemplated herein or therein, each in accordance with its terms, do not and will not conflict with or result in any breach or violation of, constitute a default under or result in the creation or imposition of any Lien upon any property or assets of the Company pursuant to the terms of (A) the certificate of incorporation or by-laws of the Company, or (B) any license, contract, indenture, mortgage, deed of trust, voting trust agreement, stockholders' agreement, note, loan or credit agreement or other agreement or instrument known to such counsel to which the Company is a party or by which it is or may be bound or to which its respective properties or assets is or may be subject, except for such conflicts, breaches, violations, defaults and creations or impositions which in the aggregate would not have a Material Adverse Effect; xii) the Company is not in violation of its certificate of incorporation or by-laws; and to the knowledge of such counsel, the Company is not in breach or, or in default with respect to, any provisions of any license, contract, indenture, mortgage, deed of trust, voting trust agreement, stockholders' agreement, note, loan or credit agreement or other agreement or instrument known to such counsel to which the Company is a party or by which it is or may be bound or to which its properties or assets is or may be subject, except for such breaches or defaults as would not have a Material Adverse Effect; xiii) neither the issuance of the Securities nor the performance by the Company of this Agreement, the Indenture and the Notes and the transactions contemplated hereby and thereby requires any consent, approval, authorization or other order of or registration or filing with, any court, regulatory body or government agency or body, other than such as already has been made or obtained and such as may be required under state securities or Blue Sky laws or the rules of the NASD or state insurance laws, as to which no opinion need be rendered; xiv) the statements in the Prospectus under the captions "Business-Legal Proceedings," and "Certain United States Federal Income Tax Considerations" insofar as such statements constitute matters of law, summaries of legal matters, documents or proceedings referred to therein, or legal conclusions, have been reviewed by such firm and are correct in all material respects; -17- 18 xv) the Notes have been approved for listing on the New York Stock Exchange, subject only to official notice of issuance; xvi) neither the execution and delivery by the Company of, nor the performance of its obligations under, this Agreement, the Indenture and the Warrants, nor the sale, issuance, execution or delivery by the Company of the Notes or the Warrants will violate Regulations G, T, U or X of the Federal Reserve Board; and xvii) the Company is not an "investment company," a company controlled by, under common control with, or controlling an "investment company" or a "promoter" or "principal underwriter" for, an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended. In rendering such opinion, such counsel may: (A) limit its opinion to matters involving the federal laws of the United States of America, the General Corporation Law of the State of Delaware and the laws (other than insurance laws) of the State of New York; and (B) as to matters of fact, to the extent they deem proper, on certificates and written statements 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, provided, that copies of any such statements or certificates shall be delivered to Underwriters' Counsel if requested. 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 that the Underwriters and they are justified in relying thereon. At each Option Closing Date, if any, the Underwriters shall have received the favorable opinion of Milbank, Tweed, Hadley & McCloy, dated such Option Closing Date, addressed to the Underwriters and in form and substance satisfactory to the Underwriters and Underwriters' Counsel confirming as of such Option Closing Date the statements made by such counsel in their opinion delivered on the Closing Date. (e) Milbank, Tweed, Hadley & McCloy shall state in the opinion letters contemplated by Section 6(d) that such counsel has participated in conferences with officers and other representatives of the Company, representatives of the independent public accountants for the Company and the Subsidiaries and the Underwriters, at which conferences the contents of the Registration Statement and related matters were discussed, and, although such counsel is not passing upon, and does not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Registration Statement, on the basis of the foregoing, no facts have come to the attention of such counsel which has lead them to believe that the Registration Statement as of its effective date contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, except that such counsel need express no opinion or belief with respect to the financial statements and related notes and other financial, statistical or accounting data included in the Registration Statement or excluded therefrom. (f) On the Closing Date, the Underwriters shall have received the opinion of Michael D. Norris, Vice President, Secretary and General Counsel of the Company, dated the Closing Date, addressed to the Underwriters and in form and substance satisfactory to the Underwriters and Underwriters' Counsel to the effect that: i) the Company and each of the Subsidiaries has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its organization. Each of the Company and the Subsidiaries are registered and qualified to do business as foreign corporations and are in good standing in each of the states listed on Annex A attached to such opinion; ii) the Company and each of the Subsidiaries has all requisite corporate power and authority and all necessary governmental authorizations, approvals, orders, licenses, certificates, franchises and permits of and from all governmental regulatory officials and bodies (except where the failure to so have any such authorizations, approvals, orders, licenses, certificates, franchises -18- 19 or permits, individually or in the aggregate, would not have a Material Adverse Effect) to own or lease their respective properties and to conduct their respective businesses, as to the knowledge of such counsel, it is now being conducted; iii) the Company has a duly authorized and outstanding capitalization as set forth in the Prospectus under the caption "Capitalization" in the Prospectus. The Company owns directly or through one or more of the Subsidiaries, the percentage of the outstanding capital stock of each Subsidiary as described in Annex B to such opinion in each case free and clear of any Liens except for the issued and outstanding shares of capital stock of each of NFLIC, FLICA, NFIC and WFC which have been pledged by the Company to secure its obligations arising pursuant to a Guaranty Agreement dated as of December 28, 1995 by the Company in favor of Fleet National Bank; iv) the Securities and all other securities issued by each of the Company and each Subsidiary or issuable by each of the Company or any Subsidiary pursuant to existing plans, agreements or arrangements relating to the issuance of securities or pursuant to currently outstanding options, warrants, rights or other securities of the Company or Subsidiary, respectively, conform, or when issued and paid for, will conform in all material respects to all statements with respect thereto contained in the Registration Statement and the Prospectus; the Warrant Agreement and the Indenture conform in all material respects to the description thereof set forth in the Registration Statement and the Prospectus; all issued and outstanding equity securities (including capital stock and options and rights with respect thereto) of the Company or any of the Subsidiaries have been duly authorized and validly issued and are fully paid and non-assessable; the holders thereof are not subject to personal liability by reason of being such holders (except as they may be liable by reason of their own conduct or acts); to such counsel's knowledge, none of such securities were issued in violation of the preemptive rights of any securityholder of the Company or any of the Subsidiaries or similar contractual rights granted by the Company or any of the Subsidiaries or applicable securities laws; the Notes have been duly authorized and, when validly authenticated, issued, delivered and paid for in the manner contemplated by the Indenture and this Agreement, will be duly authorized, validly issued and outstanding obligations of the Company entitled to the benefits of the Indenture (except as such benefits may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application relating to or effecting creditors' rights and the application of equitable principles in any action, legal or equitable); the Warrants have been duly authorized and when validly issued, delivered and paid for in the manner contemplated by the Warrant Agreement, will be duly authorized, validly issued and outstanding obligations of the Company entitled to the benefits of the Warrant Agreement; the Underlying Shares will, upon issuance in accordance with the Indenture, be duly authorized, validly issued, fully paid and non-assessable; the Warrant Shares will, upon exercise and payment therefor in accordance with the Warrant Agreement, be duly authorized validly issued, fully paid and non-assessable; the Company has duly authorized and reserved for issuance upon conversion of the Notes and exercise of the Warrants the Underlying Shares and Warrant Shares, respectively; to such counsel's knowledge, the Securities to be sold by the Company hereunder and under the Indenture and Warrant Agreement are not and will not be subject to any preemptive or other similar rights of any securityholder of the Company or any of the Subsidiaries; the holders thereof will not be subject to any liability solely as such holders (except as they may be liable by reason of their own conduct or acts); all corporate action required to be taken for the authorization, issue and sale of the Securities has been duly and validly taken; the certificates representing the Securities are in due and proper form; and upon the issuance and delivery pursuant to this Agreement, the Indenture and the Warrant Agreement of the Notes and Warrants to be sold by the Company hereunder, and when the Underwriters take delivery of the certificates representing the Notes and Warrants, and assuming the Underwriters are acquiring the Notes and Warrants in good faith without notice of any adverse claim (within the meaning of the Uniform Commercial Code as in effect in the State of New York) the -19- 20 Underwriters will acquire good and valid title thereto free and clear of any pledge, lien, charge, claim, encumbrance, pledge, security interest or other encumbrance; v) the descriptions in the Registration Statement and the Prospectus of agreements and documents to which the Company or any of the Subsidiaries is a party or by which any of them or their respective properties are bound, including any agreement or document incorporated by reference into the Registration Statement and the Prospectus or of any statutes, are accurate in all material respects and fairly present the subject matter thereof; to such counsel's knowledge there is no action, arbitration, suit or other proceeding against the Company or any of the Subsidiaries, or involving the properties or business of the Company or any of the Subsidiaries, which (x) questions the validity of the capital stock of the Company or any of the Subsidiaries or of this Agreement, the Indenture, the Warrant Agreement or of any action taken or to be taken by the Company or any of the Subsidiaries pursuant to or in connection with any of the foregoing or (y) except as disclosed in the Prospectus, could have a Material Adverse Effect; vi) the Company has full legal right, corporate power and authority to execute, deliver and perform each of this Agreement, the Indenture and the Warrant Agreement and to consummate the transactions provided for herein and therein; the execution, delivery and performance of each of this Agreement, the Indenture and the Warrant Agreement has been duly authorized by all necessary corporate action on the part of the Company; each of this Agreement, the Indenture and the Warrant Agreement has been duly executed and delivered by the Company, and, assuming due authorization, execution and delivery by each other party thereto, constitutes a legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms (except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application relating to or affecting enforcement of creditors' rights and the application of equitable principles in any action, legal or equitable, and except as rights to indemnity or contribution may be limited by applicable law); vii) the execution or delivery by the Company of this Agreement, the Indenture and the Warrant Agreement, its performance hereunder or thereunder, its consummation of the transactions contemplated herein or therein, each in accordance with its terms, do not and will not conflict with or result in any breach or violation of, constitutes a default under or result in the creation or imposition of any lien, charge, claim, encumbrance, pledge, security interest or other encumbrance upon any property or assets of the Company or any of the Subsidiaries pursuant to the terms of (A) the certificate of incorporation or by-laws of the Company or any of the Subsidiaries, (B) any license, contract, indenture, mortgage, deed of trust, voting trust agreement, stockholders' agreement, note, loan or credit agreement or other agreement or instrument known to such counsel to which the Company or any of the Subsidiaries is a party or by which any of them is or may be bound or to which any of their respective properties or assets is or may be subject, except for such conflicts, breaches, violations, defaults and creations or impositions which in the aggregate would not have a Material Adverse Effect, or (C) any statute, rule or regulation (other than federal or state securities laws) or, to the best of such counsel's knowledge, any judgment, decree or order applicable to the Company or any of the Subsidiaries of any arbitrator, court, regulatory body or administrative agency or other governmental agency or body having jurisdiction over the Company or any of the Subsidiaries or any of their respective activities or properties, except with respect to this clause (C) for such conflicts, breaches, violations, defaults and creations or impositions which in the aggregate would not have a Material Adverse Effect; viii) to the knowledge of such counsel, the Company and the Subsidiaries are not in violation of their respective charters or by-laws; neither the Company nor any of the Subsidiaries is in breach or, or in default with respect to, any provisions of any license, contract, indenture, mortgage, deed of trust, voting trust agreement, stockholders' agreement, note, loan or credit agreement or other agreement or instrument known to such counsel to which the Company or any -20- 21 of the Subsidiaries is a party or by which any of them is or may be bound or to which any of their respective properties or assets is or may be subject, except for such breaches or defaults as would not have a Material Adverse Effect, and to the knowledge of such counsel, the Company and the Subsidiaries are in material compliance with all laws, rules and regulations and all judgments, decrees and orders of any judicial or governmental authority to which the Company or any of the Subsidiaries or by which any of them is or may be bound or to which any of their respective properties or assets is or may be subject, except for such noncompliance as would not have a Material Adverse Effect; ix) the statements in the Prospectus under the captions "Business-Regulation," "Business-Legal Proceedings," "Description of the Notes," and "Certain United States Federal Income Tax Considerations" insofar as such statements constitute matters of law, summaries of legal matters, documents or proceedings referred to therein, or legal conclusions, have been reviewed by such firm and are correct in all material respects; In rendering such opinion, such counsel may rely: (A) as to matters involving the application of laws other than the laws of the United States and jurisdictions in which they are admitted, to the extent such counsel deems proper and to the extent specified in such opinion, if at all, upon an opinion or opinions (in form and substance reasonably satisfactory to Underwriters' Counsel) of other counsel acceptable to Underwriters' Counsel, familiar with the applicable laws; and (B) as to matters of fact, to the extent they deem proper, on certificates and written statements 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 the Subsidiaries, provided, that copies of any such statements or certificates shall be delivered to Underwriters' Counsel if requested. 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 that the Underwriters and they are justified in relying thereon. At each Option Closing Date, if any, the Underwriters shall have received the favorable opinion of Michael T. Norris dated such Option Closing Date, addressed to the Underwriters and in form and substance satisfactory to the Underwriters and Underwriters' Counsel confirming as of such Option Closing Date the statements made by such counsel in their opinion delivered on the Closing Date. (g) On the Closing Date and each Option Closing Date, if any, Underwriters' Counsel shall have been furnished such documents, certificates and opinions as they may reasonably require and have requested reasonably in advance for the purpose of enabling them to review or pass upon the matters referred to in Section 6(c) hereof or in order to evidence the accuracy, completeness or satisfaction of any of the representations, warranties or conditions of the Company herein contained. (h) On and as of the Closing Date and each Option Closing Date, if any: (i) there shall have been no material adverse change and no development involving a prospective material adverse change in the condition, financial or otherwise, prospects, stockholders' equity or the business activities of the Company and the Subsidiaries taken as a whole, whether or not in the ordinary course of business, from the latest dates as of which such condition is set forth in the Registration Statement and Prospectus; (ii) there shall have been no transaction, not in the ordinary course of business, entered into by the Company or any of the Subsidiaries, from the latest date as of which the financial condition of the Company and the Subsidiaries is set forth in the Registration Statement and Prospectus which is materially adverse to the Company and the Subsidiaries taken as a whole; (iii) neither the Company nor any of the Subsidiaries shall be in default under any provision of any instrument relating to any outstanding indebtedness material to the Company and the Subsidiaries taken as a whole; (iv) no material amount of the assets of the Company or any of the Subsidiaries shall have been pledged or mortgaged, except as set forth in the Prospectus; (v) no action, suit or proceeding, at law or in equity, shall have been pending or threatened (or circumstances which could reasonably be expected to give rise to same shall have arisen) against the Company or any of the Subsidiaries, or affecting any of their respective properties or businesses, before or by any court or federal, state or foreign commission, board or other administrative agency wherein an unfavorable decision, ruling or finding which could reasonably be expected to have a Material Adverse Effect, except as set forth in the -21- 22 Prospectus; and (vi) no stop order shall have been issued under the Securities Act and no proceedings therefor shall have been initiated or threatened by the Commission or any state regulatory authority. (i) On the Closing Date and each Option Closing Date, if any, the Underwriters shall have received a certificate of the Company signed by the president or chairman and by the chief financial officer of the Company, in their capacities as such, dated the Closing Date or such Option Closing Date, as the case may be, to the effect that each of such persons has carefully examined the Registration Statement, the Prospectus, this Agreement and the Indenture and that: i) the representations and warranties of the Company in this Agreement that are qualified as to materiality are true and correct, and such representations and warranties of the Company that are not so qualified are true in all material respects as if made on and as of the Closing Date or such Option Closing Date, as the case may be, and the Company has complied with all agreements and covenants and satisfied all conditions contained in this Agreement and the Indenture on its part to be performed or satisfied at or prior to the Closing Date or such Option Closing Date, as the case may be; ii) no stop order suspending the effectiveness of the Registration Statement or any part thereof or the qualification of the Trustee is in effect and no proceedings for that purpose are pending or, to such officer's knowledge, threatened; iii) since the date of the most recent financial statements included in the Prospectus, there has been no material adverse change in the condition, financial or otherwise business, prospects or results of operation of the Company and the Subsidiaries, taken as a whole, except as set forth in the Prospectus; iv) the Registration Statement and the Prospectus and, if any, each amendment and each supplement thereto, contain all statements and information required to be included therein, and none of the Registration Statement or any amendment or supplement thereto includes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading and none of the Prospectus or any amendment or supplement thereto includes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and v) subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus: (a) neither the Company nor any of the Subsidiaries has incurred up to and including the Closing Date or the Option Closing Date, as the case may be, other than in the ordinary course of its business, any material liabilities or obligations, direct or contingent, except as disclosed in the Prospectus; (b) neither the Company nor any of the Subsidiaries has paid or declared any dividends or other distributions, other than regular cash dividends, on its capital stock except as disclosed in the Prospectus; (c) neither the Company nor any of the Subsidiaries has entered into any material transactions not in the ordinary course of business, except as disclosed in the Prospectus; (d) there has not been any material change in the capital stock of the Company from the description thereof in the Registration Statement; (e) neither the Company nor any of the Subsidiaries has sustained any material loss or damage to its property or assets, whether or not insured; and (f) there is no litigation which is pending or to the best of the Company's knowledge threatened against the Company, any of the Subsidiaries or any affiliated party of any of the foregoing which could reasonably be expected to have a Material Adverse Effect and which is required to be set forth in an amended or supplemented Prospectus which has not been set forth. -22- 23 (j) On or prior to the Closing Date and each Option Closing Date, if any, the Underwriters shall have received a certificate signed by the secretary of the Company, in his capacity as such, dated the Closing Date or such Option Closing Date, as the case may be, as to: i) the absence of any contemplated proceeding for the merger, consolidation, liquidation or dissolution of the Company or any Subsidiary, as the case may be, or the sale of all or substantially all of its assets; ii) the due adoption and full force and effect of the By-laws of the Company (with a copy of the By- laws attached); iii) resolutions adopted by the Board of Directors of the Company and/or a committee thereof authorizing the offering of the Notes and Warrants and the consummation of the transactions contemplated by this Agreement, the Indenture and the Warrant Agreement (with copies of such resolutions attached); and iv) the incumbency, authorization and signatures of certain officers and directors of the Company, including all those signing this Agreement, the Indenture, the Warrant Agreement and/or any certificate delivered at such closing. (k) By no later than 5:00 p.m. New York City time on the date hereof the Underwriters shall have received a letter, dated such date, addressed to the Underwriters in form and substance satisfactory in all respects (including the non-material nature of the changes or decreases, if any, referred to in clause (iii) below) to the Underwriters and Underwriters' Counsel, relating to the Company's fiscal year ended December 31, 1996 and subsequent thereto, from Price Waterhouse LLP: i) confirming that they are independent certified public accountants with respect to the Company within the meaning of the Securities Act and the Exchange Act and the applicable Rules and Regulations; ii) stating that it is their opinion that the consolidated financial statements and supporting schedules of the Company included in the Registration Statement comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the applicable Rules and Regulations; iii) stating that, on the basis of procedures which included a reading of [the latest available [monthly management financial reports of the Company (with an indication of the date of such reports),] a reading of] the latest available minutes of the stockholders and board of directors and the various committees of the board of directors of each of the Company and the Subsidiaries, consultations with officers and other employees of each of the Company and the Subsidiaries responsible for financial and accounting matters and other procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information, nothing has come to their attention which would lead them to believe that: (A) at the date [of the latest available [monthly management reports] read by Price Waterhouse LLP, and at a subsequent date] not more than five business days prior to the date of delivery of such letter, there has been any increase in consolidated short-term indebtedness or long-term indebtedness of the Company and the Subsidiaries, or any decrease in the stockholders' equity or net current assets or net assets of the Company, as compared with amounts shown in the latest balance sheet included in the Registration Statement, other than as set forth in or contemplated by the Registration Statement, or, if there was any change or decrease, setting forth the amount of such change or decrease; or -23- 24 (B) the period from the date of the latest income statement included in the Registration Statement to [the date of the latest available income statement read by Price Waterhouse LLP, and at] a subsequent date not more than five business days prior to the date of delivery of such letter, there was any decrease in consolidated net revenues or net income, or net income per common share of the Company, in each case as compared with the corresponding period of the previous year, other than as set forth in or contemplated by the Registration Statement, or, if there was any such decrease, setting forth the amount of such decrease; and iv) stating that they have compared specific dollar amounts, numbers of shares, percentages of revenues and earnings, statements and/or other financial information pertaining to the Company and the Subsidiaries contained in the Registration Statement (in each case to the extent that such amounts, numbers, percentages, statements and information may be derived from the general accounting records, including work sheets, of the Company and the Subsidiaries and excluding any questions requiring an interpretation by legal counsel), with the results obtained from the application of specified readings, inquiries and other appropriate procedures set forth in the letter and found them to be in agreement with such results. (l) At the Closing Date and each Option Closing Date, if any, the Underwriters shall have received from Price Waterhouse LLP a letter, dated as of the Closing Date or such Option Closing Date, as the case may be, to the effect that they reaffirm that statements made in the letter furnished pursuant to Section 6(j) hereof, except that the specified date referred to shall be a date not more than five days prior to the Closing Date or such Option Closing Date, as the case may be, and, if the Company has elected to rely on Rule 430A of the Rules and Regulations, to the further effect that they have carried out procedures as specified in clause (iv) of Section 6(j) hereof with respect to certain amounts, percentages and financial information as specified by the Underwriters and deemed to be a part of the Registration Statement pursuant to Rule 430A(b) and have found such amounts, percentages and financial information to be in agreement with the records specified in such clause (iv). (m) The Company shall have delivered to the Underwriters a letter from Price Waterhouse LLP addressed to the Company stating that they have not with respect to the Company's fiscal year ended December 31, 1995 brought to the attention of any of the Company's or the Subsidiaries management any `weakness' as defined in Statement of Auditing Standard No. 60 "Communication of Internal Control Structure Related Matters Noted in an Audit" in any of Company's or the Subsidiaries' internal controls. (n) On each of the Closing Date and each Option Closing Date, if any, there shall have been duly tendered to the Underwriters the appropriate principal amount of Notes. (o) The Securities shall have been approved for trading on the New York Stock Exchange. (p) Trading in the Common Stock shall not have been suspended by the New York Stock Exchange at any time after the date hereof. (q) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange, the American Stock Exchange or the over- the-counter market shall have been suspended or limited, or minimum prices shall have been established on either of such exchanges or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, or trading in securities of the Company on any exchange or in the over-the-counter market shall have been suspended or (ii) any moratorium on commercial banking activities shall have been declared by Federal or New York State authorities or (iii) an outbreak or escalation of hostilities or a declaration by the United States of a national emergency or war or such a material adverse change in general economic, political or financial conditions (or the effect of international conditions on the financial markets in the United States shall be such) as to make it, in the judgment of the Underwriters, impracticable or inadvisable to -24- 25 proceed with the offering or the delivery of the Notes on the terms and in the manner contemplated in the Registration Statement. (r) The Indenture shall have been duly executed and delivered by the Company and the Trustee and the Notes shall have been duly executed and delivered by the Company and duly authenticated by the Trustee. (s) On or prior to the date hereof, the Underwriters shall have received clearance from the NASD as to the amount of compensation allowable or payable to the Underwriters, as described in the Registration Statement. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to the Underwriters. If any condition to the Underwriters' obligations hereunder to be fulfilled prior to or at the Closing Date or the relevant Option Closing Date, as the case may be, is not so fulfilled, the Underwriters may terminate this Agreement or, if the Underwriters so elect, they may waive any such conditions which have not been fulfilled or extend the time for their fulfillment. 7. Indemnification. (a) The Company agrees to indemnify and hold harmless each of the Underwriters (for purposes of this Section 7, "Underwriters" shall include the officers, directors, partners, employees and agents of each of the Underwriters, including specifically each person who may be substituted for an Underwriter as provided in Section 11 hereof), and each person, if any, who controls an Underwriter ("controlling person") within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, from and against any and all losses, claims, damages, expenses or liabilities, joint or several (and actions, proceedings, suits and litigation in respect thereof), whatsoever (including but not limited to any and all reasonable expenses whatsoever incurred in investigating, preparing or defending against any action, suit, proceeding or litigation, commenced or threatened, or claim whatsoever), as the same are incurred, to which any of the Underwriters or any such controlling person may become subject, under the Securities Act, the Exchange Act or any other statute or at common law or otherwise insofar as such losses, claims, damages, expenses or liabilities arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in (i) any Preliminary Prospectus, the Registration Statement or the Prospectus (as from time to time amended and supplemented), (ii) any post-effective amendment or amendments or any new registration statement and prospectus in which are included securities of the Company for use in the same offering or (iii) any blue sky application or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Securities under the securities laws thereof (any such application, document or information being hereinafter called a "Blue Sky Application), or arise out of or are based upon the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of the Preliminary Prospectus and the Prospectus, in the light of the circumstances under which they were made), provided, however, that the Company shall not be liable in any such case to the extent, but only to the extent, that any such loss, claim, damage, expense or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with the Underwriters Information and provided, further, that with respect to any untrue statement or omission or alleged untrue statement or omission made in any Preliminary Prospectus or the Prospectus, the indemnification provided for herein shall not apply to any loss, liability, claim, damage or expense to the extent the same results from the sale of Notes to a person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the Prospectus, or in the case of an untrue statement or omission or alleged untrue statement or omission in the Prospectus, a copy of the amended Prospectus or supplement thereto, if the Company has previously furnished sufficient copies thereof, based upon the number of copies requested by the Underwriters, to the Underwriters a reasonable time in advance and the claim, damage or expense of such person results from an untrue statement or alleged untrue statement or omission or alleged omission of a material -25- 26 fact contained in a Preliminary Prospectus or Prospectus that was corrected in the Prospectus or amendment or supplement thereto. The indemnity agreement in this Section 7(a) shall be in addition to any liability which the Company may have at common law or otherwise. (b) The Underwriters agree severally and not jointly to indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the Registration Statement and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company to the Underwriters, but only with respect to statements or omissions made in conformity with the Underwriters Information in any Preliminary Prospectus, the Registration Statement or the Prospectus or any amendment thereof or supplement thereto. (c) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, suit or proceeding, such indemnified party shall, if a claim in respect thereof is to be made against one or more indemnifying parties under this Section 7, notify each party against whom indemnification is to be sought in writing of the commencement thereof (but the failure to notify an indemnifying party shall not relieve it from any liability which it may have under Section 7 (a) or (b) unless and to the extent that it has been prejudiced in a material respect by such failure or from the forfeiture of substantial rights and defenses). In case any such action, suit or proceeding is brought against any indemnified party, and it notifies an indemnifying party or parties of the commencement thereof, the indemnifying party or parties 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, which may be the same counsel as counsel to the indemnifying 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 the indemnifying parties in connection with the defense of such action at the expense of the indemnifying party, (ii) the indemnifying parties shall not have employed counsel reasonably satisfactory to such indemnified party to take charge of the defense of such action within a reasonable time after notice of commencement of the action or (iii) representation of both the indemnified and indemnifying parties by the same counsel would be inappropriate to actual or potential differing interests between them (in which case, if such indemnified party notifies the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party, it being understood, however, that the indemnifying party shall, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of not more than one separate firm of attorneys for all such indemnified parties). In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. Anything in this Section 7 to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or action effected without its written consent. (d) In order to provide for just and equitable contribution in any case in which (i) an indemnified party makes claim for indemnification pursuant to this Section 7, but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that the express provisions of this Section 7 provide for indemnification in such case, or (ii) contribution under the Securities Act may be required, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid as a result of such losses, claims, damages, expenses or liabilities (or actions, suits, proceedings or litigation in respect thereof) (A) in such proportion as is appropriate to reflect the relative benefits received by each of the contributing parties, on the one hand, and the party to be indemnified on the other hand, from the offering of the Securities or (B) if the allocation provided by clause (A) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of each of the contributing parties, on the one hand, and the party to be indemnified, on the other hand, in connection with the statements or omissions that resulted in such losses, claims, damages, expenses or -26- 27 liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other, shall be deemed to be in the same proportion as the total net proceeds from the offering of the Notes (before deducting expenses) bear to the total discounts received by the Underwriters hereunder, in each case as set forth in the table on the cover page of the Prospectus. Relative fault 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 Underwriters, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, expenses or liabilities (or actions, suits, proceedings or litigation in respect thereof) referred to above in this Section 7(d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating, preparing or defending any such action, claim, suit, proceeding or litigation. Notwithstanding the provisions of this Section 7(d), no Underwriter shall be required to contribute any amount in excess of the underwriting discount applicable to the Notes purchased by the Underwriters hereunder. 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. For purposes of this Section 7, each person, if any, who controls the Company within the meaning of the Securities Act, each officer of the Company who signed the Registration Statement and each director of the Company shall have the same rights to contribution as the Company, subject in each case to this Section 7(d). Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit, proceeding or litigation against such party in respect to which a claim for contribution may be made against another party or parties under this Section 7(d), notify such party or parties from whom contribution may be sought, but the omission so to 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 hereunder or otherwise than under this Section 7(d), or to the extent that such party or parties were not adversely affected by such omission. The contribution agreement set forth above shall be in addition to any liabilities which any indemnifying party may have at common law or otherwise. 8. Representations and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement or contained in certificates of officers of the Company submitted pursuant hereto shall be deemed to be representations, warranties and agreements at the Closing Date and each Option Closing Date, as the case may be, and the agreements of the Company and the provisions with respect to the payment of expenses contained in Sections 5 and 10 and the respective indemnity agreements contained in Section 7 hereof shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter, the Company, any of the Subsidiaries or any controlling person, and shall survive termination of this Agreement or the issuance and delivery of the Securities to the Underwriters. 9. Effective Date. This Agreement shall become effective at 10:00 a.m., New York City time, on the next full business day following the date hereof, or at such earlier time after the Registration Statement becomes effective as the Underwriters, in their discretion, shall release the Notes for the sale to the public; provided, however, that the provisions of this Section 9 and Sections 5, 7 and 10 of this Agreement shall at all times be effective. For purposes of this Section 9, the Notes to be purchased hereunder shall be deemed to have been so released upon the earlier of dispatch by the Underwriters of telegrams to securities dealers releasing the Notes for offering or the release by the Underwriters for publication of the first newspaper advertisement which is subsequently published relating to the Notes. 10. Termination. (a) Subject to Section 10(b), the Underwriters shall have the right to terminate this Agreement (i) if trading on the New York Stock Exchange, the American Stock Exchange, the Nasdaq Stock Market or in the over-the-counter market shall have been suspended, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required in the over-the-counter market by the NASD or by order of the Commission or any other government authority having jurisdiction; (ii) if the United States shall have become involved in a war or major hostilities, or there shall have been an escalation in an existing war or major hostilities, or a national emergency shall have been declared in the United States; (iii) if a moratorium in -27- 28 foreign exchange trading has been declared; (iv) if the Company or any of the Subsidiaries shall have sustained a loss material or substantial to the Company or any of the Subsidiaries by fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether or not such loss shall have been insured, will, in the Underwriters' opinion, make it inadvisable to proceed with the delivery of the Securities; (v) if there shall have been such a material adverse change in the conditions or prospects of the Company or any of the Subsidiaries as in the Underwriters' judgment would make it inadvisable to proceed with the offering, sale and/or delivery of the Securities; or (vi) if there shall have been such a material adverse change in the general market, political or economic conditions in the United States or elsewhere, as in the Underwriters' judgment would make it inadvisable to proceed with the offering, sale and/or delivery of the Securities. (b) If this Agreement is terminated by the Underwriters in accordance with the provisions of Section 10(a) or Section 12 or if this Agreement shall not be carried out within the time specified herein, or any extension thereof granted to the Underwriters, by reason of any failure on the part of the Company to perform any undertaking or satisfy any condition of this Agreement by it to be performed or satisfied (including, without limitation, pursuant to Section 6, Section 10(a) or Section 12), then the Company shall promptly reimburse and indemnify the Underwriters for all of their reasonable out-of-pocket expenses, including the fees and disbursements of Underwriters' Counsel. In addition, the Company shall remain liable for all Blue Sky counsel fees and expenses and Blue Sky filing fees. Notwithstanding any contrary provision contained in this Agreement, any election hereunder or any termination of this Agreement (including, without limitation, pursuant to Sections 6, 10, 11 and 12 hereof), and whether or not this Agreement is otherwise carried out, the provisions of Section 5 and Section 7 shall not be in any way affected by such election or termination or failure to carry out the terms of this Agreement or any part hereof. 11. Substitution of the Underwriters. If one or more of the Underwriters shall fail (otherwise than for a reason sufficient to justify the termination of this Agreement under the provisions of Section 6, Section 10 or Section 12 hereof) to purchase the Securities which it or they are obligated to purchase on such date under this Agreement (the "Defaulted Securities"), the Underwriters shall have the right after consultation with the Company, within 48 hours thereafter, to make arrangement for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Underwriters shall not have completed such arrangements within such 48 hour period, then: i) if the principal amount of Defaulted Securities does not exceed 10% of the aggregate principal amount of Firm Notes to be purchased on such date, the non-defaulting Underwriters shall be obligated to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters; or ii) if the principal amount of Defaulted Securities exceeds 10% of the aggregate principal amount of Firm Notes, this Agreement shall terminate without liability on the part of any non-defaulting Underwriters. No action taken pursuant to this Section 11 shall relieve any defaulting Underwriter from liability in respect of any default by such Underwriter under this Agreement. In the event of any such default which does not result in a termination of this Agreement, the Underwriters 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 Registration Statement or Prospectus or in any other documents or arrangements. 12. Default by the Company. If the Company shall fail at the Closing Date or any Option Closing Date, as applicable, to sell and deliver the amount of Notes and the number of Warrants which it is obligated to sell hereunder on such date, then this Agreement shall terminate (or, if such default shall occur with respect to any Option Notes or Warrants to be purchased on an Option Closing Date, the Underwriters may, at their -28- 29 option, by notice from the Underwriters to the Company, terminate the Underwriters' obligation to purchase Option Notes or Warrants from the Company on such date) without any liability on the part of any non-defaulting party other than pursuant to Sections 5, 7 and 10 hereof. No action taken pursuant to this Section 12 shall relieve the Company from liability, if any, in respect of such default. 13. Notices. All notices and communications hereunder, except as herein otherwise specifically provided, shall be given in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to them at Forum Capital Markets L.P., 53 Forest Avenue, Old Greenwich, Connecticut 06870, Attention: Mr. C. Keith Hartley, with a copy to Kelley Drye & Warren LLP, Two Stamford Plaza, 281 Tresser Boulevard, Stamford, Connecticut 06901, Attention: Jay R. Schifferli, Esq. Notices to the Company shall be directed to the Company at Westbridge Capital Corp., 777 Main Street, Fort Worth, Texas 76102, Attention: Chief Financial Officer, with a copy to Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, Attention: Robert S. Reder, Esq. 14. Parties. This Agreement shall inure solely to the benefit of and shall be binding upon the Underwriters, the Company and the controlling persons, directors and officers referred to in Section 7 hereof, and their respective successors, legal representatives and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provisions herein contained. No purchaser of Notes from the Underwriters shall be deemed to be a successor by reason merely of such purchase. 15. CONSTRUCTION. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO CHOICE OF LAW OR CONFLICT OF LAWS PRINCIPLES. 16. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which taken together shall be deemed to be one and the same instrument. 17. Entire Agreement; Amendments. This Agreement constitutes the entire agreement of the parties hereto and supersedes all prior written or oral agreements, understandings and negotiations with respect to the subject matter hereof. This Agreement may not be amended except in a writing signed by the Underwriters and the Company. -29- 30 If the foregoing correctly sets forth the understanding between the Underwriters 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, WESTBRIDGE CAPITAL CORP. By: ------------------------------------ Name: Title: Confirmed and accepted as of the date first above written. FORUM CAPITAL MARKETS L.P. RAYMOND JAMES & ASSOCIATES, INC. By: FORUM CAPITAL MARKETS L.P. By: ---------------------------------- Name: Title: -30- 31 SCHEDULE I
Principal amount of Name of Underwriter Notes to be Purchased ------------------- --------------------- Forum Capital Markets L.P. . . . . . . . . . . . . . . $32,500,000 Raymond James & Associates, Inc. . . . . . . . . . . . $32,500,000 ----------- Total $65,000,000 ===========
-31- 32 ANNEX A
Jurisdictions in State of Percentage which Qualified to Name Incorporation Ownership Conduct Business ---- ------------- ---------- ------------------ National Foundation Life Insurance Company Delaware 100% (1) American Insurance Company of Texas Texas 100% (2) National Financial Insurance Company Texas 100% (3) Freedom Life Insurance Company of America Mississippi 100% (4) Freedom Holding Company Kentucky 100% Kentucky Freedom Marketing, Inc. Texas 100% Texas Westbridge Funding Corporation Delaware 100% Delaware, Texas Foundation Financial Services, Inc. Nevada 100% Kansas, Nevada, Texas Westbridge Marketing Corporation Delaware 100% Delaware, Texas Westbridge Printing Services, Inc. Delaware 100% Delaware, Texas Flex-Plan Systems, Inc. Delaware 100% Delaware Westbridge Financial Corp. Delaware 100% Delaware Precision Dialing Services, Inc. Delaware 100% Delaware, Texas Westbridge National Life Insurance Company Arizona 100% Arizona, Oklahoma LifeStyles Marketing Group, Inc. Delaware 100% (5) LSMG, Inc. Texas 100% Texas Senior Benefits, LLC Arizona 100% Arizona, Missouri, California, Kansas Senior Benefits of Texas, Inc. Texas 100% Texas American Senior Security Plans, LLC Delaware 100% Delaware, Texas American Senior Security Plans of Texas, Inc. Texas 100% Texas Health Care-One Insurance Agency, Inc. California 50% California Health Care-One Marketing Group, Inc. Texas 80% Texas
- --------------- (1) Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington, Wyoming (2) Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Illinois, Iowa, Louisiana, Mississippi, Missouri, Nebraska, Nevada, New Mexico, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Utah, West Virginia (3) Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Oklahoma, South Carolina, Tennessee, Texas, Utah, Washington (4) Alabama, Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wyoming (5) Alabama, Colorado, Delaware, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Washington -32- EX-4.1 3 FORM OF INDENTURE 1 KDW DRAFT 4/16/97 - -------------------------------------------------------------------------------- WESTBRIDGE CAPITAL CORP., Company and FIRST UNION NATIONAL BANK Trustee _______________ INDENTURE Dated as of _________ , 1997 _______________ $74,750,000 __% Convertible Subordinated Notes due 2007 - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Company Request or Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Continuing Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Current Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Designated Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Junior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Predecessor Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3 Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Significant Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Trading Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 104. Acts of Holders; Record Dates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 105. Notices, etc., to Trustee and Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 106. Notice to Holders; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 107. Conflict with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 108. Effect of Headings and Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 109. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 110. Separability Clause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 111. Benefits of Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 112. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 113. Legal Holidays. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 114. Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 ARTICLE TWO NOTE FORMS SECTION 201. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 202. Form of Face of Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 203. Form of Reverse of Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 204. Form of Trustee's Certificate of Authentication. . . . . . . . . . . . . . . . . . . . . . 19 SECTION 205. Form of Conversion Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 206. Form of Option of Holder to Elect Repurchase . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 207. Form of Assignment by Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 ARTICLE THREE THE NOTES SECTION 301. Title and Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 302. Denominations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 303. Execution, Authentication, Delivery and Dating. . . . . . . . . . . . . . . . . . . . . . . 22
- ii - 4 SECTION 304. Temporary Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 SECTION 305. Registration, Registration of Transfer and Exchange. . . . . . . . . . . . . . . . . . . . 23 SECTION 306. Mutilated, Destroyed, Lost and Stolen Notes. . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 307. Payment of Interest; Interest Rights Preserved. . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 309. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 310. Computation of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 402. Release of Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 ARTICLE FIVE REMEDIES SECTION 501. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 SECTION 502. Acceleration of Maturity; Rescission and Annulment. . . . . . . . . . . . . . . . . . . . . 29 SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 504. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 505. Trustee May Enforce Claims Without Possession of Notes . . . . . . . . . . . . . . . . . . 31 SECTION 506. Application of Money Collected. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 507. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 508. Unconditional Right of Holders to Receive Principal and Interest and to Convert. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 SECTION 509. Restoration of Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 SECTION 510. Rights and Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 SECTION 511. Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 SECTION 512. Control by Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 SECTION 513. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 SECTION 514. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 SECTION 515. Waiver of Stay or Extension Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 602. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 603. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 604. Not Responsible for Recitals or Issuance of Notes. . . . . . . . . . . . . . . . . . . . . 36 SECTION 605. May Hold Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
- iii - 5 SECTION 606. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 607. Compensation and Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 608. Disqualification; Conflicting Interests. . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 609. Corporate Trustee Required; Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 610. Resignation and Removal; Appointment of Successor. . . . . . . . . . . . . . . . . . . . . 38 SECTION 611. Acceptance of Appointment by Successor. . . . . . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 612. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 613. Preferential Collection of Claims Against Company. . . . . . . . . . . . . . . . . . . . . 39 SECTION 614. Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 702. Preservation of Information; Communications to Holders . . . . . . . . . . . . . . . . . . 41 SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company May Consolidate, Etc., Only on Certain Terms . . . . . . . . . . . . . . . . . . . 43 SECTION 802. Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . . . . . 44 SECTION 902. Supplemental Indentures with Consent of Holders . . . . . . . . . . . . . . . . . . . . . . 45 SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 904. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 904. Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 906. Conformity with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 SECTION 907. Reference in Notes to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . 47 SECTION 908. Subordination Unimpaired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 SECTION 1002. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
- iv - 6 SECTION 1003. Money for Note Payments to Be Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 1004. Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 SECTION 1005. Change of Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 SECTION 1006. Payment of Taxes and Other Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 SECTION 1007. Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 SECTION 1008. Statement by Officers as to Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 SECTION 1009. Stay, Extension and Usury Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 ARTICLE ELEVEN REDEMPTION OF NOTES . . . . . . . . . . . . . . . . . . . . . . . 52 SECTION 1101. Right of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 SECTION 1102. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 1103. Election to Redeem; Notice to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 1104. Selection by Trustee of Notes to Be Redeemed. . . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 1105. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 1106. Deposit of Redemption Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 SECTION 1107. Notes Payable on Redemption Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 SECTION 1108. Notes Redeemed in Part. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 ARTICLE TWELVE CONVERSION OF NOTES SECTION 1201. Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 1202. Conversion Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 1203. Cash Payments in Lieu of Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . . 56 SECTION 1204. Adjustment of Conversion Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 SECTION 1205. Effect of Reclassification, Consolidation, Merger or Sale. . . . . . . . . . . . . . . . . 61 SECTION 1206. Taxes on Shares Issued. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 SECTION 1207. Reservation of Shares; Shares to be Fully Paid; Compliance with Government Requirements; Listing of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 62 SECTION 1208. Responsibility of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 SECTION 1209. Notice to Holders Prior to Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . 63 ARTICLE THIRTEEN SUBORDINATION OF NOTES SECTION 1301. Agreement to Subordinate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 SECTION 1302. No Payment on Notes in Event of Default on Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 SECTION 1303. Distribution on Dissolution, Liquidation and Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 SECTION 1304. Payment to Holders of Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 66 SECTION 1305. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
- v - 7 SECTION 1306. Payment on Notes Permitted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 SECTION 1307. Authorization of Holders to Trustee to Effect Subordination . . . . . . . . . . . . . . . . 67 SECTION 1308. Trustee as Holder of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 67 SECTION 1309. Notices to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 SECTION 1310. No Fiduciary Duty by Trustee to Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 SECTION 1311. Paying Agent Treated as Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 ARTICLE FOURTEEN DEFEASANCE AND COVENANT DEFEASANCE SECTION 1401. Company's Option to Effect Defeasance or Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 SECTION 1402. Defeasance and Discharge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 SECTION 1403. Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 SECTION 1404. Conditions to Defeasance or Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . . 70 SECTION 1405. Application of Trust Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 SECTION 1406. Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
- vi - 8 RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939 AND INDENTURE, DATED AS OF _________, 1997
Trust Indenture Act Section Indenture Section - ------------- ----------------- Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609 (a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609 (a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608, 610 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701, 702(a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702(b) (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702(c) Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a) (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(b) Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704, 1008 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 (c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 (c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601 (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514 Section 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 (a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502, 512 (a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513 (a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104(c) Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503 (a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1003 Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
___________________________ Note: This reconciliation and tie shall not, for any purpose, be deemed to be part of the Indenture. - vii - 9 INDENTURE, dated as of _________, 1997, between Westbridge Capital Corp., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company"), having its principal executive office at 777 Main Street, Fort Worth, Texas 76102, and First Union National Bank, a national banking association duly organized and existing under the laws of the United States of America, as Trustee (herein called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the creation of an issue of up to $74,750,000 aggregate principal amount of its __% Convertible Subordinated Notes due 2007 (herein called the "Notes") of substantially the tenor and amount hereinafter set forth, and to provide therefor the Company has duly authorized the execution and delivery of this Indenture. All things necessary to make the Notes, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Notes, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; (4) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and (5) references to Sections or Articles mean Sections or Articles of this Indenture. 10 "Act," when used with respect to any Holder, has the meaning specified in Section 104. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Authenticating Agent" means any Person authorized by the Trustee to act on behalf of the Trustee to authenticate Notes. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board, except that, for purposes of the definitions of "Change of Control" and "Continuing Director, "Board of Directors" means the Board of Directors of the Company. "Board Resolution" means 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, and delivered to the Trustee. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York or Texas are authorized or obligated by law or executive order to close. "Capital Stock" of any Person means the Common Stock or Preferred Stock of such Person. Unless otherwise stated herein or the context otherwise requires, "Capital Stock" means Capital Stock of the Company. "Change of Control" means the occurrence of any of the following events after the date of this Indenture: (i) any Person (including, without limitation, any "person" within the meaning of Section 13(d) or 14(d) of the Exchange Act, but excluding the Company, any Subsidiary and any employee benefit plan of the Company or any Subsidiary) becomes the direct or indirect beneficial owner of shares of Capital Stock representing greater than 50% of the combined voting power of all outstanding shares of Capital Stock entitled to vote in the election of directors under ordinary circumstances, (ii) the Company consolidates with or merges into any other Person and the outstanding Common Stock is changed or exchanged as a result, (iii) the sale, transfer or other disposition of all or substantially all of the assets of the Company or of the collective assets of the Company and the Subsidiaries, (iv) at any time Continuing Directors cease for any reason to constitute a majority of the Board of Directors then in office or (v) the Company makes any distribution of cash, Property or securities (other than regular quarterly dividends, Common Stock, Preferred Stock which is substantially equivalent to the Common Stock or rights to acquire Common Stock or Preferred Stock which is substantially equivalent to the Common Stock) to holders of Common Stock, or the Company or any Subsidiary purchases or otherwise acquires Common Stock, and the sum of the Fair Market Value of such cash, Property or securities distributed or Common Stock purchased on the date the same is made, plus the Fair Market Value, when made, of all other cash, Property or securities so - 2 - 11 distributed and Common Stock so purchased which have occurred during the 12-month period ending on such date, in each case expressed as a percentage of the aggregate Current Market Price of all Common Stock outstanding at the close of business on the last Trading Day prior to the date of such distribution or purchase, exceeds 50%. "Commission" means 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, then the body performing such duties at such time. "Common Stock" means all shares now or hereafter authorized of the class of common stock, par value $.10 per share, of the Company currently authorized and stock of any other class into which such shares may hereafter have been changed. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor corporation. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by the Chairman of the Board, a Vice Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company and delivered to the Trustee. "Continuing Directors" means any member of the Board of Directors who (i) is a member of the Board of Directors on the date hereof or (ii) was nominated for election or elected to the Board of Directors with the affirmative vote of at least two-thirds of such members and members of the Board of Directors who were previously so nominated or elected. "Corporate Trust Office" means the principal office of the Trustee in _________________ at __________________ which at any particular time its corporate trust business shall be administered. "Current Market Price" means, when used with respect to any security as of any date, the last sale price, regular way, or, in case no such sale takes place on such date, the average of the closing bid and asked prices, regular way, of such security in either case as reported for consolidated transactions on the New York Stock Exchange or, if such security is not listed or admitted to trading on the New York Stock Exchange, as reported for consolidated transactions with respect to securities listed on the principal national securities exchange on which such security is listed or admitted to trading or, if such security is not listed or admitted to trading on any national securities exchange, as reported on the Nasdaq National Market, or, if such security is not listed or admitted to trading on the Nasdaq National Market, as reported on the Nasdaq SmallCap Market, or if such security is not listed or admitted to trading on any national securities exchange or the Nasdaq National Market or the Nasdaq SmallCap Market, the average of the high bid and low asked prices of such security in the over-the-counter market as reported by the National Association of Securities Dealers, Inc. Automated Quotations System or such other system then in use or, if such security is not quoted by any such organization, the average of the closing bid and asked prices of such security furnished by a New York Stock Exchange - 3 - 12 member firm selected by the Company. If such security is not quoted by any such organization and no such New York Stock Exchange member firm is able to provide such prices, the Current Market Price of such security shall be the Fair Market Value thereof. "Designated Senior Debt" means the 11% Senior Subordinated Notes due 2002 of the Company, any Senior Indebtedness outstanding from time to time under the Credit Agreement dated as of December 28, 1995 between Westbridge Capital Funding Corporation and Fleet National Bank, as amended, or the Guarantee Agreement of the Company dated concurrently therewith and any other Senior Indebtedness the principal amount of which is $10.0 million or more and which has been designated as Designated Senior Debt in an Officer's Certificate. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Fair Market Value" means, at any date as to any asset, Property or right (including, without limitation, Capital Stock of any Person, evidences of indebtedness or other securities, but excluding cash), the fair market value of such item as determined in good faith by the Board of Directors, whose determination shall be conclusive and evidenced by a Board Resolution; provided, however, that if there is a Current Market Price for such item on such date, "Fair Market Value" means such Current Market Price (without giving effect to the last sentence of the definition thereof). "GAAP" means, as of any date, generally accepted accounting principles in the United States and does not include any interpretations or regulations that have been proposed but that have not become effective. "Holder" means a Person in whose name a Note is registered in the Note Register. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. "Interest Payment Date" means the Stated Maturity of an installment of interest on the Notes. "Junior Securities" means (a) shares of any and all classes of Capital Stock and (b) securities of the Company which are subordinated in right of payment to Senior Indebtedness at the time of issuance or delivery of such securities to substantially the same extent as, or to a greater extent than, the Notes are so subordinated as provided in Article Thirteen. "Maturity," when used with respect to any Note, means the date on which the Principal of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Notes" has the meaning specified in the recitals of the Company. - 4 - 13 "Officers' Certificate" means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee and, unless otherwise provided in this Indenture, containing the statements provided for in Section 102; provided, however, that for purposes of Section 1008, "Officers' Certificate" means a certificate signed by the principal executive officer, principal financial officer or principal accounting officer of the Company. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company and who shall be reasonably acceptable to the Trustee, containing the statements provided for in Section 102. "Outstanding," when used with respect to Notes, means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except: (i) Notes theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Notes for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company, any Subsidiary or any Affiliate thereof) in trust, in accordance with this Indenture, for the Holders of such Notes and the Trustee or Paying Agent is not prohibited from paying such money to the Holders thereof pursuant to the terms of this Indenture; provided that, such Notes shall continue to be Outstanding until the redemption date or maturity date; and (iii) Notes which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture, other than any such Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Notes are held by a bona fide purchaser in whose hands such Notes are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Notes have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Trustee knows to be so owned shall be so disregarded. Notes so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Notes and that the pledgee is not the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor. "Paying Agent" means any Person authorized by the Company to pay the Principal of or interest on any Notes on behalf of the Company. - 5 - 14 "Person" means any person or entity of any nature whatsoever, specifically including an individual, a firm, a company, a corporation, a partnership, a trust, or other entity. "Predecessor Note" of any particular Note means 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 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note. "Preferred Stock" of any Person means the class or classes of equity, ownership or participation interests (however designated) in such Person, including, without limitation, stock, share, partnership and membership interests, which are preferred as to the payment of dividends or distributions by, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of, such Person (or equivalents thereof) over interests of any other class of interests of such Person. Unless otherwise stated herein or the context otherwise requires, "Preferred Stock" means Preferred Stock of the Company. "Principal" of a debt security means the principal of the security plus the premium, if any, on the security. "Principal" shall include, with respect to the Notes, the redemption price or repurchase price, if any, payable thereon. "Property" of any Person means any and all types of real, personal, tangible, intangible or mixed property owned by such Person whether or not included on the most recent consolidated balance sheet of such Person in accordance with GAAP. "Redemption Date," when used with respect to any Note to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price," when used with respect to any Note to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Regular Record Date" for the interest payable on any Interest Payment Date means the date specified in Section 202 as the "Regular Record Date." "Responsible Officer," when used with respect to the Trustee, means the chairman or any vice-chairman of the board of directors, the chairman or any vice-chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. - 6 - 15 "Senior Indebtedness" means the Principal of and interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company, whether or not such claim for post-petition interest is allowed in such proceeding) on: (a) indebtedness of the Company existing on the date hereof for money borrowed (other than the Notes) or evidenced by notes or other written obligations given in connection with the acquisition of any business, Properties or assets of any kind (including purchase-money obligations); (b) obligations of the Company as lessee under capitalized leases and leases of Property made as part of any sale and leaseback transactions; (c) indebtedness of others of any of the kinds described in the preceding clauses (a) and (b) assumed or guaranteed by the Company, including the amounts guaranteed by the Company under the Guaranty Agreement dated as of December 28, 1995 by the Company in favor of Fleet National Bank of Connecticut, as amended; (d) renewals, extensions and refundings of, and indebtedness and obligations of a successor corporation issued in exchange for or in replacement of, indebtedness or obligations of the kinds described in the preceding clauses (a) through (c); and (e) future indebtedness of the Company described in clause (a) above, and renewals, extensions and refundings thereof, if the instrument creating or evidencing such future indebtedness provides that such indebtedness is superior in right of payment to the Notes. Notwithstanding the foregoing, Senior Indebtedness shall not include (i) any future indebtedness of the kind described in clause (a) above if and to the extent such indebtedness is convertible into shares of Common Stock or other equity securities of the Company, and the Notes shall rank pari passu with any such convertible indebtedness unless the instrument creating or evidencing such convertible indebtedness provides that such convertible indebtedness is junior in right of payment to the Notes or (ii) indebtedness or amounts owed (except to banks and other financial institutions) for compensation to employees, or for goods or materials purchased, or services utilized, in the ordinary course of business of the Company or of any other person from whom such indebtedness or amount was assumed or for whom such indebtedness was guaranteed. "Significant Subsidiary" means each Subsidiary that would constitute a "Significant Subsidiary" within the meaning of Rule 1-02 of Regulation S-X of the Commission. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity," when used with respect to any Note or any installment of interest thereon, means the date specified in such Note as the fixed date on which the Principal of such Note or such installment of interest is due and payable, whether at maturity, upon redemption, upon a Change of Control or otherwise. "Subsidiary" of a Person on any date means any other Person, a majority of whose Capital Stock with voting power, under ordinary circumstances, entitling holders of such Capital Stock to elect the board of directors or other governing body of such other Person, is at such date, directly or indirectly, owned by such Person and/or a Subsidiary or Subsidiaries of such Person. Unless otherwise stated herein or the context otherwise requires, "Subsidiary" means a Subsidiary of the Company. "Trading Day" means (i) if the applicable security is listed or admitted for trading on a national security exchange, a day on which such exchange is open for business, (ii) if the - 7 - 16 applicable security is quoted on the Nasdaq National Market, a day on which trades may be made thereon or (iii) if the applicable security is not so listed, admitted for trading or quoted, any Business Day. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, or the date any supplemental indenture is executed, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "U.S. Government Obligations" means non-callable (i) direct obligations (or certificates representing an ownership interest in such obligations) of the United States for which its full faith and credit are pledged and (ii) obligations of a Person controlled or supervised by, and acting as an agency or instrumentality of, the United States, the payment of which is unconditionally guaranteed as a full faith and credit obligation of the United States. "Vice President," when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." In addition, the following terms are defined in the respective Sections:
Term Defined in Section ---- ------------------ "Aggregate Consideration" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1204 "Change of Control Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1005 "Change of Control Notice" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1005 "Change of Control Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1005 "Change of Control Payment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1005 "Change of Control Payment Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1005 "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1004 "covenant defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1403 "Conversion Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 "Conversion Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1201 "Defaulted Interest" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307 "defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1402 "Defeasance Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1404 "DTC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1202 "Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501 "Nonpayment Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1302 "Note Register" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 "Note Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 "Payment Blockage Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1302 "Trigger Event" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1204
- 8 - 17 SECTION 102. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such certificates and opinions as may be required under the Trust Indenture Act and under this Indenture. Each such certificate or opinion shall be given in the form of an Officers' Certificate, if to be given by an officer of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any other requirements set forth in this Indenture. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the Officers' Certificate provided pursuant to Section 1008) shall include (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, 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, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered in an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. - 9 - 18 Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Holders; Record Dates. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgements of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) The Company may, in the circumstances permitted by the Trust Indenture Act, fix any day as the record date for the purpose of determining the Holders entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Holders. If not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 701) prior to such first solicitation or vote, as the case may be. With regard to any record date, only the Holders on such date (or their duly designated proxies) shall be entitled to give or take, or vote on, the relevant action. (d) The ownership of Notes shall be proved by the Note Register. (e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu - 10 - 19 thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Note. SECTION 105. Notices, etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Department, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company. SECTION 106. Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at such Holder's address as it appears in the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. SECTION 107. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Indenture by operation of Sections 310 to 317, inclusive, of the Trust Indenture Act, such required provision shall control. - 11 - 20 SECTION 108. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 109. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. All covenants and agreements in this Indenture by the Trustee shall bind its successors and assigns, whether so expressed or not. SECTION 110. Separability Clause. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 111. Benefits of Indenture. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the holders of Senior Indebtedness and the Holders of Notes, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 112. Governing Law. THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SECTION 113. Legal Holidays. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) payment of interest or Principal 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, Redemption Date, or at the Stated Maturity, provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be. SECTION 114. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP, and all financial data required to be delivered hereunder shall be prepared in accordance with GAAP, applied on a consistent basis; except as otherwise specifically prescribed herein. - 12 - 21 SECTION 115. Incorporation by Reference of Trust Indenture Act. This Indenture is subject to the mandatory provisions of the Trust Indenture Act, which are incorporated by reference in and made a part of this Indenture. Such provisions shall apply to this Indenture at all times, notwithstanding that at any time or from time to time this Indenture is not required to be qualified under the Trust Indenture Act. 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; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Notes means the Company and any successor obligor on the Notes. 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 and not otherwise defined herein have the meanings so assigned to them. ARTICLE TWO NOTE FORMS SECTION 201. Forms Generally. The Notes, the Trustee's certificate of authentication and the Conversion Notice shall be in substantially the forms set forth in this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of the Notes. The definitive Notes shall be printed, lithographed or engraved or produced by any combination of these methods on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Notes, as evidenced by their execution of such Notes. - 13 - 22 SECTION 202. Form of Face of Note. WESTBRIDGE CAPITAL CORP. __% Convertible Subordinated Note due 2007 CUSIP No........... No..... $.................. Westbridge Capital Corp., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to ________________, or registered assigns, the principal sum of ______________ Dollars on _________ 1, 2007, and to pay interest thereon from _________ 1, 1997 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on _________ 1 and _________ 1 of each year, commencing _________ 1, 1997, or, if any such date is not a Business Day on the next succeeding Business Day (each, an "Interest Payment Date"), at the rate of __% per annum, until the Principal hereof is paid. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on __________ 15 and ___________ 15, whether or not a Business Day, preceding the respective Interest Payment Date (the "Regular Record Date"). Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes not less than 10 days prior to such Special Record Date, or be paid at any time 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, all as more fully provided in said Indenture. Payment of the Principal of and interest on this Note will be made at the office or agency of the Company maintained for that purpose in New York, New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest on any Interest Payment Date other than at Maturity may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Note Register. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. - 14 - 23 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. WESTBRIDGE CAPITAL CORP. By: ________________________ Attest: ________________________ Dated: SECTION 203. Form of Reverse of Note. This Note is one of a duly authorized issue of Notes of the Company designated as its __% Convertible Subordinated Notes due 2007 (herein called the "Notes"), limited in aggregate principal amount to $74,750,000, issued and to be issued under an Indenture, dated as of _________ 1, 1997 (herein called the "Indenture"), between the Company and First Union National Bank, as Trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Indebtedness and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. Conversion. Subject to and upon compliance with the provisions of the Indenture, the Holder of this Note is entitled, at his option, at any time prior to the Stated Maturity of the Outstanding Notes on _________ 1, 2007 (provided that, in case this Note or any portion hereof shall be called for redemption prior to such date, such right shall terminate with respect to this Note or portion hereof, as the case may be, so called for redemption on the Business Day next preceding the Redemption Date), to convert the principal amount of this Note (or any portion hereof which is $1,000 or an integral multiple thereof) into shares of Common Stock. The Conversion Price shall be subject to adjustment as provided in the Indenture. In order to exercise the conversion privilege, the Holder shall surrender this Note, together with the conversion notice hereon duly executed (unless such Holder is DTC, in which case the customary procedures of DTC will apply), to the Company at the designated office or agency of the Company in New York, New York, accompanied (if so required by the Company) by instruments of transfer, in form satisfactory to the Company and to the Trustee, duly executed by the Holder or by his duly authorized attorney in writing and, in case such surrender shall be made during the period from the close of business on any Regular Record Date next preceding any Interest Payment Date to the opening of business on such Interest Payment Date (unless this Note or the portion thereof being converted has been called for redemption during such period), also accompanied by payment of an amount equal to the amount of interest payable on such Interest Payment Date on the principal amount of this Note then being converted. Except as provided above and in the Indenture, no adjustment or payment is to be made on conversion for interest accrued hereon or for dividends on shares of Common Stock issued on conversion. The Company is not required to issue fractions of shares upon any such conversion, but shall make adjustment therefor in cash as provided in the Indenture. A Holder is not entitled to any rights of a holder of Common Stock until such Holder has converted its Notes into Common Stock as provided in the Indenture. - 15 - 24 Optional Redemption by the Company. The Notes are subject to redemption at any time on or after _________ 1, 2000, as a whole or in part, at the election of the Company, upon not less than 30 nor more than 60 days' notice, at the Redemption Prices (expressed as percentages of the principal amount being redeemed) set forth below if the Redemption Date occurs during the twelve-month period beginning _________ 1 of the years indicated:
For the 12 Months Redemption after 1, Price ----------------- ---------- 2000 103% 2001 102% 2002 101% 2003 and thereafter 100%
together in the case of any such redemption with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Notes, or one or more Predecessor Notes, of record at the close of business on the applicable Regular Record Dates referred to on the face hereof, all as provided in the Indenture. Mandatory Redemption. The Notes do not have the benefit of any sinking fund obligation. Repurchase at the Option of Holder. Upon a Change of Control, the Company shall make an offer to purchase all the Outstanding Notes at a purchase price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon to the Change of Control Payment Date. Within the periods specified in the Indenture, the Company shall mail a notice to each Holder setting forth the procedures governing the offer to purchase as required by the Indenture. A Holder may tender or refrain from tendering all or any portion of such Holder's Notes, at such Holder's discretion, by completing and signing the form entitled "Option of Holder to Elect Repurchase" below and delivering such form, together with the Notes with respect to which the repurchase right is being exercised, duly endorsed for transfer to the Company, to the Trustee. Any partial tender of Notes must be made in an integral multiple of $1,000. In the event of redemption or repurchase by the Company of this Note in part only, a new Note or Notes for the portion hereof not redeemed or repurchased will be issued in the name of the Holder hereof upon the cancellation hereof. Discharge and Defeasance. The Indenture contains provisions for defeasance of (a) the entire indebtedness of the Notes and (b) certain restrictive covenants upon compliance by the Company with certain conditions set forth therein. - 16 - 25 Subordination. The indebtedness evidenced by the Notes is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness, and this Note is issued subject to such provisions and each Holder of this Note, by accepting the same, agrees to and shall be bound by such provisions, and authorizes the Trustee in such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Indenture and appoints the Trustee as such Holder's attorney-in-fact for such purpose. Default. If an Event of Default shall occur and be continuing, the Principal of all the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. Modification. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Notes at the time Outstanding. Without the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture to (i) evidence the succession of another corporation to the Company and the assumption by any such successor of the covenants of the Company herein and in the Indenture; (ii) add to the covenants of the Company for the benefit of the Holders, or surrender any right or power herein conferred upon the Company; (iii) cure any ambiguity, correct or supplement any provision herein which may be inconsistent with any other provision therein, or to make any other provisions with respect to matters or questions arising under the Indenture which shall not be inconsistent with the provisions of the Indenture, provided such action shall not adversely affect the interests of the Holders in any material respect; or (iv) provide for uncertificated Notes in addition to or in lieu of certificated Notes. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of the Holders of all the Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. Transfer; Denominations; Exchange. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note Register, upon surrender of this Note for registration of transfer at the designated office or agency of the Company in New York, New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed by, the Holder hereof or such Holder's attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Notes are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same. - 17 - 26 No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Persons Deemed Owners. Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Definitions; Authentication. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to Minors Act). The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: Westbridge Capital Corp. 777 Main Street, Suite 900 Fort Worth, Texas 76102 Attn: General Counsel SECTION 204. Form of Trustee's Certificate of Authentication. This is one of the Notes referred to in the within-mentioned Indenture. FIRST UNION NATIONAL BANK, as Trustee By _______________________________ Authorized Officer SECTION 205. Form of Conversion Notice. To Westbridge Capital Corp. The undersigned owner of this Note hereby irrevocably exercises the option to convert this Note, or portion hereof (which is $1,000 or an integral multiple thereof) below designated, into shares of Common Stock, par value $.10 per share, of Westbridge Capital Corp. in accordance with the terms of the Indenture referred to in this Note, and directs that the shares issuable and deliverable upon the conversion, together with any check in payment for fractional shares and any Notes representing any unconverted principal amount hereof, be issued and - 18 - 27 delivered to the registered holder hereof unless a different name has been indicated below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Dated____________________ ______________________________________ Signature (exactly as your name appears on the face of this Note) Signature Guaranteed: By:_______________________ This signature shall be guaranteed by an eligible guarantor institution (a bank or a trust company having an office or correspondent in the United States or a broker or dealer which is a member of a registered securities exchange or the National Association of Securities Dealers, Inc.) with membership is an approved signature guaranty medallion program pursuant to SEC Rule 17Ad-15. Fill in for registration of shares of Common Stock and Notes if to be issued otherwise than to the registered holder. Social Security or Other Taxpayer Identifying Number ___________________________ ______________________________________ (Print Name) Principal Amount to be Converted (in an integral multiple of $1,000, if less than all): ___________________________ $_____________________________________ (Print address, including zip code) SECTION 206. Form of Option of Holder to Elect Repurchase. To elect to have this Note, or portion hereof (which is $1,000 or an integral multiple thereof) repurchased by Westbridge Capital Corp. pursuant to Section 1005 of the Indenture in connection with a Change of Control, state the amount you elect to have repurchased (if all, write "ALL"): $______________. Dated____________________ ______________________________________ Signature (exactly as your name appears on the face of this Note) - 19 - 28 Signature Guaranteed: By:_______________________ This signature shall be guaranteed by an eligible guarantor institution (a bank or a trust company having an office or correspondent in the United States or a broker or dealer which is a member of a registered securities exchange or the National Association of Securities Dealers, Inc.) with membership is an approved signature guaranty medallion program pursuant to SEC Rule 17Ad-15. SECTION 207. Form of Assignment by Holder. (I) or (we) assign and transfer this Note to ________________________________________________________________________________ (Insert assignee's social security or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint ________________________________________________________ agent to transfer this Note on the Note Register. The agent may substitute another to act for him. Dated____________________ ______________________________ Signature (exactly as your name appears on the face of this Note) Name: Title: Address: Phone No.: Signature Guaranteed: By:_______________________ This signature shall be guaranteed by an eligible guarantor institution (a bank or a trust company having an office or correspondent in the United States or a broker or dealer which is a member of a registered securities exchange or the National Association of Securities Dealers, Inc.) with membership is an approved signature guaranty medallion program pursuant to SEC Rule 17Ad-15. - 20 - 29 ARTICLE THREE THE NOTES SECTION 301. Title and Terms. The aggregate principal amount of Notes which may be authenticated and delivered under this Indenture is limited to $74,750,000, except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Section 304, 305, 306, 907 or 1108. The Notes shall be known and designated as the "__% Convertible Subordinated Notes due 2007" of the Company. Their Stated Maturity shall be _________ 1, 2007, and they shall bear interest at the rate of __% per annum from _________ 1, 1997 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, as the case may be, payable semi-annually in arrears on _________ 1 and _________ 1 of each year, commencing _________ 1, 1997, until the principal thereof is paid or made available for payment. The Principal of and interest on the Notes shall be payable at the office or agency of the Company in New York, New York, maintained for such purpose and at any other office or agency maintained by the Company for such purpose; provided, however, that at the option of the Company, payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Note Register. The Company shall be required to offer to repurchase Notes following the occurrence of a Change of Control as provided in Article Ten. The Notes shall be redeemable at the option of the Company as provided in Article Eleven. The Notes shall be convertible into Common Stock as provided in Article Twelve. The Notes shall be subordinated in right of payment to Senior Indebtedness as provided in Article Thirteen. The Notes shall not have the benefit of any sinking fund obligations. SECTION 302. Denominations. The Notes shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiples of $1,000. - 21 - 30 SECTION 303. Execution, Authentication, Delivery and Dating. The Notes shall be executed on behalf of the Company by its Chairman of the Board, one of its Vice Chairmen of the Board, its President or one of its Vice Presidents, under its corporate seal reproduced thereon attested by its Treasurer or one of its Assistant Treasurers, or its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Notes may be manual or facsimile. Notes bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Notes; and the Trustee in accordance with such Company Order shall authenticate and deliver such Notes as in this Indenture provided and not otherwise. Each Note shall be dated the date of its authentication. No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. SECTION 304. Temporary Notes. Pending the preparation of definitive Notes, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Notes in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Notes may determine, as evidenced by their execution of such Notes. If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at any office or agency of the Company designated pursuant to Section 1002, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as definitive Notes. - 22 - 31 SECTION 305. Registration, Registration of Transfer and Exchange. 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 designated pursuant to Section 1002 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. The Trustee is hereby appointed "Note Registrar" for the purpose of registering Notes and transfers of Notes as herein provided and the "Conversion Agent" for the purpose of converting the Notes as provided herein. Upon surrender for registration of transfer of any Note at an office or agency of the Company designated pursuant to Section 1002 for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations, of a like aggregate principal amount. Subject to Section 302, at the option of the Holder, Notes may be exchanged for other Notes of any authorized denominations, of a like aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes which the Holder making the exchange is entitled to receive. All Notes issued upon any registration of 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. Every Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Notes, but the Company may require payment of a sum sufficient from a Holder requesting such transfer or exchange to cover any tax or other government charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Section 304, 907 or 1108 not involving any transfer. The Company shall not be required to make, and the Registrar need not register, transfers or exchanges of (a) Notes selected for redemption during the 15 day (or shorter) period after the Trustee is notified of a redemption and preceding the mailing of a notice of such redemption to the Holders in accordance with Article Eleven (except, in the case of Notes to be redeemed in part, the portion thereof not to be redeemed) or (b) any Notes with respect to which a repurchase election has been tendered and not withdrawn by the Holder thereof in accordance with Section 1005 (except, in the case of Notes tendered for purchase in part, the portion thereof not to be purchased). - 23 - 32 SECTION 306. Mutilated, Destroyed, Lost and Stolen Notes. If any mutilated Note is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Note of like tenor and principal amount and bearing a number not contemporaneously Outstanding. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Note and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice of the Company or the Trustee that such Note has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount and bearing a number not contemporaneously Outstanding. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note. Upon the issuance of any new Note under this Section, 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 (including the fees and expenses of the Trustee) connected therewith. Every new Note issued pursuant to this Section in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. SECTION 307. Payment of Interest; Interest Rights Preserved. Interest on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest. Any interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (1) or (2) below: - 24 - 33 (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 proposed to be paid on each Note and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed 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 proposed 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 proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder 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) are 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, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. In the case of any Note which is converted after any Regular Record Date and on or prior to the next succeeding Interest Payment Date (other than any Note whose Maturity is prior to such Interest Payment Date), interest whose Stated Maturity is on such Interest Payment Date shall be payable on such Interest Payment Date notwithstanding such conversion, and such interest (whether or not punctually paid or duly provided for) shall be paid to the Person in whose name that Note (or one or more Predecessor Notes) is registered at the close of business on such Regular Record Date. SECTION 308. Persons Deemed Owners. Prior to due presentment of a Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Note is registered as the owner of such Note for the purpose of receiving payment of Principal of and - 25 - 34 (subject to Section 307) interest on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 309. Cancellation. All Notes surrendered for payment, redemption, registration of transfer or exchange, conversion or repurchase shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Notes held by the Trustee shall be disposed of as directed by a Company Order. SECTION 310. Computation of Interest. Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months. ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Notes herein expressly provided for), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) all Notes theretofore authenticated and delivered (other than (i) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. - 26 - 35 Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 607 and the obligations of the Trustee to any Authenticating Agent under Section 614 shall survive. SECTION 402. Release of Paying Agent. In connection with the satisfaction and discharge of this Indenture all moneys then held by any Paying Agent under the provisions of this Indenture shall, upon demand of the Company, be paid to the Trustee and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. ARTICLE FIVE REMEDIES SECTION 501. Events of Default. "Event of Default," wherever used herein, means any one of the following events (whatever the reasons 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): (1) default in the payment of any interest upon any Note when it becomes due and payable, and continuance of such default for a period of ten Business Days, whether or not such payment is prohibited by the subordination provisions of this Indenture; or (2) default in the payment of the Principal of any Note at its Stated Maturity, whether or not such payment is prohibited by the subordination provisions of this Indenture; or (3) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 30 days after there has been given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Notes a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (4) a default under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company or any of its Subsidiaries or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company or any of its Subsidiaries whether such indebtedness now exists or shall hereafter be created, which default shall have resulted in such - 27 - 36 indebtedness in an aggregate amount exceeding $10,000,000 becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable or such obligations being accelerated, without such acceleration having been rescinded or annulled within a period of 30 days after there shall have been given, by first class mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Notes a written notice specifying such default and requiring the Company to cause such acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" hereunder; or (5) the entry of a decree or order by a court having jurisdiction in the premises adjudging the Company or any of its Significant Subsidiaries a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any of its Significant Subsidiaries under federal bankruptcy law, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any of its Significant Subsidiaries or of any substantial part of the property of the Company or any of its Significant Subsidiaries, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 30 consecutive days; or (6) the commencement by the Company or any of its Significant Subsidiaries, of a voluntary case under federal bankruptcy law, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency, or other similar law, or the consent by the Company or any of its Significant Subsidiaries to the institution of bankruptcy or insolvency proceedings against the Company or any of its Significant Subsidiaries, or the filing by the Company or any of its Significant Subsidiaries of a petition or answer or consent seeking reorganization or relief under federal bankruptcy law or any other applicable federal or state law, or the consent by the Company or any of its Significant Subsidiaries to the filing of such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or any of its Significant Subsidiaries or of any substantial part of the property of the Company or any of its Significant Subsidiaries, or the making by the Company or any of its Significant Subsidiaries of an assignment for the benefit of creditors, or the admission by the Company or any of its Significant Subsidiaries in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company or any of its Significant Subsidiaries in furtherance of any such action; or (7) the entry of a judgment or order by a court having jurisdiction in the premises adjudging the Company or any of its Subsidiaries liable for the payment of money of at least $10,000,000 and such judgment or order is not vacated, discharged, stayed or bonded pending appeal within 30 days thereof. - 28 - 37 SECTION 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than an Event of Default specified in clauses (5) and (6) of Section 501) occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Notes may declare the Principal of all the Notes, and the interest accrued thereon, to be due and payable immediately, by a notice in writing to the Company (and to the Trustee, if given by Holders). Upon any such declaration such Principal shall become immediately due and payable. If an Event of Default specified in clause (5) or (6) of Section 501 occurs, such an amount shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Notes, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue installments of interest on all Notes, (B) the Principal of any Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Notes, (C) to the extent that payment of such interest is lawful, interest upon overdue installments of interest at the rate borne by the Notes, and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default, other than the non-payment of the Principal of Notes which have become due solely by such declaration of acceleration, have been cured and waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if (1) default is made in the payment of any installment of interest on any Note when such interest becomes due and payable and such default continues for a period of ten (10) Business Days, or - 29 - 38 (2) default is made in the payment of the Principal of any Note at the Maturity thereof, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for Principal and interest, with interest upon the overdue Principal and, to the extent that payment of such interest shall be legally enforceable, upon 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 the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Notes, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Notes or the property of the Company or of such other obligor or their creditors, 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 irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue Principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of Principal and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (ii) to collect and receive any moneys or other Property payable or deliverable on any such claims and to distribute the same; and any receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee - 30 - 39 and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 505. Trustee May Enforce Claims Without Possession of Notes. All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought 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 respect of which such judgment has been recovered. SECTION 506. Application of Money Collected. Subject to Article Thirteen, any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of Principal or interest, upon presentation of the Notes and the notation thereon of 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 607; and SECOND: To the payment of all amounts due the holders of Senior Indebtedness to the extent required by Article Thirteen; and THIRD: To the payment of the amounts then due and unpaid for Principal of and interest on the Notes in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for Principal and interest, respectively. SECTION 507. Limitation on Suits. No Holder of any Note shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default; - 31 - 40 (2) the Holders of not less than 25% in principal amount of the Outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Notes; it being understood and intended that no one or more Holders 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 Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. SECTION 508. Unconditional Right of Holders to Receive Principal and Interest and to Convert. Notwithstanding any other provision in this Indenture, but subject to Article Thirteen, the Holder of any Note shall have the right to receive payment of the Principal of and (subject to Section 307) interest on such Note on the respective Stated Maturities expressed in such Note (or, in the case of redemption, on the Redemption Date), to require the Company to repurchase such Note pursuant to Article Ten and to convert such Note in accordance with Article Twelve and to institute suit for the enforcement of any such payment and such rights shall not be impaired without the consent of such Holder. SECTION 509. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or - 32 - 41 employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 512. Control by Holders. The Holders of a majority in principal amount of the Outstanding Notes 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 (1) such direction shall not be in conflict with any rule of law or with this Indenture, and (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. SECTION 513. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Notes may on behalf of the Holders of all the Notes waive any past default hereunder and its consequences, except a default (1) in the payment of the Principal of or interest on any Note, or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Note affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 514. Undertaking for Costs. 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 a trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the - 33 - 42 claims or defenses made by the party litigant. This Section 514 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 508, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes or any suit for the enforcement of the right to convert any Note in accordance with Article Twelve. SECTION 515. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their 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 or the Trust Indenture Act and no others; and (ii) in the absence of gross negligence, willful misconduct or 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. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture, but the Trustee need not verify the contents thereof. (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 Section 601(c) does not limit the effect of Section 601(b); - 34 - 43 (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; 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 512. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to the provisions of the Trust Indenture Act and Sections 601(a), 601(b), 601(c) and 601(e). SECTION 602. Notice of Defaults. The Trustee shall give the Holders notice of any default hereunder as and to the extent provided by the Trust Indenture Act. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. SECTION 603. Certain Rights of Trustee. Except as otherwise provided in Section 601: (a) The Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters to the extent reasonably deemed necessary by it. (b) Whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, subject to the provisions of Section 601(b)(ii), rely on an Officers' Certificate. (c) The Trustee may act through agents and attorneys and shall not be responsible for the willful misconduct or gross negligence of any agents and attorneys appointed with due care. (d) Subject to the provisions of Section 601(c), the Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers conferred by this Indenture. (e) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. - 35 - 44 SECTION 604. Not Responsible for Recitals or Issuance of Notes. The recitals contained herein and in the Notes, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. 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 Notes or the proceeds thereof. SECTION 605. May Hold Notes. The Trustee, any Authenticating Agent, any Paying Agent, any Note Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Note Registrar or such other agent. SECTION 606. Money Held in Trust. 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 otherwise agreed with the Company. SECTION 607. Compensation and Reimbursement. The Company agrees: (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or willful misconduct on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of Principal of or interest on Notes. - 36 - 45 SECTION 608. Disqualification; Conflicting Interests. If the Trustee has or shall acquire a conflicting interest, within the meaning of the Trust Indenture Act, it shall either eliminate such conflicting 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 609. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $100,000,000 and subject to supervision or examination by federal or state authority. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation 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. SECTION 610. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 611. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Outstanding Notes, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Note for at least six months, or (2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) 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, - 37 - 46 then, in any such case, (i) the Company by a Board Resolution may remove the Trustee, or (ii) subject to Section 514, any Holder 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. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Notes delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to all Holders as their names and addresses appear in the Note Register. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. SECTION 611. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all Property and money held by such retiring Trustee hereunder, subject nevertheless to its lien, if any, provided for in Section 607. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 612. Merger, Conversion, Consolidation or Succession to Business. 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 the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, - 38 - 47 provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. SECTION 613. Preferential Collection of Claims Against Company. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Notes), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). SECTION 614. Appointment of Authenticating Agent. At any time when any of the Notes remain Outstanding the Trustee may appoint an Authenticating Agent or Agents which shall be authorized to act on behalf of the Trustee to authenticate Notes issued upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 306, and Notes so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Notes by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any state thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent 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 an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the - 39 - 48 Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders as their names and addresses appear in the Note Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent herein. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be entitled to be reimbursed for such payments, subject to the provisions of Section 607. If an appointment is made pursuant to this Section, the Notes may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication in the following form: This is one of the Notes described in the within-mentioned Indenture. FIRST UNION NATIONAL BANK ..................................... As Trustee By ..................................... As Authenticating Agent By ..................................... Authorized Officer ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee (a) Semi-annually, not more than 5 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of, and the principal amount of the Notes held by, the Holders as of such Regular Record Date, and - 40 - 49 (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; excluding from any such list names and addresses received by the Trustee in its capacity as Note Registrar. SECTION 702. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Note Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. (b) If three or more Holders (herein referred to as "applicants") apply in writing to the Trustee and such application states that the applicants desire to communicate with other Holders with respect to their rights under this Indenture or under the Notes and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five business days after the receipt of such application, at its election, either (i) afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 702(a), or (ii) inform such applicants as to the approximate number of Holders whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 702(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Holder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 702(a) a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interest of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and - 41 - 50 the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Every Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 702(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 702(b). SECTION 703. Reports by Trustee. (a) The Trustee shall transmit to all Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to Section 313 of the Trust Indenture Act at the times and in the manner provided pursuant thereto. (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the Notes are listed, with the Commission and with the Company. The Company will notify the Trustee when the Notes are listed on any stock exchange. SECTION 704. Reports by Company. (a) The Company shall file with the Trustee copies of all reports and other information and documents that the Company is required to file with the Commission pursuant to the Exchange Act. Each such report or other information or document shall be filed with the Trustee within 15 days after filing of such report or other information or document with the Commission. The Company will mail or cause to be mailed to all Holders copies of all of (i) its annual reports to stockholders and (ii) quarterly reports to stockholders which are mailed to its institutional stockholders. (b) If the Company is at any time no longer subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will prepare (i) for the first three quarters of each fiscal year of the Company, quarterly financial statements substantially equivalent to the financial statements required to be included in a report on Form 10-Q under the Exchange Act, and (ii) annually, complete audited consolidated financial statements, including, but not limited to, a balance sheet, a statement of operations, a statement of stockholders' equity and all appropriate notes. All such financial statements will be prepared in accordance with GAAP, except for changes with which the Company's independent accountants concur and except that quarterly financial statements may be subject to year-end adjustments. The Company will file or cause to be filed with the Trustee and will mail or cause to be mailed to the Holders a copy of such financial statements within 50 days after the end of each of the first three quarters of each fiscal year of the Company and within 95 days after the close of each fiscal year of the Company, respectively. Notwithstanding the foregoing, if the Company is no longer subject to such reporting requirements by reason of the acquisition of Capital Stock by, or merger or consolidation of the Company with, a Person which is subject to such reporting requirements or a Subsidiary of such a Person and such Person has - 42 - 51 unconditionally and irrevocably guaranteed payment in full when due of all amounts payable with respect to the Notes, then the Company need not prepare, file or mail the financial statements described in this Section 704(b); provided, however, that such Person complies with Section 704(a) as if references therein to the Company were references to such Person. ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company May Consolidate, Etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other corporation or convey or transfer or lease its properties and assets substantially as an entirety to any Person, without the consent of Holders of the majority in aggregate principal amount of the Outstanding Notes, unless: (1) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America, any state thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the Principal of and interest on all the Notes and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; (3) immediately after giving effect to such transaction, the Notes and this Indenture (as supplemented by any such supplemental indenture) will be valid and enforceable obligations of the Company or such successor; and (4) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 802. Successor Corporation Substituted. Upon any consolidation or merger or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 801, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect - 43 - 52 as if such successor corporation had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Notes. ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures Without Consent of Holders. Without the consent of any Holder, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to the Company and the assumption by any such successor of the covenants of the Company herein and in the Notes; or (2) to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company; (3) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture, provided such action shall not adversely affect the interests of the Holders in any material respect; or (4) to provide for uncertificated Notes in addition to or in lieu of certificated Notes; provided, however, that, in each case, the Company has delivered to the Trustee an Officers' Certificate stating that such amendment complies with the provisions of this Section 901 and an Opinion of Counsel stating that adoption of such amendment does not conflict with the provisions of this Section 901. SECTION 902. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Notes, by an Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may 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 of modifying in any manner the rights of the Holders under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Note affected thereby: - 44 - 53 (1) change the Stated Maturity of the Principal of or any installment of interest on, any Note, or reduce the principal amount thereof or the rate of interest thereon, or change the place of payment where, or the coin or currency in which, any Note or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date or, in the case of an offer to purchase Notes by the Company pursuant to Article Ten which has been made, on or after the applicable Repayment Date), or modify the provisions of this Indenture with respect to the subordination of the Notes in a manner adverse to the Holders, or (2) reduce the percentage in principal amount of the Outstanding Notes, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or (3) modify any of the provisions of this Section, or Section 513, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Note affected thereby, or (4) following the making of an offer to purchase Notes by the Company pursuant to Article Ten, modify the provisions of this Indenture with respect to the Company's obligation to purchase such Notes in a manner adverse to such Holder, or (5) modify the provisions of this Indenture with respect to a Holder's right to convert the Notes in a manner adverse to such Holder. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. After an amendment or waiver under this Section 902 becomes effective, the Company shall mail to Holders a notice briefly describing the amendment or waiver. Any failure of the Company to mail such notices, or any defect therein, shall not, however, in any way, impair or affect the validity of any such amendment or waiver. SECTION 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. - 45 - 54 SECTION 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 904. Revocation and Effect of Consents. Until an amendment, supplemental indenture or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by such Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as such consenting Holder's Note, even if notation of the consent is not made on any Note. However, prior to becoming effective, any such Holder or subsequent Holder may revoke the consent as to its Notes or a portion thereof if the Trustee receives written notice of revocation before the consent of Holders of the requisite aggregate principal amount of Notes then outstanding has been obtained and not revoked. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment or waiver. If a record date is fixed, then notwithstanding the provisions of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to consent to such amendment or waiver or to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No consent shall be valid or effective for more than 90 days after such record date unless consents from Holders of the principal amount of Notes required hereunder for such amendment or waiver to be effective shall have also been given and not revoked within such 90-day period. After an amendment or waiver becomes effective it shall bind every Holder; provided, however, that in the case of any amendment referred to in clauses (1) through (5) of Section 902 such amendment shall bind each Holder of a Note who has consented to it and every subsequent Holder of a Note that evidences the same debt as the consenting Holder's Note. SECTION 906. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. SECTION 907. Reference in Notes to Supplemental Indentures. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Notes. - 46 - 55 SECTION 908. Subordination Unimpaired. No supplemental indenture entered into under this Article shall directly or indirectly modify the provisions of Article Thirteen or the definition of Senior Indebtedness in any manner which might alter or impair the subordination of the Notes with respect to Senior Indebtedness then outstanding unless each holder of such Senior Indebtedness has consented thereto in writing. ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal and Interest. The Company will duly and punctually pay the Principal of and interest on the Notes in accordance with the terms of the Notes and this Indenture. Principal and interest shall be considered paid on the date due if the Paying Agent (other than the Company or a Subsidiary) prior to 10:00 a.m., New York City time, on that date holds money in immediately available funds and in accordance with this Indenture designated for and sufficient to pay in cash all Principal and interest then due and the Paying Agent is not prohibited from paying such money to Holders on that date pursuant to the terms of this Indenture. To the extent lawful, the Company shall pay interest (including post-petition interest in any proceeding under Title 11 of the U.S. Code or any similar federal, foreign or state law for the relief of debtors) on (i) overdue Principal and repurchase price, if any, of the Notes at the rate borne by the Notes and (ii) overdue installments of interest at the same rate. SECTION 1002. Maintenance of Office or Agency. The Company will maintain in New York, New York, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company will 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 required 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, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies (in or outside New York, New York) where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in New York, New York for such purposes. The Company will 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. - 47 - 56 SECTION 1003. Money for Note Payments to Be Held in Trust. If the Company or any Affiliate of the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the Principal of or interest on any of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the Principal or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents, it will, on or before each due date of the Principal of or interest on any Notes, deposit with a Paying Agent a sum sufficient to pay the Principal or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such Principal or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (1) hold all sums held by it for the payment of the Principal of or interest on Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided: (2) give the Trustee notice of any default by the Company (or any other obligor upon the Notes) in the making of any payment of Principal or interest; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent (if other than the Company, a Subsidiary or an Affiliate thereof) shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the Principal of or interest on any Note and remaining unclaimed for six years after such Principal or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published - 48 - 57 once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in New York, New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 1004. Corporate Existence. Subject to Article Eight, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect the corporate existence, rights (charter and statutory) and franchises of the Company and its Subsidiaries, and shall comply with all statutes, rules, regulations and orders of and restrictions imposed by governmental and administrative authorities and agencies applicable to the Company and its Subsidiaries; provided, however, that the foregoing shall not obligate the Company to preserve any such right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries and that the loss thereof is not disadvantageous in any material respect to any Holder. SECTION 1005. Change of Control. (a) In the event of a Change of Control, the Company shall give or cause to be given written notice in the form of an Officers' Certificate (the "Change of Control Notice") to all Holders, the Trustee and the Paying Agent of such event and shall make an offer to purchase (as the same may be extended in accordance with applicable law, the "Change of Control Offer") all then Outstanding Notes at a purchase price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon to the Change of Control Payment Date. The Change of Control Notice shall be given in accordance with Section 1105 and the Change of Control Offer shall be made not more than 30 days following the date of the Change of Control (the "Change of Control Date"), unless the Company has previously given a notice of optional redemption by the Company of all of the Notes in accordance with this Indenture. The Change of Control Notice shall set forth: (i) that a Change of Control has occurred and, unless the Notes are subject to a notice of optional redemption described above, that the Company is offering to repurchase all of the Outstanding Notes; (ii) a brief description of such Change of Control and, to the extent readily available to the Company, information with respect to pro forma consolidated income, cash flow and capitalization of the Company after giving effect to such Change of Control and such other financial information relating to the Company with respect to such Change of Control as the Company may, in its sole discretion, deem relevant to a decision whether to convert or hold Notes or tender Notes in connection with such Change of Control Offer; (iii) the repurchase price (the "Change of Control Payment"); - 49 - 58 (iv) the expiration date of the Change of Control Offer, which shall be no earlier than 30 days nor later than 60 days from the date the Change of Control Notice is mailed; (v) the date such purchase shall be effected, which shall be no later than 30 days after the expiration date of the Change of Control Offer (the "Change of Control Payment Date"); (vi) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes or portions thereof accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest on and after the Change of Control Payment Date; (vii) the Conversion Price; (viii) the name and address of the Paying Agent and the Conversion Agent; (ix) that Notes (duly endorsed for transfer to the Company), together with the form of "Option of Holder to Elect Repurchase" thereon completed and signed, must be surrendered to the Paying Agent prior to the expiration of the Change of Control Offer to collect the Change of Control Payment; and (x) any other information required by applicable law to be included therein and any other procedures that a Holder must follow in order to have Notes repurchased. (b) The Change of Control Offer shall remain open until the close of business on the expiration date of the Change of Control Offer. Each Holder shall have the right to withdraw his tender in accordance with applicable rules promulgated by the Commission under the Exchange Act. (c) In the event that the Company is required to make a Change of Control offer, the Company will comply with any applicable securities laws and regulations, including, to the extent applicable, Section 14(e) of, and Rule 14e-1 under, the Exchange Act. (d) On the Change of Control Payment 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 Paying Agent in immediately available funds an amount equal to the Change of Control Payment with respect to all Notes or portions thereof so accepted; and (iii) deliver to 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. - 50 - 59 (e) The Paying Agent shall promptly (but in any case not later than five Business Days after the Change of Control Payment Date) mail to each Holder of Notes so accepted payment in an amount equal to the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and mail to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered by such Holder, if any; provided, that each such new Note shall be in principal amount of $1,000 or an integral multiple thereof. The Company shall publicly announce the results of all repurchases pursuant to this Section 1005 on or as soon as practicable after the Change of Control Payment Date. SECTION 1006. Payment of Taxes and Other Claims. The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, 1) all taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or Property of the Company or any Subsidiary and (2) all lawful claims for labor, material and supplies which, if unpaid, might by law become a lien upon the Property of the Company or any Subsidiary; provided, however, 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 (in the good faith judgment of the Board of Directors evidenced by a Board Resolution) have been established. SECTION 1007. Books and Records. The Company shall, and shall cause each Subsidiary to, at all times keep proper books of record and account in which proper entries shall be made in accordance with generally accepted accounting principles and, to the extent applicable, regulatory accounting principles. SECTION 1008. Statement by Officers as to Default. The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Company, an Officers' Certificate stating that a review of the activities of the Company and the Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officer with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture and further stating, as to such Officer, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant and condition contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if an Event of Default or an event which with notice, the passage of time or both would be an Event of Default shall have occurred, describing all such defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto), and that, to the best of his or her knowledge, no event has occurred and remains in existence by reason of which payments on account of the Principal of or interest on the Notes are prohibited. - 51 - 60 SECTION 1009. Stay, Extension and Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it will 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 wherever enacted, now or at any time hereafter in force, which 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 will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted. ARTICLE ELEVEN REDEMPTION OF NOTES SECTION 1101. Right of Redemption. The Notes shall not be redeemable at the option of the Company prior to _________ 1, 2000. The Company may, at its option, redeem all or any part of the Notes at any time on or after _________ 1, 2000, at the Redemption Prices specified in the form of Note hereinbefore set forth for redemptions, together with interest accrued to the Redemption Date. SECTION 1102. Applicability of Article. Redemption of Notes at the election of the Company shall be made in accordance with this Article and such Notes. SECTION 1103. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Notes pursuant to Section 1101 shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company of less than all the Notes, the Company shall, at least 15 days prior to mailing any notice of redemption to the Holders (unless the Trustee consents to a shorter period), notify the Trustee of such Redemption Date and of the principal amount of Notes to be redeemed. SECTION 1104. Selection by Trustee of Notes to Be Redeemed. If less than all the Notes are to be redeemed, the particular Notes to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Notes not previously called for redemption, in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are quoted or listed, or if not quoted or listed, by lot or such other method that complies with applicable legal requirements and that the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to $1,000 or any integral multiple thereof) of the principal amount of Notes of a denomination larger than $1,000. - 52 - 61 The Trustee shall promptly notify the Company and each Note Registrar in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Notes shall relate, in the case of any Notes redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed. SECTION 1105. Notice of Redemption. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes to be redeemed, at his address appearing in the Note Register. In order to facilitate the redemption of Outstanding Notes, the Board of Directors may fix by Board Resolution a record date for the determination of Outstanding Notes to be redeemed; not more than 60 days nor less than 30 days prior to the applicable Redemption Date. All notices of redemption shall state: (1) the Redemption Date; (2) the Redemption Price; (3) the Conversion Price; (4) the name and address of the Paying Agent and Conversion Agent; (5) that Notes called for redemption may be converted at any time before the close of business on the Business Day immediately preceding the Redemption Date in accordance with Article Twelve; (6) that Holders who want to convert Notes must satisfy the requirements in the Paragraph of the Notes entitled "Conversion;" (7) that Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price; (8) the CUSIP number of the Notes; (9) if fewer than all of the outstanding Notes are to be redeemed, the certificate numbers and principal amounts of the particular Notes to be redeemed; (10) if any Note is being redeemed in part, that, after the Redemption Date, upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued; and - 53 - 62 (11) that unless the Company defaults in making such redemption payment or the Paying Agent is prohibited from making such redemption payment pursuant to the terms of this Indenture, interest on Notes called for redemption ceases to accrue on and after the Redemption Date. Notice of redemption of Notes to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. SECTION 1106. Deposit of Redemption Price. On or before any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Notes which are to be redeemed on that date. SECTION 1107. Notes Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Notes, or one or more Predecessor Notes, registered as such at the close of business on the relevant record dates according to their terms and the provisions of Section 307. If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the Principal shall, until paid, bear interest from the Redemption Date at the rate borne by the Note. SECTION 1108. Notes Redeemed in Part. Any Note which is to be redeemed only in part shall be surrendered at an office or agency of the Company designated for that purpose pursuant to Section 1002 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Note without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered. - 54 - 63 ARTICLE TWELVE CONVERSION OF NOTES SECTION 1201. Conversion Privilege. Each Holder may, at such Holder's option, at any time prior to the close of business on _______ 1, 2007, unless earlier redeemed or repurchased, convert such Holder's Notes, in whole or in part (in denominations of $1,000 or multiples thereof), at 100% of the principal amount so converted, into shares of Common Stock at a conversion price per share equal to $_______, as such conversion price may be adjusted from time to time in accordance with this Article Twelve (the "Conversion Price"). SECTION 1202. Conversion Procedure. (a) To convert a Note, the Holder thereof must (1) complete and sign the "Form of Election to Convert" thereon (unless such Holder is The Depository Trust Company ("DTC") or its nominee, in which case the customary procedures of DTC will apply), (2) surrender such Note to the Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Note Registrar or the Conversion Agent and (4) pay any transfer or similar tax if required by Section 1206 . The Company's delivery to the Holder of a fixed number of shares of Common Stock (and any cash in lieu of fractional shares of Common Stock into which such Note is converted) shall be deemed to satisfy the Company's obligation to pay the principal amount of such Note and, except as provided in the next sentence, all accrued interest on such Note. If such Note (including a Note which has been called for redemption and even if a Change of Control Offer has been made) is converted after a Regular Record Date and prior to the related Interest Payment Date, the full interest installment on such Note scheduled to be paid on such Interest Payment Date shall be payable on such Interest Payment Date to the Holder of record at the close of business on such record date. (b) As promptly as practicable after the surrender of a Note in compliance with this Section 1202, the Company shall issue and deliver at the office or agency of the Note Registrar or the Conversion Agent to such Holder, or on such Holder's written order, a certificate or certificates for the full number of whole shares of Common Stock issuable upon the conversion of such Note in accordance with the provisions of this Article Twelve and a check or cash with respect to any fractional share of Common Stock arising upon such conversion as provided in Section 1203. In case any Note of a denomination greater than $1,000 shall be surrendered for partial conversion, then, subject to Article Two, the Company shall execute and the Trustee shall authenticate and deliver to the Holder of the Note so surrendered, without charge to such Holder, a new Note or Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Note. (c) Each conversion shall be deemed to have been effected on the date on which such Note shall have been surrendered in compliance with this Section 1202, and 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 of Common Stock represented thereby for all purposes; provided, however, that no surrender of - 55 - 64 a Note on any date when the stock transfer books of the Company shall be closed shall be effective to constitute the Person or Persons entitled to receive such shares upon such conversion as the record holder or holders of such shares on such date, but such surrender shall be effective to constitute the Person or Persons entitled to receive such shares as the record holder or holders thereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open and, in any such case, such conversion shall be at the Conversion Price in effect on the date on which such Note shall have been surrendered. If the last day on which a Note may be converted is not a Business Day, the Note may be surrendered to that Conversion Agent on the next succeeding Business Day. Provisions of this Indenture that apply to conversion of all of a Note also apply to conversion of a portion of such Note. SECTION 1203. Cash Payments in Lieu of Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares of Common Stock shall be issued upon conversion of Notes. If more than one Note shall be surrendered for conversion at one time by the same Holder, the full number of whole shares of Common Stock which shall be issuable upon conversion shall be computed on the basis of the aggregate principal amount of Notes (or specified portions thereof to the extent permitted hereby) so surrendered. If any fractional share of Common 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 Price of the Common Stock as of the close of business on the Business Day prior to such conversion. SECTION 1204. Adjustment of Conversion Price. (a) If the Company shall (i) pay a dividend or other distribution, in Common Stock, on any class of Capital Stock of the Company, (ii) subdivide the outstanding Common Stock into a greater number of shares by any means or (iii) combine the outstanding Common Stock into a smaller number of shares by any means (including, without limitation, a reverse stock split), then in each such case the Conversion Price in effect immediately prior thereto shall be adjusted so that the Holder of any Note thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock that such Holder would have owned or have been entitled to receive upon the happening of such event had such Note been converted immediately prior to the relevant record date or, if there is no such record date, the effective date of such event. An adjustment made pursuant to this Section 1204(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date of such subdivision or combination, as the case may be. (b) If the Company shall (i) issue or distribute (at a price per share less than the Current Market Price per share of such Capital Stock on the date of such issuance or distribution) Capital Stock generally to holders of Common Stock or to holders of any class or series of Capital Stock which is convertible into or exchangeable or exercisable for Common Stock (excluding an issuance or distribution of Common Stock described in Section 1204(a)) or (ii) issue or distribute generally to such holders rights, warrants, options or convertible or exchangeable securities entitling the holder thereof to subscribe for, purchase, convert into or exchange for Capital Stock at a price per share less than the Current Market Price per share of such Capital Stock on the - 56 - 65 date of issuance or distribution, then, in each such case, at the earliest of (A) the date the Company enters into a firm contract for such issuance or distribution, (B) the record date for the determination of stockholders entitled to receive any such Capital Stock or any such rights, warrants, options or convertible or exchangeable securities or (C) the date of actual issuance or distribution of any such Capital Stock or any such rights, warrants, options or convertible or exchangeable securities, the Conversion Price shall be reduced by multiplying the Conversion Price in effect immediately prior to such earliest date by: (x) if such Capital Stock is Common Stock, a fraction the numerator of which is the number of shares of Common Stock outstanding on such earliest date plus the number of shares of Common Stock which could be purchased at the Current Market Price per share of Common Stock on the date of such issuance or distribution with the aggregate consideration (based on the Fair Market Value thereof) received or receivable by the Company either (A) in connection with such issuance or distribution or (B) upon the conversion, exchange, purchase or subscription of all such rights, warrants, options or convertible or exchangeable securities (the "Aggregate Consideration"), and the denominator of which is the number of shares of Common Stock outstanding on such earliest date plus the number of shares of Common Stock to be so issued or distributed or to be issued upon the conversion, exchange, purchase or subscription of all such rights, warrants, options or convertible or exchangeable securities; or (y) if such Capital Stock is other than Common Stock, a fraction the numerator of which is the Current Market Price per share of Common Stock on such earliest date minus an amount equal to (A) the difference between of (1) the Current Market Price per share of such Capital Stock multiplied by the number of shares of such Capital Stock to be so issued and (2) the Aggregate Consideration, divided by (B) the number of shares of Common Stock outstanding on such date, and the denominator of which is the Current Market Price per share of Common Stock on such earliest date. Such adjustment shall be made successively whenever any such Capital Stock, rights, warrants, options or convertible or exchangeable securities are so issued or distributed. In determining whether any rights, warrants, options or convertible or exchangeable securities entitle the holders thereof to subscribe for, purchase, convert into or exchange for shares of such Capital Stock at less than such Current Market Price, there shall be taken into account the Fair Market Value of any consideration received or receivable by the Company for such rights, warrants, options or convertible or exchangeable securities (including, upon exercise thereof). If any right, warrant, option or convertible or exchangeable securities, the issuance of which resulted in an adjustment in the Conversion Price pursuant to this Section 1204(b), shall expire and shall not have been exercised, the Conversion Price shall immediately upon such expiration be recomputed to the Conversion Price which would have been in effect if such right, warrant, option or convertible or exchangeable securities had never been distributed or issued. Notwithstanding anything contained in this paragraph to the contrary, the issuance of Capital Stock upon the exercise of such rights, warrants or options or the conversion or exchange of such convertible or exchangeable securities will not cause an adjustment in the Conversion Price if no such adjustment would have been required at the time such right, warrant, option or convertible or exchangeable security was issued or distributed; provided, however, that, if the consideration payable upon such exercise, conversion or exchange and/or the Capital Stock receivable - 57 - 66 thereupon are changed after the time of the issuance or distribution of such right, warrant, option or convertible or exchangeable security, then such change shall be deemed to be the expiration thereof without having been exercised and the issuance or distribution of new options, rights, warrants or convertible or exchangeable securities. Notwithstanding anything contained in this Indenture to the contrary, options, rights or warrants issued or distributed by the Company, including options, rights or warrants distributed prior to the date of this Indenture, to holders of Common Stock generally which, until the occurrence of a specified event or events (a "Trigger Event"), (i) are deemed to be transferred with Common Stock, (ii) are not exercisable and (iii) are also issued on a pro rata basis with respect to future issuances of Common Stock, shall be deemed not to have been issued or distributed for purposes of this Section 1204 (and no adjustment to the Conversion Price under this Section 1204 will be required) until the occurrence of the earliest Trigger Event. Upon the occurrence of a Trigger Event, such options, rights or warrants shall continue to be deemed not to have been issued or distributed for purposes of this Section 1204 (and no adjustment to the Conversion Price under this Section 1204 will be required) if and for so long as each Holder who thereafter converts such Holder's Notes shall be entitled to receive upon such conversion, in addition to the shares of Common Stock issuable upon such conversion, a number of such options, rights or warrants, as the case may be, equal to the number of options, rights or warrants to which a holder of the number of shares of Common Stock equal to the number of shares of Common Stock issuable upon conversion of such Holder's Notes is entitled to receive at the time of such conversion in accordance with the terms and provisions of and applicable to such options, rights or warrants. Upon the expiration of any such options, rights or warrants or at such time, if any, as a Holder is not entitled to receive such options, rights or warrants upon conversion of such Holder's Notes, an adjustment (if any is required) to the Conversion Price shall be made in accordance with this Section 1204(b) with respect to the issuance of all such options, rights and warrants as of the date of issuance thereof, but subject to the provisions of the preceding paragraph. If any such option, right or warrant, including any such options, rights or warrants distributed prior to the date of this Indenture, are subject to events, upon the occurrence of which such options, rights or warrants become exercisable to purchase different securities, evidences of indebtedness, cash, Properties or other assets or different amounts thereof, then, subject to the preceding provisions of this paragraph, the date of the occurrence of any and each such event shall be deemed to be the date of distribution and record date with respect to new options, rights or warrants with such new purchase rights (and a termination or expiration of the existing options, rights or warrants without exercise thereof). In addition, in the event of any distribution (or deemed distribution) of options, rights or warrants, or any Trigger Event or other event of the type described in the preceding sentence, that required (or would have required but for the provisions of Section 1204(e) or this paragraph) an adjustment to the Conversion Price under this Section 1204 and such options, rights or warrants shall thereafter have been redeemed or repurchased without having been exercised, then the Conversion Price shall be adjusted upon such redemption or repurchase to give effect to such distribution, Trigger Event or other event, as the case may be, as though it had instead been a cash distribution, equal on a per share basis to the result of the aggregate redemption or repurchase price received by holders of such options, rights or warrants divided by the number of shares of Common Stock outstanding as of the date of such repurchase or redemption, made to holders of Common Stock generally as of the date of such redemption or repurchase. - 58 - 67 (c) If the Company shall pay or distribute, as a dividend or otherwise, generally to holders of Common Stock or any class or series of Capital Stock which is convertible into or exercisable or exchangeable for Common Stock any assets, Properties or rights (including, without limitation, evidences of indebtedness of the Company, any Subsidiary or any other Person, cash or Capital Stock or other securities of the Company, any Subsidiary or any other Person, but excluding payments and distributions as described in Section 1204(a) or 1204(b), dividends and distributions in connection with the liquidation, dissolution or winding up of the Company in its entirety and distributions consisting solely of cash described in Section 1204(d)), then in each such case the Conversion Price shall be reduced by multiplying the Conversion Price in effect immediately prior to the date of such payment or distribution by a fraction, the numerator of which is the Current Market Price per share of Common Stock on the record date for the determination of stockholders entitled to receive such payment or distribution less the Fair Market Value per share on such record date of the assets, Properties or rights so paid or distributed, and the denominator of which is the Current Market Price per share of Common Stock on such record date. Such adjustment shall become effective immediately after such record date. For purposes of this Section 1204(c), such Fair Market Value per share shall equal the aggregate Fair Market Value on such record date of the assets, Properties or rights so paid or distributed divided by the number of shares of Common Stock outstanding on such record date. (d) If the Company shall, by dividend or otherwise, make a distribution (other than in connection with the liquidation, dissolution or winding up of the Company in its entirety), generally to holders of Common Stock or any class or series of Capital Stock which is convertible into or exercisable or exchangeable for Common Stock, consisting solely of cash where (x) the sum of (i) the aggregate amount of such cash plus (ii) the aggregate amount of all cash so distributed (by dividend or otherwise) to such holders within the 12-month period ending on the record date for determining stockholders entitled to receive such distribution with respect to which no adjustment has been made to the Conversion Price pursuant to this Section 1204(d); exceeds (y) 10% of the result of the multiplication of (1) the Current Market Price per share of Common Stock on such record date times (2) the number of shares of Common Stock outstanding on such record date, then the Conversion Price shall be reduced, effective immediately prior to the opening of business on the day following such record date, by multiplying the Conversion Price in effect immediately prior to the close of business on the day prior to such record date by a fraction, the numerator of which is the Current Market Price per share of Common Stock on such record date less the aggregate amount of cash per share so distributed and the denominator of which is such Current Market Price; provided, however, that, if the aggregate amount of cash per share is equal to or greater than such Current Market Price, then, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive upon conversion (with respect to each share of Common Stock issued upon such conversion and in addition to the Common Stock issuable upon conversion) the aggregate amount of cash per share such Holder would have - 59 - 68 received had such Holder's Note been converted immediately prior to such record date. In no event shall the Conversion Price be increased pursuant to this Section 1204(d); provided, however, that if such distribution is not so made, the Conversion Price shall be adjusted to be the Conversion Price which would have been in effect if such distribution had not been declared. For purposes of this paragraph of this Section 1204(d), such aggregate amount of cash per share shall equal such sum divided by the number of shares of Common Stock outstanding on such record date. (e) The provisions of this Section 1204 shall similarly apply to all successive events of the type described in this Section 1204. Notwithstanding anything contained herein to the contrary, no adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Conversion Price then in effect; provided, however, that any adjustments which by reason of this Section 1204(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Article Twelve shall be made by the Company and shall be made to the nearest cent or to the nearest one hundredth of a share, as the case may be, and the Trustee shall be entitled to rely conclusively thereon. Notwithstanding anything contained in this Section 1204 to the contrary, the Company shall be entitled to make such reductions in the Conversion Price, in addition to those required by this Section 1204, as would be in the best interests of the Company, which determination shall be conclusive. Except as provided in this Article Twelve, no adjustment in the Conversion Price will be made for the issuance of Common Stock or any securities convertible into or exchangeable for Common Stock or carrying the right to purchase Common Stock or any securities so convertible or exchangeable. (f) Whenever the Conversion Price is adjusted as provided herein, the Company shall promptly file with the Trustee and any Conversion Agent other than the Trustee an Officers' Certificate setting forth the Conversion Price in effect after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Promptly after delivery of such Officers' Certificate, the Company shall give or cause to be given to each Holder a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the date on which such adjustment becomes effective. (g) Notwithstanding anything contained herein to the contrary, in any case in which this Section 1204 provides that an adjustment in the Conversion Price 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 number of shares of 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 fractional share of Common Stock pursuant to Section 1203. SECTION 1205. Effect of Reclassification, Consolidation, Merger or Sale. In the event of (i) any reclassification (including, without limitation, a reclassification effected by means of an exchange or tender offer by the Company or any Subsidiary) or change of outstanding Common Stock (other than a change in par value, or from par value to no par - 60 - 69 value, or from no par value to par value, or 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 securities or other Property (including cash) with respect to or in exchange for Common Stock or (iii) any sale or conveyance of the Property of the Company as, or substantially as, an entirety to any other corporation as a result of which holders of Common Stock shall be entitled to receive securities or other Property (including cash) with respect to or in exchange for Common Stock, then the Company or the successor or purchasing corporation, as the case may be, shall enter into a supplemental indenture providing that each Note shall be convertible into the kind and amount of securities or other Property (including cash) receivable upon such reclassification, change, consolidation, merger, combination, sale or conveyance which the Holder of such Note would have received if such Note had been converted immediately prior to such reclassification, change, consolidation, merger, combination, sale or conveyance. Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article Twelve. Whenever a supplemental indenture is entered into as provided herein, the Company shall promptly file with the Trustee and any Conversion Agent other than the Trustee an Officers' Certificate setting forth a brief statement of the facts requiring such supplemental indenture. Promptly after delivery of such Officers' Certificate, the Company shall give or cause to be given to each Holder a notice of the execution of such supplemental indenture. The provisions of this Section 1205 shall similarly apply to all successive events of the type described in this Section 1205. SECTION 1206. Taxes on Shares Issued. The issuance of a certificate or certificates on conversions of Notes shall be made without charge to the Holders of such Notes for any tax or charge with respect to the issuance thereof. The Company shall not, however, be required to pay any tax or charge which may be payable with respect to any transfer involved in the issuance and delivery of a certificate or certificates in any name other than that of the Holders of such Notes, and the Company shall not be required to issue or deliver any such certificate or certificates unless and until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or charge or shall have established to the satisfaction of the Company that such tax or charge has been paid. SECTION 1207. Reservation of Shares; Shares to be Fully Paid; Compliance with Government Requirements; Listing of Common Stock. The Company shall reserve, out of its authorized but unissued Common Stock or its Common Stock held in treasury, sufficient shares of Common Stock to provide for the conversion of all of the Notes that are outstanding from time to time. Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value, if any, of the Common Stock issuable upon conversion of Notes, the Company will take all corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue Common Stock at such adjusted Conversion Price. The Company covenants that all Common Stock which may be issued upon conversion of Notes will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance and delivery thereof. The Company - 61 - 70 covenants that if any Common Stock issued or delivered upon conversion of Notes hereunder require registration with or approval of any governmental authority under any applicable federal or state law (excluding federal or state securities laws) before such Common Stock may be lawfully issued, the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be. The Company covenants that it will not take any action which would cause the exemption from the registration requirement of Section 5 of the Securities Act afforded by Section 3(a)(9) of the Securities Act to be unavailable with respect to the issuance and delivery of Common Stock upon the conversion of Notes in accordance with this Indenture. SECTION 1208. Responsibility of Trustee. The Trustee and any other Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any fact exists which may require any adjustment of the Conversion Price or other adjustment, or with respect to the nature, 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 any such adjustment, or with respect to the correctness thereof. The Trustee and any other Conversion Agent shall not be accountable with respect to the validity, value, kind or amount of any item at any time issued or delivered upon the conversion of any Note, and neither the Trustee nor any other Conversion Agent makes any representations with respect thereto. Subject to Section 603, neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver any item upon the surrender of any Note for conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article Twelve. Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 1205, but, subject to the provisions of Section 603, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers' Certificate with respect thereto. SECTION 1209. Notice to Holders Prior to Certain Actions. In the event that: (a) the Company shall declare or authorize any event which could result in an adjustment in the Conversion Price under Section 1204 or require the execution of a supplemental indenture under Section 1205; or (b) the Company shall authorize the granting to the holders of Common Stock generally of rights, options or warrants to subscribe for or purchase any shares of any class or series of Capital Stock of the Company or any Subsidiary or any other rights, options or warrants, the reclassification of Common Stock (other than a subdivision or combination of outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), the combination, consolidation or merger of the Company for which approval of any stockholders of the Company is required, the sale or transfer of all or substantially all of the assets of the Company or the voluntary or involuntary dissolution, liquidation or winding-up of the Company in whole or in part; then, in each such case, the Company shall file or cause to be filed with the Trustee and shall give or cause to be given to each Holder, as promptly as possible but in any event at least 15 days prior to the applicable date hereinafter specified, a notice stating the date on which a record is to be - 62 - 71 taken for the purpose of determining the holders of outstanding Common Stock entitled to participate in such event, the date on which such event is expected to become effective or occur and the date on which it is expected that holders of outstanding Common Stock of record shall be entitled to surrender their shares, or receive any items, in connection with such event. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event. ARTICLE THIRTEEN SUBORDINATION OF NOTES SECTION 1301. Agreement to Subordinate. The Company covenants and agrees, and each Holder of Notes, by such Holder's acceptance thereof, likewise covenants and agrees, that the indebtedness evidenced by the Notes and the payment of the Principal thereof and interest thereon shall be subordinate and subject in right of payment, to the extent and in the manner hereinafter set forth, to the prior payment in full of all Senior Indebtedness. No provisions of this Article Thirteen shall prevent the occurrence of any Event of Default hereunder. Nothing contained in this Article Thirteen or elsewhere in this Indenture or in the Notes is intended to or shall impair, as among the Company, its creditors and the Holders, the right, which is absolute and unconditional, of a Holder to convert any Note in accordance with Article Twelve. SECTION 1302. No Payment on Notes in Event of Default on Senior Indebtedness. (a) In the event (i) of any default in the payment of Principal of or interest on any Designated Senior Debt beyond any applicable grace period with respect thereto, or (ii) that the Trustee has received written notice of an event of default with respect to any Designated Senior Debt shall have occurred and be continuing permitting the holders of such Designated Senior Debt (or a trustee on behalf of the holders thereof) to declare such Designated Senior Debt due and payable prior to the date on which it would otherwise have become due and payable (a default under this clause (ii) being hereinafter referred to as a "Nonpayment Default"), unless and until such event of default shall have been cured or waived or shall have ceased to exist or the Company and the Trustee shall have received written notice from the holders (or any trustee or other representative therefor) of the Designated Senior Debt with respect to which such event of default relates approving payment on the Notes, then no payment shall be made by the Company with respect to the Principal of or interest on the Notes (other than in the form of Junior Securities) or to acquire any of the Notes (other than in the form of Junior Securities); provided, however, that no such Nonpayment Default will prevent any payment on, or with respect to, the Notes for more than 120 days from the date notice of such Nonpayment Default is received by the Trustee (a "Payment Blockage Period") unless the maturity of such Designated Senior Debt has been accelerated and the Company has defaulted with respect to the payment of such Designated Senior Indebtedness. Not more than one Payment Blockage Period may be - 63 - 72 commenced in any consecutive 360 day period, irrespective of the number of defaults with respect to Designated Senior Debt during such period, and no default with respect to Designated Senior Debt (other than a default in the payment of Principal of or interest on any Designated Senior Debt beyond any applicable grace period with respect thereto) that existed or was continuing on the date of commencement of any such Payment Blockage Period shall be, or be made, the basis for a subsequent Payment Blockage Period unless such default shall have been cured or waived for a period of not less than 180 consecutive days. (b) The provisions of this Section 1302 shall not apply to any payment with respect to which Section 1303 would be applicable. SECTION 1303. Distribution on Dissolution, Liquidation and Reorganization. In the event of (a) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relative to the Company or to its creditors, as such, or to its assets, (b) any payment or distribution of assets or securities of the Company of any kind or character, whether in cash, Property or securities, to creditors upon any dissolution or winding up or total or partial liquidation or reorganization of the Company, whether voluntary or involuntary and whether in bankruptcy, insolvency or receivership proceedings or (c) any assignment for the benefit of creditors or any other marshaling of the assets and liabilities of the Company, or upon other proceedings: (a) all Principal of and interest due on all Senior Indebtedness shall first be paid in full, or due provision made for such payment, in accordance with the terms of such Senior Indebtedness, before any payment is made on account of the Principal of or interest on the indebtedness evidenced by the Notes other than in the form of Junior Securities, or before the Holders of the Notes shall be entitled to retain any assets so paid or distributed in respect thereof other than Junior Securities; and (b) any payment or distribution of assets or securities of the Company of any kind or character, whether in cash, Property or securities (other than Junior Securities), to which the Holders of the Notes or the Trustee for their benefit would be entitled except for the provisions of this Section 1303, shall be paid or delivered by the Company or any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution of assets of the Company 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 the terms of such Senior Indebtedness, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness, before any payment or distribution is made to the Holders of the Notes. The Company shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Company within the meaning of this Section 1303. The consolidation of the Company with, or the merger of the Company into, another Person or the liquidation or dissolution of the Company following the conveyance or transfer of its properties and assets substantially as an entirety to another Person upon the terms and conditions set forth in Article Eight shall not be deemed a dissolution, winding-up, liquidation, - 64 - 73 reorganization, assignment for the benefit of creditors or marshalling of assets and liabilities of the Company for the purposes of this Section 1303 if the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer such properties and assets substantially as an entirety, as the case may be, shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions set forth in Article Eight. SECTION 1304. Payment to Holders of Senior Indebtedness. Subject to the provisions of Section 1306, in the event that, notwithstanding the provisions of Section 1302 or Section 1303, any payment or distribution of assets or securities (other than Junior Securities, as applicable) of the Company of any kind or character, whether in cash, Property or securities, shall be received by the Trustee or the Holders of the Notes from the Company in violation of such provisions, such payment or distribution shall forthwith be paid over by the Trustee or such Holders directly to holders of Senior Indebtedness or their representatives or the trustees under any indenture pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, 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 the terms of such Senior Indebtedness, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. Upon any payment or distribution of assets or securities of the Company referred to in Sections 1302 and 1303, the Trustee and the Holders of the Notes shall be entitled to rely upon any order or decree of a court of competent jurisdiction, or upon any certificate of any liquidating trustee or agent or other Person making any payment or distribution to the Trustee or to the Holders of the Notes, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness, the amount thereof for payment thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Thirteen. 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 referred to in Sections 1302 and 1303, 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, as to the extent to which such Person is entitled to participation in such payment or distribution, and as to other facts pertinent to the rights of such Person under Sections 1302 and 1303, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 1305. Subrogation. Subject to the payment in full of all Senior Indebtedness, the Holders shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Indebtedness pursuant to the provisions of this Article Thirteen (equally and ratably with the holders of all indebtedness of the Company which is not Senior Indebtedness and which is entitled to like rights of subrogation) to the rights of the holders of such Senior Indebtedness to receive payments and distributions of cash, Property and securities applicable to the Senior Indebtedness until the Principal of and interest on the Notes shall be paid in full. For purposes of such - 65 - 74 subrogation, no payments or distributions to the holders of Senior Indebtedness of any cash, Property or securities to which the Holders or the Trustee would be entitled except for the provisions of this Article, and no payments over pursuant to the provisions of this Article to the holders of Senior Indebtedness by Holders or the Trustee, shall, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders be deemed to be a payment or distribution by the Company to or on account of Senior Indebtedness. The provisions of this Article Thirteen are and are intended solely for the purpose of defining the relative rights of the Holders on the one hand and the holders of Senior Indebtedness on the other hand. Nothing contained in this Article Thirteen or elsewhere in this Indenture or in the Notes is intended to or shall: (a) impair, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders, the obligation of the Company, which is absolute and unconditional (and which, subject to the rights under this Article Thirteen of the holders of Senior Indebtedness, is intended to rank equally with all other general obligations of the Company), to pay to the Holders the Principal or Repurchase Price, if any, of and interest on the Notes as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company of the Holders and creditors of the Company other than the holders of Senior Indebtedness; or (c) prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Thirteen of the holders of Senior Indebtedness to receive cash, Property and securities otherwise payable or deliverable to the Trustee or such Holder. SECTION 1306. Payment on Notes Permitted. Nothing contained in this Article Thirteen or elsewhere in this Indenture, or in any of the Notes, shall prevent the Company from making payment of the Principal of or interest on the Notes, at any time, except under the conditions described in Section 1302 and except during the pendency of any dissolution, winding up, liquidation or reorganization of the Company within the meaning of Section 1303. Nothing contained in this Article Thirteen or elsewhere in this Indenture, or in any of the Notes, shall prevent the application by the Trustee of any moneys deposited with it hereunder, for such purpose, to the payment of or on account of the Principal of or interest on the Notes, unless, prior to the Business Day next preceding the date upon which such Principal shall have become payable, or, in the case of any payment of or on account of interest unless, prior to two Business Days before the date upon which such interest shall have become payable, the Trustee shall have received written notice, directed to it at its Corporate Trust Office, from the Company or any holder of Senior Indebtedness or any trustee therefor of the existence of any of the conditions described in Section 1302 or of any dissolution, winding up, liquidation or reorganization of the Company within the meaning of Section 1303. SECTION 1307. Authorization of Holders to Trustee to Effect Subordination. Each Holder of Notes by his acceptance thereof authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article Thirteen and appoints the Trustee his attorney-in-fact for any and all such purposes. - 66 - 75 SECTION 1308. Trustee as Holder of Senior Indebtedness. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article Thirteen in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive or be construed to deprive the Trustee of its rights as such holder. SECTION 1309. Notices to Trustee. The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Notes. Notwithstanding the provisions of this Article Thirteen or any other provisions of this Indenture, the Trustee shall not be charged with the knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Notes, unless and until the Trustee shall have received written notice thereof, directed to it at its Corporate Trust Office, from the Company or any holder of Senior Indebtedness or any trustee thereof; and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Section 601, shall be entitled in all respects to assume that no such facts exist. Subject to the provisions of Section 601, the Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee therefor) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee therefor). 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, 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 Thirteen, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 1310. No Fiduciary Duty by Trustee to Holders of Senior Indebtedness. 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 it shall in good faith mistakenly pay over or distribute to Holders of Notes or to the Company or to any other Person cash, Property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article Thirteen or otherwise. SECTION 1311. Paying Agent Treated as Trustee. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article Thirteen shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article Thirteen in place of the Trustee. - 67 - 76 ARTICLE FOURTEEN DEFEASANCE AND COVENANT DEFEASANCE SECTION 1401. Company's Option to Effect Defeasance or Covenant Defeasance. The Company may, at its option by Board Resolution at any time on or after ____________2006 or at any time after a notice of redemption has been delivered to the Holders in accordance with Article Eleven, elect to have either Section 1402 or Section 1403 be applied to all Outstanding Notes upon compliance with the conditions set forth below in this Article Fourteen. SECTION 1402. Defeasance and Discharge. Upon the Company's exercise under Section 1401 of the option applicable to this Section 1402, the Company shall be deemed to have been discharged from its obligations with respect to all the Outstanding Notes on the date the conditions set forth in Section 1404 are satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by Outstanding Notes except for (i) the rights of Holders of Outstanding Notes to receive payments out of amounts deposited in trust with the Trustee (as set forth in Section 1404) in respect of the Principal of and interest on such Notes when such payments are due, (ii) the right of Holders to convert Notes in accordance with Article Twelve, (iii) the Company's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes, and the maintenance of an office or agency for payment and money for security payments held in trust, (iv) the rights, powers, trusts, duties and immunities of the Trustee, (v) Article Eleven, if such defeasance will occur prior to ___________ 1, 2006 and (vi) this Article Fourteen. SECTION 1403. Covenant Defeasance. Upon the Company's exercise under Section 1401 of the option applicable to this Section 1403, the Company shall be released from its obligations under any covenant in Section 801 and in Sections 1005 and 1008 with respect to the Outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "covenant defeasance"), and the Notes shall thereafter be deemed not to be "Outstanding" for the purposes of any direction, waiver, consent, declaration or Act (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 501(3), but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. - 68 - 77 SECTION 1404. Conditions to Defeasance or Covenant Defeasance. The following shall be the conditions to application of either Section 1402 or Section 1403 to the Outstanding Notes: (i) The Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 609 who shall agree to comply with the provisions of this Article Fourteen applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Notes, (A) cash in United States dollars in an amount, or (B) U.S. Government Obligations which through the scheduled payment of Principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (C) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, the Principal of and interest on the Outstanding Notes on the Stated Maturity (or Redemption Date, if applicable) of such Principal (or on any date (such date being referred to as the "Defeasance Redemption Date") if when exercising under Section 1401 either its option applicable to Section 1402 or its option applicable to Section 1403, the Company shall have delivered to the Trustee an irrevocable notice to redeem all of the Outstanding Notes on the Defeasance Redemption Date and interest); provided that the Trustee shall have been irrevocably instructed to apply such money or the proceeds of such U.S. Government Obligations to said payments with respect to the Notes; (ii) In the case of an election under Section 1402, the Company shall have delivered to the Trustee an opinion of independent counsel in the United States of America stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling 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 of counsel in the United States of America shall confirm that, the Holders of the Outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred; (iii) In the case of an election under Section 1403, the Company shall have delivered to the Trustee an opinion of independent counsel in the United States of America to the effect that the Holders of the Outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (iv) No default or Event of Default with respect to the Notes shall have occurred and be continuing on the date of such deposit or, with respect to Section 501(5) or - 69 - 78 Section 501(6), at any time during the period ending on the 91st day after the date of deposit, as evidenced to the Trustee by an Officer's Certificate delivered to the Trustee concurrently with such deposit; (v) Such defeasance or covenant defeasance shall not cause the Trustee to have a conflicting interest with respect to any securities of the Company; (vi) The Company has delivered to the Trustee an Opinion of Counsel to the effect that the deposit shall not result in the Company, the Trustee or the trust being deemed to be an "investment company" under the Investment Company Act of 1940, as amended; (vii) The Company shall have delivered to the Trustee an opinion of independent counsel to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (viii) The Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of the Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company; (ix) 91 days pass after the deposit is made and during such 91 day period no event of Default specified in Section 501(5) or 501(6) shall occur and be continuing at the end of such period; (x) The Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to either the defeasance under Section 1402 or the covenant defeasance under Section 1403 (as the case may be) have been complied with; (xi) Such defeasance does not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company is a party or by which it is bound, and is not prohibited by Article 11, as evidenced to the Trustee by an Officers' Certificate delivered to the Trustee concurrently with such deposit; (xii) The Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such deposit, defeasance and discharge does not conflict with the applicable provisions of this Indenture; and (xiii) The Company shall have notified each Holder not more than 60 nor less than 30 days prior to the date of such defeasance or covenant defeasance of the effective date of such defeasance or covenant defeasance. - 70 - 79 SECTION 1405. Application of Trust Money. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article Fourteen. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of Principal and interest on the Notes. Money and securities so held in trust are not subject to Article Thirteen. SECTION 1406. Reinstatement. If the Trustee or Paying Agent is unable to apply any money in accordance with this Article Fourteen 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 this Article Fourteen until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with this Article Fourteen; provided, however that if the Company makes any payment of interest on or Principal of any Note 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 money held by the Trustee or Paying Agent. * * * * * * * * * * - 71 - 80 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. WESTBRIDGE CAPITAL CORP. [seal] BY_____________________________________ ATTEST: __________________________ FIRST UNION NATIONAL BANK [seal] BY_____________________________________ ATTEST: __________________________ - 72 - 81 STATE OF NEW YORK ) ) SS.: COUNTY OF NEW YORK) On the __ day of ________, 1997, before me personally came __________________, to me known, who, being by me duly sworn, did depose and say that he is ______________ of Westbridge Capital Corp., one of the corporations described in and which executed the foregoing instrument; that he [or she] knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he [or she] signed his [or her] name thereto by like authority. ___________________________ "Official Seal" [Name of Notary] Notary Public, State of _____________ My Commission Expires: STATE OF NEW YORK ) ) SS.: COUNTY OF NEW YORK) On the __ day of _________, 1997, before me personally came __________________, to me known, who, being by me duly sworn, did depose and say that he is ______________ _________ of First Union National Bank, one of the corporations described in and which executed the foregoing instrument; that he [or she] knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he [or she] signed his [or her] name thereto by like authority. ___________________________ "Official Seal" [Name of Notary] Notary Public, State of ____________ My Commission Expires: - 73 - EX-4.4 4 UNDERWRITERS' WARRANT AGREEMENT 1 [KDW Draft 4/17/97] - -------------------------------------------------------------------------------- WESTBRIDGE CAPITAL CORP., FORUM CAPITAL MARKETS L.P. AND RAYMOND JAMES & ASSOCIATES, INC. ----------------- UNDERWRITERS' WARRANT AGREEMENT Dated as of April __, 1997 - -------------------------------------------------------------------------------- 2 UNDERWRITERS' WARRANT AGREEMENT, dated as of April __, 1997 by and among WESTBRIDGE CAPITAL CORP., a Delaware corporation (the "Company"), FORUM CAPITAL MARKETS L.P. and RAYMOND JAMES & ASSOCIATES, INC. (the "Underwriters"). W I T N E S S E T H: WHEREAS, the Company proposes to issue to the Underwriters warrants ("Warrants") to purchase up to ________ shares (the "Warrant Securities") of Common Stock, par value $.10 per share, of the Company (the "Common Stock"); and WHEREAS, the Underwriters have agreed, pursuant to the Underwriting Agreement dated April __, 1997 between the Underwriters and the Company (the "Underwriting Agreement"), to act as the Underwriters in connection with the Company's proposed public offering (the "Offering") of up to $65,000,000 principal amount of __% Convertible Subordinated Notes due 2007 (the "Notes"); and WHEREAS, the Warrants to be issued pursuant to this Agreement will be issued on the Closing Date (as such term is defined in the Underwriting Agreement) by the Company to the Underwriters in consideration for, and as part of the Underwriters' compensation in connection with, the Underwriters acting as such pursuant to the Underwriting Agreement; NOW, THEREFORE, in consideration of the premises hereof, the payment by the Underwriters to the Company of an aggregate of $_____, the agreements herein set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Grant. The Underwriters are hereby granted the right to purchase, up to ______ shares of Common Stock (subject to adjustment as provided in Section 8 hereof) at an exercise price (subject to adjustment as provided in Section 8 hereof), of $____ per share subject to the terms and conditions of this Agreement at any time from April __, 1998 until 5:30 p.m., New York time, on April __, 2002 (the "Expiration Date"), which date is the fifth anniversary of the effective date of the Registration Statement on Form S-1 (No. 333-24137), (the "Registration Statement") relating to the registration of the Notes and Warrants. Any Warrant that is not exercised on or prior to the Expiration Date shall be void, and all rights hereunder shall cease. 2. Warrant Certificates. The warrant certificates delivered and to be delivered pursuant to this Agreement (the "Warrant Certificates") shall be in the form set forth in Exhibit A attached hereto and made a part hereof, with such appropriate insertions, omissions, substitutions and other variations as required or permitted by this Agreement. 3. Exercise of Warrant. 3.1 Method of Exercise. The Warrants initially are exercisable at an initial exercise price per share of Common Stock set forth in Section 6 hereof (subject to adjustment as provided in Section 8 hereof) payable by certified or official bank check. Upon surrender of a Warrant Certificate with a duly executed Election to Purchase (in the form of Annex A to the Warrant Certificate) together with payment of the aggregate Exercise Price (as hereinafter defined) for the Common Stock to be purchased at the Company's principal offices (presently located at 777 Main Street, Fort Worth, Texas 76102), the registered holder of a Warrant Certificate ("Holder") shall be entitled to receive a certificate or certificates for the Common Stock so purchased. The purchase rights represented by each Warrant Certificate are exercisable at the option of the Holder thereof, in whole or in part (but not as to fractional shares of Common Stock underlying the Warrants). In the case of the purchase of less than all the Common Stock purchasable under any Warrant Certificate, the Company shall cancel said Warrant Certificate upon the surrender thereof and shall execute and deliver a new Warrant Certificate of like tenor for the balance of the Warrants exercisable thereunder. 3.2 Exercise by Surrender of Warrant. As an alternative to the method of payment set forth in Section 3.1 and in lieu of any cash payment required thereunder, the Holders shall have the right at any time and 3 from time to time to exercise the Warrants by surrendering Warrant Certificates representing a certain number of additional Warrants (as determined below) as payment of the aggregate Exercise Price for the shares of Common Stock being acquired upon exercise of the Warrants. The Warrants are exercisable pursuant to this Section 3.2 by surrender of the Warrant Certificate with a duly executed Election to Purchase (in the form of Annex B to the Warrant Certificate). The number of additional Warrants to be surrendered in payment of the aggregate Exercise Price for the shares of Common Stock being acquired upon exercise of the Warrant shall be determined by multiplying the number of Warrants to be exercised by the Exercise Price, and then dividing the product thereof by an amount equal to the Market Price minus the Exercise Price. Solely for the purposes of this Section 3.2, Market Price shall be calculated at the date on which the Form of Election to Purchase is deemed to have been sent to the Company pursuant to Section 13 hereof (the "Notice Date"). 3.3 Definition of Market Price. As used herein, the phrase "Market Price" at any date shall be the average of the daily reported closing price per share of Common Stock for the 30 consecutive trading days immediately prior to such date or, if the Common Stock is not then publicly traded, as determined in good faith by resolution of the Board of Directors of the Company, based on the best information available to it. The closing price for each trading day shall be the last reported sale price as officially reported by the Nasdaq National Market system, or, if not quoted on the Nasdaq National Market system, by the principal securities exchange on which the Common Stock is listed or admitted to trading or if the Common Stock is not listed or admitted to trading on any national securities exchange or quoted by the Nasdaq National Market system, the average closing bid price as furnished by the National Association of Securities Dealers, Inc. (the "NASD") through the Nasdaq National Market system or similar organization if the Nasdaq Stock Market is no longer reporting such information. 4. Issuance of Certificates. Upon the exercise of the Warrants, the issuance of certificates for the total number of whole shares of Common Stock for which such Warrants were exercised shall be made promptly (and in any event within five business days thereafter) without charge to the Holder thereof including, without limitation, any stock transfer or similar tax which may be payable in respect of the issuance thereof, and such certificates shall (subject to the provisions of Sections 5 and 7 hereof) be issued in the name of, or in such names as may be directed by, the Holder thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificates in a name other than that of the Holder, and the Company shall not be required to issue or deliver such certificates unless or 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. The Warrant Certificates shall be executed on behalf of the Company, by the manual or facsimile signature of the then present Chairman of the Board of Directors or President of the Company under its corporate seal reproduced thereon and by the manual or facsimile signature of the then present Treasurer or Assistant Treasurer or Secretary or Assistant Secretary of the Company. Warrant Certificates shall be dated the date of execution by the Company upon initial issuance, division, exchange, substitution or transfer. Certificates representing the Common Stock issuable upon exercise of the Warrants (and/or other securities, property or rights issuable upon exercise of Warrants) shall be dated the date on which the Company receives the Election to Purchase, Warrant Certificate and payment of the Exercise Price (regardless of when executed). 5. Restriction On Transfer of Warrants. The Warrants may not be sold, transferred, assigned, hypothecated or otherwise disposed of, in whole or in part, for a period of one year from the effective date of the Registration Statement on Form S-1 (File No. 333-24137) except that the Warrants may be (i) assigned in whole or in part to any officer of either Underwriter and (ii) transferred by operation of law as a result of the death of any transferee to whom the Warrants may have been transferred. Any assignment shall be effected by a duly executed assignment in the form of Annex C to the Warrant Certificate. 6. Exercise Price. 6.1 Initial and Adjusted Exercise Price. The initial exercise price of each Warrant shall be $___ per share of Common Stock. The adjusted exercise price of each Warrant shall be the price which shall result -2- 4 from time to time from any and all adjustments of the initial exercise price in accordance with the provisions of Section 8 hereof. 6.2 Exercise Price. The term "Exercise Price" herein shall mean the initial exercise price or the adjusted exercise price, depending upon the context. 7. Registration Rights. 7.1 Piggyback Registration. If, at any time commencing after April ___, 1998 and expiring seven years thereafter, the Company proposes to register any of Common Stock (excluding for this purpose any Common Stock issuable upon exercise or conversion of other Securities) in connection with an offering under the Securities Act (other than pursuant to Form S-4, Form S-8 or any successor form of limited purpose), it will give written notice by registered mail at least 20 days prior to the filing of such registration statement to Holders of the Warrants or Warrant Securities of its intention to do so. If the Holders of the Warrants and/or Warrant Securities notify the Company within 20 days after mailing of any such notice of its or their desire to include any of their respective Warrant Securities in such proposed registration statement, the Company shall afford each of the Holders the opportunity to have such Warrant Securities registered under such registration statement, provided, however, that if the managing underwriter advises the Company in writing that the inclusion of all Warrant Securities held by the Holders proposed to be included in such registration statement would interfere with the successful marketing of the securities proposed to be registered by the Company, then the securities to be included in such registration shall be included in the following order: (a) first, the securities proposed to be included in such registration by the Company or, if such registration is for securities of specified security holders of the Company, by such holders; and (b) second, all holders of Common Stock (including Holders) entitled to be included in such registration statement (pro rata among the holders requesting such registration based upon the number of shares of Common Stock requested by each such holder to be registered). Notwithstanding the provisions of this Section 7.1, the Company shall have the right at any time after it shall have given written notice pursuant to this Section 7.1 (irrespective of whether a written request for inclusion of any such Warrant Securities shall have been made) to elect not to file any such proposed registration statement or to withdraw the same after the filing but prior to the effective date thereof. 7.2 Demand Registration. (a) At any time commencing on April __, 1998 and expiring four years thereafter which date is the fifth anniversary of the effective date of the Registration Statement. (or such earlier time as the Warrant Securities are eligible for sale under Rule 144(k)), the Holders of the Warrants and/or Warrant Securities representing a Majority (as hereinafter defined) of such securities shall have the right (which right is in addition to the registration rights under Section 7.1 hereof), exercisable by written notice to the Company, to require the Company to prepare and file with the Securities and Exchange Commission (the "Commission"), on one occasion only, a registration statement and such other documents, including a prospectus, as may be necessary in the opinion of both counsel for the Company and counsel for the Underwriters and Holders, in order to comply with the provisions of the Securities Act, so as to permit a public offering and sale of their Warrant Securities for nine consecutive months (subject to the provisions of Section 7.2(d) below) by any such Holders and any other Holders of the Warrants and/or Warrant Securities who notify the Company of their decision to join therein within 15 days after the Company provides notice pursuant to Section 7.2(b) below. (b) The Company covenants and agrees to give written notice of any registration request under this Section 7.2 to all Holders of the Warrants and/or the Warrant Securities within 10 days from the date of the receipt of any such registration request. -3- 5 (c) Notwithstanding the provisions of Sections 7.2(a), any time during which the Company is obligated to maintain the effectiveness of a registration statement pursuant to such Section 7.2(a), the Board of Directors of the Company, after consultation with counsel to the Company (which counsel shall be experienced in securities matters) has determined in good faith that the filing of such registration statement or the compliance by the Company with its disclosure obligations thereunder would require the disclosure of material information which the Company has a bona fide business purpose for preserving as confidential, then the Company may delay the filing or the effectiveness of such registration statement (if not then filed or effective, as appropriate) and shall not be required to maintain the effectiveness thereof for a period expiring upon the earlier to occur of (i) the date on which such information is disclosed to the public or ceases to be material or the Company is so able to comply with its disclosure obligations or (ii) 60 days after the Board of Directors makes such good faith determination. There shall not be more than one such delay period with respect to any registration pursuant to Section 7.2(a). Notice of any such delay period and of the termination thereof will be promptly delivered by the Company to each Holder and shall be maintained in confidence by each such Holder. 7.3 Covenants of the Company With Respect to Registration. In connection with any registration under Section 7.1 or 7.2 hereof, the Company covenants and agrees as follows: (a) The Company shall use its best efforts to file a registration statement as soon as practicable, but in any event within 90 days after receipt of any demand therefor, shall use its best efforts to have such registration statement declared effective at the earliest possible time and shall furnish each Holder desiring to sell Warrant Securities such number of prospectuses as shall reasonably be requested; provided, however, that the Company shall not be obligated to effect such registration under the Securities Act except in accordance with the following provisions: (i) the Company shall not be obligated to use its best efforts to file and cause to become effective any registration statement for a period of up to 90 days if at the time of such request any other registration statement pursuant to which shares of Common Stock of the Company are to be or were sold has been filed with the Commission and not withdrawn or has been declared effective within the prior 60 days; and (ii) the Company may delay the filing or effectiveness of the registration statement for a period of up to 120 days after the date of a request for registration if at the time of such request the Company is engaged in a firm commitment underwritten public offering of Common Stock in which the Holders may include their Warrant Securities pursuant to Section 7.1 hereof. (b) The Company shall pay all costs, fees and expenses in connection with all registration statements filed pursuant to Sections 7.1 and 7.2(a) hereof (excluding fees and expenses of Holders' counsel and accountants, any underwriting or selling commissions and any transfer taxes). If the Company shall fail to comply with the provisions of Section 7.3(a) hereof the Company shall, in addition to any other equitable or other relief available to such Holders, and be liable for any or all incidental, special and consequential damages sustained by such Holders and if such failure to comply occurred during the twelve month period immediately preceding the expiration of the Exercise Period, extend the Exercise Period by such number of days as shall equal the delay caused by the Company's failure. (c) The Company will take all necessary action which may be required in qualifying or registering the Warrant Securities included in a registration statement for offering and sale under the securities or blue sky laws of such states as reasonably are requested by the Holders; provided that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject. (d) The Company shall furnish without charge to each Holder of Warrant Securities, promptly after filing thereof with the Commission, at least one copy of the registration statement filed pursuant to Section 7.1 or 7.2 (a "Registration Statement") and each amendment thereto or each amendment or supplement to the -4- 6 prospectus included therein (the "Prospectus") including all financial statements and schedules, documents incorporated by reference therein and if the Holder so requests in writing, all exhibits thereto. (e) The Company shall take such action as may be reasonably necessary so that (i) the Registration Statement and any amendment thereto and any Prospectus forming a part thereof and any supplement or amendment thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) the Registration Statement and any amendment thereto (in either case, other than with respect to written information furnished to the Company by or on behalf of any Holder specifically for inclusion therein) does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make any statement therein not misleading and (iii) the Prospectus and any supplement thereto (in either case, other than with respect to such information from Holders), does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (f) The Company shall promptly advise the Holders of Warrant Securities registered under the Registration Statement (which advice pursuant to clauses (ii) - (iv) shall be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) and, if requested by such persons, shall confirm such advice in writing: (i) when the Registration Statement and any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the suspension by any state securities commission of the qualification of the Warrant Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes; and (iv) of the happening of any event that requires the making of any changes in the Registration Statement or the Prospectus so that, as of such date, the Registration Statement and the Prospectus do not contain an untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading. (g) 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 Warrant Securities under state securities or Blue Sky laws, the Company shall use its reasonable best efforts to obtain the withdrawal or lifting of such order at the earliest possible time. (h) The Company shall, during the period the Company is obligated to maintain the effectiveness of a Registration Statement under Section 7.2 hereof, deliver to each Holder of Warrant Securities included under the Registration Statement, without charge, such reasonable number of copies of the Prospectus (including each preliminary prospectus) included in the Registration Statement and any amendment or supplement thereto as such Holder may reasonably request to facilitate the public sale or other disposition of the Warrant Securities by the selling Holder. (i) The Company shall cooperate with the Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Warrant Securities to be sold under the Registration Statement, free of any restrictive legends and in such denominations and registered in such names as the Holders or the underwriter(s), if any, may reasonably request in connection with the sales of Warrant Securities pursuant to the Registration Statement. -5- 7 (j) Upon the occurrence of any event contemplated by Section 7(e)(ii) - (iv) hereof, the Company shall file (and use its reasonable best efforts to have declared effective as soon as possible) a post-effective amendment to the Registration Statement or an amendment or supplement to the Prospectus or file any other required document so that, as thereafter delivered to the purchasers of Warrant Securities registered under the Registration Statement, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in light of the circumstances under which they were made not misleading. Each Holder of Warrant Securities registered under the Registration Statement agrees by acquisition of such Warrant Securities that, upon receipt of any notice from the Company of the existence of any fact of the kind described in Section 7(e)(ii) - (iv) hereof, such Holder will forthwith discontinue disposition of Warrant Securities pursuant to the Registration Statement until such Holder receives copies of the supplemented or amended Prospectus contemplated by this Section 7(j), or until such Holder is advised in writing by the Company that the use of the Prospectus may be resumed, and such Holder has received copies of any additional or supplemental filings which are incorporated by reference in the Prospectus. If so directed by the Company, each Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Warrant Securities current at the time of receipt of such notice. (k) Nothing contained in this Agreement shall be construed as requiring the Holders to exercise their Warrants prior to the initial filing of any registration statement or the effectiveness thereof. (l) The Company shall permit the inclusion of securities other than Warrant Securities in any Registration Statement filed pursuant to Section 7.2(a) unless the managing underwriter advises the Holders in writing that the inclusion of all securities proposed to be included in such registration statement which are held by other holders would interfere with the successful marketing of the Warrant Securities proposed to be registered by the Holders, then the securities to be included in such registration shall be included in the following order: (a) first, the Warrant Securities proposed to be included in such registration by the Holders; and (b) second, the Company and holders of Common Stock entitled to be included in such registration statement (pro rata among the Company and holders requesting such registration based upon the number of shares of Common Stock requested by the Company each such holder to be registered). (m) The Company shall furnish to each Holder participating in the offering and to each underwriter, if any, a signed counterpart, addressed to such Holder or underwriter, of (i) an opinion of counsel to the Company, dated the effective date of such Registration Statement (and, if such registration includes an underwritten public offering, an opinion dated the date of the closing under the underwriting agreement), and (ii) if and to the extent permitted by Statement of Auditing Standards No. 72, a "cold comfort" letter dated the effective date of such Registration Statement (and, if such registration includes an underwritten public offering, a letter dated the date of the closing under the underwriting agreement) signed by the independent public accountants who have issued a report on the Company's financial statements included in such Registration Statement, in each case covering substantially the same matters with respect to such Registration Statement (and the prospectus included therein) and, in the case of such accountants' letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to underwriters in underwritten public offerings of securities. (n) The Company shall as soon as practicable after the effective date of the Registration Statement, and in any event within 15 months thereafter, make "generally available to its security holders" (within the meaning of Rule 158 under the Securities Act) an earnings statement (which need not be audited) complying with Section 11(a) of the Securities Act and covering a period of at least 12 consecutive months beginning after the effective date of the Registration Statement. (o) The Company shall deliver promptly to each Holder participating in the offering upon request, and to the managing underwriters, if any, copies of all correspondence between the Commission and the -6- 8 Company, its counsel or auditors and all non-privileged memoranda relating to discussions with the Commission or its staff with respect to the Registration Statement and shall permit each Holder and such underwriters to do such investigation, upon reasonable advance notice, with respect to information contained in or omitted from the Registration Statement as it deems reasonably necessary to comply with applicable securities laws or rules of the NASD. Such investigation shall include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times and as often as any Holder or underwriter shall reasonably request. (p) With respect to the registration of Warrant Securities pursuant to Section 7.2 to be sold to an underwriter for reoffering to the public, the Company shall enter into an underwriting agreement with the managing underwriters selected for such underwriting by Holders holding a Majority of the Warrant Securities requested to be included in such underwriting, which may include the Underwriters. Such agreement shall be satisfactory in form and substance to the Company, each Holder and such managing underwriter and shall contain such representations, warranties and covenants by the Company and such other terms as are customarily contained in agreements of that type used by the managing underwriter. The Holders shall be parties to any underwriting agreement relating to an underwritten sale of their Warrant Securities and may, at their option, require that any or all the representations, warranties and covenants of the Company to or for the benefit of such underwriters shall also be made to and for the benefit of such Holders. Such Holders shall not be required to make any representations or warranties to or agreements with the Company except as they may relate to such Holders and their intended methods of distribution and shall not be requested by the Company to provide indemnification except as provided in Section 7.3(e) hereof. (q) In addition to Warrant Securities, and except as otherwise provided in Section 7(g) hereof, upon the written request therefor by any Holders, the Company shall include in the registration statement any other securities of the Company held by such Holders as of the date of filing of such registration statement, including without limitation restricted shares of Common Stock, options, warrants or securities convertible into shares of Common Stock and shall not be requested by the Company to provide indemnification except as provided in Section 7.3(s) hereof. (r) For purposes of this Agreement, the term "Majority" in reference to the Holders of Warrants and/or Warrant Securities shall mean the Holders of Warrants and/or Warrant Securities who, assuming the immediate exercise of all of the outstanding Warrants for Common Stock, would hold in excess of fifty percent (50%) of the Common Stock then issued or issuable pursuant to Warrants that (i) are not held by the Company, an affiliate or officer thereof or any of their respective affiliates, members of their family or persons acting as their nominees or in conjunction therewith or (ii) have not been resold to the public pursuant to a registration statement filed with the Commission under the Securities Act. (s) Indemnification and Contribution. (1) The Company agrees to indemnify and hold harmless each Holder (for purposes of this Section 7(s), "Holder" shall include the officers, directors, partners, employees and agents, and each person, if any, who controls any Holder ("controlling person") within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, from and against any and all losses, claims, damages, expenses or liabilities, joint or several (and actions, proceedings, suits and litigation in respect thereof), whatsoever, as the same are incurred, to which such Holder or any such controlling person may become subject, under the Securities Act, the Exchange Act or any other statute or at common law or otherwise insofar as such losses, claims, damages, expenses or liabilities arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any preliminary Prospectus or Prospectus (as from time to time amended and supplemented) or arise out of or are based upon the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein (with respect to any preliminary Prospectus or Prospectus, in the light of the circumstances under which they were made), not misleading; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, expense or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, or any preliminary Prospectus or Prospectus or any such amendment -7- 9 or supplement in reliance upon and in conformity with written information furnished to the Company by or on behalf of any such Holder specifically for inclusion therein and provided, further, that the Company shall not be liable to any such Holder under the indemnity agreement in this subsection (1) (i) with respect to any preliminary Prospectus or Prospectus (if such Prospectus has then been amended or supplemented) to the extent that any such loss, liability, claim, damage or expense of such Holder arises out of a sale of Warrant Securities by such Holder to a person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the Prospectus (or of the Prospectus as then amended or supplemented) if the Company has previously furnished copies thereof to such Holder a reasonable time in advance and the loss, liability, claim, damage or expense of such Holder results from an untrue statement or alleged untrue statement or omission or alleged omission of a material fact contained in the preliminary Prospectus (or the Prospectus) which was corrected in the Prospectus (or the Prospectus as amended or supplemented) or (ii) to the extent that any such loss, claim, damage, expense or liability arises out of or is based upon any action or failure to act by such Holder that is found in a final judicial determination (or a settlement tantamount thereto) to constitute bad faith, willful misconduct or gross negligence on the part of such Holder. The indemnity agreement in this subsection (1) shall be in addition to any liability which the Company may have at common law or otherwise. The Company also agrees to indemnify or contribute to losses of any underwriters of Warrant Securities registered under the Registration Statement, their officers and directors and each person, if any, who controls any such underwriter (within the meaning of the Act) on substantially the same basis as that of the indemnification of the Holders provided in this Section 7(s)(1) and shall, if requested by any Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 7(p) hereof. (2) Each Holder agrees to indemnify and hold harmless the Company, each of its directors, each of its officers and each other person, if any, who controls the Company within the meaning of the Securities Act, to the same extent as the foregoing indemnity from the Company to the Holders, but only with respect to statements or omissions, if any, made in conformity with information relating to such Holder furnished in writing by such Holder specifically for use in the Registration Statement in the Registration Statement, or any preliminary Prospectus or the Prospectus or any amendment thereof or supplement thereto; provided, however, that the obligation to indemnify will be individual to each Holder and will be limited to the amount of net proceeds received by such Holder from the sale of Warrant Securities pursuant to the Registration Statement. (3) Promptly after receipt by an indemnified party under this Section 7(s) of notice of the commencement of any action, suit or proceeding, such indemnified party shall, if a claim in respect thereof is to be made against one or more indemnifying parties under this Section 7(s), notify each party against whom indemnification is to be sought in writing of the commencement thereof (but the failure to notify an indemnifying party shall not relieve it from any liability which it may have under Sections 7(s)(1) or (2) unless and to the extent that it has been prejudiced in a material respect by such failure or from the forfeiture of substantial rights and defenses). In case any such action, suit or proceeding is brought against any indemnified party, and it notifies an indemnifying party or parties of the commencement thereof, the indemnifying party or parties 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, which may be the same counsel as counsel to the indemnifying 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 the indemnifying parties in connection with the defense of such action at the expense of the indemnifying party, (ii) the indemnifying parties shall not have employed counsel reasonably satisfactory to such indemnified party to take 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, after consultation with counsel to such indemnified party or parties, that a conflict of interest exists which makes representation by counsel chosen by the indemnifying party not advisable (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 of one additional counsel shall be borne by the indemnifying parties. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all -8- 10 indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. Anything in this Section 7(s) to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or action effected without its written consent. (4) In order to provide for just and equitable contribution in any case in which (i) an indemnified party makes claim for indemnification pursuant to this Section 7(s), but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that the express provisions of this Section 7(s) provide for indemnification in such case, or (ii) contribution under the Securities Act may be required, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid as a result of such losses, claims, damages, expenses or liabilities (or actions, suits, proceedings or litigation in respect thereof) in such proportion as is appropriate to reflect the relative fault of each of the contributing parties, on the one hand, and the party to be indemnified, on the other hand, in connection with the statements or omissions that resulted in such losses, claims, damages, expenses or liabilities, as well as any other relevant equitable considerations. Relative fault 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 a Holder, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, expenses or liabilities (or actions, suits, proceedings or litigation in respect thereof) referred to above in this subsection (4) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating, preparing or defending any such action, claim, suit, proceeding or litigation. Notwithstanding the provisions of this subsection (4), no Holder shall be required to contribute any amount in excess of the amount by which the total price at which the Warrant Securities sold by such indemnifying party and distributed to the public were offered to the public exceeds the amount of any damages that such indemnifying party 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 12(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7(s), each person, if any, who controls the Company within the meaning of the Securities Act, each executive officer of the Company and each director of the Company shall have the same rights to contribution as the Company, subject in each case to this subsection (4). Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit, proceeding or litigation against such party in respect to which a claim for contribution may be made against another party or parties under this subsection (4), notify such party or parties from whom contribution may be sought, but the omission so to 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 hereunder or otherwise than under this subsection (4), or to the extent that such party or parties were not adversely affected by such omission. The contribution agreement set forth above shall be in addition to any liabilities which any indemnifying party may have at common law or otherwise. (t) Notwithstanding the foregoing provisions of this Section 7.3, no registration rights shall be extended pursuant to this Section 7 with respect to any Warrant Securities (i) which have been sold pursuant to and in accordance with an effective Registration Statement, (ii) sold in accordance with Rule 144 under the Securities Act or (iii) eligible for sale under Rule 144(k) under the Securities Act. 8. Adjustments to Exercise Price and Number of Securities. 8.1 Adjustments. (a) In the event that the Company shall subdivide its outstanding shares of Common Stock into a greater number of shares or combine its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior thereto shall be forthwith proportionately decreased in the case of a subdivision or increased in the case of a combination. An adjustment made pursuant to this Section 8.1(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such -9- 11 dividend or distribution and shall become effective immediately after the date of such subdivision or combination, as the case may be. (b) In the event that the Company shall (i) issue or distribute (for no consideration or at a price per share less than the Current Market Price (as defined below) per share on the date of such issuance or distribution) shares of any class of capital stock of the Company (such shares being hereafter referred to as "Capital Stock") generally to holders of Common Stock or to holders of any class or series of Capital Stock which is convertible into or exchangeable or exercisable for Common Stock (excluding an issuance or distribution of Common Stock described in Section 8.1(a)) or (ii) issue or distribute generally to such holders rights, warrants, options or convertible or exchangeable securities entitling the holder thereof to subscribe for, purchase, convert into or exchange for Capital Stock at a price per share less than the Current Market Price per share of such Capital Stock on the date of such issuance or distribution, then, in each such case, at the earliest of (A) the date the Company enters into a firm contract for such issuance or distribution, (B) the record date for the determination of stockholders entitled to receive any such Capital Stock or any such rights, warrants, options or convertible or exchangeable securities or (C) the date of actual issuance or distribution of any such Capital Stock or any such rights, warrants, options or convertible or exchangeable securities, the Exercise Price shall be reduced by multiplying the Exercise Price in effect immediately prior to such earliest date by: (x) if such Capital Stock is Common Stock, a fraction the numerator of which is the number of shares of Common Stock outstanding on such earliest date plus the number of shares of Common Stock which could be purchased at the Current Market Price per share of Common Stock on the date of such issuance or distribution with the aggregate consideration (based on the Fair Market Value thereof) received or receivable by the Company either (A) in connection with such issuance or distribution or (B) upon the conversion, exchange, purchase or subscription of all such rights, warrants, options or convertible or exchangeable securities (the "Aggregate Consideration"), and the denominator of which is the number of shares of Common Stock outstanding on such earliest date plus the number of shares of Common Stock to be so issued or distributed or to be issued upon the conversion, exchange, purchase or subscription of all such rights, warrants, options or convertible or exchangeable securities; or (y) if such Capital Stock is other than Common Stock, a fraction the numerator of which is the Current Market Price per share of Common Stock on such earliest date minus an amount equal to (A) the difference between (1) the Current Market Price per share of such Capital Stock multiplied by the number of shares of such Capital Stock to be so issued and (2) the Aggregate Consideration, divided by (B) the number of shares of Common Stock outstanding on such date, and the denominator of which is the Current Market Price per share of Common Stock on such earliest date. Such adjustment shall be made successively whenever any such Capital Stock, rights, warrants, options or convertible or exchangeable securities are so issued or distributed. In determining whether any rights, warrants, options or convertible or exchangeable securities entitle the holders thereof to subscribe for, purchase, convert into or exchange for shares of such Capital Stock at less than such Current Market Price, there shall be taken into account the Fair Market Value of any consideration received or receivable by the Company for such rights, warrants, options or convertible or exchangeable securities (including upon exercise thereof.) If any right, warrant, option or convertible or exchangeable securities, the issuance of which resulted in an adjustment in the Exercise Price pursuant to this Section 8.1(b), shall expire and shall not have been exercised, the Exercise Price shall immediately upon such expiration be recomputed to the Exercise Price which would have been in effect if such right, warrant, option or convertible or exchangeable securities had never been distributed or issued. Notwithstanding anything contained in this paragraph to the contrary, the issuance of Capital Stock upon the exercise of such rights, warrants or options or the conversion or exchange of such convertible or exchangeable securities will not cause an adjustment in the Exercise Price if no such adjustment would have been required at the time such right, warrant, option or convertible or exchangeable security was issued or distributed; provided, however, that, if the consideration payable upon such exercise, conversion or exchange and/or the Capital Stock receivable thereupon are changed after the time of the issuance or distribution of such right, warrant, option or convertible or -10- 12 exchangeable security, then such change shall be deemed to be the expiration thereof without having been exercised and the issuance or distribution of new options, rights, warrants or convertible or exchangeable securities. Notwithstanding anything contained in this Agreement to the contrary, options, rights or warrants issued or distributed by the Company, including options, rights or warrants distributed prior to the date of this Agreement, to holders of Common Stock generally which, until the occurrence of a specified event or events (a "Trigger Event"), (i) are deemed to be transferred with Common Stock, (ii) are not exercisable and (iii) are also issued on a pro rata basis with respect to future issuances of Common Stock, shall be deemed not to have been issued or distributed for purposes of this Section 8.1 (and no adjustment to the Exercise Price under this Section 8.1 will be required) until the occurrence of the earliest Trigger Event. Upon the occurrence of a Trigger Event, such options, rights or warrants shall continue to be deemed not to have been issued or distributed for purposes of this Section 8.1 (and no adjustment to the Conversion Price under this Section 8.1 will be required) if and for so long as each Holder who thereafter exercises such Holder's Warrants shall be entitled to receive upon such exercise, in addition to the shares of Common Stock issuable upon such conversion, a number of such options, rights or warrants, as the case may be, equal to the number of options, rights or warrants to which a holder of the number of shares of Common Stock equal to the number of shares of Common Stock issuable upon exercise of such Holder's Warrants is entitled to receive at the time of such exercise in accordance with the terms and provisions of and applicable to such options, rights or warrants. Upon the expiration of any such options, rights or warrants or at such time, if any, as a Holder is not entitled to receive such options, rights or warrants upon exercise of such Holder's Warrants, an adjustment (if any is required) to the Conversion Price shall be made in accordance with this Section 8.1 with respect to the issuance of all such options, rights and warrants as of the date of issuance thereof, but subject to the provisions of the preceding paragraph. If any such option, right or warrant, including any such options, rights or warrants distributed prior to the date of this Agreement, are subject to events, upon the occurrence of which such options, rights or warrants become exercisable to purchase different securities, evidences of indebtedness, cash, properties or other assets or different amounts thereof, then, subject to the preceding provisions of this paragraph, the date of the occurrence of any and each such event shall be deemed to be the date of distribution and record date with respect to new options, rights or warrants with such new purchase rights (and a termination or expiration of the existing options, rights or warrants without exercise thereof). In addition, in the event of any distribution (or deemed distribution) of options, rights or warrants, or any Trigger Event or other event of the type described in the preceding sentence, that required (or would have required but for the provisions of Section 8.3) an adjustment to the Exercise Price under this Section 8.1 and such options, rights or warrants shall thereafter have been redeemed or repurchased without having been exercised, then the Exercise Price shall be adjusted upon such redemption or repurchase to give effect to such distribution, Trigger Event or other event, as the case may be, as though it had instead been a cash distribution, equal on a per share basis to the result of the aggregate redemption or repurchase price received by holders of such options, rights or warrants divided by the number of shares of Common Stock outstanding as of the date of such repurchase or redemption, made to holders of Common Stock generally as of the date of such redemption or repurchase. (c) If the Company shall pay or distribute, as a dividend or otherwise, generally to holders of Common Stock or any class or series of Capital Stock which is convertible into or exercisable or exchangeable for Common Stock any assets, properties or rights (including, without limitation, evidences of indebtedness of the Company, any subsidiary or any other person or entity, cash or Capital Stock or other securities of the Company, any subsidiary or any other person or entity, but excluding payments and distributions as described in Section 8.1(a) or 8.1(b), dividends and distributions in connection with the liquidation, dissolution or winding up of the Company in its entirety and distributions consisting solely of cash described in Section 8.1(d)), then in each such case the Exercise Price shall be reduced by multiplying the Exercise Price in effect immediately prior to the date of such payment or distribution by a fraction, the numerator of which is the Current Market Price per share of Common Stock on the record date for the determination of stockholders entitled to receive such payment or distribution less the Fair Market Value per share on such record date of the assets, properties or rights so paid or distributed and the denominator shall be the Current Market Price per share of Common Stock on such record date. For purposes of this Section 8.1(c), such Fair Market Value per share shall equal the aggregate Fair Market Value on such record date of the assets, properties or rights to paid or distributed divided by the number of shares of Common Stock outstanding on such record date. Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. -11- 13 (d) If the Company shall, by dividend or otherwise, make a distribution (other than in connection with the liquidation, dissolution or winding up of the Company in its entirety), generally to holders of Common Stock or any class or series of Capital Stock which is convertible into or exercisable or exchangeable for Common Stock, consisting solely of cash where (x) the sum of (i) the aggregate amount of such cash plus (ii) the aggregate amount of all cash so distributed (by dividend or otherwise) to such holders within the 12-month period ending on the record date for determining stockholders entitled to receive such distribution with respect to which no adjustment has been made to the Exercise Price pursuant to this Section 8.1(d) exceeds (y) 10% of the result of the multiplication of (1) the Current Market Price per share of Common Stock on such record date times (2) the number of shares of Common Stock outstanding on such record date, then the Exercise Price shall be reduced, effective immediately prior to the opening of business on the day following such record date, by multiplying the Exercise Price in effect immediately prior to the close of business on the day prior to such record date by a fraction, the numerator of which is the Current Market Price per share of Common Stock on such record date less the aggregate amount of cash per share so distributed and the denominator of which is such Current Market Price; provided, however, that, if the aggregate amount of cash per share is equal to or greater than such Current Market Price, then, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive upon conversion (with respect to each share of Common Stock issued upon such conversion and in addition to the Common Stock issuable upon conversion) the aggregate amount of cash per share such Holder would have received had such Holder's Warrants been exercised immediately prior to such record date. In no event shall the Exercise Price be increased pursuant to this Section 8.1(d); provided, however, that if such distribution is not so made, the Exercise Price shall be adjusted to be the Exercise Price which would have been in effect if such distribution had not been declared. For purposes of this paragraph of this Section 8.1(d), such aggregate amount of cash per share shall equal such sum divided by the number of shares of Common Stock outstanding on such record date. (e) Anything in this Section 8 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Exercise Price, in addition to those required by this Section 8.1, as it in its discretion shall determine to be advisable. (f) For purposes of this Agreement, "Current Market Price" means, when used with respect to any security as of any date, the last sale price, regular way, of such security as reported for consolidated transactions on the New York Stock Exchange or, if such security is not listed or admitted to trading on the New York Stock Exchange, as reported for consolidated transactions with respect to securities listed on the principal national securities exchange on which such security is listed or admitted to trading or, if such security is not listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices, regular way, as reported on the Nasdaq National Market, or, if such security is not listed or admitted to trading on the Nasdaq National Market, as reported on the Nasdaq SmallCap Market, or if such security is not listed or admitted to trading on any national securities exchange or the Nasdaq National Market or the Nasdaq SmallCap Market, the average of the high bid and low asked prices of such security in the over-the-counter market as reported by the NASD Automated Quotations System or such other system then in use or, if such security is not quoted by any such organization, the average of the closing bid and asked prices of such security furnished by a New York Stock Exchange member firm selected by the Company. If such security is not quoted by any such organization and no such New York Stock Exchange member firm is able to provide such prices, the Current Market Price of such security shall be the Fair Market Value thereof. (g) For purposes of this Agreement, "Fair Market Value" means, at any date as to any asset, property or right (including without limitation, capital stock or any person, evidences of indebtedness or other securities, but excluding cash), the fair market value of such item as determined in good faith by the Board of Directors, whose determination shall be conclusive; provided, however, that, if there is a Current Market Price for such item on such date, "Fair Market Value" means such Current Market Price (without giving effect to the last sentence of the definition thereof). 8.2 Merger or Consolidation. In the event of (i) any reclassification (including, without limitation, a reclassification effected by means of an exchange or tender offer by the Company or any Subsidiary) or change of outstanding Common Stock (other than a change in par value, or from par value to no par value, or -12- 14 from no par value to par value, or 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 securities or other assets (including cash) with respect to or in exchange for Common Stock or (iii) any sale or conveyance of the assets of the Company as, or substantially as, an entirety to any other corporation as a result of which holders of Common Stock shall be entitled to receive securities or other assets (including cash) with respect to or in exchange for Common Stock, then the Company or the successor or purchasing corporation, as the case may be, shall execute and deliver to the Holder upon surrender of the Warrant Certificate held by such Holder a supplemental warrant agreement providing that the holder of each Warrant then outstanding or to be outstanding shall have the right thereafter (until the expiration of such Warrant) to receive, upon full exercise of such Warrant, the kind and amount of shares of stock and/or other securities and/or property receivable upon such consolidation or merger, by a holder of the number of shares of Common Stock for which such Warrant might have been exercised immediately prior to such reclassification, change, consolidation, merger, combination, sale or conveyance. Such supplemental warrant agreement shall provide for adjustments which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 8. The above provision of this subsection shall similarly apply to successive events of the type described in this Section 8.2. 8.3 No Adjustment of Exercise Price in Certain Cases. No adjustment of the Exercise Price shall be made if the amount of said adjustment shall be less than two cents ($0.02) per Warrant Security, provided, however, that in such case any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment so carried forward, shall amount to at least two cents ($0.02) per Warrant Security. 8.4 Adjustment in Number of Securities. Upon each adjustment of the Exercise Price pursuant to the provisions of Section 8.1(a) or (b), the number of shares of Common Stock issuable upon exercise at the adjusted Exercise Price of each Warrant shall be adjusted to the nearest full amount by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable upon exercise of Warrants immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price. 8.5 Certificate of Adjustment. After each adjustment of the Exercise Price or the amount of Warrant Securities purchasable upon exercise of Warrants pursuant to this Section 8, the Company will promptly prepare a certificate signed by the Chairman or President, and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, of the Company setting forth: (i) the Exercise Price, as so adjusted; (ii) the amount of Warrant Securities purchasable upon exercise of each Warrant after such adjustment; and (iii) a brief statement of the facts accounting for such adjustment. The Company will promptly file such certificate with its records and cause a brief summary thereof to be sent by ordinary first class mail to each Holder at his or her last address as it shall appear on the registry books of the Company. 8.6 Validity of Warrant Certificate. Irrespective of any adjustments or changes in the Exercise Price or the amount of Warrant Securities purchasable upon exercise of Warrants, Warrant Certificates theretofore and thereafter issued shall continue to express the Exercise Price per share and the amount of Warrant Securities purchasable thereunder as of the date such Warrant Certificates were originally issued; provided, the Holders shall be entitled to exercise Warrants represented by such Warrant Certificates after giving effect to each such adjustment and change, and such Warrant Certificate shall be deemed to incorporate each such adjustment and change as if new Warrant Certificates reflecting each such adjustment and change had been issued to the Holders. 9. Exchange and Replacement of Warrant Certificates. Each Warrant Certificate is exchangeable, without expense, upon the surrender thereof by the Holder at the principal executive office of the Company, for a new Warrant Certificate of like tenor and date representing in the aggregate the right to purchase the same number of Warrant Securities in such denominations as shall be designated by the Holder thereof at the time of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any Warrant Certificate, and, in case of loss, theft or destruction, of indemnity or -13- 15 security reasonably satisfactory to it, and reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant Certificates, if mutilated, the Company will make and deliver a new Warrant Certificate of like tenor in lieu thereof. 10. Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of shares of Common Stock upon the exercise of the Warrants to purchase Common Stock, nor shall it be required to issue scrip or pay cash in lieu of fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of shares of Common Stock or other securities, properties or rights. 11. Reservation and Listing of Securities. The Company shall at all times reserve and keep available out of its authorized capital stock, solely for the purpose of issuance upon the exercise of the Warrants, such number of shares of Common Stock or other securities, property or rights as shall be issuable upon exercise thereof. The Company covenants and agrees that, upon exercise of the Warrants and payment of the Exercise Price therefor, all shares of Common Stock and other securities issued by the Company upon such exercise shall be duly and validly issued, fully paid, non-assessable and not subject to the preemptive rights of any security holder of the Company. As long as the Warrants shall be outstanding, the Company shall use its reasonable best efforts to cause the Common Stock issuable upon the exercise of the Warrants to be listed (subject to official notice of issuance) on all securities exchanges on which the Common Stock may then be listed and/or quoted on the Nasdaq Stock Market if the Common Stock issued to the public is so quoted. 12. Notices to Holders. Nothing contained in this Agreement shall be construed as conferring upon the Holders the right to receive dividends or to vote or to consent or to receive notice as a stockholder in respect of any meetings of stockholders for the election of directors or any other matter or as having any rights whatsoever as a stockholder of the Company. If, however, at any time prior to the expiration of the Warrants and their exercise, any of the following events shall occur: (a) the Company shall set a record date for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or (b) the Company shall offer to all the holders of shares of Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor; or (c) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business as an entirety shall be proposed; then, in any one or more of said events, the Company shall give written notice of such event to each Holder at least 15 days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividend, distribution or offer, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with any of the events described in this Section 12. 13. Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been duly made and sent when delivered, or mailed by registered or certified mail, return receipt requested: (a) If to a Holder, to the address of such Holder as shown on the books of the Company; or -14- 16 (b) If to the Company, to the address set forth in Section 3 hereof or to such other address as the Company may designate by notice to the Holders. 14. Supplements and Amendments. The Company and the Underwriters may from time to time supplement or amend this Agreement without the approval of any Holders (other than the Underwriters) in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any provisions herein, or to make any other provisions in regard to matters or questions arising hereunder which the Company and the Initial Purchaser may deem necessary or desirable and which the Company and the Underwriters deem shall not adversely affect the interests of the Holders in any material respect. 15. Successors. All the covenants and provisions of this Agreement shall be binding upon and inure to the benefit of the Company, the Holders and their respective successors and assigns hereunder. 16. Termination. This Agreement shall terminate at the close of business on April __, 2004. Notwithstanding the foregoing, the indemnification provisions of Section 7 shall survive such termination until the close of business on April __, 2009. 17. Governing Law; Submission to Jurisdiction. This Agreement and each Warrant Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall be construed in accordance with the laws of said State without giving effect to the rules of said State governing the conflicts of laws. The Company, the Underwriters and the Holders hereby agree that any action, proceeding or claim against it arising out of, or relating in any way to, this Agreement shall be brought and enforced in the courts of the State of New York or of the United States of America for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company, the Underwriters and the Holders hereby irrevocably waive any objection to such exclusive jurisdiction or inconvenient forum and also hereby irrevocably waive any right or claim to trial by jury in connection with any such action, proceeding or claim. Any such process or summons to be served upon any of the Company, the Underwriters and the Holders (at the option of the party bringing such action, proceeding or claim) may be served by transmitting a copy thereof, by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 13 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the party so served in any action, proceeding or claim. The Company, the Underwriters and the Holders agree that the prevailing party(ies) in any such action or proceeding shall be entitled to recover from the other party(ies) all of its/their reasonable legal costs and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor. 18. Entire Agreement; Modification. This Agreement (including the Underwriting Agreement to the extent portions thereof are referred to herein) contains the entire understanding between the parties hereto with respect to the subject matter hereof. Except as set forth in Section 14 hereof, this Agreement may not be modified or amended except by a writing duly signed by the party against whom enforcement of the modification or amendment is sought. 19. Severability. If any provision of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision of this Agreement. 20. Captions. The caption headings of the Sections of this Agreement are for convenience of reference only, and are not intended, nor should they be construed as, a part of this Agreement and shall be given no substantive effect. 21. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any person, corporation or entity other than the Company and the Underwriters and any other Holders of Warrants and/or Warrant Securities any legal or equitable right, remedy or claim under this Agreement; and this Agreement shall be for the sole and exclusive benefit of the Company and the Underwriters and any other Holders of Warrants and/or Warrant Securities. -15- 17 22. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original and such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. [SEAL] WESTBRIDGE CAPITAL CORP. By: ----------------------------------- Name: Title: Attest: - --------------------------------- Name: Title: FORUM CAPITAL MARKETS L. P. RAYMOND JAMES & ASSOCIATES, INC. By: Forum Capital Markets L.P. By: ----------------------------------- Name: Title: -16- 18 EXHIBIT A [FORM OF WARRANT CERTIFICATE] THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN. EXERCISABLE ON AND AFTER APRIL __, 1998 UNTIL 5:30 P.M., NEW YORK TIME, APRIL __, 2002 No. W- ______ Warrants WARRANT CERTIFICATE This Warrant Certificate certifies that ____________________________, or registered assigns, is the registered holder of _____________ Warrants to purchase initially, at any time from April __, 1998 until 5:30 p.m. New York time on April __, 2002 (the "Expiration Date"), up to __________ fully-paid and non-assessable shares of Common Stock, par value $.10 per share (the "Common Stock"), of WESTBRIDGE CAPITAL CORP. (the "Company"), at the initial exercise price, subject to adjustment in certain events (as adjusted, the "Exercise Price"), of $_____ per share upon surrender of this Warrant Certificate and payment of the aggregate Exercise Price, at an office or agency of the Company, but subject to the conditions set forth herein and in the warrant agreement dated as of April __, 1997 by and among the Company, Forum Capital Markets L.P. and Raymond James & Associates, Inc. (the "Warrant Agreement"). Payment of the aggregate Exercise Price, shall be made by certified or official bank check in New York Clearing House funds payable to the order of the Company and by surrender of this Warrant Certificate. No Warrant may be exercised after 5:30 p.m., New York time, on the Expiration Date, at which time all Warrants evidenced hereby, unless exercised prior thereto, shall thereafter be void. The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants issued pursuant to the Warrant Agreement, which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and the holders (the words "holders" or "holder" meaning the registered holders or registered holder) of the Warrants. The Warrant Agreement provides that upon the occurrence of certain events the Exercise Price and the amount the type and/or number of the Company's securities issuable hereunder may, subject to certain conditions, be adjusted. Subject to Section 8.6 of the Warrant Agreement, in such event, the Company will, at the request of the holder, issue a new Warrant Certificate evidencing the adjustment in the Exercise Price and the number and/or type of securities issuable upon the exercise of the Warrants; provided, however, that the failure of the Company to issue such new Warrant Certificates shall not in any way change, alter or otherwise impair the rights of the holder as set forth in the Warrant Agreement. Upon due presentment for registration of transfer of this Warrant Certificate at an office or agency of the Company, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the permitted transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided herein and in the Warrant Agreement, without any charge except for any tax or other governmental charge imposed in connection with such transfer. A-1 19 Upon the exercise of less than all of the Warrants evidenced by this Warrant Certificate, the Company shall forthwith issue to the holder hereof a new Warrant Certificate representing such number of unexercised Warrants. The Company may deem and treat the registered holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, and of any distribution to the holder(s) hereof, and for all other purposes, and the Company shall not be affected by any notice to the contrary. All terms used in this Warrant Certificate which are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement. IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed under its corporate seal. Dated as of , 1997 ----------------------- WESTBRIDGE CAPITAL CORP. [SEAL] By: ------------------------------------ Name: Title: Attest: - ------------------------------ Name: Title: A-2 20 ANNEX A TO WARRANT CERTIFICATE [FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1] The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to purchase _____________________________ shares of Common Stock and herewith tenders in payment for such securities a certified or official bank check payable in New York Clearing House Funds to the order of Westbridge Capital Corp. in the amount of $_______________________________________________, all in accordance with the terms of Section 3 of the Underwriters' Warrant Agreement dated as of April __, 1997 by and among Westbridge Capital Corp., Forum Capital Markets L.P and Raymond James & Associates, Inc. The undersigned requests that a certificate for such securities be registered in the name of __________________ ______________________________________ whose address is _______________________ _______________________________________________________________________________ and that such certificate be delivered to ______________________ whose address is ___________________________________________________________________________. Dated: ----------------------- Signature ------------------------------ (Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate.) --------------------------------------- (Insert Social Security or Other Identifying Number of Holder) A-3 21 ANNEX B TO WARRANT CERTIFICATE [FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2] The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to purchase _____________________ shares of Common Stock all in accordance with the terms of Section 3.2 of the Underwriters' Warrant Agreement dated as of April __, 1997 by and among Westbridge Capital Corp., Forum Capital Markets L.P. and Raymond James & Associates, Inc. The undersigned requests that a certificate for such securities be registered in the name of __________________________________ whose address is _______________________________________________________ and that such certificate be delivered to ____________________________ whose address is _______________________________________________________________. Dated: Signature ------------------------------ (Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate.) --------------------------------------- (Insert Social Security or Other Identifying Number of Holder) A-4 22 ANNEX C TO WARRANT CERTIFICATE [FORM OF ASSIGNMENT] (To be executed by the registered holder if such holder desires to transfer the Warrant Certificate.) FOR VALUE RECEIVED ____________________________________ hereby sells, assigns and transfers unto ____________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (Please print name and address of transferee) the within Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ___________________________ Attorney to transfer the within Warrant Certificate on the books of the within-named Company, with full power of substitution. Dated: ----------------------- Signature ------------------------------ (Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate.) --------------------------------------- (Insert Social Security or Other Identifying Number of Holder) A-5 EX-5.1 5 OPINION OF MILBANK, TWEED, HADLEY & MCCLOY 1 EXHIBIT 5.1 APRIL 18, 1997 Westbridge Capital Corp. 777 Main Street Suite 900 Fort Worth, Texas 76102 RE: REGISTRATION STATEMENT ON FORM S-1 of Westbridge Capital Corp. (Registration No. 333-24137) Ladies and Gentlemen: We have acted as special counsel to Westbridge Capital Corp., a Delaware corporation (the "Company"), in connection with the preparation and filing with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), of a Registration Statement on Form S-1, No. 333-24137 (the "Registration Statement"), providing for the Company's registration of (i) $74,750,000 aggregate principal amount of Convertible Subordinated Notes due 2007 (the "Notes"), (ii) warrants to be issued as additional compensation to Forum Capital Markets L.P. and Raymond James & Associates, Inc., the underwriters of the Notes (the "Underwriters"), at the closing of the offering of the Notes (the "Warrants"), (iii) a presently indeterminable number of shares of Common Stock, par value $.10 per share, of the Company (the "Common Stock") into which the Notes will be convertible and (iv) such shares of Common Stock as may be issued upon exercise of the Warrants. In rendering the opinions expressed below, we have examined (i) the Restated Certificate of Incorporation and By-Laws of the Company, as currently in effect, (ii) the Registration Statement, (iii) certain resolutions adopted by the Board of Directors of the Company, (iv) the form of indenture relating to the Notes filed as an exhibit to the Registration Statement (the "Indenture"), (v) the form of underwriting agreement relating to the offering of the Notes filed as an exhibit to the Registration Statement (the "Underwriting Agreement"), (vi) the form of underwriters' warrant agreement relating to the issuance of the Warrants filed as an exhibit to the Registration Statement (the "Warrant Agreement") and (vii) such other documents, records and papers as we have deemed necessary as a basis for the opinions expressed below. In our examination, we have assumed the genuineness of all signatures, the authenticity of documents submitted to us as originals and the conformity with authentic original documents of all documents submitted to us as copies. As to various questions of fact material to such opinions, we have, when relevant facts were not independently established, relied upon certificates by officers of the Company. Based on the foregoing and having regard to legal considerations we deem relevant, we are of the opinion that: 1. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 2. The Notes have been duly authorized by the Company and, assuming that the Notes are duly authenticated by First Union National Bank (the "Trustee") and issued, delivered and paid for in accordance with the Underwriting Agreement and the Indenture, will be duly and validly executed, issued and delivered and will constitute valid and binding obligations of the Company, entitled to the benefits of the Indenture, and will be enforceable against the Company in accordance with their terms and the terms of the Indenture, except (a) as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws of general applicability affecting the enforcement of creditors' rights generally, (b) that such enforceability may be limited by the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including without limitation (i) the possible unavailability of specific performance, injunctive relief or any other equitable remedies and (ii) concepts of materiality, reasonableness, good faith and fair dealing and 1 2 (c) that the enforceability of provisions of the Indenture and the Notes to the effect that terms may not be waived or modified except in writing may be limited in certain circumstances. 3. The Warrants have been duly authorized by the Company and, assuming that the Warrants are issued, delivered and paid for in accordance with the Underwriting Agreement and the Warrant Agreement, will be duly and validly executed, issued and delivered and will constitute valid and binding obligations of the Company, entitled to the benefits of the Warrant Agreement, and will be enforceable against the Company in accordance with their terms and the terms of the Warrant Agreement, except (a) as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws of general applicability affecting the enforcement of creditors' rights generally, (b) that such enforceability may be limited by the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including without limitation (i) the possible unavailability of specific performance, injunctive relief or any other equitable remedies and (ii) concepts of materiality, reasonableness, good faith and fair dealing and (c) that the enforceability of provisions of the Warrant Agreement to the effect that terms may not be waived or modified except in writing may be limited in certain circumstances. 4. The shares of Common Stock issuable upon conversion of the Notes have been duly authorized by the Company and will be legally issued, fully paid and nonassessable when certificates representing such shares have been executed by proper officers of the Company, authenticated by the transfer agent and registrar for the Common Stock and delivered to the persons entitled thereto in accordance with the terms of the Notes and the Indenture. 5. The shares of Common Stock issuable upon exercise of the Warrants have been duly authorized by the Company and will be legally issued, fully paid and nonassessable when certificates representing such shares have been executed by proper officers of the Company, authenticated by the transfer agent and registrar for the Common Stock and delivered to the persons entitled thereto in accordance with terms of the Warrants and the terms of the Warrant Agreement. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this Firm under the caption "Legal Matters" in the prospectus forming a part of the Registration Statement, without admitting that we are experts, within the meaning of the term "expert" as used in the Securities Act or the rules and regulations of the Commission issued thereunder, with respect to any part of the Registration Statement, including this exhibit. Very truly yours, RSR/JRR 2 EX-23.1 6 CONSENT OF INDEPENDENT ACCOUNTANTS 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in the Prospectus constituting part of this Registration Statement on Form S-1 of our report dated March 14, 1997 relating to the consolidated financial statements of Westbridge Capital Corp., which appears in such Prospectus. We also consent to the application of such report to the Financial Statement Schedules for the three years ended December 31, 1996 listed under Item 16(b) of this Registration Statement when such schedules are read in conjunction with the financial statements referred to in our report. The audits referred to in such report also included these schedules. We also consent to the references to us under the heading "Experts" in such Prospectus. /s/ PRICE WATERHOUSE LLP - ------------------------------------ PRICE WATERHOUSE LLP Dallas, Texas April 18, 1997 EX-25.1 7 STATEMENT OF ELIGIBILITY/QUALIFICATION OF TRUSTEE 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) __ FIRST UNION NATIONAL BANK (Name of Trustee) 22-1147033 (I.R.S. Employer Identification No.) 102 PENNSYLVANIA AVENUE, AVONDALE, PENNSYLVANIA (Address of Principal Executive Offices) 19311 (Zip Code) WESTBRIDGE CAPITAL CORP. (Exact name of registrants as specified in their charters) Delaware (State of Incorporation) 73-1165000 (I.R.S. Employer Identification No.) 777 Main Street Fort Worth, TX 76102 (Address of Principal Executive Offices) ___% Convertible Subordinated Notes due 2007 (Title of Indenture Securities) 2 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO WHICH IT IS SUBJECT: Comptroller of the Currency, Washington, D.C. Board of Governors or the Federal Reserve System, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C. (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The Trustee is authorized to exercise Corporate Trust Powers. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 3. VOTING SECURITIES OF THE TRUSTEE. FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING SECURITIES OF THE TRUSTEE: Not applicable 2 3 4. TRUSTEESHIPS UNDER OTHER INDENTURES. IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING INFORMATION: (a) Title of the securities outstanding under each such other indenture. Not applicable (b) A brief statement of the facts relied upon as a basis for the claim that no conflicting interest within the meaning of section 310(b)(1) of the Act arises as a result of the trusteeship under any such other indenture, including a statement as to how the indenture securities will rank as compared with the securities issued under such other indenture. Not applicable 3 4 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR UNDERWRITERS. IF THE TRUSTEE OR ANY OF THE DIRECTORS OR EXECUTIVE OFFICERS OF THE TRUSTEE IS A DIRECTOR, OFFICER, PARTNER, EMPLOYEE, APPOINTEE, OR REPRESENTATIVE OF THE OBLIGOR OR OF ANY UNDERWRITER FOR THE OBLIGOR, IDENTIFY EACH SUCH PERSON HAVING ANY SUCH CONNECTION AND STATE THE NATURE OF EACH SUCH CONNECTION. Not applicable 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS. FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE OWNED BENEFICIALLY BY THE OBLIGOR AND EACH DIRECTOR, PARTNER, AND EXECUTIVE OFFICER OF THE OBLIGOR: Not applicable 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS. FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH DIRECTOR, PARTNER, AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER: Not applicable 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE. FURNISH THE FOLLOWING INFORMATION AS TO SECURITIES OF THE OBLIGOR OWNED BENEFICIALLY OR HELD AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT BY THE TRUSTEE: Not applicable 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE. IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH UNDERWRITER ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE: Not applicable 4 5 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR. IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE TRUSTEE (1) OWNS 10 PERCENT OR MORE OF THE VOTING STOCK OF THE OBLIGOR OR (2) IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON: Not applicable 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR. IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE TRUSTEE, OWNS 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH PERSON ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE: Not applicable 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE. EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS INDEBTED TO THE TRUSTEE, FURNISH THE FOLLOWING INFORMATION: Not applicable 13. DEFAULTS BY THE OBLIGOR. (a) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO THE SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH DEFAULT. None. (b) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE THAN ONE OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER THERE HAS BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR SERIES AFFECTED, AND EXPLAIN THE NATURE OF ANY SUCH DEFAULT. None. 5 6 14. AFFILIATIONS WITH THE UNDERWRITERS. IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. Not applicable 15. FOREIGN TRUSTEE. IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE TRUSTEE IS AUTHORIZED TO ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO BE QUALIFIED UNDER THE ACT. Not applicable - trustee is a national banking association organized under the laws of the United States. 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY. 1. Copy of Articles of Association of the trustee as now in effect. 2. No certificate of authority of the Trustee to commence business is furnished since this authority is contained in the Articles of Association of the trustee. 3.* Copy of the authorization of the trustee to exercise corporate trust powers. 4. Copy of the existing By-Laws of the Trustee, as now in effect. 5. Not applicable. 6.* The consent of the Trustee required by Section 321 (b) of the Act. 7. A copy of the latest report of Condition of the Trustee published pursuant to the law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. * Exhibits thus designated have heretofore been filed with the Securities and Exchange Commission, have not been amended since filing and are incorporated herein by reference (see Exhibit T-1 Registration Number 22- 13279). 6 7 In answering any item in this statement of eligibility and qualification which relates to matter peculiarly within the knowledge of the obligor of its directors or officers, or an underwriter for the obligor, the undersigned, First Union National Bank, has relied upon information furnished to it by the obligor or such underwriter. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, First Union National Bank, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Newark, and State of New Jersey, on the 10th day of April 1997. FIRST UNION NATIONAL BANK By: /s/ Christopher E. Golabek -------------------------------- Assistant Vice President 7 8 EXHIBIT 1 FIRST UNION NATIONAL BANK (EFF. 1/1/96) (formerly First Fidelity Bank, National Association) BYLAWS ADOPTED: JANUARY 10, 1994; AMENDED APRIL 19, 1994; AMENDED April 18, 1995; AMENDED September 3, 1996 ARTICLE I Meetings of Shareholders Section 1.1. Annual Meeting. The regular annual meeting of the shareholders for the election of directors and transaction of whatever other business may properly come before the meeting, shall be held at the Main Office of the Association, or such other place as the Board of Directors may designate, at 10:00 A.M., on the second Thursday of April of each year or such other time within 90 days as may be set by the Board of Directors. If, from any cause, an election of directors is not made on the said day, the Board of Directors shall order the election to be held on some subsequent day, as soon thereafter as practicable, according to the provisions of the law; and notice thereof shall be given in the manner herein provided for the annual meeting. Section 1.2. Special Meetings. Except as otherwise specifically provided by statute, special meetings of the shareholders may be called for any purpose at any time by the Board of Directors or by any one or more shareholders owning, in the aggregate, not less than twenty-five percent of the stock of the Association. Section 1.3. Notice of Meetings. Notice of Annual and Special meetings shall be mailed, postage prepaid, at least ten days prior to the date thereof, addressed to each shareholder at his address appearing on the books of the Association; but any 8 9 failure to mail such notice, or any irregularity therein, shall not affect the validity of such meeting, or of any of the proceedings thereat. A shareholder may waive any such notice. Section 1.4. Organization of Meetings. The Chairman shall preside at all meetings of shareholders. In his absence, the President, or a director designated by the Chairman shall preside at such meeting. Section 1.5. Proxies. Shareholders may vote at any meeting of the shareholders by proxies duly authorized in writing. Proxies shall be valid only for one meeting to be specified therein, and any adjournments of such meeting. Proxies shall be dated and shall be filed with the records of the meeting. Section 1.6. Quorum. A majority of the outstanding capital stock, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders, unless otherwise provided by law. A majority of the votes cast shall decide every question or matter submitted to the shareholders at any meeting, unless otherwise provided by law or by the Articles of Association. ARTICLE II Directors Section 2.1. Board of Directors. The Board of Directors (hereinafter referred to as the "Board"), shall have power to manage and administer the business and affairs of the Association. Except as expressly limited by law, all corporate powers of the Association shall be vested in and may be exercised by said Board. Section 2.2. Number. The Board shall consist of not less than five nor more than twenty-five persons, the exact number within such minimum and maximum limits to be fixed and determined from time to time by resolution of a majority of the full Board or by resolution of the shareholders at any meeting thereof; provided, however, that a majority of the full Board may not increase the number of directors to a number 9 10 which: (a) exceeds by more than two the number of directors last elected by shareholders where such number was fifteen or less; and (b) to a number which exceeds by more than four the number of directors last elected by shareholders where such number was sixteen or more, but in no event shall the number of directors exceed twenty-five. Section 2.3. Organization Meeting. A meeting shall be held for the purpose of organizing the new Board and electing and appointing officers of the Association for the succeeding year on the day of the Annual Meeting of Shareholders or as soon thereafter as practicable, and, in any event, within thirty days thereof. If, at the time fixed for such meeting, there shall not be a quorum present, the directors present may adjourn the meeting, from time to time, until a quorum is obtained. Section 2.4. Regular Meetings. The regular meetings of the Board shall be held on such days and time as the directors may, by resolution, designate; and written notice of any change thereof shall be sent to each member. When any regular meeting of the Board falls upon a legal holiday, the meeting shall be held on such other day as the Board may designate. Section 2.5. Special Meetings. Special meetings of the Board may be called by the Chairman of the Board, or President, or at the request of three or more directors. Each director shall be given notice of each special meeting, except the organization meeting, at least one day before it is to be held by facsimile, telephone, telegram, letter or in person. Any director may waive any such notice. Section 2.6. Quorum. A majority of the directors shall constitute a quorum at any meeting, except when otherwise provided by law; but a less number may adjourn any meeting, from time to time, and the meeting may be held, as adjourned without further notice. Section 2.7. Term of Office and Vacancy. Directors shall hold office for one year and until their successors are elected and have qualified. No person shall stand for election as a director of this Association if at the date of his election he will have 10 11 passed his seventieth birthday; provided, however, this prohibition shall not apply to persons who are active officers of this Association, an affiliate bank, or its parent corporation, or a former chief executive officer of the Association. No person, who is not an officer or former officer of this Association, an affiliate bank, or its parent corporation and who has discontinued the principal position or activity the person held when initially elected, shall be recommended to the shareholders for reelection; provided, however, that exceptions may be made because of a change in principal position or activity which would be compatible with continued service to this Association. No person elected as a director may exercise any of the powers of his office until he has taken the oath of office as prescribed by law. When any vacancy occurs among the directors, the remaining members of the Board, in accordance with the laws of the United States, may appoint a director to fill such vacancy at any regular meeting of the Board, or at a special meeting called for that purpose. Section 2.8. Nominations. Nominations for election to the Board may be made by the Executive Committee or by any stockholder of any outstanding class of capital stock of the Association entitled to vote for the election of directors. Section 2.9. Communications Equipment. Any or all directors may participate in a meeting of the Board by means of conference telephone or any means of communication by which all persons participating in the meeting are able to hear each other. Section 2.10. Action Without Meeting. Any action required or permitted to be taken by the Board or committee thereof by law, the Association's Articles of Association, or these Bylaws may be taken without a meeting, if, prior or subsequent to the action, all members of the Board or committee shall individually or collectively consent in writing to the action. Each written consent or consents shall be filed with the minutes of the proceedings of the Board or committee. Action by written consent 11 12 shall have the same force and effect as a unanimous vote of the directors, for all purposes. Any certificate or other documents which relates to action so taken shall state that the action was taken by unanimous written consent of the Board or committee without a meeting. ARTICLE III Committees of the Board Section 3.1. Executive Committee. The Board may by resolution adopted by a majority of the entire Board designate an Executive Committee consisting of the Chairman of the Board, the President, and not less than two other directors. Subject to the national banking laws and the Association's Articles of Association, the Executive Committee may exercise all the powers of the Board of Directors with respect to the affairs of the Association, except that the Executive Committee may not: 1. (a) exercise such powers while a quorum of the Board of Directors is actually convened for the conduct of business, (b) exercise any power specifically required to be exercised by at least a majority of all the directors, (c) act on matters committed by the Bylaws or resolution of the Board of Directors to another committee of the board, or (d) amend or repeal any resolution theretofore adopted by the Board of Directors which by its terms is amendable or repealable only by the Board; 2. amend the Articles of Association or make, alter or repeal any Bylaw of the Association; 3. elect or appoint any director, create or fill any vacancies in the Board of Directors or remove any director, or authorize or approve any change in the compensation of any officer of the Association who is also a director of the Association; 12 13 4. authorize or approve issuance or sale or contract for sale of shares of stock of the Association, or determine the designation and relative rights, preferences and limitations of a class or series of shares; 5. adopt an agreement of merger or consolidation, or submit to shareholders any action that requires shareholder approval, including any recommendation to the shareholders concerning the sale, lease or exchange of all or substantially all the Association's property and assets, a dissolution of the Association or a revocation of a previously approved dissolution; or 6. authorize an expenditure by the Association in excess of $10 million for any one item or group of related items. The committee shall hold regular meetings at such times as the members shall agree and whenever called by the chairman of the committee. A majority of the committee shall constitute a quorum for the transaction of business. The committee shall keep a record of its proceedings and shall report these proceedings to the Board at the regular meetings thereof. The committee shall serve as the nominating committee for nominations to the Board. The committee shall provide oversight on all Community Reinvestment Act ("CRA") matters pertaining to the Association. The committee shall also be responsible for monitoring the CRA activities of the Association on an on-going basis and making periodic reports on such CRA activity to the Board. Section 3.2. Chairman of the Executive Committee. The Board may designate one of its members to be Chairman of the Executive Committee who shall preside at the meetings thereof and shall perform such duties as the Board shall assign to him from time to time. Section 3.3. Audit Committee. The Board shall appoint a committee of three or more persons exclusive of the officers of this Association which committee shall be known as the Audit Committee. It shall be the duty of this committee at least once in every twelve months to examine the affairs of the Association, and determine whether it is in a sound and solvent condition and to recommend to the Board such changes in the manner 13 14 of doing business, etc., as may seem to be desirable. The committee may cause such examination to be made in its behalf and under its supervision by outside accountants and may also use the services of any other persons either inside or outside the Association to assist in its work. The results of each examination shall be reported in writing to the Board. Section 3.4. Audit of Trust Department. The Audit Committee shall, at least once during each calendar year and within fifteen months of the last such audit make suitable audits of the Trust Department or cause suitable audits to be made by auditors responsible only to the Board, and at such time shall ascertain whether the department has been administered in accordance with law, Part 9 of the Regulations of the Comptroller of the Currency, and sound fiduciary principles. In lieu of such periodic audit the Audit Committee, at the election of the Board, may conduct or cause to be conducted by auditors responsible only to the Board an adequate continuous audit system adopted by the Board. A written report of such periodic or continuous audit shall be made to the Board. Section 3.5. Other Committees. The Board may appoint from time to time other committees composed of one or more persons each, for such purposes and with such powers as the Board may determine. The Chairman of the Board shall have the power to designate another person to serve on any committee during the absence or inability of any member thereof so to serve. Section 3.6. Directors' Emeritus. The Board may designate one or more persons to serve as Director Emeritus. Such Director Emeritus shall have the right to attend any and all meetings of the Board, but shall have no vote at such meetings. A person designated as Director Emeritus may serve in that capacity for a period of three years. Section 3.7. Alternate Committee Members. The Board may, from time to time, appoint one or more, but no more than three persons to serve as alternate members of a committee, each of whom shall be empowered to serve on that committee in place of a 14 15 regular committee member in the event of the absence or disability of that committee member. An alternate committee member shall, when serving on a committee, have all of the powers of a regular committee member. Alternate committee members shall be notified of, and requested to serve at, a particular meeting or meetings, or for particular periods of time, by or at the direction of the chairman of the committee or the Chairman of the Board. ARTICLE IV Officers Section 4.1a. Appointment. The senior officers of this Association shall be chosen by the Board and shall be the Chairman of the Board, one or more Vice Chairmen, the President, the Chief Financial Officer and such other officers as in the judgment of the Board may be from time to time required. The Chairman of the Board and the President shall be chosen from the Directors. The Board may designate a person to serve as secretary of all meetings of the Board and of the shareholders and the persons so designated shall keep accurate minutes of such meetings. Section 4.1b. Other Officers. The Chairman, the President, the Chief Executive Officer, any Vice Chairman or any Senior Executive Vice President may appoint such other officers with such titles and duties as he may designate. Section 4.2. Term of Office. The officers who are required by the articles of association or the bylaws to be members of the Board shall hold their respective offices until the Organization meeting of the Board following the annual meeting of shareholders or until their respective successors shall have been elected, unless they shall resign, become disqualified or be removed from office. Each other officer shall hold office at the pleasure of the Board. Any officer may be removed at any time by the Board. 15 16 Section 4.3. Chairman of the Board. The chairman of the board shall be designated as Chairman of the Board. He shall preside at all meetings of the stockholders and directors and he shall be a member of all committees of the Board except the Audit Committee. He shall have such other powers and perform such other duties as may be prescribed from time to time by the Board. He shall be subject only to the direction and control of the Board. Section 4.4. President. The president shall be the chief executive officer of the Association and he shall be designated as President and Chief Executive Officer. In the absence of the Chairman the President shall preside at all meetings of the Board. The President shall be a member of each committee of the Board except the Audit Committee. He shall have the powers and perform the duties conferred or imposed upon the President by the national banking laws, and he shall have such other powers and perform such other duties as may from time to time be imposed upon or assigned to him by the Board. Section 4.5. Chief Financial Officer. The Chief Financial Officer shall have such title as may be designated by the Board and he shall be responsible for all monies, funds and valuables of this Association, provide for the keeping of proper records of all transactions of the Association, report to the Board at each regular meeting the condition of the Association, submit to the Board, when requested, a detailed statement of the income and expenses, be responsible for the conduct and efficiency of all persons employed under him, and perform such other duties as may be from time to time assigned to him by the Board. Section 4.6. Other Officers. All other officers shall respectively exercise such powers and perform such duties as generally pertain to their several offices, or as may 16 17 be conferred upon or assigned to them by the Board, the Chairman of the Board or the President. Section 4.7. Bond. Each officer and employee, if so required by the Board, shall give bond with surety to be approved by the Board, conditioning for the honest discharge of his duties as such officer or employee. In the discretion of the Board, such bonds may be individual, schedule or blanket form, and the premiums may be paid by the Association. Section 4.8. Officers Acting as Assistant Secretary. Notwithstanding Section 4.1a of this Article IV, any Senior Vice President, Vice President or Assistant Vice President shall have, by virtue of his office, and by authority of the Bylaws, the authority from time to time to act as an Assistant Secretary of the Association, and to such extent, said officers are appointed to the Office of Assistant Secretary. ARTICLE V Trust Department Section 5.1. Trust Department. There shall be a department of the Association known as the Trust Department which shall perform the fiduciary responsibilities of the Association. Opinions of counsel shall be retained on file in the Trust Department in connection with all important matters pertaining to fiduciary activities. Section 5.2. Trust Investment. Funds held in a fiduciary capacity shall be invested in accordance with the instrument establishing the fiduciary relationship and local law. Where such instrument does not specify the character and class of the investments to be made and does not vest in the Association a discretion in the 17 18 matter, funds held pursuant to such instrument shall be invested in investments in which corporate fiduciaries may invest under local law. ARTICLE VI Stock Certificates and Transfers Section 6.1. Stock Certificates. Ownership of capital stock of the Association shall be evidenced by certificates of stock signed by the Chairman or President, and the Secretary, or an Assistant Secretary. Each certificate shall state upon its face that the stock is transferable only upon the books of the Association by the holder thereof, or by duly authorized attorney, upon the surrender of such certificate, and shall meet the requirements of Section 5139, United States Revised Statutes, as amended. Section 6.2. Transfers. The stock of this Association shall be assignable and transferable only on the books of this Association, subject to the restrictions and provisions of the national banking laws; and a transfer book shall be provided in which all assignments and transfers of stock shall be made. When stock is transferred, the certificates thereof shall be returned to the Association, canceled, preserved and new certificates issued. Section 6.3. Dividends. Dividends shall be paid to the shareholders in whose names the stock shall stand at the close of business on the day next preceding the date when the dividends are payable, provided, however, that the directors may fix another date as a record date for the determination of the shareholders entitled to receive payment thereof. 18 19 ARTICLE VII Increase of Stock Section 7.1. Capital Stock. Shares of the capital stock of the Association, which have been authorized but not issued, may be issued from time to time for such consideration, not less than the par value thereof, as may be determined by the Board. ARTICLE VIII Corporate Seal Section 8.1. Seal. The seal, an impression of which appears below, is the seal of the Association as adopted by the Board of Directors: [Seal] The Chairman of the Board, the Vice Chairman, the President, Senior Executive Vice President, Executive Vice President, Senior Vice President, Vice President, each Assistant Vice President, the Chief Financial Officer, the Secretary, each Assistant Secretary, each Trust Officer, each Assistant Trust Officer or each Assistant Cashier, shall have the authority to affix the corporate seal of this Association and to attest to the same. ARTICLE IX Miscellaneous Provisions Section 9.1. Fiscal Year. The fiscal year of the Association shall be the calendar year. Section 9.2. Execution of Instruments. All agreements, contracts, indentures, mortgages, deeds, conveyances, transfers, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits, bonds, undertakings, proxies and other instruments or documents may be signed, executed, acknowledged, verified, delivered or accepted in behalf of the 19 20 Association by the Chairman of the Board, or any Vice Chairman, or the President, or Senior Executive Vice President, or Executive Vice President, or Senior Vice President, or Vice President, or Assistant Vice President, or Chief Financial Officer, or the Secretary, or Assistant Secretary, or, if in connection with the exercise of fiduciary powers of the Association, by any of said officers or by any Trust Officer or Assistant Trust Officer, to the extent authorized by the corporate policy of the Association, as adopted and modified from time to time. Any such instruments may also be executed, acknowledged, verified, delivered, or accepted in behalf of the Association in such other manner and by such other officers as the Board may from time to time direct. Section 9.3. Records. The organization papers of this Association, the articles of association, the bylaws and any amendments thereto, the proceedings of all regular and special meetings of the shareholders and of the directors, the returns of the judges of elections, and the reports of the committees of directors shall be recorded in an appropriate minute book, and the minutes of each meeting shall be signed by the Secretary or any other officer appointed to act as secretary of the meeting. Section 9.4. Banking Hours. This Association and its branch offices shall be open on such days and during such hours as shall be fixed from time to time by the Board. Section 9.5. Voting Shares of Other Corporations. The Chairman, any Vice Chairman, the President, or any Vice President is authorized to vote, represent and exercise on behalf of this Association all rights incident to any and all shares of stock of any other corporation standing in the name of the Association. The authority granted herein may be exercised by such officers in person or by proxy or by power of attorney duly executed by said officer. ARTICLE X Bylaws Section 10.1. Inspection. A copy of the Bylaws, with all amendments thereto, shall at all times be kept in a convenient place at the Head Office of the Association, and shall be open for inspection to all shareholders, during banking hours. Section 10.2. Amendments. These Bylaws may be changed or amended at any regular or special meeting of the Board by the vote of a majority of the Directors. 20 21 EXHIBIT 2 FIRST UNION NATIONAL BANK ARTICLES OF ASSOCIATION (EFFECTIVE JULY 11, 1996) For purposes of organizing an Association to carry on the business of banking under the laws of the United States, the undersigned do enter into the following Articles of Association: FIRST. The title of this Association shall be First Union National Bank. SECOND. The Main Office of the Association shall be in Avondale, County of Chester, State of Pennsylvania. The general business of the Association shall be conducted at its main office and its branches. THIRD. The Board of Directors of this Association shall consist of not less than five nor more than twenty-five persons, the exact number to be fixed and determined from time to time by resolution of a majority of the full Board of Directors or by resolution of the shareholders at any annual or special meeting thereof. Each Director, during the full term of his directorship, shall own a minimum of (a) $1,000 par value of stock of this Association or (b) preferred or common stock of First Fidelity Bancorporation having (i) aggregate par value equal to or greater than $1,000, (ii) aggregate shareholders' equity equal to or greater than $1,000 or (iii) aggregate fair market value equal to or greater than $1,000. Any vacancy in the Board of Directors may be filled by action of the Board of Directors. FOURTH. There shall be an annual meeting of the shareholders the purpose of which shall be the election of Directors and the transaction of whatever other business may be brought before said meeting. It shall be held at the main office or other convenient place as the Board of Directors may designate, on the day of each year specified therefor 21 22 in the By-laws, but if no election is held on that day, it may be held on any subsequent day according to such lawful rules as may be presented by the Board of Directors. FIFTH. (A) General. The amount of capital stock of this Association shall be (i) 25,000,000 shares of common stock of the par value of twenty dollars ($20.00) each (the "Common Stock") and (ii) 160,540 shares of preferred stock of the par value of one dollar ($1.00) each (the "Non-Cumulative Preferred Stock"), having the rights, privileges and preferences set forth below, but said capital stock may be increased or decreased from time to time in accordance with the provisions of the laws of the United States. (B) Terms of the Non-Cumulative Preferred Stock. 1. General. Each share of Non-Cumulative Preferred Stock shall be identical in all respects with the other shares of Non-Cumulative Preferred Stock. The authorized number of shares of Non-Cumulative Preferred Stock may from time to time be increased or decreased (but not below the number then outstanding) by the Board of Directors. Shares of Non-Cumulative Preferred Stock redeemed by the Association shall be canceled and shall revert to authorized but unissued shares of Non-Cumulative Preferred Stock. 2. Dividends. (a) General. The holders of Non-Cumulative Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, but only out of funds legally available therefor, non-cumulative cash dividends at the annual rate of $83.75 per share, and no more, payable quarterly on the first days of December, March, June and September, respectively, in each year with respect to the quarterly dividend period (or portion thereof) ending on the day preceding such respective dividend payment date, to shareholders of record on the respective date, not exceeding fifty days preceding such dividend payment date, fixed for that purpose by the Board of Directors in advance of payment of each particular dividend. Notwithstanding the foregoing, the cash dividend 22 23 to be paid on the first dividend payment date after the initial issuance of Non-Cumulative Preferred Stock and on any dividend payment date with respect to a partial dividend period shall be $83.75 per share multiplied by the fraction produced by dividing the number of days since such initial issuance or in such partial dividend period, as the case may be, by 360. (b) Non-cumulative Dividends. Dividends on the shares of Non-Cumulative Stock shall not be cumulative and no rights shall accrue to the holders of shares of Non-Cumulative Preferred Stock by reason of the fact that the Association may fail to declare or pay dividends on the shares of Non- Cumulative Preferred Stock in any amount in any quarterly dividend period, whether or not the earnings of the Association in any quarterly dividend period were sufficient to pay such dividends in whole or in part, and the Association shall have no obligation at any time to pay any such dividend. (c) Payment of Dividends. So long as any share of Non-Cumulative Preferred Stock remains outstanding, no dividend whatsoever shall be paid or declared and no distribution made on any junior stock other than a dividend payable in junior stock, and no shares of junior stock shall be purchased, redeemed or otherwise acquired for consideration by the Association, directly or indirectly (other than as a result of a reclassification of junior stock, or the exchange or conversion of one junior stock for or into another junior stock, or other than through the use of the proceeds of a substantially contemporaneous sale of other junior stock), unless all dividends on all shares of Non-Cumulative Preferred Stock and non-cumulative Preferred Stock ranking on a parity as to dividends with the shares of Non-Cumulative Preferred Stock for the most recent dividend period ended prior to the date of such payment or declaration shall have been paid in full and all dividends on all shares of cumulative Preferred Stock ranking on a parity as to dividends with the shares of Non-Cumulative Preferred Stock for the most recent 23 24 dividend period ended prior to the date of such payment or declaration shall have been paid in full and all dividends on all shares of Non-Cumulative Stock (not withstanding that dividends on such stock are cumulative) for all past dividend periods shall have been paid in full. Subject, to the foregoing, and not otherwise, such dividends (payable in cash, stock or otherwise) as may be determined by the Board of Directors may be declared and paid on any junior stock from time to time out of any funds legally available therefor, and the Non-Cumulative Stock shall not be entitled to participate in any such dividends, whether payable in cash, stock or otherwise. No dividends shall be paid or declared upon any shares of any class or series of stock of the Association ranking on a parity (whether dividends on such stock are cumulative or non-cumulative) with the Non-Cumulative Preferred Stock in the payment of dividends for any period unless at or prior to the time of such payment or declaration all dividends payable on the Non-Cumulative Preferred Stock for the most recent dividend period ended prior to the date of such payment or declaration shall have been paid in full. When dividends are not paid in full, as aforesaid, upon the Non-Cumulative Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends (whether dividends on such stock are cumulative or non-cumulative) with the Non-Cumulative Preferred Stock, all dividends declared upon the Non-Cumulative Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with the Non-Cumulative Preferred Stock shall be declared pro rata so that the amount of dividends declared per share on the Non-Cumulative Preferred Stock and such other Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the Non-Cumulative Preferred Stock (but without any accumulation in respect of any unpaid dividends for prior dividend periods on the shares of Non-Cumulative Stock) and such other Preferred Stock bear to each other. No interest, or sum of money in lieu of interest, shall be payable in 24 25 respect of any dividend payment or payments on the Non-Cumulative Preferred Stock which may be in arrears. 3. Voting. The holders of Non-Cumulative Preferred Stock shall not have any right to vote for the election of directors or for any other purpose. 4. Redemption. (a) Optional Redemption. The Association, at the option of the Board of Directors, may redeem the whole or any part of the shares of Non-Cumulative Preferred Stock at the time outstanding, at any time or from time to time after the fifth anniversary of the date of original issuance of the Non-Cumulative Preferred Stock, upon notice given as hereinafter specified, at the redemption price per share equal to $1,000 plus an amount equal to the amount of accrued and unpaid dividends from the immediately preceding dividend payment date (but without any accumulation for unpaid dividends for prior dividend periods on the shares of Non-Cumulative Preferred Stock) to the redemption date. (b) Procedures. Notice of every redemption of shares of Non-Cumulative Preferred Stock shall be mailed by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses as they shall appear on the books of the Association. Such mailing shall be at least 10 days and not more than 60 days prior to the date fixed for redemption. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the shareholder receives such notice, and failure duly to give such notice by mail, or any defect in such notice, to any holder of shares of Non-Cumulative Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Non-Cumulative Preferred Stock. In case of redemption of a part only of the shares of Non-Cumulative Preferred Stock at the time outstanding the redemption may be either pro rata or by lot or by such other 25 26 means as the Board of Directors of the Association in its discretion shall determine. The Board of Directors shall have full power and authority, subject to the provisions herein contained, to prescribe the terms and conditions upon which shares of the Non-Cumulative Preferred Stock shall be redeemed from time to time. If notice of redemption shall have been duly given, and, if on or before the redemption date specified therein, all funds necessary for such redemption shall have been set aside by the Association, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for shares so called for redemption shall not have been surrendered for cancellation, all shares so called for redemption shall no longer be deemed outstanding on and after such redemption date, and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on redemption thereof, without interest. If such notice of redemption shall have been duly given or if the Association shall have given to the bank or trust company hereinafter referred to irrevocable authorization promptly to give such notice, and, if on or before the redemption date specified therein, the funds necessary for such redemption shall have been deposited by the Association with such bank or trust company in trust for the pro rata benefit of the holders of the shares called for redemption, then, notwithstanding that any certificate for shares so called for redemption shall not have been surrendered for cancellation, from and after the time of such deposit, all shares so called for redemption shall no longer be deemed to be outstanding and all rights with respect to such shares shall forthwith cease and terminate, except only the right of the holders thereof to receive from such bank or trust company at any time after the time of such deposit the funds so deposited, without 26 27 interest. The aforesaid bank or trust company shall be organized and in good standing under the laws of the United States of America or any state thereof, shall have capital, surplus and undivided profits aggregating at least $50,000,000 according to its last published statement of condition, and shall be identified in the notice of redemption. Any interest accrued on such funds shall be paid to the Association from time to time. In case fewer than all the shares of Non-Cumulative Preferred Stock represented by a stock certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof. Any funds so set aside or deposited, as the case may be, and unclaimed at the end of the relevant escheat period under applicable state law from such redemption date shall, to the extent permitted by law, be released or repaid to the Association, after which repayment the holders of the shares so called for redemption shall look only to the Association for payment thereof. 5. Liquidation. (a) Liquidation Preference. In the event of any voluntary liquidation, dissolution or winding up of the affairs of the Association, the holders of Non-Cumulative Preferred Stock shall be entitled, before any distribution or payment is made to the holders of any junior stock, to be paid in full an amount per share equal to an amount equal to $1,000 plus an amount equal to the amount of accrued and unpaid dividends per share from the immediately preceding dividend payment date (but without any accumulation for unpaid dividends for prior dividend periods on the shares of Non-Cumulative Preferred Stock) per share to such distribution or payment date (the "liquidation amount"). In the event of any involuntary liquidation, dissolution or winding up of the affairs of the Association, then, before any distribution or payment shall be made to the holders of any junior stock, the holders of Non-Cumulative Preferred Stock shall be entitled to be paid in full an amount per share equal to the liquidation amount. 27 28 If such payment shall have been made in full to all holders of shares of Non-Cumulative Preferred Stock, the remaining assets of the Association shall be distributed among the holders of junior stock, according to their respective rights and preferences and in each case according to their respective numbers of shares. (b) Insufficient Assets. In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, the available assets of the Association are insufficient to pay such liquidation amount on all outstanding shares of Non-Cumulative Preferred Stock, then the holders of Non-Cumulative Preferred Stock shall share ratably in any distribution of assets in proportion to the full amounts to which they would otherwise be respectively entitled. (c) Interpretation. For the purposes of this paragraph 5, the consolidation or merger of the Association with any other corporation or association shall not be deemed to constitute a liquidation, dissolution or winding up of the Association. 6. Preemptive Rights. The Non-Cumulative Preferred Stock is not entitled to any preemptive, subscription, conversion or exchange rights in respect of any securities of the Association. 7. Definitions. As used herein with respect to the Non-Cumulative Preferred Stock, the following terms shall have the following meanings: (a) The term "junior stock" shall mean the Common Stock and any other class or series of shares of the Association hereafter authorized over which the Non-Cumulative Preferred Stock has preference or priority in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Association. (b) The term "accrued dividends", with respect to any share of any class or series, shall mean an amount computed at the annual dividend rate for the class or series of which the particular share is a part, from, if such share is cumulative, the date on 28 29 which dividends on such share became cumulative to and including the date to which such dividends are to be accrued, less the aggregate amount of all dividends theretofore paid thereon and, if such share is non-cumulative, the relevant date designated to and including the date to which such dividends are accrued, less the aggregate amount of all dividends theretofore paid with respect to such period. (c) The term "Preferred Stock" shall mean all outstanding shares of all series of preferred stock of the Association as defined in this Article Fifth of the Articles of Association, as amended, of the Association. 8. Restriction on Transfer. No shares of Non-Cumulative Preferred Stock, or any interest therein, may be sold, pledged, transferred or otherwise disposed of without the prior written consent of the Association. The foregoing restriction shall be stated on any certificate for any shares of Non-Cumulative Preferred Stock. 9. Additional Rights. The shares of Non-Cumulative Preferred Stock shall not have any relative, participating, optional or other special rights and powers other than as set forth herein. SIXTH. The Board of Directors shall appoint one of its members President of this Association, who shall be Chairperson of the Board, unless the Board appoints another director to be the Chairperson. The Board of Directors shall have the power to appoint one or more Vice Chairmen and Vice Presidents and such other officers and employees as may be required to transact the business of this Association. The Board of Directors shall have the power to define the duties of the officers and employees of the Association; to fix the salaries to be paid to them; to dismiss them; to require bonds from them and to fix the penalty thereof; to regulate the manner in which any increase of the capital of the Association shall be made; to manage and administer the business and affairs of the Association; to make all By-laws that it may 29 30 be lawful for them to make; and generally to do and perform all acts that it may be legal for a Board of Directors to do and perform. SEVENTH. The Board of Directors shall have the power to change the location of the main office to any other place permitted by law, but subject to the approval of the Comptroller of the Currency; and shall have the power to establish or change the location of any branch or branches of the Association to any other location, without the approval of the shareholders, but subject to the approval of the Comptroller of the Currency. EIGHTH. The corporate existence of this Association shall continue until terminated in accordance with the laws of the United States. NINTH. The Board of Directors of this Association, or any one or more shareholders owning, in the aggregate, not less than 25 percent of the stock of this Association, may call a special meeting of shareholders at any time. Unless otherwise provided by the laws of the United States, a notice of the time, place, and purpose of every annual and special meeting of the shareholders shall be given by first-class mail, postage prepaid, mailed at least ten days prior to the date of such meeting, to each shareholder of record at his address as shown upon the books of this Association. TENTH. (A) Indemnification of Directors. The Association shall, to the fullest extent permitted by applicable banking, corporate and other law and regulation, indemnify any person who is or was a director of the Association from and against any and all expenses, liabilities or other losses arising in connection with any action, suit, appeal or other proceeding, by reason of the fact that such person is or was serving as a director of the Association and may, to the fullest extent permitted by applicable banking, corporate and other law and regulation, advance monies to such persons for expenses incurred in defending any such action, suit, appeal or other proceeding on such terms as the Association's Board of Directors shall 30 31 determine and as are required by applicable banking, corporate and other law or regulation or interpretation by the applicable banking regulators. The Association may purchase insurance for the purpose of indemnifying such persons and/or reimbursing the Association upon payment of indemnification to such persons to the extent that indemnification is authorized by the preceding sentences, except that insurance coverage and corporate indemnification shall not be available in connection with a formal order by a court or judicial or governmental body assessing civil money penalties against such person or in the event that such coverage or indemnification would be prohibited by applicable banking, corporate and other law or regulation. (B) Indemnification of Officers, Employees and Agents. The Association shall indemnify any person who is or was an officer, employee or agent of the Association or who is or was a director, general partner, trustee or principal of another entity serving as such at the request of the Association from and against any and all expenses, liabilities or other losses arising in connection with any action, suit, appeal or other proceeding, by reason of the fact that such person is or was serving as an officer, employee or agent of the Association or as a director of another entity at the request of the Association, to the extent authorized by the corporate policy of the Association, as adopted and modified from time to time by the shareholders of the Association, except to the extent that such indemnification would be prohibited by applicable banking, corporate and other law or regulation. The Association may advance monies to such persons for expenses incurred in defending any such action, suit, appeal or other proceeding in accordance with the corporate policy of the Association, as adopted and modified from time to time by the shareholders of the Association, under such terms and procedures as are required by applicable banking, corporate and other law or regulation or interpretation by the applicable banking 31 32 regulators, except to the extent that such advancement would be prohibited by applicable banking, corporate and other law or regulation. The Association may purchase insurance for the purpose of indemnifying such persons and/or reimbursing the Association upon payment of indemnification to such person to the extent that indemnification is authorized by the preceding sentence, except that insurance coverage and corporate indemnification shall not be available in connection with a formal order by a court or judicial or governmental body assessing civil money penalties against such person or in the event that such coverage or indemnification would be prohibited by applicable banking, corporate and other law or regulation. ELEVENTH. These Articles of Association may be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders of a majority of the stock of this Association, unless the vote of the holders of a greater amount of stock is required by law, and in that case by the vote of the holders of such greater amount. TWELFTH. The Association, at any time and from time to time, may authorize and issue Debt Obligation, whether or not subordinated, without the approval of the shareholders. 32 33 EXHIBIT 3 REPORT OF CONDITION Consolidating domestic and foreign subsidiaries of the First Union National Bank of Avondale in the state of Pennsylvania, at the close of business on December 31, 1996, published in response to call made by Comptroller of the Currency, under title 12, United States Code, Section 161. Charter Number 33869 Comptroller of the Currency Northeastern District. STATEMENT OF RESOURCES AND LIABILITIES ASSETS Thousand of Dollars ------------------- Cash and balance due from depository institutions: Noninterest-bearing balances and currency and coin............. 1,835,479 Interest-bearing balances...................................... 83,025 Securities....................................................... ////////// Hold-to-maturity securities.................................... 431,623 Available-for-sale securities.................................. 2,429,818 Federal funds sold and securities purchased under agreements ////////// to resell in domestic offices of the bank and of it ////////// Edge and Agreement subsidiaries, and in IBFs: ////////// Federal funds sold............................................. 998,987 Securities purchased under agreements to resell................ 465,602 Loans and lease financing receivables: Loan and leases, net of unearned income.............. 19,495,582 LESS: Allowance for loan and lease losses............ 258,533 LESS: Allocated transfer risk reserve................ 0 Loans and leases, net of unearned income, allowance, and reserve.......................................................... 19,237,049 Assets held in trading accounts.................................. 0 Premises and fixed assets (including capitalized leases)......... 95,941 Other real estate owned.......................................... 49,984 Investment in unconsolidated subsidiaries and associated ////////// companies........................................................ 26,336 Customer's liability to this bank on acceptances outstanding..... 44,524 Intangible assets................................................ 398,568 Other assets..................................................... 731,433 Total assets..................................................... 27,128,369 LIABILITIES Deposits: In domestic offices......................................... 21,604,197 Noninterest-bearing.......................... 4,512,791 Interest-bearing............................. 17,091,406 In foreign offices, Edge and Agreement subsidiaries, and IBFs.................................................... 390,835 Noninterest-bearing.......................... 70 Interest-bearing............................. 390,765 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and IBFs Federal fund purchased...................................... 305,422 Securities sold under agreements to repurchase.............. 1,308,107 Demand notes issued to the U.S. Treasury......................... 99,992 Trading liabilities.............................................. 0 Other borrowed money:............................................ ////////// With original maturity of one year or less....................... 8,000 With original maturity of more than one year................ 9,532 Mortgage indebtedness and obligations under capitalized leases... 6,149 Bank's liability on acceptances executed and outstanding......... 45,252 Subordinated notes and debentures................................ 475,000 Other liabilities................................................ 656,346 Total liabilities................................................ 24,908,832 Limited-life preferred stock and related surplus................. 0 EQUITY CAPITAL Perpetual preferred stock and related surplus.................... 160,540 Common Stock..................................................... 452,156 Surplus.......................................................... 1,300,080 Undivided profits and capital reserves........................... 318,243 Net unrealized holding gains (losses) on available-for-sale ////////// securities...................................................... 11,482 Cumulative foreign currency translation adjustments.............. 0 Total equity capital............................................. 2,219,537 Total liabilities, limited-life preferred stock and equity ////////// capital........................................................ 27,128,369
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